[Homestead] The GOP bankruptcy "reform" scam
tvoivozd at infionline.net
Sat Feb 5 08:24:50 EST 2005
What is really needed is to outlaw unilateral contracts and send the
officials of the
Bank Mafia to prison for extortion.
Boston.com THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
The Boston Globe <http://www.boston.com/news/globe/>
WILLIAM J. MCLEOD
Bring lenders, not borrowers, to heel
By William J. McLeod | February 5, 2005
CONGRESS WILL soon debate legislation that will limit bankruptcy options
for many Americans. If passed, people facing bankruptcy could find their
financial situations worsen by no fault of their own.
Certain events typically lead someone to file bankruptcy: a job loss,
divorce, or health issue. Each, in varying degrees, can adversely affect
the income of a household. The Harvard Law and Medical Schools study
released in the journal Health Affairs this week found that half of all
bankruptcies are caused by medical-related bills and most of the
affected are middle class and insured.
Washington does not spend a lot of time talking about these cases.
Instead, expect to hear about people who rack up mountains of credit
card debt that they have no chance of ever paying in their lifetimes.
You will hear of trips abroad, expensive TVs, and houses full of unpaid
furniture. What you will not hear are the true stories of the too many
people who use their credit cards for food, prescriptions, medical
expenses, and their kids' clothes.
Ultimately, the bankruptcy reform legislation would push debt-burdened
individuals into payment plans -- for up to five years. A lot can happen
in five years, like a divorce, a health problem, or job loss. Congress
will also likely consider limiting the homestead exemption -- the amount
of equity that a homeowner can shield from creditors -- which will
render the recently increased Massachusetts homestead exemption of
What's missing in this new legislation? Any change to the current
practice of lending money to just about anyone. These days, there is
little difference between some credit card companies and a loan shark.
Of course, credit card companies do not break legs, they just increase
the percentage rate if a payment is late, add a late fee, add an
overlimit fee, and some even charge an annual fee for the privilege of
getting more fees. There are many people trying to get out of debt, but
they are being thwarted by the perfectly legal fees and interest being
levied against them.
The credit card industry is spending millions trying to convince
Congress that the average American in debt is an irresponsible buffoon
with an entitlement complex. Debtors cannot afford lobbyists. Before we
let Congress shut the bankruptcy court doors on thousands of Americans,
consider where you would be if your household lost a wage earner and
then call your member of Congress.
The problem is not with the bankruptcy process. Our leaders need to know
that it does not take much for an unexpected and uncontrolled event to
lead someone to the doors of the bankruptcy court.
Perhaps more important, our leaders need to spend more time asking
themselves what makes these financial difficulties so possible and so
probable. Hopefully, honest answers will lead to more meaningful reform
for people struggling with debt.
William J. McLeod is a bankruptcy attorney in Boston and a member of the
National Association of Consumer Bankruptcy Attorneys.
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The New York Times Company
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