Redstate

with something on this site.  Good overview.  This shouldn't be a "left" vs. "right" debate; it's political whores of every stripe (I'm looking at you, Biden) vs. middle/working class.

It is bills like this and this that make our side look like we're the whores of corporate America and more than willing to screw everyone for a buck.

Shame, indeed.

I haven't seen any polls on the issue, and would be interested to see what they suggest.

I wouldn't be surprised if there was significant public support for making bankruptcy more difficult.  Few people seem to think that they or anyone they care about will have to go bankrupt.

And bankruptcy also carries a moral stigma.  So just as it's hard to get support for easing up on the punishment of criminals (or, say, for changing the law to allow felons to vote), it's going to be hard to muster much public enthusiasm in favor of easing up on those who go bankrupt.

Even Josh is perfectly willing to consign the "stupid" to misery; if the public as a whole thinks that the bankrupt tend to be stupid or irresponsible, good luck getting the government to make their life easier.

But this is just speculation. I'd like to see some actual polling date.

My guess is that the public doesn't know this bill exists nor what is contained in it.  For that matter, I don't really know much about it and I'm a political junkie.

That is very worrisome to me, but I don't expect the public to follow every piece of legislation.  Most people have lives... maybe I should get one.

But even if they did know or care, I think the factors I mentioned would make it difficult to raise a stink about about this bill.  So it's basically a freebie for all concerned.

. . . against the actual merits or contents of the bill as to why it would be bad so much as complaining about what you see as the practices of credit card companies.   None of which absolves individuals from their obligations to pay their bills.

The fact of the matter is unless you think adults should not be responsible for honoring their voluntary agreements (and that's what a credit agreement is), there is no reason to be against a bill that has the effect of requiring more people to file Chapter 13 and try to reorganize their debts rather than ditch them entirely under a Chapter 7.  

The bill requires adults to be responsible and owe up to their obligations.  I'm proud that the Republicans and moderate Democrats supported it and I look forward to President Bush signing this long overdue legislation into law.

to dredge up innumerable examples of people who have manifestly abused the current system.  Whether addressing this problem requires mere enforcement of existing laws or new legislation is an open question, at least to those of us who haven't bothered to immerse ourselves in the tedious details of bankruptcy law and court proceedings.  However, that said, there are indeed people who need to suffer the tightening of the screws.

On the other hand, actually addressing predatory lending practices, from the extension of credit to the unemployed to the exorbitant interest rates credit lenders are permitted to charge, will require us to lessen our fealty to the idea of the supremacy of market forces.  And we all know what happens to Republicans who try that, don't we?

The law protects the assets of more wealthy individuals from being touched by bankruptcy proceedings. They can place money in a trust and avoid paying those voluntarily entered upon credit agreements. They are also allowed to keep multi-million dollar homes as their primary residence when they are unable to pay those same voluntary obligations.

. . is an indictment of any of the actual contents of the bill since those issues at worse may not have been fixed by this legislation but nor were they caused by it.  

If you want to argue that the legislation doesn't go far enough, be my guest and we'll probably be in agreement.  

However I've got the sneaking suspicion that when the legislation has been signed into law and the MSM finally starts to scrutinize the arguments by its detractors, it will then come to light that just as they've exaggerated claims about bankruptcies caused by unpaid medical bills, they've probably been exaggerating claims about wealthier debtors being able to use trusts to get out of paying their bills (which they should be required to pay)  since some courts may not recognize the protection of those trusts when set up by a debtor for his own benefit.

But look at the bright side of the Bill; The CC Companies can now charge up to 30% Interest on revolving credit! Oh, sorry, not a good thing. Nevermind.

BTW, Both Partys are Corporate Whores.

Granting these companies more protections and basically removing their risk would seem to me an interference in market forces as well.

I haven't read the bill, I've been too tied up with the FEC - but frankly, I think Josh goes a little far by describing this bill as wholly awful. My understanding is that it includes special protections previously unknown for military folks and those afflicted with medical problems - as well as granting additional rights as a creditor to a spouse seeking child support.

I think you've got it backwards.  By allowing a debtor to essentially break his or her contract and file Chapter 7 - the government has already interfered with market forces.  Making it more difficult to do so and requiring both parties to honor their contract, the government has moved closer to its legitimate function of upholding their contract.

If we remove the notion of debtor's prisons from consideration - then there's ALWAYS been some sort of save haven for debtors. Writing off bad debt has, as I understand it, part of the risk's associated with lending money on the open market.

In a democracy, when corrupt laws like these get passed by the supposed representatives - the solution is to vote them out of office.  We cannot do that because 1) the turnover in the congress is lower than in the communist politburo. 2) the second political party has been corrupted equally to the other.  We do not have a republic  - We do not have a democracy - we have one ruling party -

when you get a chance read the amendments rejected by Republicans and a few Democrats. Then perhaps you could let me know why numbers 16, 17, 28, 29, 32, 37, 42, for starters, are so wrong. And no, these weren't crafted to derail the bill, like 47 -- they are just plain decency.

peoples lives then I might agree that the government should be more concerned with regulating the contract between lenders and borrowers, but for most people credit isn't a luxury but a necessity.  When I was in college my dad encouraged me to get a credit card just so that I could start building credit.  Building good credit is most important for people with lower incomes because they are the ones who will most likely need to take out loans etc... The fact that they are also the ones most hurt by predatory practices by credit companies is wrong.  The government's first responsibility is to the citizens, the free market is secondary.

Okay, maybe I'm too easily swayed, but The Economist is bashing the bill and that's enough to convince me (Subscription required).

LAST year, nearly 1.6m Americans filed for relief from their creditors. That number has almost doubled in the past decade. Under current law, people get their debts wiped away by the mere act of filing under Chapter 7 of the bankruptcy code. But a new law, the Bankruptcy Abuse Prevention and Consumer Protection Act, makes that much harder. It imposes a means test that would force people who earn more than their state's median income into Chapter 13 of the code, which requires debtors to submit to a repayment plan. It would also make poorer debtors jump through many more hoops to get relief....

More troubling is the part of the legislation that makes it harder for poorer debtors, not likely to be the abusers of the system, to file for bankruptcy. Some 84% of all filers are too poor to qualify for the new law's means test. But they will still be put through a great deal of rigmarole to get relief. For example, all debtors will have to get credit counselling before they file--a costly process, and one which does little to steer people out of bankruptcy. The bill also requires people to produce all sorts of paperwork, from payroll stubs to tax returns. Those who have not kept strict records will have to give up or pay for a lawyer to plead their case in court.

Other quirks of the legislation make one wonder why credit-industry groups are so keen on it. One loophole allows rich debtors to go on shielding assets in special trust accounts that are legal in a few states. And debtors' fancy homes in Texas and Florida will still be off-limits to creditors. The bill's backers say that fear of trampling on states' rights stopped them closing such loopholes. But it smells rather pervasively like special treatment for the rich.

Kennedy Amdt. No. 29; to provide protection for medical debt homeowners.

REJECTED

This one protected up to $150,000 in home equity from creditors.

AND

Kennedy Amdt. No. 28; to exempt debtors whose financial problems were caused by serious medical problems from means testing.

REJECTED

Both amendments were sponsored by Sen. Kennedy, and had the simple goal of consumer protection for individuals whose medical debts are the reason they're filing for bankruptcy.

Durbin Amdt. No. 16, As Modified.; to protect service members and veterans from means testing in bankruptcy, to disallow certain claims by lenders charging usurious interest rates to service members, and to allow service members to exempt property based on the law of the State of their pre military residence.

REJECTED

There were many more amendments, all rejected.

....to protect military families, they'd kick the predatory "savings" institutions (FirstCommand, natch) off every post in the nation.

If they really wanted to protect folks with medical problems, they wouldn't have voted down the amendment cited above allowing seniors homestead protection.

Color me unimpressed.  This bill is still a whopping net negative.

cannot allow for these decencies, there's probably not much that can be said for it in the end.  Disgusting.

. . .where I'm not sympathetic to federalism arguments--Article I, Section 8, clause 4 of the US Constitution clearly grants the power "To establish. . . uniform Laws on the subject of Bankruptcies throughout the United States."  Unfortunately, they've let state insolvency laws substitute for federal ones in many cases, giving states the incentive to make attractive homestead exemptions that draw rich debtors to their states to sink equity into large houses before filing, leaving the creditors out of luck and the new state with a nice property tax windfall.  This should be done away with--one set of standards should control what assets may be protected in bankruptcy proceedings in federal courts.

Grants it to Congress, that is--though the reference to Article I, Section 8 should have made that clear.

http://www.consumerlaw.org/initiatives/bankruptcy/content/KeyProblemswit...

I cut and pasted the section titles below:

"1. Subjects Debtors to a "Means Test" that Fails to Screen for Abuse and Instead Penalizes Honest Debtors by Imposing Additional Costs and Filing Burdens.

2. Creates a "Safe Harbor" from the Means Test for Low-Income Debtors, But Still Subjects Them to Increased Costs and Filing Requirements, Including Credit Counseling and Education.

3. Requires Stricter Scrutiny of Low-Income Debtors' Expenses in Chapter 13 Than Higher Income Debtors and Makes Some Debtors Too Rich for Chapter 7 and Too Poor for Chapter 13.

4. Erodes Bankruptcy's Fresh Start by Making More Debts Nondischargeable in Both Chapters 7 and 13.

5. Promotes Predatory Lending by Encouraging Creditors to Take Liens on Household Goods of Nominal Value.

6. Creates New Creditor Opportunities for Reaffirmation Abuses by Weakening Current Debtor Protections and Giving Creditors Safe Harbor from Liability.

7. Undermines Debtors' Ability to Save Homes and Cars in Chapter 13.

8. Drastically Reduces Fundamental Protections Afforded Debtors Under the Automatic Stay."

And this:

"In a study commissioned by the nonpartisan American Bankruptcy Institute,

two researchers from Creighton Law School conducted a case-by-case analysis

to determine whether debtors currently in Chapter 7 could plausibly repay some

portion of their debts. They concluded that up to 3.6% of Chapter 7 debtors

would be candidates for any repayment in Chapter 13"

from here:

http://www.nacba.org/108_congress/pdfs/truth_about_bankruptcy.pdf

shows what a tremendous prblem this bill will solve.  3.6% of chapter 7 filers might actually be able to pay more in Ch 13.  I think I trust a judge to pick out the obvious ones in there.

that an indecipherable contract produced by scads of attorneys and accountants hardly constitutes a true contract in the sense that both parties understand and agree to the terms of the contract.  Especially for the people stupid, or uneducated enough to take on a loan at 30% interest.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:SP00068:

"AMENDMENT PURPOSE:

To provide a maximum amount for a homestead exemption under State law."

http://www.alperlaw.com/constitutional_protection.html

"What makes Florida's homestead protection such a powerful asset protection tool is its unlimited monetary protection. A Florida resident can invest millions of dollars in large estate homes and farms and protect the full value of these luxury residences under the protection of Florida's homestead provisions."

Hey! Thorley, are you proud of that little loophole for screwing the poor and allowing the rich to dance through?

As others have mentioned, our politicians are whores.

This is on us, folks. This is on the Republican Party. It's going to hurt a lot of people; it is a pure giveaway to business sectors that need no state help; and it makes us look like the corporate toadies we apparently are. Shame.

Why the apparent shock?  

After the $724 billion GOP govt giveaway to Big Pharma in 2003, how is any of this stuff really suprising?

These guys campaign as usual on stopping gay marriage, keeping America safe, limiting abortion, etc. but when the chips are down, what always comes first?    

I must have missed the President campaigning on giveaways to incredibly rich people, but between knocking down the top tax rate along with the millionaire estate tax and then the medicare bill and social security privatization and "tort reform" and now this...  

This is hardly anything new.  There's not now and never has been a mandate for corporate cronyism, but if you can continually get one on wars and culture wars, who's going to stop it?

Is this really what you're voting for?  Who's holding these people accountable?  Don't expect them to change a thing until you make them pay a political price for it.  There are plenty (though not enough) of politicians fighting this stuff.  There will only be more of them when people make it a voting issue instead of sitting back, sighing, and saying, "well...okay...but can we pleeeease do something about partial birth abortion now? Not now? well...okay...how about later?  You promised! Okay, next year...I love you too"

http://www.senate.gov/legislative/LIS/roll_call_lists/vote_menu_109_1.ht...

Some of the provisions you mention, proposed by the Democratic Party, and defeated largely by the Republicans.

"AMENDMENT PURPOSE:

To protect disabled veterans from means testing in bankruptcy under certain circumstances"

"AMENDMENT PURPOSE:

To protect servicemembers and veterans from means testing in bankruptcy, to disallow certain claims by lenders charging usurious interest rates to servicemembers, and to allow servicemembers to exempt property based on the law of the State of their premilitary residence."

"AMENDMENT PURPOSE:

To exempt debtors whose financial problems were caused by failure to receive alimony or child support, or both, from means testing."

"AMENDMENT PURPOSE:

To protect employees and retirees from corporate practices that deprive them of their earnings and retirement savings when a business files for bankruptcy."

"AMENDMENT PURPOSE:

To preserve existing bankruptcy protections for individuals experiencing economic distress as caregivers to ill or disabled family members."

"AMENDMENT PURPOSE:

To limit the exemption for asset protection trusts."

" AMENDMENT PURPOSE:

To limit the amount of interest that can be charged on any extension of credit to 30 percent."

"AMENDMENT PURPOSE:

To exempt debtors whose financial problems were caused by serious medical problems from means testing."

I think that makes the point.

I think our Republican representatives will be hearing their records on these votes in the next election cycle.

what do the social conservatives think about the Christian attorneys who protested this bill being blown off by GOP Sen. Grassley?

That the few good things in this bill are enormously outweighed by the large bad things.

. . . but don't pretend that the Democrats who were responsible for killing the original $174 Billion bill and who wanted a $900 Billion alternative bill have a leg to stand on with this issue.

The truth is that, as a social conservative, I think that it is par for the course.  In a fair percentage of cases, social conservatives are the riders at the back of the party bus (all implied analogies to African-Americans and the other party intended), the riders who are strung along each cycle because we've got nowhere else to go.  

Need to be able to edit completely innaccurate posts.

"Durbin Amdt. No. 112; To protect disabled veterans from means testing in bankruptcy under certain circumstances."

"Sessions Amdt. No. 23; To clarify the safe harbor with respect to debtors who have serious medical conditions or who have been called or ordered to active duty in the Armed Forces and low income veterans."

Still a bad bill though.

I believe we started with Social Security reform so young people aren't stuck paying multiple generation's bills.  If 5-10 Dems had switched over on that one, then we'd have a pro-ownership way of creating wealth for the working poor.  Instead 5-10 Dems switched over and joined many more Republicans on this one.  Both parties look poor here, Republicans just look poorer.

As for priorities, SS reform, Tax Reform, and pursuing democracy abroad don't seem to be totally shelved.  This bad piece of legislation is making it through, but I can only imagine the "universal health care reforms" that would happen if Dems were in charge.  And abortion will be dealt with or had you not noticed the underlying tension based on judicial nominees and Democrats new tactic of filibustering them.  

So are you suggesting pro-life, pro-SS reform, anti-tax, pro-democracy voters should have voted for Kerry?  I don't see how that would have been a better decision.  Give me a true conservative to vote for and I will, but Bush was better than Kerry and most of us know it.

but the defeated amendment would have established a uniform homestead exemption, overturning the existing system where each state establishes a homestead exemption.

Personally, I think trying to equate property value between Nebraska and Long Island is a little unfair to someone.

The other way it changed the law from the current system, which you quote, is that now you must have owned the home for 40 months prior to declaring bankruptcy to be able to shield the property under a homestead exemption.

So the worst you can say about the proposed law on this subject is that it is more stringent that the existing law in preventing rich people from abusing the system and provides the exact same homestead protection as the existing law.

. . .with the "expensive real estate" states in mind would be the way to go:  yes, it would mean that one could afford to buy a nicer home in a low-value state and have it be protected in bankruptcy, but you couldn't hide any more equity in it than you could in another state.

Grassley said. "I'll bet those lawyers wouldn't want us to impose the principles of forgiving debt every seven years. If that were the law, nobody would loan them money."

When introducing his bill, Grassley said bankruptcy was not intended as a "convenient financial planning tool where deadbeats can get out of paying their debt scot-free while honest Americans who play by the rules have to foot the bill."

Indeed

The bill actually fixes part of the homestead problem:

It [the bankruptcy reform legislation] would also make it more difficult for some people to try to shelter their assets through the purchase of expensive homes in states like Florida and Texas, which have homestead exemptions. To shelter more than $125,000 in assets, homes must have been purchased at least three and a third years before a bankruptcy filing.

You see this is the kind of thing you can learn by actually studying an issue and the actual contents of proposed legislation rather than just mindlessly regurgitate the pretty-sounding name of amendments.

On the other hand, actually addressing predatory lending practices, from the extension of credit to the unemployed

When my daughter started college last year the banks were there to help set up accounts for the kids, in our case Wells Fargo. I was very clear that she should not be given a credit card or overdraft. They issued a debit card with overdraft,  she spent $380 more than was in her account and then the fun started.

Within one month ( when she received the first account statement) of the overdraft ( basically a loan to an unemployed 18 year old full-time college student ) the charges were up to $550. After 3 or 4 months it was over $1000 and in collections.

She destroyed the card as soon as we realized what was going on. She told the bank , shortly after the overdraft, that she could pay them in the summer when she had earned some money. There was no consideration and up went the fees and late charges.

When she had earned some money we called the collections company and offered to pay $500 to forgive the debt.. ( I told them it was $500 and a letter clearing the debt or nothing) the bank argeed and she paid. She learned a hard lesson. These guys show no mercy.

I was very clear that she was not to have any credit including overdraft... they did it anyway.

I will add this year I opened another an account with my daughter, this time at Wachovia. Again I was very clear..  no credit, no overdraft. I even told the bank rep about the issues the year before. When the card arrived in the mail with the account details...  surprise surprise  $1000 overdraft. We went back to the back and changed it, but they tried.   Read the fine print out there.

Or at least it was when I worked at a bank.  The reason being is that sometimes there are delays in deposits and it prevents you the customer from being overdrawn (and charged a hefty fee in the process) if a check doesn't clear when you expect it to.  While some people do unfortunately abuse it, it usually helps to prevent more problems than it creates.

One word of caution though - don't ever get a credit card from Wells Fargo if you can avoid it.  I used to work as a fraud investigator and we would contact the issuing banks to verify suspicious purchases on a card and also so that they could also alert their customer if the number had been stolen.  Every time I dealt with Wells Fargo their attitude was "we don't contact our customers about charges, it's up to them to monitor the activity and dispute the charges."  

I can understand that some places may not think they have a duty to notify a merchant that a card was stolen (although that's a pretty poor way to maintain relations and fraudsters are a common enemy of merchants, customers, and banks alike) but it seems beyond the pale not to notify your customer if someone may have stolen their card number.  

Having worked in the credit field in the analysis, collections, and fraud investigation areas I can tell you it can take months to dispute fraudulent charges that appear on your statement and/or have them taken off your CBR which is especially problematic when people go in for a home loan.  On the other hand, if you can catch them immediately, most credit card companies can clean it up with a phone call that day, cancel the card number to prevent further charges, and the customer's record stays clean.

I've probably listened in or made hundreds of phone calls in which a customer was contacted to verify a charge.  99 percent of them (whether the purchase was legitimate or not) were very grateful that this was done.

Just my $0.02 in a slightly-off topic post.

Dang.  That is more bipartisan support than I would have expected.  Hmmm... I still think this is a bad piece of legislation, but I hope I'm missing something.

But who are those 18 Dem Senators? I know the one Indie is Jim Jeffords.  Anyone have a list?

The market has already made its decision to loan and to whom and at what risk, taking into account the bankruptcy laws and has priced its products accordingly.  Now that folks are up to their eyeballs in debt, they want to change the rules in the middle of the game.  

Changing the rules to benefit one of the players after everyone has already made their bets is interfering with market forces.  At the very least this bill should not apply to debt incurred before the date of this bill.  The bankruptcy laws in place at the time the debt was incurred were an implicit part of the contract between the parties and the debt was priced accordingly.

And by the way it is my understanding that there was an amendment to specifically prohibit asset protection trusts and it was voted down.  That just seems wrong.

My guess

Ye shall know them by their donors.

is here.  Of particular interest is Reid with the majority, and Lieberman with the minority.

Thorley's entitled to his opinion and it doesn't make him a troll.  I uprated him to offset your 1 even though I disagree with him.

Wasn't aware that a "1" necessarily = troll. The ratings reflect my opinion of these posts.

May the bridges you built today with this kind of integrity last a lifetime.

So then even in Texas and Florida they can come after my house that I've owned for less than three years! Fantastic! And I'm middle class! This is great!

Law of unintended consequences, buckaroo. Do you seriously think this would make life harder for the rich rather than the poor? Have you ever seen how many assets the average bankruptcy debtor brings into bankruptcy that aren't his house? (Hint: It's roughly equivalent to the number of brain cells Babs Boxer is toting at any time, and last I checked, you don't need all the fingers on one hand to count those.)

After reading all the back and forth in the thread, I'm starting to agree with Trevino.  Debt is a fact of American life and extensive debt is becoming more a part of everyone's financial picture.  I'm worried about this bill, call me a handwringer, mostly because of this:

"The people affected by this bill are almost exclusively the desperate and the stupid."

It's true.  But then, states don't have any compunction about running lotteries that also prey on the mathematically illiterate, and they  have less and less of a problem these days with using casino gambling revenues, which also prey on the desperate and the stupid, to generate revenue for the public treasury.  So seen one way, this becoming a kind of "make them poor, keep them poor" society.

But people are also leery of private Social Security accounts, and the efforts to get people to save more money are meeting an awfully chilly response, too, so...

Now on top of that add this new law that makes it more difficult for people to file bankruptcy while paying lip service to the institutions encouraging people at every turn to get deeper into debt...

I'll tell you what:  the recent National Governor's Association educational summit seems to have missed something very important while everyone was busy patting each other on the back for admitting that high schools are in trouble:    

Every high school in America should have a mandatory financial management class to teach incipient adults about the Brave New World of debt management that they are about to enter.  It should be a minimum of one semester, and cover everything from ATM fees to Rent-a-Centers, from personal savings to bankruptcy laws, credit card offers and how to read the fine print.  

It should also cover such nuances as how to negotiate with your credit card company for the best interest rates and, more than anything else:

The importance of saving receipts, bills, check stubs, and reading the fine print.

Since it seems were going full-bore into the territory of enforcing people's financial responsibilities, we'd better start teaching 17-year-olds how to do it -- and fast.

For those of you not able to check out his/her link - #37 states as rejected: Nelson (FL) Amdt. No. 37; To exempt debtors from means testing if their financial problems were caused by identity theft.

For those who, like me prior to last year, thought identity theft couldn't happen to me, wake up.  It's a nightmare.  Luckily after 10 months of constant vigilance, I got my name/credit cleared.  Why are they so interested in punishing those who are victims already?  

Also, look at the ones for the elderly, the very ill.  How could our senators do this?  They are punishing those who are desperately hurting through no fault of their own.

I'm all for making irresponsible idiots pay their bills, but to reject these amendments shows it's not about the idiots.  This is cruel and heartless and we all know it.

is beginning to smack, ever so slightly, of a campaign in class warfare.

What really is the problem here?  Is it that corporate financial operations and obligations are treated differently than are individual, or 'little guy' obligations?

Well.  Are they not different?  In scope?  In levels of responsibility?  In the frequency and intensity and levels of financial risk? In purpose? In economic and social effect?

Perhaps I am naive.  Maybe I have an incomplete and/or unsophisticated view of this issue.  And I am the first to admit that either of these (or both) are true.

But, if the complaint is underpinned by the notion that corporations and individuals should not be distnguished under this law - then why are they distinguished in the Tax Code?  In governmental licensing requirements? In law? Elsewhere.

Seriously.  I guess I am just not getting it.

Bankruptcy is not about who should pay their bills or who shouldn't.

The question is to what extent the government should go to collect money for the lender.  No lender can force the debtor to pay his debt without the almost free (talk about corporate welfare) assistance from the government.  

Bankruptcy is where the government (which belongs to all of us, even the poor) refuses to use its power and public money to assist the lender on it's "bad business investments" by confiscating the debtors property and income.

It's amazing to me how people just assume big business and finance companies are entitled to have the government collect their loans for them, but the real owners of this country, the people, shouldn't have a right to stop the forced confiscation of their property and income by these non-owners.

Corporations have no constitutional rights. This country belongs to ALL the people (real people, not legal fictions), even those who don't, won't, or can't pay their bills.

trevino -

Agreed that this is crappy legislation, and that it can, and will, be laid at the feet of the Republicans.

An observation: a major reason this bill is likely to pass is that noone in Congress can gain or hold their seat without massive infusions of cash from industry, trade, and other special interest groups.  IMO, the problem with this bill lies there, rather than in its particulars, odious as they are.

Cheers -

"Corporations have no constitutional rights."

I believe this is incorrect.  

As I understand it: since the late 19th C (1886, Santa Clara County vs Southern Pacific Railroad) corporations have been considered to be legal persons, as "person" is defined in the 14th amendment, and are entitled to some, many, or all (unclear to me which) of the protections granted to persons by the Constitution.

Con law experts, jump in if you like.  I'd be interested in the commentary.

Cheers -

This is a God Send for the Democrats.  I can see the ads now featuring ordinary people with huge medical bills who face a lifetime of harassment as wages are siezed to pay bills they can't pay.  This will be hung around the necks of the Republicans like an anvil and they may drown next election.  Cost: 20 seats in House and two to three Senate seats.  Then the bill will be repealed..........with Hillary in the White House in 2008.  A really awful bill and a stupid one.

Walt, sorry to jump on you like that.  I realize now that we have no real guideline for ratings.  I always thought of them as 1=troll, 2=stupid, 3=average, 4=well thought through, 5=linked and provocative response... and none of it depended on whether I agreed with the poster but rather it depended on their analytical ability and the value of their commentary in the discussion.  Since that was just my understanding and not a site guideline, I apologize for bringing it up.

As a bankruptcy trustee in Los Angeles, Ca., I can tell you for a fact that most bankruptcy filings are not caused by medical bills. They are mostly the result of the millions of solicitations sent out by credit card companies pre-approving cards for people who have no ability to pay. What person on welfare is going to say no to an offer to get credit when it means they can buy groceries or a new tv set before the next check rolls in ? These people don't understand the cost of credit and are ripe for the plucking by the credit card providers who profit from the 22+  percent interest plus late charges, over limit fees, annual fees etc. etc.

The new bankruptcy bill will not solve this issue and is really bad law. The only people who will really benefit from this bill are the bankruptcy lawyers who will be paid by the wealthy debtors (yes, there are quite a few of these trying to take advantage of the bankruptcy discharge)  to exploit loop holes in the bills to obtain a discharge for their clients.

And I'm not going to go into the politics of the issue or the specifics of the bill, just the concept itself.

Bankruptcy    Bill

RedState contributor Josh Trevino provides some pretty effective arguments against the Bankruptcy reform bill. However, I think that some reform is required, although perhaps not in the form recommended by the the Congress.

First, there should be restrictions to keep consumers from abusing the bankruptcy system. The nature and form of those restrictions can be discussed, but the fact that consumers should be responsible for their over-consumption is something that I'm in favor of.

Second, there should've been added restrictions on the enticements that the credit card companies currently engage in. Their aggressive lending practices to those that are clearly unable to sustain the credit levels offered to them is problematic. However, I do NOT want to move to the European system (or return to 1970s America), where credit cards are virtually non-existent (resulting in fewer commercial transactions). Imposing cap on amount of credit extended to a person based on their income would suffice.

[...]

More at Another Rovian Conspiracy

. . .that weren't there before?

We've already seen that the bankruptcy bill tightens part of the homestead exemption although many think it should do more.

It's one thing to argue that the bill doesn't go far enough but unless you believe in making the perfect the enemy of the good, it doesn't make it a "bad bill."

Ouch.  This bill was, is and will be a bad idea.  I note that "dray" posted a very insightful comment above, this is about making it easier on creditors to collect - not reducing fraud.  

I respectfully submit that if lenders tightened their due diligence procedures in granting credit, they would eliminate most future problems with the "deadbeats."  But this would require them to stop taking accounts with everyone - cutting into profits.  Lenders made a decision to pay money to force through legislation specifically designed to give themselves a massive legal advantage over individuals with virtually no financial leverage.  

A "win" for the good guys indeed.

P.S. - By all means, ignore all of the bankruptcy judges, trustees, bankruptcy scholars, etc. who vigorously opposed this bill. I am in bankruptcy court 3-5 days a week - if you think the judges and trustees are not aggressively pursuing frauds then you are delusional.  This bill is only supported by those ignorant of bankruptcy law, procedures and history.  

Thank you Republican leadership - you have made my party the shill for merchants of human misery.

. . .because my local convenience store has already weighed in the risks of shoplifters and priced their products accordingly that we shouldn't "change the rules" and get tougher on those who wish to steal.

Eighteen Democratic Senators voted for bankruptcy reform.  In order to campaign on the issue, Democrats will have to be willing to eat about one-third of their own caucus which is political suicide when you're the minority party.  Had it been strictly along party lines that would be another story but it wasn't.  There was a clear bipartisan majority in favor of the legislation so Republicans are pretty much bullet-proof.

More importantly it was a good bill (not a perfect one) and there are plenty of things in it such as reducing the homestead exemption/loophole and means-testing so that wealthier debtors have to use Chapter 13 rather than Chapter 7 which Republicans can use in our favor.  

I agree that some reform is needed.  What we have now, though, is punitive to those with no leverage yet allows protection trusts to be created to shield assets.  Hey, I can make a great side line creating such trusts.  But it would not negate the fact that this embraces a Dickensian ideal of what modern American society should look like.

What frustrates me is that creditors can fight fraud now - but chose NOT to.  No doubt they are smarter than I - why play by the rules when you can change the game to tilt everything in your favor - and still not have to pursue your rights - an agency of the government will now assist you in collecting your "no-due-diligence" loans.

Apparently State courts already can and some are deciding that an asset protection trust set up to shield your assets from bankruptcy is contrary to public policy which suggests that this is simply something that the opposition concocted to justify voting against the bill.  Sort of like how people were running around claiming that the Patriot Act meant John Ashcroft was going to be snooping in your library records ;)  

Besides which that's merely an argument that the bill may not go far enough rather than an actual argument against the contents of the legislation.  

Sir,

I can easily destroy any political message which attempts to paint forcing persons into chapter 13 as a good unto itself. Do you really think that the "moral issue" of shilling for Visa will trump suffering by Joe and Wendy Sixpack?

Perhaps the credit card companies will all massively reduce their rates as their losses drop.  And Santa Claus and the Easter bunny will broker peace in the middle east.  And you consider this a wise political move. Fascinating.

What frustrates me is that creditors can fight fraud now - but chose NOT to.

How do they do that? One thing I've yet to see anyone mention in all of this caterwauling for the poor is the fact that if the EVIL credit card companies don't offer the same credit oppotunities to all people across the board, then they will soon be hit by arimes of class action attorneys for "redlining".

Now why has no one mentioned this practice by the tort bar and their minions in gov't. to force the financial industry to violate what they would normally practice as due diligence? Is it ignorance our purposeful misdirection?

Voting No. This should be a clue the bill wasn't all bad.

Akaka (D-HI)

Boxer (D-CA)

Cantwell (D-WA)

Corzine (D-NJ)

Dayton (D-MN)

Dodd (D-CT)

Dorgan (D-ND)

Durbin (D-IL)

Feingold (D-WI)

 Feinstein (D-CA)

Harkin (D-IA)

Kennedy (D-MA)

Kerry (D-MA)

Lautenberg (D-NJ)

Leahy (D-VT)

Levin (D-MI)

Lieberman (D-CT)

Mikulski (D-MD)

 Murray (D-WA)

Obama (D-IL)

Reed (D-RI)

Rockefeller (D-WV)

Sarbanes (D-MD)

Schumer (D-NY)

Wyden (D-OR)

 

. . . pay their bills on time, make careful decisions about how to spend their money in case there is a rainy day, don't abuse their credit cards and ask "why shouldn't other people be expected to do the same"?

Besides which I already pointed to two parts of the legislation which are targeted towards making wealthier debtors pay their bills including the fact that the homestead exemption will now specifically exclude those who are guilty of securities fraud.  

Funny how for all of the whining and complaining about the legislation no one seems to actually refer to the contents of the bill itself, they merely complain about what it doesn't include.

The article you linked to states rather clearly that if properly set up the protection trust works.  Yet let us look specifically at the homestead protection.  Some states allow more protection than others.  This is by operation of state law.  Bankruptcy law incorporates a great deal of state law treatment for uniquely state based assets - such as real estate, which makes sense, correct?  Now - are you arguing that a state's authority over treatment of real property within that state by operation of law should be modified by a national standard?  If so, what of states with expensive real estate?  Too bad for them?  Or do cheaper states reap a windfall?

In you discussion you have yet to address the opposition to this bill by bankruptcy judges, trustees and attorneys.  Isn't that like ignoring the input of cops and prosecutors when discussing a new "anti-crime" bill?

. . .when you look at who it was who sponsored the various amendments, it should clue you in that they may not have been as benign as their descriptions might lead you to believe.

. . . there is no reason that you can't take up this separate issue in separate legislation.

My recommendation that the credit limit be some multiple (<1 or >1, I don't care) of a person's income would result in a tsunami of criticism from the poverty "protectors."  

However, I think this would still allow for credit cards to be a major financial tool for most people, without offers of $100k worth of credit line to the unemployed (such as Travino's roomie).  Although, I will assume that if he were to begin signing up for every card offer (which probably had a few grand on each), many of the companies would've retracted the offer (since his credit situation had changed).  Thus, he never really could've gotten his hands on $100k worth of credit.  (but hey, other than that, it's a great example)

As I mention in my post here, one of the things that really needs to happen is education in finance and micro- and macro-economics.  B/c there are too many in our country (including some on the supposedly "free market" right, who don't have a basic understanding.  

This bill will pass.  I don't talk about people paying their bills - that is their choice.  I have voted on this subject with my wallet and blood, sweat and tears.  No debt - house in Socal paid off, not one dime of student loans (B.A., JD, MBA - all top 20 schools).  Everywhere I look I see people making stupid, stupid choices about their finances.  However, I do not favor legislating advantages for a financial institution in its stupid financial choices over an individual making stupid choices.

And I have yet to hear anyone even attempt to make a credible argument that this will reduce costs to consumers.  Increase profits to lazy lenders? Very likely.

It says that many fail to provide protection because they aren't set up correctly while others have not been held up by the courts because its contrary to public policy to set up an APT for yourself to shield your assets from bankruptcy (which was my original point).  Those are actually two separate issues and you've confused them nicely.

As far as the homestead exemption goes, this legislation actually reigns in the exemption by requiring that if it's (a) over $125,000 or (b) the debtor is guilty of securities fraud that they must have owned it for about 40 months prior to filing.  This would curtail the ability of wealthier debtors to hide their assets in a "mansion" or whatever the latest DNC talking point were.

The politics on this issue suck... primarily due to the easy way in which it can be demagogued, with the amplification of the MSM.  They'll find the sorriest people that have made seemingly minor mistakes and bludgeon the GOP on the issue.  It fits their worldview and how they frame everything anyway, so don't expect a pass b/c some Dems signed up to it.  While their votes do provide political cover in an actual race, the general "GOP hates the little guy" message will reverberate and will have to be responded to...

It seems needlessly callous and more than a little naive to imply that the solution to mounting debt problems is merely Joe and Wendy paying their bills and being smarter.

I'm following your argument here and am not disputing necessarily your support of the bill. But I do dispute the attitude that everyone's debt problems can all be traced to carelessness or stupidity. Debt can mount and overwhelm DESPITE diligence. Let's not be naive. Credit card companies have a variety of methods of tricking less savvy consumers. And living without acquiring any debt is increasingly difficult, which is by DESIGN of the companies that profit from the debt, from the interest.

Certainly medical bills can destroy you. It's very nice to say one is obligated to pay one's debts. Now if only the insurance companies felt that way. Denied, denied. Maybe it hasn't happened to you but it's not a myth. They'll screw you right over, trust me.

Yes, people can manage their way out of debt, they can pay their bills usually. I have had medical bills stack up on me, but we've managed to keep up, barely. Of course, I earn a salary that is about double what a lot of two income families earn combined. I didn't always though, and I know how fast debt can overwhelm even careful, honest, hard-working people that make every effort to pay their debts.

Maybe this particular bill is good and maybe it is not. But I doubt you, or the party, will find much support for it if the advertisement is "you should have been smart"!

I agree - yet we are shooting ourselves in the foot, reloading and then doing it again.  Credit card companies?  This is our poster child for the party?  Personally I am all for telling people they spend too much and live a life thay they just cannot afford.  They need to eat less, work harder and accept that they likely will not have the fun sexy lives they see on TV.  Oh, and cancel the cable TV - you cannot afford it , you over-weight whiners.

Just try using that message to win an election.

Oh.My.God.  I just realized.  the whole "shut up and do as we tell you as we are your societal betters" message.......We are turning into the Dems!ARGHHHHHH! (sound of gunshot, body slumping to floor)(Californio - out)

No one's trying to tell people how they should live their lives, but merely making sure that people accept the consequences(good or bad) of the decisions they make. Isn't that what conservatism has always stood for?

But we seem to have a number of "conservatives*" on this forum who because they don't like credit card companies are trying to absolve people of responsibility for their voluntary obligations.

Maybe if we start a thread on improper sexual behavior, some of these "conservatives*" will want to trumpet the importance of personal responsibility because a lot of them are sure AWOL on it here.

* FTR most of the conservatives at Red State appear to have not weighed in on the issue and a few have had the guts to join in and support bankruptcy reform.  These comments should not be construed as referring to them.  Moreover my ire is also directed at many self-proclaimed "libertarians" who seem to have chucked the principle that government's role in a free society is to actually enforce contracts rather than intervene to let one party ditch their responsibility merely because they too don't like credit card companies.

Let me know when you see one register to vote

corporations are legal persons at least as far as the federal government is concerned.

First I'll admit my ignorance of Bankruptcy Law and that I have not read the bill, only news reports.

Here is the relevant portion of the amendment:

``(5) Notwithstanding any other provision of this section, the maximum amount of a homestead exemption that may be provided under State law shall be $300,000.''

Most states don't have unlimited homestead exemptions, Fl, Tx, Ut, do.

Strife said:  "Personally, I think trying to equate property value between Nebraska and Long Island is a little unfair to someone."

Remeber this someone is applying for Bankruptcy protection, possibly in a state other than the one in which they have one or more of their houses.  Perhaps a ski lodge in Utah, and beach house in Miami.  These assests are protected by these states homestead laws.  Democrats want to limit it to $300,000.  Do you see how defeating such a provision can be viewed as pro-rich anti-poor?  If I have a $5,000,000 house in Miami I can go bankrupt in Ga and then go back to living in my $5,000,000 house in Miami.  While the guy living in the trailer down the street in Ga gets his trailer towed away by the CC co.

Scott:  "...it would mean that one could afford to buy a nicer home in a low-value state and have it be protected in bankruptcy,..."

No, not if ones state had no homestead provision or set the level lower.  Remember we're talking about filing for bankruptcy here.  An asset is an asset.  If creditors can take someones home in one state why should you be able to protect your home, or second homes in other states without using that asset to pay off the debt you have incurred and it is your responsibility to pay.  This allows peope with millions in equit to declare bankruptcy on thousands in debt and still keep their millions in equity.  That my frieds is bankruptcy abuse.

Thorley:  "The bill actually fixes part of the homestead problem"

Part yes but it still allows Ken Lay to keep his multimillion dollar vacation home in Utah after he files bankruptcy.  The Amendment that was defeated would have prevented this abuse of the bankruptcy law by the rich, the very rich, and the extrmely rich.

Thorley:  "You see this is the kind of thing you can learn by actually studying an issue and the actual contents of proposed legislation rather than just mindlessly regurgitate the pretty-sounding name of amendments."

Yes precisely!  It is also the kind of thing you can learn by reading the amendments with the pretty sounding name!  Since I did not see any of "the actual contents of proposed legislation" in that lovely newspaper article you linked to I enclose this link for your studying and learning pleasure.

http://www.senate.gov/legislative/LIS/roll_call_lists/vote_menu_109_1.ht...

When you've finished please come back and continue "mindlessly regurgitating" the Lakeland, Fl The Ledger, to us.

Thomas:  "So then even in Texas and Florida they can come after my house that I've owned for less than three years! Fantastic! And I'm middle class! This is great!"

Yes that is yet another reason this is a bad bill.  Even in Tx or Fl if you bought your home recently it could be liquidated to pay debt.  While Ken Lays resort in Utah which he has possessed for some time, or the Kennedy family compound in Fl owned for years would not be touchable.

Thomas:  "Law of unintended consequences, buckaroo. Do you seriously think this would make life harder for the rich rather than the poor? Have you ever seen how many assets the average bankruptcy debtor brings into bankruptcy that aren't his house?"

First, I am not a "buckaroo" and I've never played one on TV.  

Second, restricting "rich" bankruptcy filers in Fl, Tx, Ut, etc to protecting only $300,000 leaves them with adequate funds to find housing and yes it makes life harder on them than letting them keep the extra $4.7 million in their manison.  They are filing bankruptcy remember?  Claiming that there is no way they can repay what they owe.  The poor filing for bankruptcy would rarely have $300,000 in equity in their home in any state and so they cannot avail themselves of this protection of assets.  Unlimited homestead laws protect the rich.

Gentlemen, I suggest you accept it.  This bill does little to prevent the admittedly small amount of real bankruptcy abuse that occurs.  It is a gift to credit card companies from your Senators and Congressman.  In large part it screws the poor and maintains protections for the rich.  You will be hearing it in campaign adds in the near future I promise you.

Thorley:  "The bill actually fixes part of the homestead problem"

Part yes but it still allows Ken Lay to keep his multimillion dollar vacation home in Utah after he files bankruptcy.

Actually the legislation curtails the homestead exemption for anyone convicted of securities fraud.

Pick another boogey-man.

Good point, and that rules out the "all" option.  Corporations apparently are only granted "some" or "many" of the rights granted to natural persons.

The issue of corporate personhood, in the sense of a legal person entitled to Constitutional protection, is getting a lot of attention these days.  In many progressive circles, it is seen as a bad thing, because it can disadvantage private citizens when their interests come into conflict with those of corporations.

The bottom line in this context is that corporations, correctly or not, do have at least some standing as persons, in the Constitutional sense, before the law.  You can look it up.

Cheers -

the issue.

Currently federal bankruptcy law lets each state set its own homestead exemption. The new law does not change that. So your real gripe here is with the existing bankruptcy system, not with the new law.

Let's look at the bill summary:

Generally limits the extent to which debtors can shelter real estate assets from bankruptcy creditors by abusing unlimited homestead exemptions available in certain states. The bill establishes a general rule that a debtor is bound by the homestead exemption of his prior state of residence until he has been located in a new state for two years. In addition, a debtor may not claim a homestead exemption of more than $125,000 until he has resided in a more generous state for 40 months. This $125,000 cap is made permanent for any debtor who owes money as a result of violating federal or state securities law, fraud, a RICO violation, or an act that caused serious injury or death. Finally, in any case where a debtor attempts to hinder, delay, or defraud a creditor within the ten years prior to filing bankruptcy by changing residence to a more generous homestead exemption state, the debtor will not be permitted to shelter assets under that more generous exemption.

And if you're going to try to correct me, spell my name right.

The Supremes and Corporations have something in common . . . Legal Fiction.

Let's see now . . . corporations should have some of those good ole American unalienable Rights?

"When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

"Creator" in this context refers to a Supreme Being. Corporations are created by men not God! Man is not a supreme being.

If we want to protect our freedom we need to be able to look beyond the BS routinely expounded by the Courts (who in most cases aren't elected).

Yes, Corporations have some legal rights, BUT NOT ON THE LEVEL OF THE PEOPLE!  Corporations are creatures of the Individual States.  The Federal government doesn't have a procedure for creating corporations they are not obligated to give them constitutional rights, but only to recognize their interstate rights in commerce.

I don't need to look it up. I can read the Declaration of Independence and The US Constitution for myself and I able to understand the framers didn't intend to place corporations on the same par as the people.

I think you still get my point.  

And what if he is never convicted of criminal wrongdoing?  What if he loses a civil suit to employees and shareholders?

Remember a fella named O.J.?

I must say, I agree with the original analysis...but let me offer a different perspective as to why I agree...

When a squadron commander, I had many a young airman working for me.  They were, in many cases, in their first professional jobs earning their first salaries - and obtaining their first credit cards.  

More than one airman had difficulty with his/her credit cards.  They were given levels of credit that far exceeded their salaried-ability to re-pay.

Yes, many of the airmen were not fiscally disciplined or focused.  They, no doubt, had never been taught such skills; and, sadly, many had probably come from family environments wherein no discipline existed.

I, therefore, had to "discipline" the airmen and communicate to them the error of their ways - the errors of their mental processes. The issue was: how?  

It would have been very easy to say: "Don't do that"..."Shame on you"....and, tragically, it would have been all too easy to simply judicially punish them & reduce their rank & take away a strip, meaning reduce their pay(!)...or worse yet, turn them over to the First Sergeant whose idea of discipline was mowing lawns and planting flowers.

Well, here is what I told them in an effort to communicate to them the dangers inherent with credit.  Granted, what I said was, perhaps, an overstatement, but they understood it.  The net result of the following analogy was a dramatic reduction in the frequency of over-indebtedness or non-payment of credit cards.

Credit card merchants are like drug dealers.  They seduce you with feeling better.  They hook you, as do the drug dealers, initially with a little credit (a free drug hit)...they actively generate a dependency.  Then they both begin to extend credit in an effort to make certain the hook is set...once set, they reel you in.  The credit cards merchants, as do the drug dealers, cut off the credit and demand repayment - at whatever the cost...most certainly at a high interest rate.  Neither the credit card companies nor the drug dealers care about your dependency.  And neither cares about your welfare...your job...career...or livelihood.

The only difference between the credit card merchants and the drug dealer is that one is legal - the other illegal.  The one thing they have in common is: they can both ruin your life.

The new bankruptcy law enables and empowers the drug dealers...er, sorry, I meant the credit card merchants.

with the homestead exemtion is that the ammendment limiting it to $300,000 was defeated by the Republicans.

The only thing OJ was able to save was his NFL pension. Admittedly, a nice chunk of change, but after the criminal trial he didn't have anything left to shelter.

We are the government.

You will not get an argument from me that corporate personhood is a legal fiction, and that corporations should not be accorded the same rights as natural persons.

My goal in this exchange has simply been to point out that, rightly or wrongly, for about 120 years the settled interpretation of the law has been that corporations, as legal "persons", have at least some of the same protections under the constitution as natural persons.

That may make you puke, and in fact I might be puking right along side of you, but it is what it is.

Cheers -

at least in my opinion.

Who is the $300,000 limit going to hurt? Older folks who are house-rich. That's it. And let's face it, increasingly $300,000 isn't much house.

Outside of the occasional 60-Minutes show the idea of gazillionaire sheltering his assets in a house to avoid bankruptcy is just fiction. Why would they do that? Even if they did, how many of those people go bankrupt as opposed to older folks living in Los Angeles, San Francisco, Chicago, Washington DC, Boston, and the pricy suburbs around them.

Right now the state can take care of them by taking property values into consideration. With a universal $300,000 the courts couldn't even make a judgment call.

This bill does require you to live in the house for 40 months prior to bankruptcy before you can use an increased homestead exemption. That seems to me to 1) improvement over the current system and 2) a good way of deterring homebuying as a bankruptcy dodge.

Everybody who doesn't agree with you is opposed to personal responsibility?

What exactly is your background with this issue, such that you can pronounce others--including those who work in the field--to be opposed to personal responsibility?

This is one (of many) instances where the market fails before it begins:  why should anyone comply with an inherently unfair/unjust contract?  It's tantamount to soldiers following illegal orders.

Since the consumer has so little REAL choice, they MUST accept the terms of the issuing credit card bank--which can include interest rates so high that some states (thought sadly, few) have usury laws setting rate ceilings.

The credit card industry holds all the cards(or at least the aces), and the "little guy" is not only preyed upon, but squeezed hard.

This is similar to raising minimum wage... in economic terms, it makes perfect sense to be against it (it increases unemployment, encourages illegal immigration, sets a floor for employers instead of a true market-based price, inflates the cpi, etc, etc)  Just like rent control in NY.... it sounds good, but from an economic standpoint it's terrible.

if more people understood the economic consequences of the policies, it'd be a different issue.  but that's a deeper problem than can be addressed in time for the next campaign... it'd take several generations to fix entirely - I say we start now!

(of course, even the most learned in economics can be complete tools, as demonstrated by one Princeton professor)

;-)

Another Rovian Conspiracy

Either you believe people should be responsible for honoring their obligations or you don't.  If you believe in personal responsibility than you cannot be opposed to requiring more people who would otherwise be able to discharge their debts under Chapter 7 to now have at least restructure them under Chapter 13.  Nor can you be opposed to limiting the ability of debtors who are guilty of fraud, violating securities statutes, or committing intentional torts that result in serious bodily injury or death from being able to hide their assets in their homestead.

Which is what this legislation does and while it may not go far enough in that regards, it's a good start and a good bill.

Don't sign the credit agreement or take the credit card if you don't want to agree to the terms.  

Then try buying a house, a car, or getting a loan.

Let me know how that works out for you.

I think you'll find your advice isn't too practical.

Creditor's offer lending agreements based on the fact the debtor can file bankruptcy.

Debtors don't agree not to file for bankruptcy!

They only agree to pay the debt.  Filing bankruptcy stops the Creditor from using the government to collect their debt.

The debtor's obligation is still there, even after bankruptcy, and in fact their is  nothing in the law that keeps a bankrupt debtor from paying the obligations owed or the creditor from accepting payment from a bankrupt debtor.

Somehow, morally, these facts didn't stop creditors from buying off the debtors' legally elected representatives to pass legislation contrary to their best interest and the agreements they entered into for credit.

In effect the bankruptcy laws have been turned upside down to help the creditor collect its debts from the debtor instead of protecting the debtor from the creditor.  

Classic and obvious straw man, Thorley.

The question before us is not: "Should people be responsible for honoring their obligations?"

Rather, it is: "To what extent should creditors be able to enlist the power of government to recover from individuals who default on debt?"

Of course people are responsible for honoring their obligations. But shouldn't people also be responsible for their own poor investment/lending decisions, i.e., issuing credit to bad credit risks?

Then try buying a house, a car, or getting a loan.

And what, pray tell, do any of those things have to with credit cards? Again, if the terms of the agreement don't seem fair, don't sign up.

But to add further, let's take a look at federal & state banking laws which REQUIRE banks to issue a certain percentage of loan $$s to minorities. If the banks cannot attract the proper number of qualified minority loan applicants, tough doo-doo, they still have to meet the mandated quota. So what happens? They have to lower credit standards to garner more minorities.

This is a compeltely different topic, but was merely in answer to Walt's non sequitir above.

I'm not harping so much on the reason why people declare bankruptcy (although it is a personal responsibility issue IMO but put that aside for the moment) but rather responding to the idea that this is somehow going to work against Republicans politically.

Here's the thing, in order for Democrats to criticize the bill they have to go after about a third of their own party including their Senate Minority Leader who voted for it and the fact that it passed overwhelmingly on a bipartisan basis.  Which pretty much negates any ability to hang it all on the Republicans unless they want to start an intra-party fight in the process particularly when the other side can claim the coveted mantel of "bipartisan cooperation."

Moreover you may have noticed that most of complaints about the bill are not about the actual contents of the bill itself but rather things that people tried to include or thought should have been added but weren't.  Which means that they're left with arguing that the bill could have been stronger (sure it could, what bill couldn't?) rather than being able to go after someone for anything "bad" that was included in the actual legislation.  

In contrast the Republicans and Democrats who voted for it can point to any number of positive things that are in the actual legislation (e.g. tightening the homestead exemption and means-testing wealthier debtors) which represent net improvements in the overall bankruptcy legislation.  In other words they can point to something concrete whereas their opponents are left arguing for some hypothetical legislation.

IMO someone who voted for a bill that actually tightened our nation's bankruptcy laws is probably in a better position politically than someone who voted against strengthening our nation's bankruptcy laws and then tries to argue that they really favored legislation that would have been "even tougher" on "rich deadbeats."  It puts them in the "I really did vote for the $87 Billion before I voted against it" position and we all know how well that worked out ;)

Signing a credit card agreement has nothing to do with bankruptcy.

One either breaches the terms of the agreement or not.

Bankrupcty merely prevents the creditor from using tax supported government entities from collecting their debts.

The government belongs to all the people not to tje big financial interests just because they can afford to buy off your congressman or senator.

of a person who was NOT convicted of a criminal offense.  But who did lose a Civil Case and was ordered to pay damages.

I presented this example in the context of Ken Lay.  Perhaps Mr. Lay will NOT be convicted of a criminal offense when he comes to trial in 2006.  (Just like OJ see?)  

Perhaps he will however, lose a civil suit filed by shareholders or employees.  (Similar to OJ losing to Nicoles family see?)  

Texas' unlimited homestead exemption would allow Ken Lay to put all of his money into a mansion in Tx back when the SHTF and if he is not convicted of a crime he can declare bankruptcy and his millions in house will be protected.

Is this fair?  To the (hypothetical) shareholders who were awarded damages? Or should Mr Lay in this case liquidate his assets and pay his debt?

So go back to my original point in which Lay was but an illustrative example not a structural part of the argument.  Should people with millions, or even hundreds of thousands, in assets be able to shield those assets from creditors?  Hell NO!  If you have that much money you are not bankrupt and you need to take responsibility for your debts as so many of us here have already said so many times.

Since the bankruptcy legislation in question does not require a criminal conviction.  OJ (unfortunately) would be exempt since there is a five year statute of limitation on the exception for intentional torts that lead to serious bodily injury or death.

Again a possible argument that the legislation may not have gone far enough but hardly an indictment of its actual contents.

Under your analysis we should outlaw divorce.

Only 3.6% of Chapter 7 filers could pay any more if they were forced into Ch 13.

"In a study commissioned by the nonpartisan American Bankruptcy Institute,

two researchers from Creighton Law School conducted a case-by-case analysis

to determine whether debtors currently in Chapter 7 could plausibly repay some

portion of their debts. They concluded that up to 3.6% of Chapter 7 debtors

would be candidates for any repayment in Chapter 13--a finding that was subject

to learning more about the debtors' expenses. [1]

Further, "studies" conducted by the credit industry ostensibly demonstrating that

a substantial number of bankruptcy filers could afford to pay back many of their

debts were criticized by both the Congressional Budget Office (CBO) and the

U.S. General Accounting Office (GAO). There simply is no credible evidence

that a significant number of debtors would be able to pay their bills if they were

prevented from filing for Chapter 7."

http://www.nacba.org/108_congress/pdfs/truth_about_bankruptcy.pdf

I'm finished with the bankruptcy bill/law.  It jeopardizes families who fall on hard times and rewards the irresponsible business practices of predatory lenders.

Now how do I make text boxes and embed links?

. . . is that people use credit cards to build credit. I have a friend who has been told that she cannot rebuild her credit UNLESS she uses her credit cards. They are a means to establish one's credit history.

And because you must sign an agreement to get a credit card, I don't see how it's a non sequitur. Access to, and use of, credit cards is one of the key methods to build (or destroy) one's credit.

I just don't see what OJ has to do with Ken Lay in any particular.

OJ lost most of his assets to Johnnie Cochran. The Brown family took the remainder (remember the auction of his Heisman Trophy). The only asset OJ could shield was his NFL pension.

That would be an excellent answer, if there were a real "choice" in the matter.

People have the terms of virtually every "contract" dictated to them now from cell phone service contracts, card user agreements, authorization of credit and background checks for employment and insurance and more.  The banks, providers, employers set the terms because they hold all the power.  Being the only game in town they can all offer the same lousy terms, service, etc.  We need them more than they need us, as it were.  The only so-called choice is not to participate.  Properly understood, the choice is between working and being broke, between accepting the draconian terms of lenders and not buying a house or a car.  Opting out is essentially choosing to be excluded:  no credit, no insurance; no insurance (required in many places for drivers), no car; no car, no job; no credit, no job.  It's all connected.

Anyone believing these to be viable "choices" is, of course, invited to test that assumption...

is that if you pay your bill on time and in full the credit card company will cancel you card.

Bankruptcy dosen't absolve people of their obligation to pay their bills, it absolves the government from spending its resources in recovering  debts for lenders who use bad business judgment.  

Republicans nor GW have anything to be proud of.  Selling out the people to credit card companies is not only disgusting it's STUPID. Do a poll to determine the likeability of credit card companies in this Country then ask yourselves why these bozos would risk all of their 2004 gains for this gang of organized criminals.

Two parties can mutually agree to end their marital contract or one party can move to terminate it in the event of some sort of breach (e.g. infidelity, abuse, neglect, etc.) by the other party.

if you pay your bill on time and in full the credit card company will cancel you card

That's a load or crap! I pay mine off in full every month & have never had one cancelled. Ever.

And Walt, your non sequitir was bringing up loans and mortgages in a discussion of credit cards. Try to keep up, okay?

Of course two parties can agree to anything legal.  But, apparently, you've never practiced any family law.  The overwhelming majority of civil litigation in this Country is divorce, . . .  these people are'nt agreeing to anything.

You mean breach of agreement? Like not paying your debt as agreed?  So where one party to a marriage breaches the agreement he/she should'nt be allowed out of that obligation? The obligation of marriage.  

I think you make my point.

Are you saying that you believe that a person can have no credit history whatsoever--because he or she never used a credit card--and then get a loan to buy a house at age 30?

No one forces you to buy any of those things. You can take the bus, or ride a bike. You can rent. You don't need to take out high interest credit.

As I understand the bankruptcy bill, the congress wants to FORCE debtors to pay their unsecured debts if the debtor has income.

This is wage garnishment! There is no constitutional provision for the federal goverment to enact forced wage garnishment for the benefit of private parties. Federal Bankruptcy laws are constitutionally mandated and traditionally enacted to collect the assets of debtors and distibute the proceeds to the creditors.  Chapter 13 wage earners plans before this bill were VOLUNTARY!

This bill may be unconstitutional under the 10th amendment, especially in states like Texas where wage garnishment is (with a few exceptions) not allowed.

by my use of OJ and Lay as illustrative examples. Forget Ken Lay, forget OJ. Please argue with my arguments, they are my point not my examples.

My point is simple.  This law makes it harder for middle class families who fall on hard times to get bankruptcy protection.  It allows the rich to continue to protect unlimited assets, and it protects and encourages irresponsible lending behavior.  (And yes, I do include all the defeated amendments that would have prevented real abuse of bankruptcy, in my damnation of this law.)

So tell me:

1)  Why do you support punishing poor people and protecting the rich?  

2)  The lenders recklessly loan their money to people who are not financially responsibile.  Why do you think the creditors should be protected from suffering a loss on their risky lending policies?

3)  Especially since I have already pointed out that only 3.6% of Ch 7 filers could pay more back under Ch 13?  

4) Even if this is off and it's 10% there is a bankruptcy court judge presiding over the case.  Don't you trust him to make such a judgement more than you trust a blanket law imposed by Congress?  

5) There is also an attorney working for the creditor, don't you think he will point out that the debtor can afford to pay off more of his debt?

6)  The amendment proposed actually prevented one egregious form of bankruptcy abuse.  It was defeated so the rich can continue to abuse bankruptcy like this:

"Marvin Warner, a former ambassador to Switzerland and the owner of a failed Ohio Savings & Loan, who paid off only a fraction of $300 million in bankruptcy claims while keeping his multi-million-dollar horse ranch near Ocala, Florida."

"Or Dr. Carlos Garcia-Rivera, a Miami physician with no malpractice insurance, who was named in four separate malpractice actions, filed for bankruptcy protection, and kept a $500,000 home with a 100-foot swimming pool."

"Or the Dallas developer, Talmadge Wayne Tinsley, who filed under chapter 7 after incurring $60 million in debts. Tinsley objected to the Texas law that permitted him to keep only one acre of his $3.5 million, 3.1-acre magnolia-lined estate. But that acre included a fivebedroom, six-and-a-half-bath mansion with two studies, a pool and a guest house."

"Or the movie actor, Burt Reynolds, who declared bankruptcy in 1996, claiming more than $10 million in debt. Reynolds kept a $2.5 million home--appropriately named ``Valhalla''--while his creditors received 20 cents on the dollar."

"Or Paul Bilzerian, who used Florida's unlimited homestead exemption to avoid his creditors. He filed for bankruptcy in 1991, and filed again last month. He retains his $5 million Florida home, and can completely avoid the $200 million in debt owed his creditors, including the IRS."

http://www.house.gov/judiciary_democrats/hr975homesteaddissenting108cong...

The Homestead Amendment would have prevented these and other abuses of the system.  Why do you defend the abuse of bankruptcy by the rich?  Why do your Senators?

Wait a minute, I think I see...Marvin Warner is that you?  Talmadge Wayne Tinsley what are you doing here?

Why do you insist on subsidizing foolish creditors who loan 60 million dollars out of greed only to get caught with their pants down.

You and the rest of us taxpayers pay for this government collection process.  When these so called ripoff rich guys filed bankruptcy they saved the taxapayers millions of dollars and unclogged the courts.

Let the big wheeler dealers eat it!

We're not responsible for their losses, unless of course your like the politicians and your on their payroll . . . or is it the Kool-aid?

Poor analogy,

According to Article I, Section 10 of the Constitution, "no State shall pass any ex post facto Law.'' Now I admit not all agree this should apply to both criminal and civil law, but, the fact is in your example the shoplifter would get more consideration from congress than poor debtors.

Also, if a store owner is stupid enough to enter into a contract with a shoplifter for terms on shoplifting then so be it.  That is your premise right? The store owner would agree with the shoplifter to shoplift only so much because he figured the losses into his pricing? And of course if the shoplifter shoplifted too much the shoplifter would be in breach?  Apples and Oranges.

Have you read these comments? or is English your second language?

I'm quite sure we are paying more screwing 10,000 Joe six-packs than we would pursuing these egregious examples of bankruptcy abuse.  We are paying for the collection process anyway.  Why do you support allowing the rich to escape collections while the middle class family cannot?

That's why I have argued in favor of the amendment to limit the Homestead exemption.

In this case we are responsible for their losses.  We bailed out S&Ls, we pay higher fees to our banks to cover these losses.  It is the average person being forced into Ch 13 instead of Ch 7 bankruptcy that costs us much and gains us little.  This law makes the whole process longer and more difficult with more lawyers, credit counselors, etc. so you make my argument again. This law sucks.

Read the thread and you will see that what I insist on is:  not passing laws that further subsidize foolish creditors and punish the middle class family while rewarding the rich.

No issue with your points, just your language choice.

But I think, in all due respect, that many commenters lack real experience with the current system to really know if this bill is good or bad.  I have been practicing bankruptcy law (consumer and commercial) for the past 6 years, and lived and breathed the consumer side for 2 of those years, day in and day out.  This bill is bad, punitive and flawed, and every bankruptcy professional I know feels the same way.  The only people who like it are those who work in the credit departments of big companies.

Thorley, this is not a personal responsibility issue.  This is a practical, real life issue of how to deal with the impact of insolvency, also known as "you can't squeeze blood from a stone."  In my experience, 99% of people who file for bk do it as a last resort, and it is a deeply shaming experience.  If you were to review every single petition that is filed in a bk court for a year or two (as I did for 2 years) you will quickly spot a repeating pattern as to why people file: lost job, recent divorce, or large medical bills.  BK filers, often for reasons beyond their control, get in a situation where creditors demand payment beyond their ability to pay.  What should "personal responsibility" lead them to do?  Let creditors evict them from their home and seize all their assets so they have no place to live, no money to buy food and clothes for their kids, no car to drive to work?  How does that help anyone?  How does that help society?  You prefer having people destitute and homeless and needing large welfare assistance from the government to merely live?  Yeah, that's a nice small-government solution.

Here is how the typical scenario plays out in the real world.  Family gets by on the income both parents derive from working their jobs.  Something catastrophic occurs: lost job, divorce, major medical emergency.  Family is then put in a real situation where they have little to no money, and no prospect of having money in the near term. They are faced with a choice: we can use a credit card to buy food for the kids, or we can starve?  What should they do in that situation if they are "personally responsible?"  Please tell me.

By the way Thorley, you seem to like the number 13, as in people should have to file a 13 if they want relief.  Given that, I'm surprised you forgot a more important legal doctrine bearing the same number.  I can't be sure, but I seem to recall some constitutional amendment with the number 13, something about how the government cannot force involuntary servitude upon people except as punishment for a crime.  Maybe you should look that up and tell us how forcing people into a 13 scenario for up to 5 years does not violate that principal.

I did it from the debtor and creditor side for two years. Thirteen is hardly slavery.

Thomas, if so, then you must know when Congress first debated the 78 Code, the reason they did not make 13 mandatory is concern for violating the 13th amendment.  Forcing someone to continue working for a 5 year period (remember, eligibility for 13 requires regular income) in order to pay off debts sounds like involuntary servitude to me.

Here is the biggest problem I have with the reform bill.  In order to confirm a Chapter 13 plan, the court must find it was proposed in good faith.  Every court I know reads this requirement to mean the debtor must pay back a certain percentage of his or her unsecured debts over that 5 year period.  In other words, if you can't pay a certain percentage you have no hope of completing a 13 plan.  I have known some bankruptcy judges that require a 50% payout to meet this test.  Now what will happen under the reform bill when the means test says you must file a 13 but you don't have enough money to meet the 50% (or whatever it is) threshold?  You probably get converted to a 7, but why go through all that trouble in the first place?    

I see the proponents of the "reform" bill as wanting bankruptcy to be punitive: a debtor gets in trouble so he or she must lose everything.  That is terrible policy.  Bankruptcy laws exist to ensure there is not a permanent underclass of citizens in this country.  The "reform" bill undermines that purpose.  

Of course, we could always revert to practice under the first bankruptcy law enacted by England: being declared a bankrupt could be a capital offense in certain circumstances.  Now that's personal responsibility.

government collecting debts-- government will also forbid collection of debts against someone who files Chapter 7.

You have this issue all wrong.

Memo: Karaoke to Congress: Bankruptcy Bill is Bad Legislation for Many Reasons, Send This Bill Singing Back to the Senate

March 16, 2005

Rollover Mr. Speaker!

(Tune: Rollover Beethoven, Chuck Berry, BMI-Isalee Music Corp Arc Music)

I'm gonna write a little letter,

Gonna mail it to my congress today.

There's a rockin' little bill

I want my rep' to slay.

Roll over Mr. Speaker, `n let me hear it again today.

You know, my anxieties risin'

And C-N-N is blowin' a fuse.

Common sense is gettin' beat up

And my checkbook is singin' the blues.

Roll over Mr. Speaker and turn those creditor screws.

My consumption gland is swollen,

My creditors a turnin' the screws.

We're rollin' up debt

Spendin' money like fools

But they keep lendin' it, SO what we gonna do?.

Well, if you feel you like it

You can go Bankrupt

If you hurry up

Just a trifle longer--discharge it,

Roll it over,

Roll over Mr. Speaker and turn those creditor screws.

See the whole song at ,http://www.gooddebt.com/blog Rollover Mr. Speaker

This is a bad bill, not what I voted Republican for. Why should congress be Credit Card Companies Collection Agency?

I found this discussion while searching for information, and then decided to stay and add  a bit.

I am an attorney in small-town general practice, including bankruptcy. I have two credit cards, and have paid off all my major bills, raised and educated three children, and have some opinions which I would like to inflict upon you.

1. The credit industry will take advantage of you every time you let them. They will not cancel your credit card if you pay in full at the end of every month, they still make money from the merchant every time you use their card, even though you never pay them a dime in interest.
   
   
2. Up to now, the Chapter 13 procedure has encouraged debtors who can not pay at least 30% of their debts over three years to go into Chapter 7, unless doing so would cause them to lose their home to foreclosure.  Stopping a foreclosure is the most acceptable reason for chapter 13, even so, the process, lasting three to five years, results in a lot of failed plans.
   
   
3. Most of my clients would have preferred to pay their bills, but lenders who add fees and charges, and simultaneously raise the interest rate to extortionate levels, threaten lawsuits and wage garnishments, and they all want to be paid at once, never mind the other bills, drove them to seek bankruptcy relief.
   
   
4. The bill, as I read it, is going to add a lot of extra cost to the bankruptcy process, starting with the debtors having to undergo debt counselling, the attorneys having to, in effect, guarantee the statements of their clients, the trustees and other court personnel having to check more details on more marginal  cases. And these marginal cases are already the ones most likely to fail, even without the additional procedures and costs.
   
   
5. A failed chapter 13 is frequently converted to a chapter 7, usually without there having been enough paid through the plan to make any difference to the creditors.
   
   
6. Most debtors start re-building their credit within months after filing a chapter 7. Many receive unsolicited credit card offers even before they are discharged. Think about it - they have the same income, no old bills, and they can't get a bankruptcy discharge for six years! They are some of the best credit risks around!
   

With a chapter 13, all the debtor's "extra" income has to go into the plan. Credit rehabilitation has to wait until the chapter 13 is terminated (for whatever reason) so the whole process is put on hold.

     Maybe I just don't like change, but I don't see the need, and I really think the Republican party is going to give itself a black eye that will last for years. The fact that a few Dems voted for it is not going to make any difference, it's expected that they have no principles. This has been a Republican project, bought and paid for by the credit industry, and everybody knows it.

This is something we can do:

PlasticRevolution.org

some simple ways to get their attention and kill that bill.

So I thought about it for a while and put up this site:

plasticrevolution.org

Take a look and see if you like it.

I would be ok with the bill if it made govt and the rich just as responsible, but it doesn't.

The fact is the people didn't pressure senate for this, the credit card companies did.  Believe me, they haven't been short of cash.  Most of the people getting screwed are  hard working poor in the rural states.

Let's help everybody and try and shake things up.  Let them know this govt is for the people, by the people.

Your home and property troubles in Florida are over...

File now before the law goes into effect, and your home is protected, no matter what your income is or what your home is worth...

http://www.floridahomesteadservices.com