Breach of faith.
By trevino Posted in Law — Comments (139) / Email this page » / Leave a comment »
The bankruptcy bill before the Congress is bad law, bad practice, and an example of bad faith with the common people whom elected officials presumably serve. When it passes -- and it will -- it will be thanks purely to the Republican Party.
Read on.
I'm not going to bore you with a million links to analyses of the bill and its politics -- they are found easily enough. The point here is fairly simple: The bill is basically a gift to corporate lenders that tightens requirements on consumers while paradoxically loosening restrictions on credit card companies. The argument for the bill goes something like this: The record number of bankruptcies in America is indicative of a lack of personal responsibility made possible through too-lax bankruptcy laws; these bankruptcies in turn force up costs and interest rates for responsible consumers; ergo, if we tighten bankruptcy requirements, American consumers and the credit industry will be better off.
This argument is almost wholly false for several reasons:
It's already plenty difficult to declare bankruptcy for the average consumer. I know because I've seen it, and I also know that it is a profoundly humiliating process that forever follows and tarnishes a person's good name and good credit. The notion that bankruptcy is somehow easy and easily abused to be deeply offensive. Make no mistake: there are those who abuse it nonetheless; but the solution to this is existing enforcement, not en masse punishment.
The record number of bankruptcies in America is not the fault of consumers so much as it's the fault of credit companies willing to extend credit to pretty much anyone, independent of their means or station. When I lived in Brooklyn, one of my roommates was unemployed for almost a full year. After six months of unemployment, he did an experiment and saved all the pre-approved credit offers he received. The result: in one month, this unemployed 26-year old was offered almost a hundred thousand dollars in preapproved credit. That the bankruptcy bill does zero to address this corporate malfeasance -- a major and easily-addressed cause of the bankruptcy rate -- is absurd.
To my knowledge, there is no empirical evidence establishing a relationship between bankruptcies and credit interest rates. The latter remain wildly variable, indicating that the credit companies have plenty of leeway. Furthermore, there is no empirical evidence that credit companies -- or any businesses involved in forms of lending -- are suffering more than ordinary cost-of-business risk from bankruptcies. This is a red herring.
The people affected by this bill are almost exclusively the desperate and the stupid. While we ought to have little problem allowing the latter their fate, having been amongst the former, I believe compassion demands something more for them than a simple tightening of the screws. But then, compassion appears to have no place amongst the Republicans pushing this wretched law:
Republicans also defeated an amendment that would have permitted seniors entering bankruptcy to protect $75,000 of the value of their homes, as well as one that would have exempted from the means test family members forced into bankruptcy by the need to care for a sick relative.
And the GOP rebuffed an effort by Sen. Daniel K. Akaka (D-Hawaii) to force credit card companies to disclose to their clients how long it would take to pay off their balances if they made only the minimum payments.
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.
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Breach of faith. 139 Comments (0 topical, 139 editorial, 0 hidden) Post a comment »
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.
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.
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.
[...]
. . .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.
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.
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.