I read in the Wall Street Journal today that the bankruptcy bill is sure to pass soon, they've pretty much worked out all the differences. Some of the scariest stuff is that they will require credit counseling, so the scum bags that are ripping people off by the thousands will now get richer. I hate those non-profit ones, especially. They will also "qualify" you for bankruptcy, to see if you can go through Chapter 13 instead.
I heard that the bill goes into effect 180 days after the president signs the bill. So If it gets signed in June it will go into effect in December. That means a massive increase in personal chapter 7 BK in the last 6 months of the year. Gee, I wonder how this will help the recovery of the economy.
From: http://www.bankrate.com/cic/story_home.asp?web=cic&story=news/pf/20000202a&prodtype=bank - A means test would be required for people filing for Chapter 7, the section of bankruptcy law that allows a filer to wipe out debts and get a fresh start. No means test is required now. - It would be harder to protect one's personal vehicle from creditors. - Internal Revenue Service standards for vehicle expenses would be adopted. Right now, it is up to the judge to decide whether vehicle expenses are reasonable. - In some cases, a house worth more than $250,000 would not be protected in bankruptcy, and it would be harder to move to a state with generous homestead laws, sink all your assets into a big house, then declare bankruptcy while keeping the house. - People who want to file would first have to receive education about the alternatives to bankruptcy and get credit counseling. These are not requirements now. - Child-support and alimony payments would have a higher priority. - Creditors could ask the bankruptcy judge to throw out an individualâ??s bankruptcy petition or ask the judge to convert a Chapter 7 filing to Chapter 13. Right now, those with a financial interest in the proceedings, such as creditors, can't make such requests. - People filing for bankruptcy could give as much as 15 percent of their income to charity without being challenged.
One thing to remember with this bill is that it not really against harry homeowner, who is barely getting by. This bill was designed to stop those so called "rich people" from filing BK and keeping their mulitude of assets. Pricey mansions, expensive cars, etc. Harry Homeowner doesn't have a 250K house, he doesn't have high CLs that are maxed out at 50K and 100K. This is what the bill is intended for. If our schools and parents would teach credit consumer education I think the total # of BKs declared each year would substantially decrease. Unfortunately, today most people don't learn the who, what, hows of credit until its too late. Dani
I believe that a vast majority of people never want to be in a position where bankruptcy must be considered in the first place. The "rich" bankruptcy filers will surely find ways around the new laws the same as they do already--it's all about enough money to pay good lawyers. In my view, the new law will only affect the average consumer who is in over their heads and who only has funds to pay for marginal legal repesentation during bankruptcy proceedings. Knowing this, the creditors will surely create many roadblocks (and heartaches) for many desperate consumers who don't know what to do about their debt problems. Unfortunately, more power to the creditors is not a good thing as most have demonstrated that they are heartless. Isn't seven years of punishment by being branded as a "deadbeat" on all your credit records enough punishment? Not only do people lose their credit these days, the punishment that goes along with that can mean no new jobs........It's ironic that people who need to work may not get selected because their employers' pre-job credit check could eliminate them. Since the creditors have the money (billions), they have been applying enough pressure to Congress to change the credit laws so that they are more favorable to their positions. That's why we have to take any laws that protect us, the ordinary people, and use them to their maximum advantage. Before you know it, hospitals will be allowed to come and repossess patients who are discharged without paying their bills!!!!! Just joking of course, but anytime that consumers lose more rights to large, wealthy institutions, it's not necessarily a good thing. If financial institutions were so concerned about who receives credit, they wouldn't be sending out pre-approved letters by the millions every week. If you gamble, then there's always the risk that you might lose. This applies to creditors as well as to consumers.
The Boston Globe on the bankruptcy Bill: http://www.boston.com/dailyglobe2/129/editorials/Card_sharks+.shtml "The thrust of the legislation is to make it more difficult for consumers to file for Chapter 7 bankruptcy, which lets them get out from under credit card debt and other unsecured loans. More would have to file under Chapter 13, which can require stiff repayment schedules. Advocates for children worry that child support claims would take a back seat to debt repayments after a debtor parent went through a Chapter 13." "In fact, a 1999 study by federal bankruptcy judges found that the median income of debtors seeking bankruptcy protection was $21,500. A recent upsurge in filings is an accurate reflection of the impact that layoffs, divorces, and medical emergencies have had on the bankruptcy rate." Right now it costs $900 to 1,200 for a good attorney to file a chapter 7 (liquidation) BK. This new bill will among other things, drive this cost up. These are a lot of people who loose a job and just have to stop paying bills due to no cash and there are some people who become disabled and have no hope of ever earning the money they once made. To make people who have never been late paying bills go get education when they are in financial crisis is silly. I agree wholeheartedly that Americans don't get much, if any, personal fiancee education but sending a person to Consumer Credit Counseling (CCC) at the 11th hour is not the answer. One of the problems with CCC is that a person must have enough income to more than meet their minimum payments. For most people, bye the time they file a chapter 7 BK, they owe money in credit card debt alone equal to 70% of their income, if they still have an income. Sure their is abuse of the system. So what. This is a capitalist society and a very rich one at that. We can afford to have individual consumers make mistakes once and a wile. Corporations do it all the time. Enron is one example. http://abcnews.go.com/sections/business/DailyNews/enron_bankruptcy020315.html I can name an example that if far worse that most people have never heard off. Long Term Capital management (LTCM). These people had a hedge fund in 1998. First the Thai land market went sour, then the former Soviet Union started to default on their loans. This hedge fund called the government for help and were bailed out. They had $.6 billion in assets and $100 billion in investments. They were going to go down hard with a net loose of about $ 99 billion. The government got a consortium of banks to bye them out for a measly $3.5 billion. http://www.globalpolicy.org/socecon/global/hedgfund.htm When this kind on nonsense goes in, my heart doesn't exactly bleed for the credit card companies.
Well, we all know the credit card companies can't manage money - Net First, NextCard, and Providian, just to name a few. The problem with big business, as well as, our federal government (who also can't manage money wisely) is that they increase (and push) the burden onto the consumer. This is the problem I have with corporate America and our wonderful government. When huge corporatons fail (like Enron and Global Technologies) the bill is passed onto to us. Who else is going to help fund Enron's ex-employees 401Ks? The same goes for our government, instead of stating "Do we really need another $110 hammer or a $5000 toilet?" Why not cut back spending on stupid stuff. Do they really need another pay raise? For what? The typical American consumer cannot pass on the increase in taxes or prices like government agencies and corporate America can. We are stuck. It comes out of our grocery bill, our savings account, or our entertainment fund, if not our mortgage and auto loans. It's a case of the blind leading the blind. Dani PS Sorry about my rambling I'm way off course in discussing BK issues, but ooh the way corporate America works ticks me off.
Double speak. When the military purchases a hammer for $110 they don't call it a hammer, they call it a "linearly delivered reciprocal impact percussion device". When a 6 cent nut fails they don't say a six cent nut failed, they say "A hexiformal compression unit suffered catastrophic stress failure."
Nothing like a federal law helping the shysters with their credit reporting and scoring con games is there. Forced credit counseling is nothing other than mandatory credit trashing. And the ones who aren't will be getting new suckers!
Great isn't it: Now we will have a law that we have to take action(s) so as to lower scores and damage your credit report!
I could not AGREE with you more!! Corporations are in business to screw their customers and employees.
Where I think comsumers are really going to get squeezed is if the bk bill does pass and, cc compnaies began to enforce arbitration agreements early in the default process. They'll know a bk threat may be easier said than done and if they can get an arbitration ruling in their favor they go right to collections. You may not have a chance to invoke any FDCPA protections.
I want to get that $5,000 toilet...If it cleans itself and it is GUARANTEED to FLUSH 100% of the time with 100% sucess!!!
One thing more about this article that is interesting is that it points out that Genus was purchase by Community College in Seattle. WTF with that? Something extremely fishy is going on. And about that $5000 toliet and $110 hammer, I used to work for a government contracting agency, and it's not that the stuff is anything special it just takes forever for these guys to make a decision. It's 1 hour of design, $10 in parts, the rest is in overhead like 4 hour meetings with contractors who are billing $125/hour. And this happens on a weekly basis for months. The military won't buy anything off the shelf unless it undergoes inspections at every phase of manufacturing from the time the metal was mined to treated, to machined. Then you have the paperwork that goes along...you get the idea.
