Mostly rational politics, with occasional rants about how a few crazy Republicans are ruining the country.
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Thursday, March 03, 2005
The Bankruptcy Bill
I've been doing some reading lately about the so-called "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005", which is this year's version of the bankruptcy reform bill that has been introduced in every Congress since 1996. Only thing is this year there's a strong likelihood it will pass both the Senate and House, and Bush would definitely sign it.
The main problem with the bill is that it reduces judges' discretion. Currently judges can decide, based on a full examination of situation and finances, whether someone files under Chapter 7 (which erases the debts after filers forfeit a certain percentage of their remaining assets) or Chapter 13 (which forces a repayment schedule). The new bill removes the discretion and replaces it with a means test - only those under the median state income can file Chapter 7, the rest have to go to Chapter 13.
Doesn't seem too bad, right? But the problem is that over 50% of Chapter 7 filers are bankrupt because of major medical expenses... middle class people caring for sick parents, children, etc. They are not frivolous spenders, but honest people facing serious financial trouble, who may now lose their protection against burdensome debt. At the same time, the bill leaves in place a number of loopholes for corporations and the wealthy, allowing them to shield or move certain assets so as not to face repayment.
In typical Republican form, the bill is a gift to the credit card companies.
Update: DailyKos reports that 3 Democratic amendments (to save seniors' houses, address the medical expenses issue, and disclose the cost of only paying the minimum balance on a credit card) were voted down today in the Senate, 59-40 and 58-39. The Dems that crossed over to vote against the medical expenses amendment were Biden, Carper, Johnson (SD) and Nelson (NE). That's just a betrayal, probably because of campaign donations. Joe Biden: I'll remember this in 2008.