With all the wailing and moaning about HR685, Bankruptcy Abuse Prevention and Consumer Protection Act, I thought I would wander over to Thomas to see what it says for myself.
What I found was a typical Congressional document of 258 sections (quick count, +/- 5 sections accuracy) and 502 PDF pages. What do you think the odds are that any legislator read it completely, even the sponsors?
My understanding of the bill (an overview is here written by Paul Stewart Snyder, an attorney in Kentucky) is that it makes it much harder to file Chapter 7 bankruptcy, and more people will have to file for Chapter 13 instead. Chapter 7 allows the debtor to simply dump all debt. Chapter 13 requires at least some repayment.
Additionally,
Before anyone can file bankruptcy under the Bankruptcy Reform Act, they must receive a certificate from an APPROVED non-profit credit counseling agency that states that they have received a briefing on opportunities for available credit counseling and have been assisted in performing an individual budget analysis.
Is that a bad thing? For folks with huge credit card debt, it may be their best opportunity to learn.
Many of the complaints revolve around credit card companies, as they have spent a lot of money pushing for this legislation. I believe in personal responsibility, and there are avenues for bypassing some of the problems with credit cards if people aren’t carrying around a dozen of them. The marketing of cards at low rates makes it fairly simple to replace a high-interest card with a different one and transfer a balance unless you already have cards from every single creditor in the business. That is the bigger issue. The number of credit card companies is in continual decline. MBNA, CitiCorp, NationsBank. There aren’t many more. And they certainly won’t transfer high-interest debt from one of their cards to another.
From what I can see, the law is nowhere near as pernicious as some would have us believe. It attempts to restrict the ability of people to simply walk away from their debts, and limits the frequency of doing that. When you look at people like Donald Trump who live off other people’s money and bankrupt everything they touch, it is probably a good thing.
And if you don’t like the new law, you’d best look at filing under the current ones:
Most of the provisions of the Bankruptcy Reform Act will not take effect until 6 months after the date President Bush signs it into law. You have that long to get your finances in order and decide if you need to file bankruptcy.
And the credit card companies are no saints: the first time you are late with a payment, regardless of your previous payment history, they jack your rate from 6, 7, 8 percent – or whatever – to 25 or 26 percent. Usury.
Comment by Paulie at The Commons — March 11, 2005 @ 8:09 am
And the credit card companies deserve some scrutiny. As the Big Three I mentioned gobble up the competition, rates will only get worse.
Comment by Bunker — March 11, 2005 @ 10:29 am
If we need a bill, it’s to tighting the usery laws. There’s a lot of insane, loan shark type stuff going on out there. And the credit car dcompanies are predatory. Your argument that its easy to get low interest rate cards isn’t true if your credit isn’t good. Mine was trashed several years ago when a whole lot of bad luck fell on me. I didn’t file bankruptcy and I managed to clean up my credit, but for years I couldn’t get a card ezxcept a secured one and those things are a rip off. Then I was offered unsecured cards, but you have to pay $300 in fees to get one. That whole industry is out of control.
And as I said on my blog, most of these bankrupcies are over health care debts. People get wiped out when someone has serious hospital care. It could happen to anyone. We need to fix the health care business AND the credit business.
Comment by James Hudnall — March 11, 2005 @ 7:40 pm
You won’t get an argument from me about the card companies needing some “help”.
Comment by Bunker — March 11, 2005 @ 7:49 pm