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Shi Huangdi
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Pittsburgh, PA
Apr 1999
time: 00:36
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As those of you who have been following US Politics know, the GOP is pushing through a new bankruptcy reform bill that will make it much harder for people to declare bankruptcy and put away their debts. The GOP has claimed that people abuse bankruptcy protection, even though the vast majority of people applying for bankruptcy are victims of medical emergencies, job loss, and divorce. This would all help the credit card companies who pull in huge profits, by luring people into accepting credit they can't afford to pay back.
Some of you may be familiar with Free Republic. It is known for being one of the most right-wing websites on the internet, where whenever the GOP pushes any rightist legislation it is always backed. Moderates are largely absent. For those of you familiar with the forums at DemocraticUnderground, FR is the conservative counterpart of that website. You would think that if anyone not in the credit industry would support this, it would be them.
But:
http://www.freerepublic.com/focus/f...sts?q=1&&page=1
Amazing. The majority of posters there seem to be strongly against this. Bush should take notice that when freaking FREE REPUBLIC of all places begins attacking you from the left, you know you have gone way too far, and it's not likely that anybody supports your position.
Oh well. Will the Democrats be smart enough to use this effectively in the 2006 elections? My guess is: No.
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:36
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quote:
Losing your job is something by nature that is unexpected, particularly if there is a long span of unemployment, which is far more then a dip along the road. |
Bankruptcy isn't a tool to take care of something merely unexpected. The fact is that too many people are living paycheck to paycheck when their financial wherewithal is sufficient for them to plan ahead to weather the storms. We all pay extra because these people don't plan ahead.
The reason why I put medical conditions in a separate category is because in many cases it's not something that can be reasonably budgeted in. Few people are going to be able to take a million dollar hit on a decade or two's hard savings.
Last edited by DanS on 10-03-2005 at 11:51
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Shi Huangdi
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Pittsburgh, PA
Apr 1999
time: 00:36
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From, CNN, a listing of the Bill's major effects:
quote:
A qualifying test: Currently, it's up to the court to determine if your case qualifies for Chapter 7 bankruptcy.
Under the new bill, your income will be subject to a two-part means test. First, it will be subject to a formula that exempts certain expenses (rent, food, etc.) to determine whether you can afford to pay 25 percent of your "nonpriority unsecured debt" such as your credit card bills. Second, your income will be compared to your state's median income.
You won't be allowed to file for Chapter 7 if your income is above your state's median and you can afford to pay 25 percent of your unsecured debt, said California-based bankruptcy attorney Stephen Elias. But you may be allowed to file for Chapter 13.
If your income is below the state's median but you can pay 25 percent of your unsecured debt, you may be able to file Chapter 7, but the court can still require you to file Chapter 13 instead if it believes that you would be abusing the system by filing for Chapter 7, Elias said.
Under current law, the court has great latitude in deciding whether debtors may file for bankruptcy in consideration of their personal circumstances. Under the bill, there will be few if any exceptions made to the means test, no matter how sympathetic your case, said Leon Bayer, a bankruptcy attorney in Los Angeles.
Determining what you can afford to pay: Currently, if you file for Chapter 13 today, the court determines what you can afford to pay based on what you and the court deem to be reasonable and necessary expenses.
Under the bill, the court would apply living standards derived by the IRS to determine what is reasonable to pay for rent, food and other expenses to figure out how much you have available to pay your debts. The IRS regulations are more stringent, and to contest them means asking for a hearing from a judge, which can mean more time and expense, Elias said.
Creditors' recourse: Currently, creditors who won't receive any money owed in a bankruptcy case may contest the ruling if it's a Chapter 7 case, but not if it's a filing under Chapter 13.
Under the new bill, that right to contest is extended to creditors in Chapter 13 filings.
Lawyer liability: Under the new bill, if information about a client's case is found to be inaccurate, the bankruptcy attorney may be subject to various fees and fines.
What that means for consumers is it will be harder to find a bankruptcy attorney willing to file because of the liability and the additional work required to verify a client's information, Elias said.
Those who are willing are likely to charge more. Right now, for routine cases, it can cost between $500 and $1,000 to file, Elias noted. He expects the minimum may go up to $1,000 if the bill becomes law.
Credit counseling and money management: Under the new bill you must meet with a credit counselor in the six months prior to applying for bankruptcy. And before debts are discharged, you must attend money management classes.
What should you do?
For those people who have considered bankruptcy, the time to act may be now, consumer advocates say.
Talk to a good bankruptcy lawyer, Plunkett said. If together you decide bankruptcy is the right call, you might consider speeding up your plans to file. If the bill is passed into law, its main provision won't go into effect until six months after passage, Plunkett said.
Typically, it can take a couple of weeks to file for bankruptcy, said Bayer, who expects a lot of people will file before the new provisions go into effect. |
The lawyer liability could be the most significant fact here. This could really discourage alot of lawyers from practicing in the field, making filling a bankruptcy much harder.
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10-03-2005 10:31
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