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.