posted on March 8, 2005 11:53:09 PM new
Erasing Debts With Bankruptcy Gets Harder
Updated 2:12 AM ET March 9, 2005
By MARCY GORDON
WASHINGTON (AP) - Erasing medical bills, credit card charges and other debts in bankruptcy soon will become more difficult under landmark legislation that has vaulted its last major hurdle before Senate passage.
The legislation gliding toward congressional passage following Tuesday's procedural vote in the Senate would constitute the most sweeping overhaul of U.S. bankruptcy laws in a quarter-century.
Senate passage this week and likely House approval of that bill next month would deliver to President Bush the second of his pro-business legislative priorities after Republicans fattened their majorities in both chambers in November's elections.
Banks, credit card issuers and retailers have pushed for eight years for bankruptcy revisions that would force more people to repay at least part of their debt. It nearly passed in 2002 _ failing when the Senate accepted, but House Republicans rejected, a Democratic amendment barring protesters from using bankruptcy to avoid paying court fines for blocking abortion clinics.
This year, with four more Republican senators, the abortion provision was rejected Tuesday on a 53-46 vote. Later the Senate voted 69-31 to limit further amendments, close the debate and hold a final vote this week.
The bill would set up a new test for measuring a debtor's ability to pay.
Those with insufficient assets or income could still file a Chapter 7 bankruptcy, which if approved by a judge erases debts entirely after certain assets are forfeited. But those with income above the state's median income who can pay at least $6,000 over five years _ $100 a month _ would be forced into Chapter 13, where a judge would then order a repayment plan.
Critics say that's unfair because many people who file for bankruptcy have lost their jobs, or are going to lose them.
According to current law, a bankruptcy judge determines under which chapter of the bankruptcy code a person falls _ whether they have to repay some or all of their debt.
Sensing a long-elusive victory at hand, Republican backers exulted Tuesday and urged colleagues to move speedily through remaining Senate deliberations.
The bill's supporters argued that bankruptcy frequently is the last refuge of gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires, often celebrities, who buy mansions in states with liberal homestead exemptions to shelter assets from creditors.
Opponents, too, have a litany of stories. Sen. Edward M. Kennedy, D-Mass., speaks of Zoraya Marrero, a single mother with three children from Woodbridge, Va., the eldest of whom has spina bifida. Having had to return $60,000 in state disability benefits and medical coverage for the child, and paying medical expenses, Marrero recently filed for bankruptcy.
Most applicants "did not seek bankruptcy relief willingly," Kennedy says. "Millions of ... Americans in similar situations have filed for bankruptcy only after exhausting all other options."
A recent Harvard University study found that costly illnesses led to about half of all personal bankruptcies and that most people who file for bankruptcy protection because of medical problems have health insurance.
Consumer and civil rights groups and unions say the legislation is unfair to low-income working people, single mothers, minorities and the elderly and would remove a safety net for those who have lost their jobs or face mounting medical bills. They say it would turn the bankruptcy courts into collection agencies for the credit card companies.""
Once again the poor and sick are kicked in the teeth by the bush administration and large corporations haven't got a thing to worry about.
posted on March 9, 2005 05:32:03 AM new
Crow, I know you care about the poor and middle class in America. We both fight a mind set that don't seem to give a rats ass about anyone but themselves. I see the tide is starting to turn on that kind of a mind set as more poor middle class people are becoming more informed. All middle class people should know by now that it is good for industry and the greedy rich to have poor people by the millions it makes for a cheaper work force.
If America had better health care coverage and more good paying jobs there would be way less bankruptcy in America.
"The bill's supporters argued that bankruptcy frequently is the last refuge of gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires, often celebrities, who buy mansions in states with liberal homestead exemptions to shelter assets from creditors." If this bunch of BULL ROAR is true then make laws that make it harder for these people to file bankruptcy only and leave the sick and needy alone.
posted on March 9, 2005 07:54:18 AM new
::If America had better health care coverage and more good paying jobs there would be way less bankruptcy in America::
What a load of crap. Yes, there are those that are forced into bankruptcy because of unforseen and uncovered medical coverage and those people deserve all of the protection they can get. The problem is the bankruptcies are the result of credit card debt of the people that have no impulse control combined with a whole class of lawyers who make a living telling then that they don't actually have to pay off debts, they can just declare bankruptcy and start all over again.
At what point do you start expectiung people to take responsibilty for their actions? It's one thing to be compassionate, but good lord, aren't we responsible for ANYTHING we do anymore?
As for good paying jobs... don't you think that would be made a bit more feasible if companies were actually recieving the billions of dollars of credit card debts that are being written off?
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
[ edited by fenix03 on Mar 9, 2005 07:57 AM ]
posted on March 9, 2005 08:09:36 AM new
Too many people, irresponsibly run up their credit card debt then bail by filing Chapter 7. Six months later they have new CC's and are at it again.
After I broke my leg. I was forces to file bankruptcy, and opted for Chapter 13. I wanted to pay my debt, just needed time to do so.
President Bush didn't have anything to do with this proposed reform. The initial idea was conceived and proposed under the clinton administration.
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Consumer advocates fear measure offers little protection to debtors
By PURVA PATEL
Copyright 2005 Houston Chronicle
More than a million consumers filed for personal bankruptcy last year, costing lenders an estimated $60 billion.
Although lenders may see some relief this year with the passage of a bankruptcy overhaul, consumer advocates worry it would do little to aid those seeking bankruptcy protection.
The U.S. Senate is set to approve a bill as early as today to make it harder for consumers to file for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code.
Creditors say the bill will make borrowers more accountable because it encourages consumers to file under Chapter 13, which requires repayment of some debt, instead of Chapter 7, which entails liquidating assets to repay creditors and offers debtors a fresh start.
But consumer advocates contend the bill simply favors abusive creditors and hurts honest consumers overwhelmed by medical bills or a sudden crisis.
"There's nothing good in this legislation," said Ed Mierzwinski, consumer program director of U.S. Public Interest Research Group. "This legislation hurts working families who suffer terrible emergencies by ripping the safety net of bankruptcy out from under them."
Bankers first proposed the bill in 1997 after personal bankruptcy rates swelled through the 1980s and 90s. Filings hit 1.13 million in 1996 and 1.56 million in 2004.
To lower that rate, the industry says it's targeting those who abuse the system to avoid paying their debts.
Essentially, consumers looking to file for bankruptcy would be subject to a means test, and those with incomes 25 percent above their state's "median" income level will be forced to file under Chapter 13.
In Texas, the 2003 median income for a household of four was $54,554, less than the national median income of $65,093.
Bankruptcy judges and attorneys call the means test unnecessary because bankruptcy judges can already decide whether consumers can afford to repay debts under Chapter 13 or need to file under Chapter 7.
Consumers can claim "special circumstances" and request hearings, but creditors would also get more power to bring litigation against debtors to dismiss cases and prevent the discharge of debts — adding litigation costs to consumers seeking debt relief.
'Misses the point'
Former Chief Judge of the U.S. Bankruptcy Court for the Southern District of Texas William R. Greendyke says the test robs judges of some powers and will burden overworked courts.
The bill also fails to address the root of the problem. Instead, it assumes the worst of those who need to file and strips them of a new beginning that Chapter 7 offers, he said.
"It misses the point," said Greendyke, now a partner at Fulbright & Jaworski in Houston. "Can we deter crime by imposing the death penalty? It's overkill. Just because they make it hard to file for bankrutpcy, it doesn't mean it's going to solve the problem."
Consumer groups say the bill lacks protections against practices that can keep consumers debt-laden. They worry creditors will continue to extend credit loosely, charge high interest rates and pile on fees.
"I'm really disappointed in the senators from Texas and other places for not standing up for the little guy," said consumer advocate Mierzwinski, noting that the giant credit card issuer MBNA Corp. was President Bush's largest corporate campaign contributor in 2000. "To give all this smoke about personal responsibility ignores that this is a complete giveaway to the credit card companies."
Consumer groups wanted more stringent disclosure requirements from credit card companies, restrictions on who they can market to and an end to the practice of jacking-up interest rates after one late payment.
Not a reform bill
Supporters of the bill say it is meant to reform bankruptcy law, not the credit industry.
"They're pretty heavily regulated, and if that's something regulators want to look into, that's the job of the regulators," said Laura Fisher, spokeswoman for the American Bankers Association. "That's not what this bill is for."
The bill holds debtors that can make payments accountable and keeps the courthouse doors open for people who genuinely need protection, she said.
Regulating lending can also be tricky, she added, because policymakers must balance borrowers' personal responsibility with free markets.
"If you're going to limit lending to an individual, how do you determine who you're going to limit lending to?" she said, adding that many services now require credit. "Think about how credit cards are used in current society. You can't get an Internet connection without a credit card. If you limit credit to certain people, are you saying they can't have Internet access?"
The House of Representative has said it will move the legislation quickly this year, if the Senate passes it without major changes. Most observers expect the bill to be ready for the president's signature by Easter.
If the bill passes, courts will likely see a temporary spike in bankruptcy filings as consumers rush to file before the new law goes into effect, said Jaret Seiberg, an analyst with Stanford Washington Research Group.
A word to the wise ain't necessary, it's the stupid ones that need the advice."
- Bill Cosby
posted on March 9, 2005 08:38:38 AM new
They have been talking about doing this for years. Crowfarm take you head out of the sand and get some better information.
My objection is to the CC companies. They dole out credit as if it was candy. Then you use it and then they get upset. I think they also need to put limits on CC companies.
posted on March 9, 2005 08:47:57 AM new
A recent Harvard University study found that costly illnesses led to about half of all personal bankruptcies and that most people who file for bankruptcy protection because of medical problems have health insurance.
Consumer and civil rights groups and unions say the legislation is unfair to low-income working people, single mothers, minorities and the elderly and would remove a safety net for those who have lost their jobs or face mounting medical bills. They say it would turn the bankruptcy courts into collection agencies for the credit card companies.""
Critics say that's unfair because many people who file for bankruptcy have lost their jobs, or are going to lose them.
BEAR:
"Senate passage this week and likely House approval of that bill next month would deliver to President Bush the second of his pro-business legislative priorities after Republicans fattened their majorities in both chambers in November's elections
posted on March 9, 2005 09:27:53 AM new
Crow - I'm not trying to be snide or sarcastic - I'm asking a serious question.
At what point do you believe people have to take responsibility for their actions?
We are not talking about the people whose income does not cover their monthly needs. We are talking about people who have enough to pay all the bills and put food on the table and still have at least $25 a week that could go to paying off their bills. Why do you feel they shouldn't have to?
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
posted on March 9, 2005 09:49:37 AM new
I am one keeping my fingers crossed this passes, although today I'm reading it might be blocked by the same disagreement that kept it from being passed during the clinton administration.
Even IF half of the bankruptcies ARE for medical or injury causes....that still leaves the other half who will now have their filings reviewed to see if they do have the ability to pay some of their debt back. If they do....they should. Too many taking advantage of a system that was meant to protect the true, unusual circumstance debtor....not those who went on a spending spree and who COULD still pay back THEIR debt.
As of June of 2004 there were 1.6 million filings for bankruptcy. Getting even 1/2 of those to pay back their debts or some of their debts would be a tremendous amount of money.
posted on March 9, 2005 10:06:26 AM new
fenix, why do you just ask about people? This bill does nothing to rein in BIG business bankruptcy.
In other words, a person who has overwelming medical bills will have a harder time filing and getting back on their feet.
Their insurance company, their health care provider, the credit card company ....all those big corporations will have NO problems filing and starting over again.
Again, the bush administrations cares nothing for the average American (including vets who are forced into bankruptcy by being deployed so long !!!!!!)
The bush administration cares only for the richest and biggest.
That's my point, bush has consistantly proved it, and nothing the neocons in here can type will change this.
[ edited by crowfarm on Mar 9, 2005 10:09 AM ]
posted on March 9, 2005 10:19:33 AM new
Ya, linduh, like your Non answers.....any comment on Armstrong Williams yet, or a dozen other questions I asked YOU that you didn't answer.
linduh, I know your neonazi attitude about how anything good for the rich is fine with you and any abuse of the poor or sick is also fine with you.
I don't even consider you human.
March 4 2005
CREDIT CARD PROFITS RISE ALONG WITH BANKRUPTCY FILINGS
By Peter G. Gosselin, Times Staff Writer
WASHINGTON &emdash; In the eight years since they began pressing for the tough bankruptcy bill being debated in the Senate, America's big credit card companies have effectively inoculated themselves from many of the problems that sparked their call for the measure.
By charging customers different interest rates depending on how likely they are to repay their debts and by adding substantial fees for an array of items such as late payments and foreign currency transactions, the major card companies have managed to keep their profits rising steadily even as personal bankruptcies have soared, industry figures show.
See table at right showing rise in credit card profits along with rising bankruptcy rates.
posted on March 9, 2005 10:30:42 AM new
::Fenix, why do you just ask about people?::
Because the law you are reffering to deals with people. It has nothing to do with corporate bankruptcy. I asked you a simple question which is at the basis of this topic that you brought it up. Since you are the one that brought the topic to us for discussion, I am attempting to engage YOU in a discussion as to YOUR views.
At what point do you believe people have to take responsibility for their actions?
We are not talking about the people whose income does not cover their monthly needs. We are talking about people who have enough to pay all the bills and put food on the table and still have at least $25 a week that could go to paying off their bills. Why do you feel they shouldn't have to?
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
[ edited by fenix03 on Mar 9, 2005 10:43 AM ]
posted on March 9, 2005 11:00:15 AM new
linduh, your excuses are lame and you fail to realize they could be turned around and applied to you.
Fenix says, "Why do you feel they shouldn't have to? "
Fenix do some research on just who has to file for bankruptcy. Yes, people should be responsible for their debts and so should CORPORATIONS, who aren't. But , there are people who get hit with overwelming catastrophe's, medical and otherwise and that's why bankruptcy is used. I heard a man tell how he got hurt at work. Had a good paying job, health benefits...but couldn't work due to the injury. He lost that job because he couldn't work, his doctor ordered therapy but his insurance wouldn't pay for it....he had a choice, go to work unable to walk or lose his job. He couldn't pay his bills after losing his house and everything else and filed for bankruptcy.
These are the type of people that this inhuman administration wants to punish....ignoring the corporations' bankruptcy because of the large donations given to the Republican party.
Before you trot out all the old , old arguments about "people should be responsible for their blah , blah, blah....
do some research, find out what is really going on.
There ARE veterans who have to file for bankruptcy because they were deployed so long they couldn't pay all their bills VETERANS .
Look it up!
posted on March 9, 2005 11:07:05 AM new
crowfarm's OWN article says:
The bill would set up a new test for measuring a debtor's ability to pay.
Those with insufficient assets or income could still file a Chapter 7 bankruptcy, which if approved by a judge erases debts entirely after certain assets are forfeited.
But those with income above the state's median income who can pay at least $6,000 over five years _ $100 a month _ would be forced into Chapter 13, where a judge would then order a repayment plan.
--------------
And I find it strange that currently serving in war vets would be filing for bankruptcy....as they get EXTRA pay for fighting in a war zone. Something else must be going on and it surely isn't because of medical expenses either.
posted on March 9, 2005 11:36:07 AM new
Crow - go back and read your article again. I'm not sure you actually understood it since the examples you bring up are of persons who would not be effected.
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
posted on March 9, 2005 12:04:16 PM new
No, fenix, YOU do some research instead of relying on your antiquated ideas.
Oh, darling, I really don't care about your opinion of what I do or don't understand.
Your lack of research skills do definitely need improving, though..
And, I'm positive YOU don't understand what this measure means.
posted on March 9, 2005 12:14:53 PM new
Fenix03, Reported by the AP today. A recent Harvard University study found that costly illnesses led to about half of all personal bankruptcies.
The 3 biggest reasons for bankruptcies is medical bills, job loss, and divorce.
Like I said before if this White House did something about the real problems of out of control medical cost and the loss good paying jobs there would be no reason to change the bankruptcy laws.
Hey middle class look into the REAL REASONS for the high rate of bankruptcies in America. You will find you the middle class are getting screwed not the rich or industry.
NOW READ ALL THE POSTS BY WHITE HOUSE SUPPORTERS ON THIS BOARD. YOU WILL SEE THEM PLAYING THE AGE OLD GAME OF BLAMING THE VICTIM FOR THE PROBLEM. SMOKE BLOWERS EVERY DAM ONE OF THEM. THEY ARE SHAMELESS PEOPLE
posted on March 9, 2005 12:29:40 PM new
It's really quite simple.
The bill would set up a new test for measuring a debtor's ability to pay.
Those with insufficient assets or income could still file a Chapter 7 bankruptcy, which if approved by a judge erases debts entirely after certain assets are forfeited.
posted on March 9, 2005 12:37:00 PM new
Fenix, while I agree that people should be responsible for paying back money owed, something has to be done about medical bankruptcy. I bet that's the number one reason for filing. People that just spend money on credit because they're irresponsible should be separate imo.
In Canada, if you file for bankruptcy, you can't get credit for 7 years. After that, it's difficult.
posted on March 9, 2005 12:47:57 PM new
Crow - I know exactly what it means. It means that if I decided to declare bankruptcy to rid myself of 20K of debt that I currently hold (about half of which now is medical) I would probably be put into payments. Thing is that that 20K of debt is half of what it used to be, and that despite being self empolyed with a business that I built up all by myself with nothing more than a computer and a high school education I have paid that debt. They were my expenses, my responsibility and despite all of those ads and mailers and notices from lawyers swearing that they could get me out of all of them, I am paying them off.
See, I have a sob story too. Difference is I stopped sobbing and started dealing with it. When did we decide that the purpose of our government was to bail us out? How in the world can we stand here and insist that the government has no right to decide matters of our body, hearts and minds but expect it to take care of everything else?
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
Medical Bills Leading Cause of Bankruptcy, Harvard Study Finds
February 3, 2005
Illness and medical bills caused half of the 1,458,000 personal bankruptcies in 2001, according to a study published by the journal Health Affairs.
The study estimates that medical bankruptcies affect about 2 million Americans annually -- counting debtors and their dependents, including about 700,000 children.
Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy.
Most of the medical bankruptcy filers were middle class; 56 percent owned a home and the same number had attended college. In many cases, illness forced breadwinners to take time off from work -- losing income and job-based health insurance precisely when families needed it most.
Families in bankruptcy suffered many privations -- 30 percent had a utility cut off and 61 percent went without needed medical care.
The research, carried out jointly by researchers at Harvard Law School and Harvard Medical School, is the first in-depth study of medical causes of bankruptcy. With the cooperation of bankruptcy judges in five Federal districts (in California, Illinois, Pennsylvania, Tennessee and Texas) they administered questionnaires to bankruptcy filers and reviewed their court records.
Dr. David Himmelstein, the lead author of the study and an Associate Professor of Medicine at Harvard commented: "Unless you're Bill Gates you're just one serious illness away from bankruptcy. Most of the medically bankrupt were average Americans who happened to get sick."
Today's health insurance policies -- with high deductibles, co-pays, and many exclusions -- offer little protection during a serious illness. Uncovered medical bills averaged $13,460 for those with private insurance at the start of their illness. People with cancer had average medical debts of $35,878.
"The paradox is that the costliest health system in the world performs so poorly. We waste one-third of every health care dollar on insurance bureaucracy and profits while two million people go bankrupt annually and we leave 45 million uninsured" said Dr. Quentin Young, national coordinator of Physicians for a National Health Program.
"With national health insurance ('Medicare for All'), we could provide comprehensive, lifelong coverage to all Americans for the same amount we are spending now and end the cruelty of ruining families financially when they get sick."
posted on March 9, 2005 12:58:55 PM new
Well, fenix, you're a true ego-centric neocon tunnel-vision Republican.....YOUR situation should apply to EVERYBODY because YOU are supreme...........NOT!
Big shock to the neocons...there ARE other people who count....not just you....not EVERYONE"S situation is YOURS!
posted on March 9, 2005 01:04:20 PM new
Krafty - I don't disagree on medical... accept of course there is this tiny issue of... if no one has to pay their medical bills, who pays those bills that keep hospitals open? It's a difficult issue. Hospitals are not cheap to run and neither is a visit to one. Somehow someone needs to find a balance that allows both the facility and the patient to survive or it's just going to keep getting worse.
Thing is, this law effects people who can afford to pay something on their bills but are convinced they don't have to. I don't know how prevalent bankruptcy is in Canada but in the US it's now big business. Point your antenna south and see if you can pick up a Jerry Springer episode - there is one every commercial break.
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
posted on March 9, 2005 01:09:23 PM new
Crow - you know I have to admit, I made a mistake. For some reason, I read this article you posted and thought that it was actually the opportunity for an exchange of ideas on an important issue. How stupid of me. Why in the world would I ever have thought that you would want to take part in a conversation like that when it would be so much simpler for you to just call everyone names. I mean, why answer a single question posed to you when you can just insult the questioner. Some things never change. I will try not to make the mistake again.
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
posted on March 9, 2005 01:18:49 PM new
Crowfarm, why can't you have a decent discussion without the crap? While I'm at it, I'm appalled at you saying Linda is a neonazi or whatever you said, because she was beaten as a child. That's awful.
Linda and Fenix, I felt terrible after reading your posts yesterday. It really bothered me and I feel for what you've both been through.
posted on March 9, 2005 01:41:28 PM new
{{KD}} - Those long ago hurts were dealt with many, many years ago - and I believe were a major cause of me wanting my own children to feel loved, always. But as usual you're very kind.
posted on March 9, 2005 01:52:14 PM new
Hospitals cost money to run. Employees deserve a decent wage. The cost of a heart transplant is out of everyone's reach. A previous poster told us of how much it cost medicare for his kidney transplant approximately $815,000 something that insurance will never cover it. If insurance covered it we as a little person could not afford insurance. It is a viscous circle and it will never stop. People are living longer. Well maybe we need Dr. Kevorkian to stop that trend. How about that crowfarm in favor of that?
Crowfarm always has nothing but doom and gloom to post. To Call Fenix this - you're a true ego-centric neocon tunnel-vision Republican proves she doesn't read this board. All she likes to see is her ideas printed and bigpeepa the screamer comes in and pats her on the back.
On a side note. Notice when you use spell checker and you have used the name bigpeepa the next word that comes up. Bagpipe.
I am sure when a person or families file CC bankrupcy there is a sinking feeling that they have failed but on the bright side maybe they have learned a lesson not to happen again.
