April 24, 2001
E D I T O R I A L
Bankruptcy Bill Will Only Help Banks
The current bankruptcy reform bill passed by Congress is nothing more than a cornucopia of special interests brought forth by lobbyists who have blanketed members of Congress with millions in political donations for the last several election cycles.
Attorney Audrey B. Blondin speaking at the annual conference of the National Association of Consumer Bankruptcy Attorneys (NACBA) in Philadelphia, Pennsylvania, April, 2001 on the topic of "Representing the Small Business Owner in Chapter 7 Bankruptcy".
Don't be fooled into thinking that this legislation will help to curb perceived "abuses" in the system, On the contrary, the bankruptcy bill as it currently stands is full of provisions that will unfairly harm hardworking, financially vulnerable Americans everywhere.
This newly passed legislation creates a new standard for determining whether people filing for bankruptcy should be forced to repay a portion of their debts. This standard is arbitrary, unreasonable and fails to take into account the reasons behind their indebtedness.
It creates many new types of non-dischargeable debts in favor of credit card companies, both for debtors in Chapter 7 and Chapter 13, which would place credit cards in direct competition with women trying to collect child support after bankruptcy.
The whole point of bankruptcy reform is to create accountability for both creditors in their lending practices and debtors in their personal spending habits: The current bill fails to require important specific disclosures on monthly credit card statements that would show the time it would take to pay the balances due, and the total coat of credit if only the minimum payments are made. It does nothing to discourage lenders from further increasing the debt load of consumers who already are over their heads in debt, and contains no protections against other abusive creditor actions and predatory lending practices.
Amendments were offered in the Senate version of the bill that would have placed a $2,600.00 credit limit on credit cards issued to moat people under 21 years of age without a parent's approval. Other amendments would have required minors to get a parent's co?signature on a credit card application, and required credit card companies to provide consumers with information about the total cost of credit. Ail of these amendments helped the average consumer. All were defeated in the Senate.
More than 60 organizations joined in opposing this bankruptcy legislation, including the AFL-CIO, UAW; AFSCME, National Organization for Women, Consumers Union and the YWCA. In the past two years, during good economic times, bankruptcy rates have fallen sharply, declining 9% in 2001, and another 6% in 2000. Now that the economic tables have turned, the idea of prohibiting the right to file bankruptcy just when Americans need it most is the real abuse in this system.
In this last election cycle, $9.2 million was contributed from the banking, finance and credit card industries to politicians in support of this proposed legislation.
In reality, let's reform what's really broken, a system where the rich and powerful buy away the rights of those least able to afford to protect their rights, the working families, single mothers with children, those laid off from their jobs and those who have the misfortune to become sick or hospitalized with no health insurance in a country that continues to refuse to provide health insurance for all.
No one disputes that responsibility is the key word here, but responsibility applies across the board to all Americans. Those that can repay their debts should. Those that cannot should not be forced into a lifetime of indebtedness by a system unwilling to adequately consider the consequences of its actions against society's moat needy and vulnerable citizens.
Audrey B. Blondin practices in Torrington.
She is a member of the National Association of Consumer Bankruptcy Attorneys
and has lobbied on behalf of responsible bankruptcy reform in Washington, D.C.