Bankruptcy Attorneys

The House gave final passage yesterday to legislation intended to make it harder for consumers to wipe out debt through bankruptcy, clearing the way for President Bush to sign the bill into law as he has promised to do.

Lawmakers voted 302 to 126 for the bill, which is identical to a measure the Senate passed last month. It would make the most significant changes to bankruptcy law since 1978. Its passage by Congress is a victory for executives in the credit card, retail and auto financing industries who have pushed it for nearly a decade. They argue that the changes are necessary to weed out abusers of the system who use Chapter 7 bankruptcy protection to shirk debt they can afford to pay
“This bill will help restore responsibility and integrity to the bankruptcy system by cracking down on fraudulent, abusive, and opportunistic bankruptcy claims,” said House Judiciary Committee Chairman F. James Sensenbrenner Jr. (R-Wis.).

Sen. Charles E. Grassley (R-Iowa), the chief sponsor of the bill, said the bill would preserve two key principles: Those able to pay some of their debts would have to do so, and those who need a fresh start would still be able to extinguish their debt through bankruptcy.

Consumer advocacy groups and many Democrats, who fought the legislation, disagree, arguing that lenders’ liberal credit policies and aggressive sales practices have been equally responsible for putting many Americans over their heads in debt. They say the new legislation would be too harsh on individuals driven into debt by job loss, sickness, divorce or military duty. That is especially unfair, they say, because the bill would preserve loopholes that enable wealthy individuals who file for bankruptcy to shield unlimited amounts of money in complex trusts and in multimillion-dollar homes in states including Texas and Florida.

“The big winner under the new law will be credit card issuers, whose reckless and abusive lending practices have driven many Americans to the brink of bankruptcy,” said Travis B. Plunkett, lobbyist for the nonprofit Consumer Federation of America. “Now that Americans in bankruptcy will have to pay more back to creditors, they have a right to expect that credit card companies will lower their interest rates and fees. We will be watching credit card companies closely to see if they will become more responsible corporate citizens in return for this unprecedented gift from Congress.”

This entry was posted on Monday, February 25th, 2008 at 7:09 am and is filed under Bankruptcy, Bankruptcy Attorney. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.