Hopefully this will stop people from trying live beyond their means and not paying for it, but of course Bush has to give the rich an easy way to get around the laws that everyone else has to follow.

Can he be any more openly and blatently biased for the rich?

WASHINGTON (CNN) -- The Senate voted as expected Thursday evening and approved a controversial bill that would overhaul the federal bankruptcy code to make it harder for people of means to get government protection while avoiding their debts.

The bill was approved 83-15 after a full day of debate. One senator voted present.

Detractors said the legislation is unfair to the poor and newly unemployed, and characterized it as an elaborately wrapped gift to the financial services industry courtesy of the Congress' majority Republicans.

Proponents said the bill would go a long way to end what they described as rampant abuse of the bankruptcy protection system.

Should the legislation become law, the result will be the most sweeping overhaul of the federal bankruptcy protection regime in 20 years.

To bring the bill to a vote, Republicans had to first thwart Democratic attempts to curb the lending practices of credit card issuers. A "cloture" vote had to be taken to limit debate before floor arguments wound down.

A similar bill passed the House overwhelmingly on March 1. President Bush has pledged to sign the final House-Senate compromise version when it is available to him.

There is one caveat.

Bush is opposed to a provision reducing homestead exemptions to $125,000 that was added as an amendment Thursday afternoon.

The amendment, drafted by Sen. Herb Kohl, D-Wisconsin, seeks to diminish the effects of unlimited homestead exemptions in states such as Texas and Florida, where debtors are allowed to keep their homes -- no matter how valuable those homes might be.

Millionaire debtors, Kohl said, habitually sink millions of dollars into expansive houses, then stay on the property while their bankruptcy cases are worked out.

Sen. Kay Bailey Hutchison, who like Bush is a Texas Republican, blasted the amendment on the Senate floor Thursday, saying it was a direct violation of states' rights.

"We're very encouraged by the direction of the bankruptcy legislation," White House spokesman Ari Fleischer said. "However, we continue to work with leaders on the Hill. The president is looking forward to the presentation of the bill that he can sign."

Grassley tastes victory

Sen. Charles Grassley, R-Iowa, had been trying for at least four years to pass the measure.

Bankruptcy-overhaul bills passed the Senate in each of the past three years, and one even made it to President Bill Clinton for signature last December. Clinton vetoed the measure, arguing it did little to protect needy debtors.

This year looks to be Grassley's year, with many Democrats supporting the bill and a friendly Republican in the White House.

"I have pursued this because I believe when you are right you will eventually win out," Grassley, chairman of the Senate Finance Committee, said on the Senate floor Thursday morning.

Republicans and many Democrats said too many Americans are taking advantage of the system.

"There's people that have the ability to repay," Grassley said. "They go into bankruptcy, they go into Chapter 7. Everything would be wiped clean. They're not paying their bills."

Chapter 7 bankruptcy allows debtors to rebuild their personal finances while forgiving most of their high-interest debt -- and, in some cases, all of their debt.

Chapter 13 bankruptcy establishes a steady payment scheme for debtors to repay their obligations. Under the Grassley bill, individual creditors now eligible for Chapter 7 would be steered by a bankruptcy court into Chapter 13.

"It was from the small business people of 'Main Street USA' that I heard about people declaring bankruptcy," Grassley said Thursday morning, saying small business owners in Iowa told him they were often stuck footing the bill for customers who declared themselves insolvent.

"Months later, these business owners would see these people driving down the street in a new car," Grassley said. "We were impressed with the number of small businesspeople who would tell us about the abuse of bankruptcy laws, people not paying their bills, and then the small business owner being stuck with it."

"The moral of this bill is if you have some money to pay off your debt, you're not going to get off scot-free," Grassley told CNN On Thursday.

Sen. Jeff Sessions, R-Alabama, continued the GOP charge later in the day.

"This legislation will be used on a relatively small amount of people filing for bankruptcy who have the income to cover their debts," he said. "There ain't no such thing as a free lunch. Somebody is going to pay this debt if you don't."

Sessions suggested that average American is forced to pay roughly $450 annually to cover defaults, bankruptcies and credit fraud.

Credit practices questioned

Sen. Paul Wellstone, D-Minnesota, who led the opposition to the bill on the Senate floor, charged that passage of the bill was a form of payback to corporate America.

He and other Democrats argued that too many people would be saddled with debt and be required to pay off credit cards and car loans as the economy turns sour and many people find themselves out of jobs.

Wellstone argued that credit card companies have too much leeway in offering high-interest credit lines to those who can least afford them. Democrats have attempted to place restrictions on the card companies, but those attempts have been turned back.

"Why don't we call on the credit card companies to be accountable?" Wellstone said. "They need to be held accountable for their predatory lending practices."

Sen. Robert Torricelli, a New Jersey Democrat who supported the legislation, agreed with the opposition on the subject of credit industry practices.

"There are 3.5 billion credit card solicitations sent out every year," Torricelli said. "That's 41 for every man, woman and child."

Both argued that there was little chance that all of those solicitations were sent only to people who could afford to take on a high level of unsecured, high-interest debt.

"This is a class issue, these are poor people we are talking about," Wellstone said. "None of us was ever put in this situation. President Bush, whatever happened to compassionate conservatism?"

Wellstone, debating Grassley on Thursday morning, said he understood that bankruptcy fraud is a problem that must be addressed, but said the bill "goes too far" and cited studies indicating that only 3 percent of those who file for Chapter 7 abuse the system.

"Bankruptcy has been a safety net not just for low-income people, but for middle-income people as well," Wellstone said. "It is being shredded. I think all I can say is, we'll just have to see how history judges us.

"I think there has been abuse. I just think we lost our way and we went way beyond dealing with the abuse, and we have written a bill that basically is for the credit card companies," he said.

Grassley acknowledged on CNN that "we have a lot of protection in there for creditors. But we also have a lot of education information on interest in there for debtors."

Sharp increase in filings

The number of personal bankruptcies has nearly doubled over the last 10 years -- in 1990, the number of filings was a little more than 700,000 per year; in 2000, more than 1.2 million were filed.

Grassley's bill is meant to reduce the incentive to file for bankruptcy with the introduction of a means test -- on average, a family of four making $52,000 a year would no longer be able to "wipe the slate clean" by filing under Chapter 7.

"The idea here is that people are entitled to only the relief that they need but no more," said Samuel Gerdano of the American Bankruptcy Institute. "So the bill sets up an elaborate screening mechanism with an arithmetic test to determine the debtor's incomes and their expenses -- after which if they can repay some part of their debts."

Credit card companies, banks and even the big automakers have been lobbying for the reform and contributing to Republican candidates.

-- Cherri (jessam5@home.com), March 16, 2001

Answers

Cherri is correct in one aspect - nothing should be exempted, including million dollar homes. But this bill is way overdue. Bankruptcy is one thing, but the 'slate' should never be wiped clean. That is the ultimate in irresponsibility - to be able to incur debts and then never having to pay those debts in any manner is wrong, no matter what your income level.

-- livin' high on the hog (moreinterpretation@ugly.com), March 16, 2001.

"Why don't we call on the credit card companies to be accountable?" Wellstone said. "They need to be held accountable for their predatory lending practices."

This is way too funny. Let's not blame the people spending beyond their means. Let's blame the companies who gave them credit.

Did you read Cherri, 83-15 vote?

Can he be any more openly and blatently biased for the rich? Please explain.

-- Maria (anon@ymous.com), March 16, 2001.

Maria, you are so used to you and I disagreeing on everything that you did not comprehend that I, personally, approve of this bill.

I ahve mentioned a neighbor who, while on welfare, ran up $40,000.00 in credit card debt with the idea she could go bankrupt to get out from under it. She is now working two jobs to pay them off, but has bought her second new SUV in 4 years.

What I did not like in this is the part where the laws in certain states, Texas and Florida are stated in the article,
The amendment, drafted by Sen. Herb Kohl, D-Wisconsin, seeks to diminish the effects of unlimited homestead exemptions in states such as Texas and Florida, where debtors are allowed to keep their homes -- no matter how valuable those homes might be.

Millionaire debtors, Kohl said, habitually sink millions of dollars into expansive houses, then stay on the property while their bankruptcy cases are worked out.

This is just another maneuver for people with a lot of money to sneak themselves out of following the laws the rest of us have to live by.

But the law itself is great in my opinion, I am always amazed at people and businesses who live way beyond their means who use bankrupcy to shirk the responsibilites of being held responsible for their actions. There are a lot of circumstances where people who have to use bankrupcy, like when there are mass layoffs in a town, in which the fault is not their own. But as in almost every situation that exists, there are those who take misuse it. This law forces people to be held responsible for their own actions.

Just because credit card companies hands you a card, you don't have to run them up. The credit card companies make their money off of the interest, they are not looking out when people don't pay right now. With this new law, they will just be making more money because people will have to pay at high interest. They have not been hurt at all because of the way things are, after this law goes through expect to be able to get credit even easier.

-- Cherri (jessam5@home.com), March 16, 2001.

Thomas Jefferson filed for bankruptcy, several times.

-- He (Sure@sHell.did), March 16, 2001.

an uneducated guess, i am willing to bet there will be alot of people who will need to file while bushinator is in office.

-- bushater (a@bush.hater), March 16, 2001.

Sorry Cherri, I thought the comments

Hopefully this will stop people from trying live beyond their means and not paying for it, but of course Bush has to give the rich an easy way to get around the laws that everyone else has to follow.

Can he be any more openly and blatently biased for the rich?

were from you.

-- Maria (anon@ymous.com), March 16, 2001.

Maria:

That part baffled me too. Here is something Bush campaigned on, that Cherri agrees with. Her conclusion: Bush is bad! Here is a bipartisan proposal, and the only part Bush disagrees with helps the rich more than Bush wants to. Cherri's conclusion: Bush could not possibly be more biased toward the rich!

I guess this is just one of those bills that hurts so good. Can you imagine how "blatently biased toward the rich" Bush would be if he *opposed* this bill? A guess for someone so intolerably awful in Cherri's nightmares, Bush isn't actually bad at all while she's awake.

-- Flint (flintc@mindspring.com), March 16, 2001.

Flint:

Both senators from Texas oppose the bill in the present form. One voted against it. The override of the Homestead Act will be removed in conference [it isn't, I am told, in the House version]. If it isn't, Whitehouse sources have been hinting that Dubya will veto the bill.

We will see what happens.

Best Wishes,,,,

Z

-- Z1X4Y7 (Z1X4Y7@aol.com), March 16, 2001.

Flint, why does everything have to be so black and white with you? If I do not like the platforms that Bush and repugs stand on then I have to dislike all of them. No. I am an individual and there are things I agree with and things I disagree with. Am I supposed to change my own views to go along party lines because I believe in most of them? No.

The thing above about Bush and the homestead part of the bill is that someone with millions of dollars can spend that money on a home, go bankrupt, and sell their home so they have millions of dollars and went bankrupt so they didn't have to pay those they owed money to. If they need to go bankrupt, they should not be able to pour millions of dollars they owe to others into to this "safety nitch". There should be a limit to how much their "homestead" can be worth. Yes people do not need to sell their homeatead, especially if it is their source of income when they go bankrupt. But this is not supposed to be a way for people who are rich and want to get rid of their debts to go bankrupt yet keep their millions. Why shouldn't the people they own money to, business they are in debt to, be paid by people who can afford to pay them? I do not agree with all of the democratic ideas, I used to be a republican, we are not required to give our political affiliation here. I vote for those people and things I agree with. Are there states where people are required to vote along party lines?

-- Cherri (jessam5@home.com), March 16, 2001.

Cherri:

I agree with you there should be some reasonable limit on what you can protect when you declare bankruptcy. The original goal was that they didn't want to put you out on the street, or deprive you of the tools of your trade so that you couldn't make a living. The idea was that bankruptcy was something that you could recover from more or less gracefully, and wouldn't lose absolutely everything.

And of course, the lawyers got hold of this, and quickly figured out a legal way to follow the letter of the law while violating the intent completely. So now it's not just fairly poor people suffering bad luck who go bankrupt, it's fat cats who live like kings on borrowed money as long as they can, then "hide" it from creditors to get out of having to pay what they borrowed.

But there are problems with placing dollar limits on homesteads also. Who gets to appraise this value? The idea is that you should not need to sell your house. So how much is it worth? Placing a limit invites creative appraisals. And if your homestead really is worth more than some arbitrary limit, are you required to sell it anyway, and buy some place cheaper? That price of $125,000 sounds rather inflexible. What if your house is "worth" $130,000? Must you sell it? Hell, by the time you've paid closing costs and real estate agent commission, you sure don't get to keep $125,000. And is that number indexed to property value changes over time? How?

I don't know how these details might be worked out, but I do know that they can make all the difference. I agree there should be some limit, but I believe a fixed $125,000 is too small. What do you think the limit should be?

-- Flint (flintc@mindspring.com), March 16, 2001.

That is the ultimate in irresponsibility - to be able to incur debts and then never having to pay those debts in any manner is wrong, no matter what your income level.

For the folks that go on a spending spree and then attempt to bail on their obligations, yes, this is irresponsible. But for those who have had impeccable credit for decades and then, through no fault of their own, were hit with humongous medical expenses, there needs to be some form of relief. This new bankruptcy law does NOT afford these folks the opportunity of ever recovering financially, *especially* when they are attempting to recover their health. When's the last time YOU attempted to live on a disability income?

-- Unforseen (Circumstances@HavaHeart.com), March 16, 2001.

Unforseen:

Yes, there will always be border cases that will suffer no matter how the law is written.

However, I think if you take a closer look you will find that many of these cases, while they had impeccable credit for many years, nonetheless operated well in debt, covering minimum payments month to month. It doesn't take much of a medical problem to push such people out the airlock.

In reality, very few of us can absorb 6-figure medical expenses for any period of time regardless of our debt situation. And for those so unfortunate as to have this happen, this bill won't put them into any worse situation. Genuine unexpected hardship is still permitted, and suitable payment schedules can still be worked out.

-- Flint (flintc@mindspring.com), March 16, 2001.

These are good questions. These things need to be brought up and discussed before legeslation is pasted. And that has not been done.

Why?

The question of what the limit on homesteads should be is a complicated one which should be worked out. This takes time and a big effort. It would involve a lot of work to determine this.

As for the the last question, Yes, unfortunatly I do know and understand completly :o(

-- Cherri (jessam5@home.com), March 17, 2001.

A fixed homestead exemption doesn't make sense to me either. A homestead exemption needs to take into account the local real estate market. How about something like, the debtor may be obliged to sell if an alternative dwelling meets the following conditions:

• Its cost is at least $50,000 less than the current dwelling's value
• Its cost is at least 25% less than the current dwelling's value (The thought here is that in an area with a very high cost of living, the debtor's selling a $500,000 home to purchase a $450,000 home might not help creditors at all.)
• Its location would add no more than one hour to the debtor's daily round trip work commute

I don't know that these specific criteria are right; I'm suggesting that some kind of criteria are needed.

-- David L (bumpkin@dnet.net), March 17, 2001.

David L:

Once again, the problems is that you either codify things in detail, or you leave them up to the discretion of the courts. But detailed codification waves a red flag in the eyes of the lawyers, who will find a way to protect wealth from creditors any time such protection is permitted. And discretion is regularly abused, especially when largish amounts of money are present.

Maybe the value of the house should be factored into the payment plan. You can keep the house, but the repayments will continue until you have repaid *either* all your debts, *or* an amount equal to the value of your house, whichever comes first.

-- Flint (flintc@mindspring.com), March 17, 2001.

Yes, there will always be border cases that will suffer no matter how the law is written.

The people with medical hardships are *already* suffering and certainly don't need the added stress of suffering additional financial hardship as well. This, of course, ties into the deplorable state of our health care. If doctors did what they were *supposed* to do right from the get-go then many exorbitant and crushing medical expenses (and bankruptcies) could be avoided.

Genuine unexpected hardship is still permitted, and suitable payment schedules can still be worked out.

Well, aren't you the empathetic and righteous one! Again, when's the last time YOU attempted to exist on a disability income? There is NO leeway to "work out" a "suitable payment schedule" unless you expect the person to stop eating or live in the dark. Some people make good salaries and pay exorbitant sums into the system only to end up receiving a small, very small, pittance of what they've paid in when a medical crisis occurs. They can barely make ends meet on a subsistence level without having to fork over even a few dollars towards a payment plan that benefits those who will hardly suffer if they don't receive their "pound of flesh".

FYI - a new study says disastrous medical bills play a significant role in personal bankruptcies, accounting for about 40 percent of the filings last year. About 500,000 Americans filed for bankruptcy protection in 1999 at least in part because of heavy medical expenses. Seniors and women, as well as families headed by single women, were the groups in bankruptcy that were hardest hit by medical expenses. (http://www.blackstocks.com/in_news/9298.c/page2099.html)

Apparently you don't give a damn if seniors and children suffer so the doctors and credit card companies can prosper. And at a 40% rate, they hardly qualify as "borderline" cases!

-- Flip (Over@Coin.com), March 17, 2001.

Flip:

Interesting. Can you point me to this study, so that I can see how terms like "disastrous" and "significant" are quantified? If this bill assumes blood can be squeezed from a stone, it's poorly written. Certainly the intent isn't to go after financially responsible people who were underinsured. Trying to get money from those who have none is not a cost effective strategy for the credit card companies under any circumstances.

I wonder why CNN calls a bill "controversial" that passes by 85-15 in the Senate. This is effectively unanimous, in a senate split 50-50. I believe "controversial" is a code word meaning "we disagree with this bill, and we don't care how YOU feel, we TELL you how to feel."

-- Flint (flintc@mindspring.com), March 17, 2001.

Interesting. Can you point me to this study, so that I can see how terms like "disastrous" and "significant" are quantified?

According to CBS Marketwatch (http://aolpf.marketwatch.com/source/blq/aolpf/archive/20000621/news/c urrent/personal.asp) the report was published in a specialty journal "Norton's Bankruptcy Adviser." You can find your own link if you want to dissect the report.

If this bill assumes blood can be squeezed from a stone, it's poorly written.

YOU certainly think so by your above comments! Which is why I urge you to reconsider your previous flippant remarks that have no basis in reality. "Suitable payment schedules", my ass!

while they had impeccable credit for many years, nonetheless operated well in debt, covering minimum payments month to month.

Reality lesson #1: Injured or ill people can't work. Their income goes down and their daily living expenses are a stretch to cover while they're simultaneously crushed by the additional cost of medical care. And 80% of these people ARE insured - it's just that medical coverage these days SUCKS! But according to you, it's okay if 40% of these people have to "suffer". Geez, Flint, you're really a cold-hearted bastard-prick.

Maybe you should ponder this old adage for awhile: "There, but for the grace of god, go I."

And if you think you're immune, consider this - the percentage of debtors who identified healthcare costs and their income effects as primary reasons for filing bankruptcy rose to 45 percent last year from about 20 percent in 1991. Now what does that tell you about our broken system in general?

-- THINK (Before@Speaking.com), March 17, 2001.

Think:

So you think it's a dandy trick to run up every credit card you can find right to the max and then declare bankruptcy? To me, this sounds a little dishonest. I suppose you might say that you should become ill after doing all this, so you can claim these debts are due to circumstances beyond your control?

I think the goal here is to find some system that prevents cheats without punishing the innocent. This is another pendulum -- too easy to file bankruptcy, we invite credit card fraud. Too difficult, and we make life miserable for those who could not avoid misfortune. Until we live for a while under this new policy, I don't think we can measure whether the pendulum has swung too far the other way. And maybe right in the middle and we get *both* too much credit card fraud and too much unnecessary suffering, and must pick one.

You seem to conveniently forget that there are many people perfectly happy to profit from the misfortunes of others. As soon as any policy is cast in legal terms, the lawyers will find some way to violate the intent while sticking to the letter. It sounds like you should rather be campaigning for better health insurance policies, rather than more lenient bankruptcy laws.

-- Flint (flintc@mindspring.com), March 17, 2001.

So you think it's a dandy trick to run up every credit card you can find right to the max and then declare bankruptcy?

You're delusional. I never said or insinuated any such thing. But it was a nice ploy to distract attention from yourself. Unfortunately it didn't work.

I suppose you might say that you should become ill after doing all this, so you can claim these debts are due to circumstances beyond your control?

Now you're being just plain ridiculous. I understand why it's been said that you like to argue for argument's sake...you apparently say things without serious thought just to get a reaction. Sorry, but I won't play that game. My point is clear: few actually abuse the bankruptcy laws and many desperately need it's protection. If you can't understand this then you have rocks for brains.

-- Ta (Ta@Bye.com), March 17, 2001.

Ta:

[few actually abuse the bankruptcy laws and many desperately need it's protection. If you can't understand this then you have rocks for brains.]

But this is not the case. MANY abuse the bankruptcy laws, and MANY desperately need the protection. We are trying to balance as well as we can between these two problems. We cannot find a good balance by pretending (as you do) that one side hardly exists. Nor does it make good sense to argue that we should be willing to absorb any amount of abuse if that's the price of helping those who are desperate. Beyond some point, that price becomes too high. When the Senate is 50-50 between the parties and votes 85-15, you have a pretty damn solid indication that the price we have been paying is too high in the opinion of the very large majority of people.

So what I've been doing is trying to find some way to curb the abuse without punishing those whom bankruptcy is really intended to protect. If you can think of some way to accomplish this, we are open to suggestion. If you only want to quote out of context and call names, then I guess we'd better trust that our politicians are smarter than you are.

-- Flint (flintc@mindspring.com), March 17, 2001.

“My point is clear: few actually abuse the bankruptcy laws and many desperately need its protection.”

Ah my dear Mr. Ta, your ‘point’ is actually just a statement by yourself and not backed by any raw data or true factual input. In reality kind sir, the bankruptcy courts are a safe-haven for all manner of cheats, con-artists, dead beats, and folks who just plain have no fiscal or moral responsibility, in other words ‘Liberals’. (couldn’t help myself). Many wealthy folks and companies have also abused these laws to wreck havoc on the concept of paying ones debts.

Yes, there are people and businesses that deserve another chance. For the most part, they shall remain unaffected by the new guidelines, as they are not the targets of this legislation. You have shown me a total lack of knowledge regarding the bankruptcy community in the United States so I’ll be sure to look closely at your future posts. Somehow, I doubt if Mr. ‘Ta’ will be a regular participant on this forum.

-- So (cr@t.es), March 17, 2001.

So:

I'll second that. People willing to speak responsibly and stand behind what they say tend to use a regular handle. Mindless hecklers and other morons dream up a new one every time. They must think it's "clever" and don't realize it's an admission of stupidity.

But often enough, the points I'm trying to make become clearer against a backdrop of idiocy. I *need* people like Ta, if only to demonstrate the mindset that led to the lousy bankruptcy laws we're now changing.

-- Flint (flintc@mindspring.com), March 17, 2001.

the price we have been paying is too high in the opinion of the very large majority of people.

Nope. Not a large majority at all...just the legislators who've had their nests feathered by beeeeg contributions from credit card companies and banks. Follow the money...it's generously flowing into the pockets of the politicians at the expense of the Little People. The politicians are just repaying the favor of having been bought.

-- 1 (2@3.com), March 18, 2001.

Dont tell anyone but they are all out to get flint. Everyone would like to be just as he is. So intelligent and yet so naive.

-- not bowing (bow2@thegreat.one), March 18, 2001.

I also would like to kid myself that when the politicians vote overwhelmingly FOR something I like, they are expressing the will of the people. And when they vote overwhelmingly AGAINST what I like, they have all been bought off. Heads I win, tails you lose.

Somehow, though, I just haven't yet been able to trick myself this way. Since you have, you should consider yourself lucky.

-- Flint (flintc@mindspring.com), March 18, 2001.

When the Senate is 50-50 between the parties and votes 85-15, you have a pretty damn solid indication that the price we have been paying is too high in the opinion of the very large majority of people.

Either that or you have a pretty damn solid indication that the credit card lobby has been spreading a lot of seed around DC. I don't think that the "oh crap I need to get out of this mountain of debt lobby" has much scratch to spread around.

-- Uncle Deedah (unkeed@yahoo.com), March 18, 2001.

Flint, I don't think you understand what unforeseen was saying. Not all debts are from credit cards. It is possible that a person who uses little or no credit cards, or uses them responsibly, could incur a disability that ends up costing a lot more than their medical coverage covers ending up in a situation where they need to go bankrupt to survive. The medical bills are the overwhelming debt, not credit card charges.

Or a farmer may experience a drought one year and be unable to pay their creditors, they don't owe credit money to card companies.

Perhaps a completely different set of laws should be made to cover credit cards bankruptcies, and another to cover everything else.

Hey! I think that's the answer~~ create a seperate set of laws to cover bankrupcies that involve strictly or mostly credit card debts. That is the bigest area of abuse, other situations would still be held to present standards, or even manipulated to prevent abuse without loosing the origional entent of the laws.

The credit card companies are making a lot more money off of people who cannot or will not pay the full payment each month then they do on responsible chargers. If a person maxes out their limit of $1,000.00 and doesn't pay even the minimum for 6 months due to illness or getting laid off a job, they end up owing 1,500.00. The credit card company loves these kinds of chargers, they can then garnish the borrowers wages (after they resume working) and get the money.

Part of what I dislike so much about politicians is their lie that small business owners are the ones who loose money when someone goes bankrupt. The credit card companies pay the business, it is them who are out the money when someone goes bankrupt. They do target people who should not be given credit, high school students, people with poor work histories, people new to the work market.

They spend a LOT of money on advertisements trying to entice people into using credit. They also have spent a lot of money in DC pushing for this legislation.

High school should have a mandatory course in basic economics, kids should learn what exactly they are getting themselves into when they charge.

Credit card companies are legal loan sharks.

-- Cherri (jessam5@home.com), March 18, 2001.

Cherri:

I agree that credit card debt is as easy to get into as they can make it, and that credit card interest rates are high. But these rates are also clearly stated (granting that the introductory rates are in big print, and the real rates are in fine print and cut in without notice). I don't think that you can make a strong case that the credit card companies are evil simply because they make it as easy as possible for YOU to be irresponsible. Your finances are your own responsibility.

In any case, I must say I would hate to have to sit in judgment of just how avoidable any particular bankruptcy may have been. Even moreso I'd hate to have someone else make that determination of me. We can't see the future, and all of us would have done things differently if we could see the future. With few exceptions, bankruptcies result from unexpected circumstances. Sure, the more risk you take the more likely you'll get hurt. But not everyone who runs up their credit cards is irresponsible, and not all of them go bankrupt.

-- Flint (flintc@mindspring.com), March 18, 2001.

Credit card companies are legal loan sharks.

How true! If people are expected to pay back even a portion of their debts under the new bankruptcy laws then the credit card companies should be willing to reduce their interest charges from 20% usury rates to something more reasonable and affordable. (HA! in my dreams! this new bill was designed to serve Big Business and nobody else.)

-- Give (And@Take.com), March 18, 2001.

Flint, you said to Cherri

I don't think that you can make a strong case that the credit card companies are evil simply because they make it as easy as possible for YOU to be irresponsible.

Credit card companies are not EVIL. This bill is UNBALANCED. It is way more creditor-friendly than it is consumer-friendly.

Just as an example: Proposed disclosure in the consumer's interest would have required the credit card lender to print on each monthly statement a schedule showing how long it will take to pay off this debt, while making minimum payments at the current rates.

That would be relatively easy to implement, and would certainly have added some more teeth to "Truth in Lending." But motions to include this simple, consumer-friendly provision in "Bankruptcy Reform" were repeatedly struck down. Why do you suppose that is? (rhetorical question)

Your finances are your own responsibility.

Yes, and by the same token, the bank reaps the consequences of ITS irresponsible underwriting. Small wonder it gets stuck with a percentage of bad loans whether by honest people who could never afford the credit in the first place, or by abusers. Yet, the bank persists with its practices because in the aggregate, it is still highly (obscenely?) profitable. And the larger its customer base and the higher the outstanding balances, the more a attractive a candidate it is for buyouts and mergers.

I have little sympathy when they then turn around and plead mercy from the Congress. Good point, Give@and take. Bankruptcy filings peaked in 1998 and have been on a steady decline since then. (In California they are down 40% from the 1998 peak.) I'll believe their intentions when I see them reduce the cost of credit to the consumer. Hasn't happened yet.

-- Debbie (dbspence@usa.net), March 18, 2001.

Debbie:

You will have to enlighten me a bit more. Some years back, I fell on hard times myself. I tried to get a business started, and borrowed about $25,000 on my credit cards. Unfortunately, the business never got of the ground, leaving me saddled with this debt. At 22% interest! Why would I borrow money at such exorbitant rates? Because my business was considered too risky for me to borrow at normal rates (and they were right!). Typical credit card debt has high interest because there is NO collateral. That high interest pays for considerable risk.

And yet this bill implies (a little bit) that even that much interest might not be high enough. The credit card companies are not coining money last I looked - their bad loan rate is very high. The high interest on this debt mostly goes to pay for all the bankruptcies they have to eat.

It was not difficult for me to calculate how much I was paying in interest. Nor was it difficult to calculate that at the minimum payment rate, I'd be paying until hell freezes over.

Now, I suppose the smart thing for me to do was to declare bankruptcy myself. After all, I had NO assets when I finally gave up on the business. No house, no bank account, no equities. My total net worth would probably have to have been sold at a garage sale, and might have brought a couple of hundred dollars, depending on how affluent the people were that my old cloths fit [grin]. And that was IT!

What I did instead was found a real, paying job, and I took advantage of all of those 2.9% introductory offers, and put all my credit card debt into those offers. I kept track of how long each offer was good for, and kept cycling that debt from one card to another as the offers expired. And meanwhile I put every penny I could squeeze into payments. After about 5 years, it was all paid off. Minimal interest.

Should I have declared bankruptcy instead? From my own experience, I have little patience with those who refuse to face their problems, and expect others to coddle them. YOU can calculate minimum payment interest and terms, or if you can't then fer pete's sake get a book and learn how! Nobody should have to stand over your shoulder saying "now, be careful using that credit card, interest rates are very high and the credit card company wants your interest."

All the information you need is already provided. Grow up.

-- Flint (flintc@mindspring.com), March 18, 2001.

SENATE OKS TIGHTER RULES ON BANKRUPTCY
WIPING OUT DEBT WOULD BE HARDER
By William Neikirk

March 16, 2001

WASHINGTON --
In a victory for banking and credit card firms that have long lobbied for such a move, the Senate voted Thursday to make it harder for Americans to wipe out their debt and get a fresh financial start by filing for bankruptcy.

Although consumer interests called the measure too harsh on low-income borrowers, the Senate followed the House in voting to tighten a bankruptcy system that lenders said makes it too easy for people to avoid repaying at least some of their debt. The Senate tally was 83-15.

President Bush has endorsed the bill, which represents an overhaul of the bankruptcy system, and he is expected to sign it into law after differences in the House and Senate versions are reconciled.

"We're very encouraged by the direction of the bankruptcy legislation," White House spokesman Ari Fleischer said. "We're going to continue to work with leaders on the Hill, and the president is looking forward to the presentation of a bill that he can sign."

President Bill Clinton killed similar legislation in December by refusing to sign it after Congress had adjourned for the year.

At the heart of the bill is a provision requiring Americans who file for bankruptcy to undergo a means test to determine whether they will be allowed to eliminate all of their debt or be forced to enter into a repayment plan under court order.

Only those who prove they cannot pay at least 25 percent of their debt over five years would be permitted to file under the law's Chapter 7 provisions allowing debt wipeout and a fresh start. Others would have to file under Chapter 13 and agree to a court-approved repayment schedule.

Supporters of the bill, including businesses, credit card companies and retailers, said current bankruptcy law is too liberal and allows too many people to avoid repaying at least some of their obligations, costing creditors more than $3 billion a year, according to a Justice Department estimate. This cost is passed on to consumers, the bill's supporters said.

Opponents, including consumer organizations and organized labor, have said the measure caves in to financial interests, notably the credit card industry. They argued that the bill would impose hardship on many low-income people and permit the wealthy in some states to protect sizable assets tied up in the value of their homes.

On Thursday afternoon, the Senate by voice vote accepted an amendment by Sen. Herb Kohl (D-Wis.) allowing debtors seeking bankruptcy protection to keep no more than $125,000 of the equity in their homes.

The White House opposes such caps.

The bill also limits repeat bankruptcy filings and puts child support and alimony payments ahead of all other financial obligations.

Personal bankruptcies in the United States reached a record 1.4 million in 1998, up more than 300 percent since 1980. The total declined to about 1.3 million in 1999 and 1.2 million last year.

Sen. Peter Fitzgerald (R-Ill.) voted "present" during Thursday's roll call to avoid a conflict of interest because his family owns a bank. Sen. Barbara Boxer (D-Calif.) also did not vote.

During days of debate, Sen. Paul Wellstone (D-Minn.) led the attack on the measure, calling it an outrageous effort by lenders to prey upon poor Americans who cannot pay back their debts. "The big guys are going to win, the little people are going to get smashed," he said.

But he and other opposing senators, including Sen. Dick Durbin (D-Ill.), failed in their efforts to add more consumer protections. Durbin said the bill would crack down on borrowers without "correcting some of the abuses in the credit industry."

The Illinois senator said credit card companies had swamped college campuses with applications and easy approvals in hopes that students will run up big credit card debt. He said some college presidents have told him debt is one of the major reasons many students drop out.

Durbin also said the bill had been approved after banking and credit card interests had filled the coffers of both parties with millions of dollars in campaign contributions. "Poor people who file for bankruptcy don't have a lobbyist," he said.

Yet supporters said too many Americans in recent years have abused bankruptcy laws by filing under Chapter 7's less onerous provisions.

Advocates also said current law encourages irresponsibility by debtors and that making it more difficult for them to wipe their debt off the books will serve as a deterrent to running up debt. Bankers estimate that borrowing costs are up to $500 higher per person a year because of abuse of the system.

Sen. Jeff Sessions (R-Ala.) said the issue is a "moral question" and added: "If you can pay back your debts, you ought to pay them. We ought not to say to a person with a $10,000 income, perfectly capable of paying back a substantial portion of his debts, you can just not pay them. In fact, some of these people, over a period of three to five years, can pay back all of their debts, we have learned."

Under the bill, the means test provides that a filer earning more than the median income and who can repay $10,000 or 25 percent of his unsecured debt over five years should be shuttled into a Chapter 13 repayment plan.

The median income of bankruptcy filers in 1998 was $22,000 a year, according to a study by federal bankruptcy judges.

However, Frank Torres, legislative counsel for Consumers Union, said the means test is flawed because it doesn't take into account medical expenses or costs related to job loss. "Amendments to fix this problem have all been rejected," he said.

After coming out of bankruptcy, filers still would be responsible for some of the unsecured debt, such as credit card obligations, Torres said, "which means that you have to pay more of your debt off after you get out of bankruptcy."

The bill also would impose other burdens on bankruptcy filers that consumer advocates oppose. For example, those able to meet the Chapter 7 means test would have to complete a credit-counseling program before being able to file in order to wipe out their debts.

Some opponents sought to limit what critics regarded as a huge loophole in the law, allowing some people facing bankruptcy to use state homestead exemption laws to shield income from creditors by investing thousands and even millions of dollars of assets in a house.

The bill would deny using the homestead exemption within two years of a bankruptcy filing, but critics said a person with lots of assets as well as a large amount of debt could find ways to evade this provision.

Torres said the bill would be especially hard on single mothers and divorced women.

After the vote, Sen. Joseph Biden (D-Del.) enumerated specifics in the legislation that gave priority to the family-support claims of women and children over other creditors. Those protections are what helped win his support for the bill, he said, "and I support it wholeheartedly."

-- Cherri (jessam5@home.com), March 18, 2001.