The new bankruptcy bill is making its way though the Senate this week. Isn't that scary? I've been searching for an outline of the proposed changes, but I haven't been able to find anything aside from news articles. In short: debtors at or above the median income for their state would not be allowed to file Chapter 7, rather forced into a court-ordered repayment plan. A few alarming things about this:
- The Senate rejected (53-46) an amendment to prevent abortion protesters from using bankruptcy to avoid paying court fines or penalties. Um, hello? The purpose of this bill is to prevent people from abusing the bankruptcy system. But these convicts are exempt? Guess who's rejoicing. (Caveat: that link will take you directly to Pro-Life Daily.)
- The Senate voted (69-31) to cap the debate on the issue. That means there has been a limit set on the time our Senators spend discussing the issue before a vote sends this bill to the House. Democrats proposed several amendments that would protect debtors facing medical hardships, as well as protecting a portion of the patients' home value from being seized by creditors. In our Republican-controlled Senate, the amendments were defeated and the bill is expected to clear by the end of the week.
- Credit card and lending companies have been pushing this bill for 8 years, saying that it will curb the number of people filing bankruptcy to escape their debt. But consider these numbers, courtesy of Newsday: only 4.3 percent of bankruptcy filings are a result of credit card debt. The top causes are divorce, job loss, and medical bills. Of those going bankrupt for medical reasons, 75.7 percent actually had health insurance. That last fact speaks volumes about another topic, but we'll save that for another day.
Under current law, the court can deny someone bankruptcy status if a judge believes they are abusing the system. The big banks don't think that's good enough. I, on the other hand, have faith in the ability of U.S. judges to weed out those abusers. Current law protects us, the consumers, by dealing with bankruptcy on a case-by-case basis. Who might a bill backed by the GOP, credit card and lending companies protect?
Info Links:
BankruptcyInformation.com
U.S. Courts Bankruptcy Page
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