This bill is so bad even the freepers are against it. http://www.freerepublic.com/focus/f-news/1358749/posts March 8, 2005 OP-ED COLUMNIST The Debt-Peonage Society By PAUL KRUGMAN Today the Senate is expected to vote to limit debate on a bill that toughens the existing bankruptcy law, probably ensuring the bill's passage. A solid bloc of Republican senators, assisted by some Democrats, has already voted down a series of amendments that would either have closed loopholes for the rich or provided protection for some poor and middle-class families. The bankruptcy bill was written by and for credit card companies, and the industry's political muscle is the reason it seems unstoppable. But the bill also fits into the broader context of what Jacob Hacker, a political scientist at Yale, calls "risk privatization": a steady erosion of the protection the government provides against personal misfortune, even as ordinary families face ever-growing economic insecurity. The bill would make it much harder for families in distress to write off their debts and make a fresh start. Instead, many debtors would find themselves on an endless treadmill of payments. The credit card companies say this is needed because people have been abusing the bankruptcy law, borrowing irresponsibly and walking away from debts. The facts say otherwise. A vast majority of personal bankruptcies in the United States are the result of severe misfortune. One recent study found that more than half of bankruptcies are the result of medical emergencies. The rest are overwhelmingly the result either of job loss or of divorce. To the extent that there is significant abuse of the system, it's concentrated among the wealthy - including corporate executives found guilty of misleading investors - who can exploit loopholes in the law to protect their wealth, no matter how ill-gotten. One increasingly popular loophole is the creation of an "asset protection trust," which is worth doing only for the wealthy. Senator Charles Schumer introduced an amendment that would have limited the exemption on such trusts, but apparently it's O.K. to game the system if you're rich: 54 Republicans and 2 Democrats voted against the Schumer amendment. Other amendments were aimed at protecting families and individuals who have clearly been forced into bankruptcy by events, or who would face extreme hardship in repaying debts. Ted Kennedy introduced an exemption for cases of medical bankruptcy. Russ Feingold introduced an amendment protecting the homes of the elderly. Dick Durbin asked for protection for armed services members and veterans. All were rejected. None of this should come as a surprise: it's all part of the pattern. As Mr. Hacker and others have documented, over the past three decades the lives of ordinary Americans have become steadily less secure, and their chances of plunging from the middle class into acute poverty ever larger. Job stability has declined; spells of unemployment, when they happen, last longer; fewer workers receive health insurance from their employers; fewer workers have guaranteed pensions. Some of these changes are the result of a changing economy. But the underlying economic trends have been reinforced by an ideologically driven effort to strip away the protections the government used to provide. For example, long-term unemployment has become much more common, but unemployment benefits expire sooner. Health insurance coverage is declining, but new initiatives like health savings accounts (introduced in the 2003 Medicare bill), rather than discouraging that trend, further undermine the incentives of employers to provide coverage. Above all, of course, at a time when ever-fewer workers can count on pensions from their employers, the current administration wants to phase out Social Security. The bankruptcy bill fits right into this picture. When everything else goes wrong, Americans can still get a measure of relief by filing for bankruptcy - and rising insecurity means that they are forced to do this more often than in the past. But Congress is now poised to make bankruptcy law harsher, too. Warren Buffett recently made headlines by saying America is more likely to turn into a "sharecroppers' society" than an "ownership society." But I think the right term is a "debt peonage" society - after the system, prevalent in the post-Civil War South, in which debtors were forced to work for their creditors. The bankruptcy bill won't get us back to those bad old days all by itself, but it's a significant step in that direction. And any senator who votes for the bill should be ashamed. E-mail: krugman@nytimes.com http://www.nytimes.com/2005/03/08/opinion/08krugman.html?hp=&oref=login&pagewanted=print&position=
I've done a few bankruptcies...for companies and individuals. Just a few. I've been on the creditor side of a bankruptcy many, many times. MOST times people are filing BK because of medical bills or a divorce. I've seen the proposed amendments in the past, when they gained steam pre-9/11, and I found them to be scary. This thread needs a Refman post. He works in this field every day.
I think the bill is great. Huge investment banks, and credit card companies don't have enough money. They need more. People who are broke and can't pay their bills should be squeezed harder so that these needy companies can get every last drop out of them. If people had a medical emergency then it is too bad. They are sick why do they need the money. Meanwhile these banks and credit card companies have their health. They need every bit of it, very badly. We can't let anything bad happen to them.
I do think bankruptcy is used more often and in means that it shouldn't be but the credit card companies are the problem by extending so much credit to non-credit worthy individuals in the first place.
guess how quickly credit card companies send offers of credit to individuals who recently filed bankruptcy. i know people who got new credit cards in the midst of their bankruptcy...before discharge.
Thus, we must protect those great-big-o credit card companies from themselves by punishing their customers. I guess this ownership society thingy only applies to individuals and not corporations.
Totally agree with FD here. I would fully support this bill if it also contained provisions to tighten up availability to credit. At the sametime its also sad that we don't have better access to healthcare and other programs that might prevent people going bankrupt because of medical bills in the first place.
That being said, I still believe its an individual's responsibility to be smart about credit if offered to them. People can't be extended credit, buy a bunch of crap then declare bankruptcy and expect not to pay it because the companies shouldn't have offered it.
And if you have a major illness and cann't pay for your rent or food you shouldn't use your credit either right? In those situations people often only think of how to handle the immidiate needs.
But sadly that isn't what happens with a large portion of the bankruptcy cases. I believe that more often than not they are the result of a major medical condition, divorce, etc. If it was only people buying what they can't afford that would be one thing. That does happen, but I believe it isn't what happens in most of the cases.
in my experience, this is exactly right. sometimes people find themselves on the other end of a lawsuit, as well....whether that suit has merit or not, if you have other debt and you can't afford an attorney to fight the claim, you're out of luck. bankruptcy is probably the only way out of that. people don't realize how quickly a lawsuit, with or without merit, can ruin a person financially. having said that...i think our culture is all about buying whether or not you can afford it or not. but MOST people want to pay their debts. i know a guy who owns a company that buys debt that is already out past the statute of limitiations. even though he has no legal recourse againt the debtors, he gets a tremendous response because most people feel like if they incurred the debt, they should pay it...no matter how long after the fact it is. he reduces that debt considerably for a settlement of that debt, obviously.
I have gone to New York ghetto and seen one parking lot with Lexus, Lincoln, Porsche and several other brands that I never saw in the suburban area I lived, it is amazing. (I guess those are most likely drug dealers though)
Also I would support this law if they added in some consumer protections in regard to credit cards, like better identity theft protections and a better process to challenge questionable purchase, controls on the interest rates and fees charged by credit cards. At the sametime that they are extending credit to more people the credit card companies are putting in more byzantine fees and charging usurous interest rates.
We have one f'ed up democracy. Sometimes I wonder if the collective subconscious votes for these things (through their representatives) just to stockpile excuses for a revolution. People can't be that stupid, can they? But ultimately, I blame the fall of Communism for taking away the fear in the hearts of the rich, greedy and stupid. They oppress with impunity, seemingly not to realize that all the -isms are just new bottles for the age-old wine: kill those who've oppressed you and take away everything they robbed from you. That does not go away regardless of whether Communism or Fascism is in vogue or not.
I bet the Mob is wondering how the Credit Card companies stole the loansharking business from them. I thought usury was illegal. But if you call yourself a credit card company it's o.k
