Article Options I was 9 years old, and the phone in our house had a weird problem: It kept ringing with calls from people I didn’t know. They’d ask for “Mom or Dad” in a stern voice. And when I told them Mom and Dad weren’t home (as was usually the case), the voices would leave ominous messages: “This is so-and-so from Macy’s (or Visa or MasterCard or Discover or San Ramon Bank). We’re calling about the overdue invoice from May (or April or March or November). Please send payment as soon as possible.” I could always sense irritation when I took their message, as if they thought I was the reason their money never showed up. I wasn’t. Like many American divorces, my parents came with the added bonus of severe financial hardship. At the time, I didn’t get why we had to drop off my dad’s new car at some random parking lot in Martinez with the keys inside. I didn’t understand why we had to move out of our house and into a different one farther from where I went to school. Or why, even after the bank repossessed a car and a home, the “creditors” — what my parents called those angry telephone voices — didn’t stop calling. What I did get was that their calls were not as important as they sounded. What was important then was whether or not one of my parents would stick around long enough to cook dinner — or even talk, for that matter. Usually their “talking” started out OK, but more and more often it would devolve into fights that would last for hours, with both of them screaming at each other from different sides of the living room in the same malicious tone. And when they would see a note that one of the “creditors” called, the screaming only got louder, until one of them would shut themselves up in their room (they slept in separate rooms after we moved). Then the talk was over, and soon after, one of them would leave. Our family’s downward spiral ended in two drastic legal measures: divorce and bankruptcy. When you’re pulling coins out of the sofa to buy groceries and not talking to your spouse except to lacerate him or her with more blame and/or hurt — when there ain’t no way things are getting better on their own — all you can do is wipe the slate clean and move on. But this week President George W. Bush signed off on a piece of legislation that makes it harder for families to do just that. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 makes it so that even after filing for bankruptcy, many debtors will have to devise a way to pay back some of those angry telephone voices. The credit industry (and the Republican legislative majority that passed the bill) claim that it will put a stop to “abusive” bankruptcy filings, which they say have been escalating. Too many people living the high life, and forcing others to pay for it, they say. The new laws will make credit cheaper for everyone, they say. Uh huh. Filing for bankruptcy, by the way, makes the next 10 years of life for the filer absolute hell. Being poor sucks now, but try living in the real world with the worst credit rating possible. You can’t get a credit card (so you can’t buy anything online or by mail-order, buy a plane ticket or rent a car). You can’t get a loan, so good luck buying a house or a car. In a consumption-driven world, you might as well have your hands tied behind your back. A recent Harvard study found that half of all U.S. bankruptcies are related to illness or medical bills. I bet the other half are related to divorce. Or they are from people who got tricked into acquiring a huge amount of credit debt — lord knows it’s hard with all these credit card applications clogging our mailboxes every day — and eventually can’t pay anymore. But in any of these circumstances, what occurs that entitles the debtor to be stripped of his or her right to a clean slate? In a society that depends on its members buying commodities with terminal voracity, don’t we at least owe our fellow consumer the chance to start over, with no grudge? That is how it’s been since 1898 — but this is a new era of American politics, where The Good Ideas We Had are meaningless. Where the explanation for each increasingly inexplicable action by the body that claims to be our government lies in the intricacies of special-interest lobbying. In other words, follow the money, and you’ll find yourself looking at a group of interests — Credit, Retail, Evil — that’ve been clamoring for the first major bankruptcy change in 27 years. That don’t seem to care that their advertising trickery and dauntless persistence have created an overuse of and dependence on credit that’s now regarded nonchalantly as the American Way. Or that the states hardest hit by the new law, where bankruptcy filings are most common — Utah, Texas, Indiana, Ohio — are all generally Republican. While it’s getting harder to overstate the horror of current congressional reality, the benefits of a fresh-start bankruptcy law are crystal-clear. More than 10 years after their double-whammy of bankruptcy then divorce, both my parents have happily remarried and restarted their financial lives. I haven’t picked up the phone from an angry creditor since. But with a government of con men who manipulate the system exclusively for the benefit of big business, who notice the less fortunate only when they owe money, I guess it shouldn’t surprise us that future generations won’t be so lucky. Class warfare’s apparently been declared — so who’ll blame me for asking: When begins the revolution? ... As soon as you turn off the television and report to iport@ucsd.edu. Back to Top ^^
US President George W. BushU.S. President George W. Bush signed into law Wednesday a major bankruptcy reform bill, making the most sweeping changes to the laws of personal bankruptcy in the past two decades.   Bill S.256 is predicted to reduce the chances of filing Chapter 7 bankruptcy for 30,000 to 210,000 families per year, according to the American Bankruptcy Institute.

The legislation was strongly opposed by some consumer advocates and by some Democrats in Congress, who complained about the lack of debate on exemptions they attempted to introduce and tried to derail the passage of the bill.  Those who are unable to file for Chapter 7 bankruptcy will then be forced to file under Chapter 13, which requires payment of some debts by order of a judge based on the financial resources of the debtor.

Opponents said the bill will end a chance for a fresh start in the financial lives of the American people by keeping them in debt to collection agencies, as well as credit card companies and banks who have made it easy to obtain high credit limits amid mounting consumer debt.

In his remarks before signing the bill, which he supported, Bush said, "The bipartisan bill I'm
about to sign makes common-sense reforms to our bankruptcy laws.  By restoring
integrity to the bankruptcy process, this law will make our financial system
stronger and better.  By making the system fairer for creditors and debtors,
we will ensure that more Americans can get access to affordable credit."

The bankruptcy bill received a 302-126 approval in the house, after receiving a 74-25 vote in the Senate last month following strong, mostly partisan debate.

The US bankruptcy system was established in 1898.  It allowed judges and debtors to come to terms with the costly medical bills that can follow a relative's death, or a family illness. Such cases form nearly half of all bankruptcies filed in the USA, according to the American Bankruptcy Institute.

Now many of those people will have to work out repayment plans suitable to creditors instead of having debts erased by a judge, according to the new law, which takes effect in six months.

In the past, a judge or court representative would calculate an individual's income and subtract necessities of life to come up with a practical repayment plan of some debt. The new law stipulates that a graph, showing the poverty level in whichever state the consumer is living will be the criteria.  It assumes that if people can subsist at that poverty level, then everything over that can be used to repay creditors.

Additionally, a provision that allowed debtors to file their own Chapter 7 fresh start bankruptcy has been changed to require a lawyer, paid by the debtor, to do the filing.

The new law also erased "usury" provisions in lending laws, with some lawmakers saying that paying 30 percent interest was not too much when a debtor was behind on payments.

But Bush said that credit will "be more affordable because when bankruptcy is less common, credit can be extended to more people at better rates,"  meeting demands of the credit card companies which they have been pressing for the last eight years.

"The big winners under the new law will be the special interests that literally wrote it, particularly the credit card industry," said Travis B. Plunkett, legislative director of the Consumer Federation of America. "This is particularly ironic because reckless and abusive lending practices by credit card companies have driven many Americans to the brink of bankruptcy."

The forces arrayed on the losing side of this bill said it will hurt low-income working people, single mothers, minorities, and elderly and will end a safety net for people who have lost jobs or face major medical bills. People who fail (refuse) to pay or refuse to go to court will punished by a fine and or arrest warrant made out in their name. About fifty thousand Americans will be punished by a fine and or warrant about three thousand Americans every year will go to jail under the new bankruptcy law. For some people this will be a third strike so they will be put in jail for life.

But Mallory Duncan, a lawyer for the National Retail Federation, said "Bankruptcy has gone from a stigma to a financial planning tool for many."

New personal bankruptcy filings have increased from 172,423 in 1978 to 1,599,986 last year, an increase of 828% during that time; however, it edged down slightly last year.

About 2 percent to 13 percent of those who dissolve their debts in Chapter 7 bankruptcy each year in exchange for forfeiting some assets will be disqualified from doing so under the law, according to the American Bankruptcy Institute.

Bankruptcy lawyers anticipate a rush to the courthouse to beat the six-month window before the new reforms take effect.