NACA Campaign: STOP the Bankruptcy Bill!
NACA started a campaign to stop the Bankruptcy Bill. Please take a moment and tell your Senators to oppose the bill - it’s easy, you can do this online in a couple of minutes.
I can not emphasize enough that I’m all for people paying their bills. However, not only do most people file for bankruptcy due to medical problems, job loss, divorce, etc., but the creditors openly argue in their court filings (Ameriquest and Capital One) that it is OK for them to lie to consumers!
Not every lie and every incorrect credit reporting leads to bankruptcy. It’s a lot like picking up a virus - people with a strong immune system are unlikely to get ill.
The CRAs and creditors deliberately attack our credit rating and continually misrepresent the products and loans they sell - it doesn’t take much of an emergency to end up really broke and with 30% interest rates on the credit card balances, leaving no choice but bankruptcy.
From What’s At Stake
Key Problems with S. 256, the Bankruptcy Bill
S. 256, the bankruptcy bill recently introduced in the U.S. Senate, is nearly identical to the bankruptcy bill passed by the House of Representatives in the last Congress. That bill was opposed by broad coalition of labor, women’s groups, consumer groups, senior organizations, faith communities, civil rights organizations, law scholars, bankruptcy trustees, retired bankruptcy judges, economists and editorial boards of major national newspapers [Wash Post, NY Times, LA Times] and regional papers.
The budgets of American families have been hit hard in recent years by massive layoffs, outsourcing of jobs, corporate scandals and ravaged pension and 401 (k) plans. Passage of the bankruptcy bill would make it harder for families hit by financial misfortune to get back on track. It would benefit the very profitable credit card industry at the expense of the modest-income families who represent the great majority of those who declare bankruptcy.
Bankruptcies are driven by economic difficulties. The timing of this bill couldn’t be worse. Ninety percent of all bankruptcies are triggered by the loss of a job, high medical bills or divorce. The economic recession has taken its toll on many families. Long-term unemployment continues to be a problem and the number of Americans without health insurance is at its highest level ever and growing. Seniors can’t afford their prescriptions and more and more people are losing their pensions as companies continue to struggle to be profitable. The business bankruptcy provisions in the bill would also hurt business reorganization, causing further job loss.
Key problems with the bill include:
Imposes a rigid means test. The bill sets up an inflexible formula to determine if an individual debtor will be presumed ineligible for chapter 7 relief. A debtor whose Chapter 7 case is challenged due to these assumptions will have to litigate the issue-- an expense many debtors cannot afford. The court is not allowed to waive the means test even if the debtor is seeking bankruptcy relief because of some terrible circumstance beyond his or her control.
Endangers child support. Despite extravagant claims to the contrary, the bill still threatens the welfare of children. If the parent who owes child support is the debtor, the bill will divert more money to other creditors (such as auto lenders) and allow more non-child support debts to survive bankruptcy. Thus after the bankruptcy is over the custodial parent will have to fight with creditors for the debtor’s limited income.
Allows millionaires to continue to shelter their assets in bankruptcy. The bill will still allow some rich debtors (those who have not been found to have committed certain types of wrongdoing, or those who have owned their home in the state longer than 40 months) to protect an unlimited amount of value in their residences.
Expands opportunities for creditor motions. Creditors will be able to threaten debtors with new costly litigation and make it more likely that debtors who cannot afford to defend themselves in court will be coerced into giving up their legal rights.
Makes chapter 13 plans to save homes and cars far more difficult. Contrary to the supposed aim of encouraging more chapter 13 payment plans, numerous provisions in the bill will make chapter 13 much harder and less attractive. For many debtors, the bill will require five year plans (up from three years), assuring that the failure rate will be even higher than the current two thirds who can’t complete plans because of unexpected income or job loss.
Makes debtors more vulnerable to eviction. The bill makes it easier for residential landlords to evict a tenant who is in bankruptcy. Provides misleading information to debtors in the name of “credit disclosure.” Instead of providing a borrower with the information he or she needs to borrow responsibly and avoid getting into financial difficulty, this bill allows creditors to provide misleading information that may give a borrower a false sense of financial security.
Limits the ability for businesses to reorganize. The bill contains many restrictions on the ability of businesses to reorganize under chapter 11 and protect jobs. For this reason, labor and business bankruptcy lawyers have opposed these provisions.
Posted by Christine on 03/04/2005 at 11:47 PM
Court - rulings - procedures • (4) Comments • Permalink
Christine,
You really are right on these issues. ANd thanks for the attention to NACA’s fight against the BK Bill, and as well for the fight of the consumer coalition against arbitration.
An example of the horrible arbitration problem - consumers who get the Choicepoint letter and accept CP’s free credit guard for a year are required to go through the same site at Experian where consumers also would get their annual free credit report from FACTA. Under both circumstances, the shrinkwrap terms and conditions bind the consumer to mandatory binding arb. in future disputes with Experian.
Len
Len, I only noticed the “terms” for TU when ordering my annual free report, and despite ordering online and by phone, TU has yet to provide the report.
Regarding future disputes, did Congress authorize any kind of terms to be attached to the free annual reports?
I also didn’t know about the CP credit guard offer and again mandatory binding arbitration. That’s just outrageous.
I know that not *every* legislator is corrupt, but having watched the erosion of consumer rights in the last 15 years, well, it’s just depressing.
Agreed. I think the courts and the legislature is just niave re: arbitration. They don’t realize how difficult and expensive it is - 10-15k in fees sometimes.
The NACA FCRA clan is busy debating what to do about the freecreditreports conditions - but for now the best we an do is advocate that consumes NOT obtain the reports online, but instead wait the extra time for regular mail.
Regards,
Len
I’ve been waiting for the TU report for a couple months now.
I find having to wait for snail mailed credit reports very distressing. There are millions of people like me who don’t have the luxury of postal service home delivery.
I’m assuming that TU simply ignored my telephone request for the free report, but then again, considering how much mail I get for other people, who knows who has my report.
Not to mention that possibly someone else ordered my report as I posted yesterday.
Anyway, the Senate passed the BK bill, we’ll see what happens in the House.
