Class warfare is about to escalate in America. I’m surprised that the credit card industry-sponsored Bankruptcy Bill hasn’t garnered more attention.
Paul Krugman’s column…
pkarchive.org/column/030805.html
Arianna Huffington’s column…
workingforchange.com/article … emid=18695
And this time it isn’t just the Republicans who are to blame (though they are leading the charge).
cheers,
DB
Well, not surprising. It seems that in order for the richest 1% of the U.S. to get richer, new ways to squeeze money it outta tomatos (errr, the other 99%) have to be invented. THe problem is that people can’t seem to understand that after the first couple o’ billion, its all the same (exactly how many yachts can one USE???)…
…ahh well, then again, I don’t really give a rats ass anymore as the cost of basic health insurance has pretty much priced the good 'ole USA outta my reach (errr, the quote I got was US$1300/month for a family of 3…geez, my brother in law doesn’t even MAKE that much in a month)…
…as far as I’m concerned, the U.S. can implode on itself economically if it wishes…it sure as hell seems hell bent on it…
Apparently the main change is going to be for people who run out of money but still have a job. (They’ll take into account expected future earnings / ability to pay.) If you come to bankrupcy court unemployed, then you can file Chapter 7 just like before. Right?
Wrong. From what I’ve read the main change will be to force poor people who file Chapter 7 (which relieves them of all obligation to repay their debts) into Chapter 13 (under which they must agree to a repayment plan), taking away judicial discretion in such matters. While initially that might sound reasonable, it seems less so when one considers that –
Law makers could have amended the Bankruptcy Act to tighten up the many ways in which rich people use the law to protect their assets, such as placing their assets in trusts to avoid being subject to the bankruptcy law, or subjecting corporate executives who file personal bankruptcy to the same standards applicable to the working poor, or cutting back on homestead exemptions (this exemption permits one to keep ones house when filing bankruptcy, which is reasonable so long as there are limits on the value of the house, but in several states there are no such limits, so one can file bankruptcy and keep ones multimillion dollar mansion)
They could have gone after many of the lucrative and ethically suspect practices of lenders, such as overextension of credit cards to students and other bad-risk borrowers, paycheck loans to the poor and mortgage loans to the elderly, that are more likely to cause problems than solve them for the borrowers
More than half of all personal bankruptcy filings are the result of medical bills, followed by divorce and job loss
The amount owed by Americans to Credit card companies (who pushed for the amendments) has increased exponentially, leading to record profits by such companies at the expense of the poor suckers foolish enough to run up impossible debts using the cards and credit limits that in many cases never should have been given to them and to pay the exorbitant fees (did you know that in most states in the US the “legal rate of interest” is about 10% – meaning that it is illegal for anyone to lend money at a greater rate of interest and any contract calling for a higher rate will be reduced to the legal rate by the courts – except in the case of credit card companies, who lobbied successfully so that they could charge 20% or 22% or whatever?)
Moreover, isn’t it just a little hypocritical that an administration that has created the larges budget deficits in US history should complain about people not paying their debts?
So, the amendments do not appear to be a sincere effort at genuine reform. They seem to be just one more policy that goes after poor, simple people while ignoring the much greater problems associated with the wealthy and the powerful.
The credit card companies want to be able to charge a huge risk premium to poor people with actually having to take on the risk. If it becomes more difficult to go bankrupt, then this is what will happen.
So, who still gets to file Chapter 7?
its not that bad, if U R unemployed U still can claim bankruptcy.
In Canada, someone with student loans can’t declare bankruptcy for 10 yrs after graduating, regardless of whether they have money or a job or any possessions.
The only crappy thing about this bill is how it hurts the ppl weighed down by medical bills. Yet, some republicans said this bill stops doctors and lawyers fmo claiming bankruptcy when they can easily repay the amount by working for 2 yrs…
I saw a recent study that put bankruptcy reasons at 80 percent for job loss, medical and divorce BUT my question is this? Is no one saving for that rainy day? I mean if these people are going bankrupt because they have one to two months of job loss or whatever, I think that they might want to re-examine where they are spending their money. I think that housing is becoming very pricy in many of these cities but then maybe it is time to find a roommate. Again, while I sympathize with these people who are going bankrupt, the world is like that. Creating costly programs to deal with them is ultimately going to reward the weak over the strong and eventually those systems collapse as well. I have seen this over and over again in Argentina and elsewhere. You keep taxing the productive to reward the nonproductive and you will get what you subsidize more unproductive forces.
Credit card companies do not get a lot of sympathy from me however. When I was back in the States, I was living with my Mom (rentfree) drove a used Mazda Miata (cheap insurance) so essentially no expenses and a lot of displosable income and was still working online for my Argentine Senate job. I had an income but there was no way that these credit card companies would know that. I had nothing on paper other than a clean credit rating. I was INUNDATED with offers EVERY month, maybe three to four pre-approved credit cards with anywhere from $7500 to $15000 to even $20,000 approved credit limits.
This to me is very incredible and if these credit card companies get burned then they are going to have to take some of the blame BUT another reason credit-card interest is so high is that it is unsecured AND because so many people have abused the system running up debts and then declaring bankruptcy. I guess I would not mind seeing interest on credit cards reduced. I mean really we all understand by now that someone will pay and ultimately does. This is the same thing with all these class action suits and medical malpractice suits. We will ALL pay higher rates of insurance and medical fees to cover this stuff. We ultimately lose in the end. So personally I am not going to get too worked up about this yet. I think that there is still a lot of abuse in the system that needs to be cleaned up and we are hearing one sad side of the story.
[quote=“fred smith”]Credit card companies do not get a lot of sympathy from me however. When I was back in the States, I was living with my Mom (rentfree) drove a used Mazda Miata (cheap insurance) so essentially no expenses and a lot of displosable income and was still working online for my Argentine Senate job. I had an income but there was no way that these credit card companies would know that. I had nothing on paper other than a clean credit rating. I was INUNDATED with offers EVERY month, maybe three to four pre-approved credit cards with anywhere from $7500 to $15000 to even $20,000 approved credit limits.
[/quote]
Wrong. From what I’ve read the main change will be to force poor people who file Chapter 7 (which relieves them of all obligation to repay their debts) into Chapter 13 (under which they must agree to a repayment plan), taking away judicial discretion in such matters.[/quote]
SJ:
It sounds like Mother Theresa basically has it right, except that he should have said “will be to force rich people”, instead of “will be to force poor people…” The bill is designed to go after wealthier abusers (the kind that can afford to hire the lawyers who now oppose the bill).
The way the legislation targets the more well-off, is by forcing those who color=blue[/color] have an income above their state’s median income, and color=blue [/color]have the ability to make substantial payments over the next 3 years, to go into Chapter 13 as MT described.
Poor people still have access to Chapter 7.
Qualification color=blue[/color] was added to ensure that people do not get forced into Chapter 13 just because they have a high income (because this could potentially hurt someone who had a high income but has recently lost their job) – so they also added the requirement that you have to both have a high income, and also have an ability to pay going forward.
[quote=“Associated Press”]Under the new income test, those with insufficient assets or income could still file a Chapter 7 bankruptcy, which if approved by a judge erases debts entirely after certain assets are forfeited. But those with income above the state
I guess you didn’t read the Paul Krugman
article at the beginning of this thread. Some
relevant quotes:
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.
cheers,
DB