Bankruptcy Reform Act, proposed legislation threat to family

The New Bankruptcy Legislation

An Editorial

Most of the publicity about the new law focuses on the "means test." The new law was written by the credit card companies but the "means test" is only the most visible of the changes. It's as if someone shows you how the tailor adjusted the collar on your shirt without telling you that every single seam was also taken in. This new shirt will be painful. The means test basically says that if you can pay some of your debts back, you should, and you will be required to attempt at least partial repayment (Chapter 13) rather that get a fresh start (Chapter 7) with no repayment effort. That idea sounds fair enough and, in fact, it is fair. It may come as a surprise to some, but the "old" bankruptcy law already has a "means test" and it is called Section 707(b) of the bankruptcy code. That gives the U.S. Trustee the power to ask the Court to require Chapter 7 debtors to switch to Chapter 13 if it appears that the debtor could make a significant repayment to creditors over a three-year period.

So what's new about the Reform Act? The Chapter 13 repayment period will be normally be almost twice as long -- 5 years instead of 3 years. That's not just a means test, that's a lot longer repayment period. What else? Well, how do you decide how much a debtor can pay back? That sounds easy -- it is the debtor's income minus his expenses of living - that's what he has left over to pay to the creditors. The crucial element is how you calculate what expenses of living the debtor is permitted spend. Under the old law, the debtor stated what he though was reasonable and the Trustee would object to anything that seemed unnecessary or extravagant - then the Court would decide what was fair. Under the new law, we will all be told what living expenses are reasonable using IRS guidelines of what the IRS thinks is reasonable. Let's just say that most articles I have seen label the IRS guidelines as "stringent." And of course the more "stringent" the expenses, then the more money is left over for ...drum roll...the credit card companies. So this will be a mean, "means test."

Oh, there’s a lot more, but if you need an idea of how radical and mean-spirited this law change is going to be, consider the following. There is a provision in the new law that says, in the interpretation of a CNN article "Under the new bill, if information about a client's case is found to be inaccurate, the bankruptcy attorney may be subject to various fees and fines." Did you get that? The lawyer can be fined if his client has supplied the lawyer with false information that the lawyer, believing his client, forwards to the court. Since when are lawyers the guarantors of his client data - data by the way which the debtor has always been required to certify to be true, in writing to the court. We're not talking about a lawyer knowingly supplying false information. We are talking about a lawyer supplying information from his client that he believes is true. We have no idea at present how far this goes. Must the lawyer go to the client's house and count the TV's? Talk to the neighbors to see if any boats are missing from his yard? How can the lawyer know if the client has second income painting houses on the weekend that the client fails to mention? Fine the lawyer? This is outrageous. It is un-American. Yet it is about to become the law. There's more, but that's enough for now.
That’s my comment on the new law. What follows is about my anger as an American citizen, which you may not care to read.

So what are the lessons here? The first is that big business, big money, really runs this country and does whatever it wants. We have witnessed the willingness of a majority of senators and congressmen to basically sell their votes to those who can afford it. I have never seen it quite so out in the open. They are not even embarrassed! That is truly a bitter civics lesson. It's not the way they taught me Civics in 5th, I can tell you that. Maybe “checks and balances” had a double meaning I missed at the time.

The second lesson is that it is amazing how easily U.S. voters have been duped into voting in office the senators and congressmen who did this, who care almost nothing for the people they represent. In the USA we really are a gullible electorate. The Republicans, who have pushed this new bankruptcy bill the hardest, were able to succeed this time where they have failed for the last eight years, and that is because they won the recent election. Even though it was by the skin of their teeth, an extremely close election coming down to a couple hundred thousand people in Ohio, the President declared he now had a Mandate. A mandate! To some, a mandate is a ringing approval from a dominating majority. To this president, a mandate is doing better than “winning in spite of losing the popular vote” like he did last time.

The Republicans won the election by taking positions on high-emotion-content issues like gay marriage, the right to bear assault weapons, and having government control over whether women can have abortions. These issues drowned out a serious discussion about making war in Iraq and whether we are there to stop the threat of WMD to this country, or whether we are really there to ensure the death of Saddam (hopefully at the hands of the Iraqis themselves) because ...Saddam tried to assassinate George W's daddy in Kuwait after the first Gulf War. When the WMD issue vanished in the harsh light of day, our stated reasons for being in Iraq morphed into we are there to Free Them, but there was almost no discussion about how many Iraqis we had to accidentally kill in the process of Freeing Them. (It brings to mind that macabre phrase from the Vietnam War "In order to save the village it was necessary to destroy it.") Focusing on stopping gay marriage diverted attention from much discussion about whether this war in Iraq is worth, in addition to the dead Iraqis, the 1,500 American soldiers killed and the 1,500 American families dipped into everlasting pain. There has been an almost deafening silence in this country about Rumsfeld's shocking endorsement of torture performed by... Americans. This country has always stood flat against torture as the absolute worst of all human activity. We know exactly how we feel when Americans are POW's and what level of torture would be acceptable if performed on our own sons and daughters. The answer is zero. But would we want our boys and girls to be subjected to Rumsfeld's directives regarding acceptable interrogation "techniques?"

Well, if many voters have been duped, what are the Republicans truly after? They really care very little whether gays marry, or whether Survivalists can shoot their AK47’s on the weekend, or whether young girls and women can terminate a pregnancy. Big money people don’t care much what the gays do, big money folks don’t hang out with Survivalists, and rich daughters have always been able to discreetly get an abortion if they need it, in this country or elsewhere. Republicans in office do care that voters care, but that’s about it. What Republicans do care about is money. Whether is Halliburton (the VP’s old company) catering the war in Iraq, or weakening EPA standards to make it easier for business to profit, or opening up national parks to mining and timber companies, their motivation stays consistent. Make the rich richer and convince enough ordinary Americans to thinks they are Republicans’ too by taking strong positions on emotional issues. Money. The Social Security proposal is not to save Social Security. President Bush’s plan is to guide Social Security money into the “personal accounts’ of folks who will then be looking to invest into American companies. All that money looking for a place to invest! That huge supply of money competing, personal account against personal account, for the same investment opportunities. That has big business just drooling. People just throwing money their way!

The arrogance and brass of the Republicans is just amazing. But where is the outrage? Is no one outraged that what we read at the local library is subject to being secretly monitored, and should the librarian tip us off that our own government is watching what we read, that librarian commits a federal offense? Guess what they called that law? The Patriot Act.

And guess what they call the new bankruptcy law? The Bankruptcy Reform and Consumer Protection Act. Can you believe it?

I object to all of this.

What to do? Next election, remember all the Republicans who voted for the Bankruptcy Reform Act. And remember the Democrats who turned their backs on their own people to vote with the Republicans. Get rid of them. C’mon people. At the next election, let’s get some people of principle in office. There have to be some somewhere. Then let’s roll back much of what this administration and congress has done.

- Eric Ruff

The New Bankruptcy Legislation

An Editorial

Well, the long dreaded day is almost upon us. On March 10, the Senate passed the infamous "Bankruptcy Reform Act" which is a Christmas-come-early for the credit card companies. The bill now heads to the House of Representatives where is will meet warm reception and almost to a certainty be passed in the blink of an eye. The best guesses are that this will happen right round April 1, which is the perfect time for this trick upon the American consumer. If you need to file bankruptcy, do it quickly.

Most of the publicity about the new law focuses on the "means test." The new law was written by the credit card companies but the "means test" is only the most visible of the changes. It's as if someone shows you how the tailor adjusted the collar on your shirt without telling you that every single seam was also taken in. This new shirt will be painful. The means test basically says that if you can pay some of your debts back, you should, and you will be required to attempt at least partial repayment (Chapter 13) rather that get a fresh start (Chapter 7) with no repayment effort. That idea sounds fair enough and, in fact, it is fair. It may come as a surprise to some, but the "old" bankruptcy law already has a "means test" and it is called Section 707(b) of the bankruptcy code. That gives the U.S. Trustee the power to ask the Court to require Chapter 7 debtors to switch to Chapter 13 if it appears that the debtor could make a significant repayment to creditors over a three-year period.

So what's new about the Reform Act? The Chapter 13 repayment period will be normally be almost twice as long -- 5 years instead of 3 years. That's not just a means test, that's a lot longer repayment period. What else? Well, how do you decide how much a debtor can pay back? That sounds easy -- it is the debtor's income minus his expenses of living - that's what he has left over to pay to the creditors. The crucial element is how you calculate what expenses of living the debtor is permitted spend. Under the old law, the debtor stated what he though was reasonable and the Trustee would object to anything that seemed unnecessary or extravagant - then the Court would decide what was fair. Under the new law, we will all be told what living expenses are reasonable using IRS guidelines of what the IRS thinks is reasonable. Let's just say that most articles I have seen label the IRS guidelines as "stringent." And of course the more "stringent" the expenses, then the more money is left over for ...drum roll...the credit card companies. So this will be a mean, "means test."

Oh, there’s a lot more, but if you need an idea of how radical and mean-spirited this law change is going to be, consider the following. There is a provision in the new law that says, in the interpretation of a CNN article "Under the new bill, if information about a client's case is found to be inaccurate, the bankruptcy attorney may be subject to various fees and fines." Did you get that? The lawyer can be fined if his client has supplied the lawyer with false information that the lawyer, believing his client, forwards to the court. Since when are lawyers the guarantors of his client data - data by the way which the debtor has always been required to certify to be true, in writing to the court. We're not talking about a lawyer knowingly supplying false information. We are talking about a lawyer supplying information from his client that he believes is true. We have no idea at present how far this goes. Must the lawyer go to the client's house and count the TV's? Talk to the neighbors to see if any boats are missing from his yard? How can the lawyer know if the client has second income painting houses on the weekend that the client fails to mention? Fine the lawyer? This is outrageous. It is un-American. Yet it is about to become the law. There's more, but that's enough for now.
That’s my comment on the new law. What follows is about my anger as an American citizen, which you may not care to read.

Civics anyone

So what are the lessons here? The first is that big business, big money, really runs this country and does whatever it wants. We have witnessed the willingness of a majority of senators and congressmen to basically sell their votes to those who can afford it. I have never seen it quite so out in the open. They are not even embarrassed! That is truly a bitter civics lesson. It's not the way they taught me Civics in 5th, I can tell you that. Maybe “checks and balances” had a double meaning I missed at the time.

The second lesson is that it is amazing how easily U.S. voters have been duped into voting in office the senators and congressmen who did this, who care almost nothing for the people they represent. In the USA we really are a gullible electorate. The Republicans, who have pushed this new bankruptcy bill the hardest, were able to succeed this time where they have failed for the last eight years, and that is because they won the recent election. Even though it was by the skin of their teeth, an extremely close election coming down to a couple hundred thousand people in Ohio, the President declared he now had a Mandate. A mandate! To some, a mandate is a ringing approval from a dominating majority. To this president, a mandate is doing better than “winning in spite of losing the popular vote” like he did last time.

The Republicans won the election by taking positions on high-emotion-content issues like gay marriage, the right to bear assault weapons, and having government control over whether women can have abortions. These issues drowned out a serious discussion about making war in Iraq and whether we are there to stop the threat of WMD to this country, or whether we are really there to ensure the death of Saddam (hopefully at the hands of the Iraqis themselves) because ...Saddam tried to assassinate George W's daddy in Kuwait after the first Gulf War. When the WMD issue vanished in the harsh light of day, our stated reasons for being in Iraq morphed into we are there to Free Them, but there was almost no discussion about how many Iraqis we had to accidentally kill in the process of Freeing Them. (It brings to mind that macabre phrase from the Vietnam War "In order to save the village it was necessary to destroy it.") Focusing on stopping gay marriage diverted attention from much discussion about whether this war in Iraq is worth, in addition to the dead Iraqis, the 1,500 American soldiers killed and the 1,500 American families dipped into everlasting pain. There has been an almost deafening silence in this country about Rumsfeld's shocking endorsement of torture performed by... Americans. This country has always stood flat against torture as the absolute worst of all human activity. We know exactly how we feel when Americans are POW's and what level of torture would be acceptable if performed on our own sons and daughters. The answer is zero. But would we want our boys and girls to be subjected to Rumsfeld's directives regarding acceptable interrogation "techniques?"

Well, if many voters have been duped, what are the Republicans truly after? They really care very little whether gays marry, or whether Survivalists can shoot their AK47’s on the weekend, or whether young girls and women can terminate a pregnancy. Big money people don’t care much what the gays do, big money folks don’t hang out with Survivalists, and rich daughters have always been able to discreetly get an abortion if they need it, in this country or elsewhere. Republicans in office do care that voters care, but that’s about it. What Republicans do care about is money. Whether is Halliburton (the VP’s old company) catering the war in Iraq, or weakening EPA standards to make it easier for business to profit, or opening up national parks to mining and timber companies, their motivation stays consistent. Make the rich richer and convince enough ordinary Americans to thinks they are Republicans’ too by taking strong positions on emotional issues. Money. The Social Security proposal is not to save Social Security. President Bush’s plan is to guide Social Security money into the “personal accounts’ of folks who will then be looking to invest into American companies. All that money looking for a place to invest! That huge supply of money competing, personal account against personal account, for the same investment opportunities. That has big business just drooling. People just throwing money their way!

The arrogance and brass of the Republicans is just amazing. But where is the outrage? Is no one outraged that what we read at the local library is subject to being secretly monitored, and should the librarian tip us off that our own government is watching what we read, that librarian commits a federal offense? Guess what they called that law? The Patriot Act.

And guess what they call the new bankruptcy law? The Bankruptcy Reform and Consumer Protection Act. Can you believe it?

I object to all of this.

What to do? Next election, remember all the Republicans who voted for the Bankruptcy Reform Act. And remember the Democrats who turned their backs on their own people to vote with the Republicans. Get rid of them. C’mon people. At the next election, let’s get some people of principle in office. There have to be some somewhere. Then let’s roll back much of what this administration and congress has done.

- Eric Ruff