Democrats push for protections in bankruptcy bill

[papau]

http://www.boston.com/news/nation/washington/articles/2005/03/01/democrats_push_for_protections_in_bankruptcy_bill/

Democrats push for protections in bankruptcy bill
By Bryan Bender, Globe Staff | March 1, 2005

WASHINGTON -- Democrats prepared yesterday to stymie a proposal to tighten federal bankruptcy laws, contending that the first overhaul in over a decade would unduly penalize Americans who go broke from medical bills and harm some military personnel impoverished after extended periods on duty away from home.

The Senate began debate on legislation that would make it harder for Americans to use the bankruptcy code to wipe out their debts, especially credit card bills. The Republican-sponsored Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 -- backed by the credit card and banking industry -- is well positioned to pass in the GOP-controlled Congress, according to analysts, but Democrats and consumer groups said they would fight for changes as the bill is brought for a vote this week.

Under current law, Americans can declare bankruptcy under Chapter 7 of the code, allowing them to walk away from their debts in return for forfeiting any assets to their creditors. However, credit card companies and the banking industry contend that many people who do so are able to repay at least some of their debt. The bill now being considered, a key Republican objective since 1997, would force people above a minimum income level to file for bankruptcy under Chapter 13, where a court can order them to repay some of what they owe.

Opponents of the bill, which in different forms has been blocked three times in the past eight years, said they will offer amendments to guarantee protection for those consumers they say would be most affected: the estimated 1 million Americans driven into bankruptcy by overwhelming medical debts, many of whom run up massive credit card balances to pay hospital bills and drug costs. Other changes sought by Democrats would offer extra protection to military families.<snip>

The bankruptcy overhaul bill, sponsored by Senator Charles E. Grassley, Republican of Iowa, would use a means test based on IRS cost-of-living data to prevent individuals of a certain income and above from wiping out all unsecured debt. In most cases, if a debtor is considered able to repay $6,000 over five years, he or she would be required to file for Chapter 13 bankruptcy and become subject to a repayment plan.

The legislation would also clamp down on a scam known as ''cram-down," in which people purchase new cars, then file for bankruptcy so they have to pay only the market value of the vehicle, which decreases about 25 percent as soon as the automobile is driven off the lot. The changes were reportedly recommended by the bipartisan National Bankruptcy Review Commission nearly a decade ago.
<snip>

Democrats also want more safeguards for service members, reservists, and veterans, such as an Army reservist from Arkansas and father of four whose convenience store went under after he left for duty in Iraq.

[Trillo]

1. Why is the middle class being grouped with the rich?

This would protect poor peoples right to declare chapter 7, but not the middle class. $100 per month is much too low. I'm sure it seems high to poor people who can't imagine having an extra $25 per week or $5 per day. An extra $5 per day of disposable income doesn't make one rich.

[On the Road]

2. I Like the Military Line

especially since it's tied in to extended tours of duty.

[asjr]

3. The Republicans are so greedy for power they forget

about the citizens. They simply do not care, especially those who are in lock-step with this pResident. They are the Party of Mean. How much longer this sort of thing can go on is "unknowable." The Ukraine and Lebanon could be a role model for us. They got out in the streets and protested loudly.

[FloridaPat]

4. Funny how they forgot the unemployed. As usual. The invisible

people of America.

And what idiot would buy a new car and go bankrupt? I have a friend with bad credit had to buy a new car. Because of her credit, she had to pay 30% interest - for a car! The bankruptcy stays on your credit report for 7-10years. Long time to keep a car.