The House has passed the bankruptcy reform bill

March 1, 2001 10:07 PM

The House has passed the bankruptcy reform bill that Clinton vetoed at the end of the last session. I'm mildly optimistic that it won't pass the Senate, given that the Democratic vote in the House was split. But should we be worried at all? At first glance, it doesn't seem like a bad idea. But so many consumer groups are against it, and it seems to benefit credit card companies while hurting individuals, so I'm inclined to think we should leave things as-is. Especially since personal bankruptcies are down and credit card issuers' profits are up. Anyone know more about this?
posted by aaron (7 comments total)

Well, I know that the Amex/7-Eleven stored value gift card that works like an AmEx charge card online and in person is really cool, and doesn't get you in credit trouble at *all*... but I don't think that's what you were looking for.
posted by baylink at 6:18 AM on March 2, 2001

I don't know, aaron. I've seen lots of people take advantage of the bankruptcy protection provided in Chapter 7, but then I was an attorney and came into contact with that kind of stuff more often than most people.

My personal feeling is that this law gives judges a framework for determining if someone is able to pay off at least some of their debts instead of having them wiped out all together. I think that's a good idea based on moral grounds (and no, being a lawyer and having morals are not antithical). However, some people actually cannot pay their debts. And they need some way to start over.

I think this bill will draw a line that accomplishes both goals.
posted by CRS at 6:48 AM on March 2, 2001

I like the idea behind the bill, but I'm worried about the follow-through and execution.

If I have, say, $1,000 in my bank account but declare bankruptcy due to $12,394.23 in delinquency on my credit card bills... but I need that $1,000 to do things such as pay other bills, would this bill give my creditors the right to that $1,000, and throw me out on my butt?

If that's the case, I'd say it's no good; then I'll enter the welfare system and tie up even more government monies there!

However, as a side note, I think that all of it comes down to a lack of financial responsibility. There do need to be exceptions made for the "hard times", as former prez Bill said... but I'm wondering if the line drawn by this bill is too fuzzy. Can anyone enlighten?
posted by hijinx at 7:00 AM on March 2, 2001

i'd have more sympathy for the credit card companies if they didn't hyper-aggressively market a living in debt product and lifestyle. their own tactics contribute to the problem they (claim to) need legislation to help with.

of course, i'm still cranky that my bank purposely alters the order they process checks. they make sure to post them in highest dollar amount first. this 'friendly customer oriented' procedure makes sure they ding the maximun number of checks possible for insufficient funds.
posted by lescour at 7:13 AM on March 2, 2001

Heh--I guess it's not as exciting as getting my blog mentioned in Newsweek, but I still think it's cool when I see my site mentioned in a news story. Yahoo! doesn't provide direct links, but you can go straight to the House and Senate versions of the bills in question.
posted by MrMoonPie at 7:26 AM on March 2, 2001

Funny how corporations always have the most foresight. This seems great preparation for an economic downturn, when the ever-escalating average personal debt that helped drive the economy will finally catch up with that average consumer.

Be sure to use the proposed Social Security personal investment plan to invest in... paying off the credit card bill.
posted by Joe Hutch at 9:14 AM on March 2, 2001

This bill is bad news. hijinx, your scenario of a credit card company taking your last $1000 and throwing you out on the street is exactly what this bill would do. Why else would banks and credit card comapnies be pushing for it so hard? They want their money, no matter what it does to people. The only thing missing from the bill is the return of debtors' prisons.

Think I'm exaggerating? According to this article, one opponent of this bill is former federal bankruptcy judge Francis Conrad. He says, "People will be forced to pay the credit card companies -- instead of buying food, instead of paying alimony. You will create poverty."

The article also mentions that this bill has already passed the Congress once, under Bill Clinton's presidency. He vetoed it. I had no idea that happened. The media sure kept it quiet. That should have made headlines. ("Bill Clinton Displays Some Balls for Once!")

I recall that some time last year, Time magazine ran an excellent cover story on the push for "bankruptcy reform". Believe it or not, I say "excellent" and "Time magazine" in the same sentence in all seriousness. That's because this article was not written by any of Time's regular contributors; it was written by Donald Barlett and James Steele, authors of "America: Who Stole the Dream?" and "America: Who Really Pays the Taxes?". (They also wrote a four-part series on corporate welfare for Time a while back, which won an award for investigative journalism. ) Much of what they wrote about bankruptcy reform in their Time article is echoed in the Salon article I linked to above. Basically, the whole thing is a nasty ploy by banks and credit card companies to maximize profits by destroying people's lives. It's the elimination of the debt-relief safety valve, and it will likely have disastrous effects on the American economy. (When it does, no doubt they will try to pin the blame elsewhere.)

Oddly enough, I can get Barlett and Steele's article to come up as part of search results on Time's website, but when I actually try to look at the article, it gives me an error.
posted by Potsy at 8:25 PM on March 12, 2001