The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which passed in the Senate on March 10, contains a number of provisions that are helpful to the credit card industry but harmful to ordinary Americans. In the future, individuals who are deeply in debt due to a medical or financial crisis will not be able to enter the protection of Chapter 7 bankruptcy, under which their debt would be erased. Instead, they will be forced to declare bankruptcy under Chapter 13, meaning that they are required to pay back their debt in increments. This change would eliminate the chance for a fresh start after a family emergency, such as extended unemployment or a serious illness. Here is a sample of what America is saying about the bankruptcy bill:

St. Louis, Missouri – St. Louis Post-Dispatch
April 11, 2005 – Letter to the Editor

"As an attorney in Granite City who represents people forced to file for bankruptcy, I can tell you these are not people who are looking to beat the system. Overwhelmingly, American families file for bankruptcy because they have been driven there — largely by medical and economic catastrophe — not because they want to go there.

"Faced with declining real wages, job insecurity, long-term unemployment and rising health care costs, American families have turned to all-too-available and increasingly expensive ‘easy’ credit. Rather than addressing the reasons people in this area get lured into steep debt, the Senate’s measure instead will siphon more money away from these families and put it into the deep pockets of the credit card industry, which last year raked in profits of $30 billion, much of it from increasing penalty fees and sky-high interest charges."

Santa Fe, New Mexico – The Santa Fe New Mexican
April 5, 2005 – Letter to the Editor

"The U.S. Senate is poised to pass sweeping bankruptcy legislation that will make it significantly more difficult for ordinary people to gain protection from creditors in the event of a catastrophic family event.

"No longer will our primary residences be exempt from creditors. Instead, if we’re unfortunate enough to suffer injury or illness that prevents us from working, the ‘compassionate conservatives’ in Congress believe it’s just fine for our creditors to seize our homes and toss us out on the street."

Boise, Idaho – The Idaho Statesman
April 12, 2005 – Letter to the Editor

"Currently, 70 percent of the people who file Chapter 13 bankruptcy are unable to complete their original repayment plan…. When creditors become willing to work with consumers to get debts repaid in a realistic and compassionate manner, rather than through strong-arm tactics, we can achieve the dual goal of reducing bankruptcy rates and helping creditors collect more of what is owed them."

Pittsburgh, Pennsylvania – Pittsburgh Post-Gazette
April 11, 2005 – Letter to the Editor

"I have been waiting and waiting and waiting for someone to point out the sheer audacity of President Bush siding with the creditors (who themselves could use several lessons in sound business management) and making it more difficult for debtors, in a debt-driven society, to attain help with their debt, all the while running up a deficit that is increasing by billions and billions of dollars."

San Francisco, California – The San Francisco Chronicle
April 10, 2005 – Editorial

"The bill would make it harder for debtors to file for bankruptcy under Chapter 7, and push more debtors — it targets those who earn more than a state’s median income — into Chapter 13, which has tougher repayment standards. That sounds fair enough — except that the Senate wasn’t interested in making banks act more responsibly by dispensing with venal lending practices, such as lending money to people who have just filed bankruptcy and enticing college students with easy credit.

"Consider this: The Senate rejected a measure to cap credit-card interest rates at 30 percent. Now, I ask, why should Washington want to protect lenders, who charge desperate people as much as 36 percent in per annum interest?"

Shreveport, Louisiana – The Times
April 6, 2005 – Editorial

"Most bankruptcies result from medical emergencies, job loss or divorce, but Republican politicians apparently don’t care. Working people can’t afford to get sick in Bush’s America and they face employment outsourcing and ever-growing economic insecurity because of his policies. Now they are discouraged from filing for bankruptcy even when their devastating debt is no fault of their own….

"Credit card companies made $30 billion in profits last year. Republicans think that’s not enough, so they shot down a Democratic amendment which would have excluded active duty troops and Iraqi combat veterans from the bill’s stringent requirements. So much for those ‘We support the troops’ bumper stickers."

Durham, North Carolina – The Herald-Sun
April 7, 2005 – Letter to the Editor

"Congress is wrong in making it harder for people to file for bankruptcy, most experts agree. As a divorce attorney for nearly 20 years, I’ve witnessed the trauma both husbands and wives experience in a divorce. No one files because it’s fun. People file because they have real financial problems.

"The recently passed bankruptcy bill will have unintended consequences of hurting people who are in debt through no fault of their own. In bad marriages, it’s common to see debt incurred secretly by one spouse. Often spouses incur large amounts of debt and their husbands and wives don’t know it….

"At least before there was some way to help the deceived spouse. Under this new legislation, both spouses will be stuck with the remittance of the failed marriage forever. Besides, we shouldn’t be protecting credit card companies before innocent people."




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