New bankruptcy rules are hurting
The bankruptcy law passed by Congress five months ago to prevent people from abusing protection from creditors isn’t crimping bad-apple deadbeats; it's cracking down on people who need relief the most, argues Thomas Kostigen in his column on marketwatch.com, a Dow Jones news and analysis service.
those who most need the help
Out of more than 60,000 clients of credit counseling firms under the new law’s requirement, fewer than one out of 20 consumers, or 3.3%, qualified to pay off their debts under a debt management plan, with the remaining 96.7% requiring the same bankruptcy filing that they would have needed under the old law. The National Association of Consumer Bankruptcy Attorneys reports that four out of five would-be bankruptcy filers were forced into financial crises by forces beyond their control, such as the loss of a job, medical expenses or the death of a spouse.
Massachusetts Senator Edward Kennedy along with other Democrats and consumer groups warned that the law would be overly harsh on ordinary debtors, while allowing loopholes for wealthy debtors and corporations.
“It's time to re-think what Congress clearly didn’t do before it enacted the bankruptcy law of 2005: who the law affects the most,” Kostigen urges.
Read the column here.
Update: In an angry ruling, a federal bankruptcy judge has written that "the parties pushing the passage of the Act had their own agenda ... to make more money off the backs of the consumers in this country. ... To call BAPCPA a 'consumer protection' act is the grossest of misnomers." (He's talking about the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.)
Read the opinion here and the AlterNet article here.