'Bankruptcy Reform' Equals 'Screw the Middle Class'

Today, the US Senate will pass a “bankruptcy reform” bill - Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This bill is anything but reform. It does nothing to 'protect' consumers. The bill essentially gives the credit card industry a green light to swindle American consumers, gives creditors greater opportunity to profit from personal family crises while hanging those families out to dry, and gives protections to anti-abortion zealots who are held civilly responsible for the damage they inflict in the course of crusading against abortion.

Professor Elizabeth Warren spelled out the worst of the bill at Talking Points Memo:

• Make debtors pay more to creditors, both in bankruptcy and after bankruptcy, so that a bankruptcy filing will leave a family with more credit card debt, higher car loans, more owed to their banks and to payday lenders.

• Make it more expensive to file for bankruptcy by driving up lawyers’ fees with new paperwork, new affidavits, and new liability for lawyers, so that the people in the most trouble can’t afford to file.

• Make more hurdles and traps, with deadlines that a judge cannot waive even if someone has a heart attack or an ex-husband who won’t give up a copy of the tax returns, so that more people will get pushed out of bankruptcy with no discharge.

• Make it harder to repay debts in Chapter 13 by increasing the payments necessary to confirm in a repayment plan, so that more people will be pushed out of bankruptcy without ever getting a discharge of debt.

These are the main provisions, but there are even more hideous components that really stick it to the average Joe while there is nothing to reign in the real crooks – the Ken Lays of the world.

Here’s some of the things the bill allows:

• No cap on interest that credit card companies can charge (an amendment to cap rates at 30% was defeated),


• No protection for families who experience economic distress as a result of caring for ill family members,


• No protection for families and individuals whose debt is caused by medical emergencies,


• The bill would force elderly homeowners to lose their home when they declare bankruptcy,


• Allows really rich people to place their assets in “protected trusts” that cannot be touched by creditors – call this one the Ken Lay special,


• Gives no protection to employees’ earnings, pensions, or retirement benefits when their employer declares bankruptcy,


• Limits the amount of closure required by credit card companies regarding interest, fees, and other “hidden” requirements of credit card agreements.

The Democrats could have stopped this bill if they had united in the way they have on Social Security – 41 votes (there are 44 D Senators) would have prevented this bill from coming to a vote. But these Democrats voted to bring the bill up:

Biden-DE
Byrd-WV
Carper-DE
Conrad-ND
Johnson-SD
Kohl-WI
Landrieu-LA
Lieberman-CT
Lincoln-AR
Nelson-FL
Nelson-NE
Pryor-AR
Salazar-CO
Stabenow-MI

Furthermore, Senators Biden, Nelson of Nebraska, Carper, Landrieu and Salazar have consistently voted against Democratic amendments to insert some protections for the elderly, military, and those caught in financial crisis by health care costs. Oh, and every single Republican looks to be on board for this bill – as if you had to wonder.

Let’s see how many vote for this rotten bill’s passage. Update to come later.