The bill has already been approved by the Senate. Although it does nothing to curb reckless and predatory lending practices, it does endanger child support for those who are truly down and out, and imposes a strict "one-size-fits-all" means test.
As with past incarnations of this consumer unfriendly legislation, the opponents of the bill include: consumer and civil rights advocates, religious organizations, unions, editorial boards of newspapers from coast to coast, House and Senate staff members, advocates for women and children, and even bankruptcy lawyers.
Lenders would like us to believe that hordes of greedy consumers are taking advantage of the current system. But that's simply not true. Data show that only around 3% of people who declare bankruptcy are defrauding their creditors.
What is true? Through layoffs, a serious illness in the family, and/or divorce, perhaps compounded by other unexpected life events, too many hardworking, honest people find themselves in financial disaster, pressured heavily by debt collectors. All they want is a chance to get back on their feet. But without a job or health insurance, with a deadbeat for an ex, and kids to support -- it's not easy.
There's no reason to make it harder on people than it already is. The law's rigid formula will wreak havoc for many families whose unique circumstances make them worthy of an individualized, thoughtful plan to get out from under and pay their debts. Given the war in Iraq and fears of terrorism at home, with the economy stalling, layoffs increasing, and pensions as well as savings dwindling, now is not the time to take away what little safety net our current bankruptcy laws offer.
Here's an excerpt from an excellent letter sent to the powers that be in Washington by groups and coalitions representing more than 225 public interest and labor organizations:
"This unbalanced bill would have a particularly destructive effect on working Americans who most need the bankruptcy safety net when misfortune strikes: women, who represent the single largest group in bankruptcy; African American and Latino homeowners, who are 500 percent more likely than white homeowners to find themselves in bankruptcy; laid-off workers, whose numbers are rising, and older Americans, who are now the fastest growing age group in bankruptcy."
Tell Your Congressperson to Vote "NO!"
Our hope is that the House will not pass this bill. You can help by letting your congresspeople know that you object to it. You might want to point out, as an editorial in the Raleigh News & Observer put it, "Now would be the worst time to narrow the chance of a fresh start since credit card companies began lobbying for a crackdown on bankruptcies in 1997. Senators have squashed this special-interest bill before, and the House's thoughtless action requires them to come to the rescue again."
You could also tell your congresspeople to curb their own spending, rather than dictate harsh new bankruptcy rules. Urge them to take a look at the 2003 Congressional Pig Book, which details the latest in pork-barrel spending and is published by the nonpartisan, nonprofit Citizens Against Government Waste (CAGW). "When Congress passed the 2003 Omnibus Appropriations Bill," as CAGW puts it, "the country was staring at a $300 billion budget deficit and preparing for military action overseas. Instead of being fiscally responsible, members of Congress loaded the bill up with thousands of pork-barrel projects ranging from the National Peanut Festival in Alabama to the National Cowgirl Museum and Hall of Fame in Texas."
Finally, you might want to mention that voting in favor of this bill would show a real disconnect between Main Street, USA, where the median family income is $56,500, often with no benefits at all, and East Capitol Street, in Washington, where legislators make $150,000+++ a year, plus generous health and retirement benefits. (Many have working spouses as well.)
We'll keep updating this page. In the meantime, do whatever you can to bankruptcy-proof yourself ... now. Even in good economic times, over a million people a year declare bankruptcy. This year, the number will be much higher. We offer lots of practical stratgies for taking control in our book, Invest in Yourself. And click here for our crash course on protecting yourself from unexpected financial difficulties.