Bankruptcy "Reform" Law Isn't Working--Or Is It?
The National Association of Consumer Bankruptcy Attorneys has released a damning report concerning the efficacy of last year's bankruptcy "reform" law--at least in terms of the law's stated purpose. Unfortunately, the law's real purpose is being fulfilled magnificently.
The law's stated purpose, as indicated by its euphemistic title "The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005", is to prevent people from using the bankruptcy system as a "financial planning tool". Of course, it is sheer insanity to suggest that a poor person in the age of modern debtors imprisonment could ever conceivably use bankrupty as a tool for building wealth. However, as you may recall, the law applied almost exclusively to poor people, but did nothing to prevent corporations and wealthy individuals like Donald Trump from using bankruptcy as a financial planning tool. To quote from my own blog entry on Trump's latest bankruptcy in April of 2005:
"No such problems for Mr. Trump, however. His latest bankruptcy is the definition of smooth-sailing. Under the Chapter 11 reorganization plan, Trump's company will borrow $500 million to refurbish it's casinos, and expects to save some $98 million annually with lower interest payments."
Passage of a law that even members of Congress themselves admit was written by the credit card industry will certainly be regarded by future generations as one of the darkest moments in American history (learn more here)--as will Hillary Clinton's reprehensible role as the only senator who did not even bother to vote on the bill at all, in a sickening betrayal of the American People that could only have one selfish purpose: to enhance her chances of winning the presidency in 2008.
The NACBA's report analyzed 61,335 people who have used the services of credit counseling agencies since the law went into effect in October 2005. The report's findings are as shocking as they are predictable:
97% did not have the means to repay any debts.
79% had fallen into financial trouble due to huge medical bills, death of a spouse, or loss of a job.
Hardly the description of 61,335 "deadbeats" who are abusing the bankruptcy system as a "financial planning tool".
Which brings us to the real purpose of this "reform" law--to allow the financial service industries to exploit and manipulate consumers through predatory lending, to terrorize defaulted debtors unimpeded by constitutionally-mandated bankruptcy protection from creditor harassment (the real purpose of bankruptcy), and to force consumers into the American Debtors Prison, with no means to escape.
That purpose fits perfectly with the data obtained in the NACBA's study.
As one would expect, the financial service industries have a creative explanation for why the NACBA report contradicts everything they based their bankruptcy reform law on. AP writer Marcy Gorden quotes one banking industry public relations officer as saying that "the recent trend in filings was 'a very small snapshot of the (bankruptcy) system right now. ... We haven't gotten to a 'new normal' right now".
And with that brilliant analysis--which contradicts reason, the history of usery, and the observed facts--the banking industry walks away from one of the worst Congressional scandals in American history, unscathed.
The 'new normal' is the American Debtors Prison. Bought and paid for by the financial service industries, and delivered to your door by your own elected members of the United States Congress.
You may read the entire NACBA report here (72KB, PDF).
All the best,
Paul
The law's stated purpose, as indicated by its euphemistic title "The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005", is to prevent people from using the bankruptcy system as a "financial planning tool". Of course, it is sheer insanity to suggest that a poor person in the age of modern debtors imprisonment could ever conceivably use bankrupty as a tool for building wealth. However, as you may recall, the law applied almost exclusively to poor people, but did nothing to prevent corporations and wealthy individuals like Donald Trump from using bankruptcy as a financial planning tool. To quote from my own blog entry on Trump's latest bankruptcy in April of 2005:
"No such problems for Mr. Trump, however. His latest bankruptcy is the definition of smooth-sailing. Under the Chapter 11 reorganization plan, Trump's company will borrow $500 million to refurbish it's casinos, and expects to save some $98 million annually with lower interest payments."
Passage of a law that even members of Congress themselves admit was written by the credit card industry will certainly be regarded by future generations as one of the darkest moments in American history (learn more here)--as will Hillary Clinton's reprehensible role as the only senator who did not even bother to vote on the bill at all, in a sickening betrayal of the American People that could only have one selfish purpose: to enhance her chances of winning the presidency in 2008.
The NACBA's report analyzed 61,335 people who have used the services of credit counseling agencies since the law went into effect in October 2005. The report's findings are as shocking as they are predictable:
97% did not have the means to repay any debts.
79% had fallen into financial trouble due to huge medical bills, death of a spouse, or loss of a job.
Hardly the description of 61,335 "deadbeats" who are abusing the bankruptcy system as a "financial planning tool".
Which brings us to the real purpose of this "reform" law--to allow the financial service industries to exploit and manipulate consumers through predatory lending, to terrorize defaulted debtors unimpeded by constitutionally-mandated bankruptcy protection from creditor harassment (the real purpose of bankruptcy), and to force consumers into the American Debtors Prison, with no means to escape.
That purpose fits perfectly with the data obtained in the NACBA's study.
As one would expect, the financial service industries have a creative explanation for why the NACBA report contradicts everything they based their bankruptcy reform law on. AP writer Marcy Gorden quotes one banking industry public relations officer as saying that "the recent trend in filings was 'a very small snapshot of the (bankruptcy) system right now. ... We haven't gotten to a 'new normal' right now".
And with that brilliant analysis--which contradicts reason, the history of usery, and the observed facts--the banking industry walks away from one of the worst Congressional scandals in American history, unscathed.
The 'new normal' is the American Debtors Prison. Bought and paid for by the financial service industries, and delivered to your door by your own elected members of the United States Congress.
You may read the entire NACBA report here (72KB, PDF).
All the best,
Paul
posted by Paul at 9:59 PM
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