The Bankruptcy Reform To Pass

Bend over folks and let the bankers shaft you again. UNable to get out of
debt, priceless. For everything else there is Master card.

Carl F. Worden OCTOBER 05

$30 billion dollars in profits last year alone buys a lot of congressional votes, and the credit card industry boards will be hoisting a few beers today to a president and congress that have all but finished the paperwork
for them.

The Bankruptcy Reform Bill went down to defeat early in Bush’s first term,
almost entirely due to an amendment Democrats slipped in that denied
bankruptcy to abortion protesters who had been successfully sued for
millions of dollars in damages. That brought on enough negative Republican
votes to kill the measure then, but the bill’s supporters learned their
mistakes from last term and didn’t repeat them this time.

This time, the Bankruptcy Reform Bill got passed largely under the radar,
and with no amendments attached at all. Last term, the proposed legislation
got a lot of front-page news. This time it was hard to find any mention of
it on Fox, CNN or any other frontline media.

If you wanted to follow the Bankruptcy Reform debate this time, you had to
watch C-Span, and there you would have discovered the most onerous of facts
surrounding this bill.

In a nutshell, the Bankruptcy Reform Bill is largely a bankruptcy denial
bill. It forces people who don’t “qualify” for complete discharge of debt
under Chapter 7 to be forced into Chapter 13, where they are required to pay
off their debts over time – if ever.

Item 1: While this bill was being debated, another bill that would have
placed a ceiling of 30%(!) on the interest credit card companies could
charge, was soundly defeated by the same Republicans intent on passing a
bill making the discharge of credit card debt extremely difficult if not
impossible for most people.

Item 2: Democrats wanted to amend the bill to allow military, National Guard
soldiers and reservists returning from duty in Iraq and elsewhere to beexcluded from the new restrictions. The Republicans overwhelmingly defeated it.

Item 3: Democrats wanted to make exceptions for people filing bankruptcy due
to unexpectedly high, uninsured medical costs. The Republicans
overwhelmingly defeated it.

The Bankruptcy Reform Bill is expected to easily clear a Senate vote today,
where it is expected to sail through the House of Representatives and be
signed into law by President George W. Bush the moment it casts a shadow on
his desk.

I watched Senator Dick Durbin of Ohio give one of his most poignant and
plaintive speeches today, begging the Republicans to, at the very least,
include the amendment for military personnel returning from fighting the War
on Terror.

You should have seen the faces of the Republicans as they heard Durban’s
pleas. They were as stone-faced and unmoved as any hardened death-row guard
carrying out an execution. They were intent; they were going to go through
with this, and nothing short of an act of God was going to stop them. Well,
nothing did.

There is nothing in the Bankruptcy Reform Bill that will benefit the people
of the United States. Small businesses will realize little if any benefit
from it. It is a bill almost entirely designed to protect the credit card
industry from citizens who are about to hit the wall financially, and they
got it passed just in time.

American credit card debt has never been higher, and the hemorrhaging of
American jobs and prosperity to other nations after the passage of NAFTA &
GATT in 1994 continues unabated to inexorably suck the economic strength out
of America. Our dollar is steadily losing value against other denominations
like the Euro.

Back in June of 2002, I advised my readers to “Go For The Gold”, which was then selling
at $320.00 an ounce. Today, gold is selling at $442.00 an ounce, an increase
of 38%. That is a direct reflection of how much value the American dollar
has lost. Not too long ago, I warned of a very troublesome trend in America:
The use of home equity to make purchases like cars and paying off credit
card debt. Americans who own homes have been watching their equity rise
meteorically, while sucking out that equity through refinancing at
historically low interest rates.

What happens when the housing bubble bursts, sending values south, and when
interest rates begin to rise? Those people who are spending 120% of income
through refinancing and credit card debt are going to hit the wall. So is
our economy! They are going to lose their homes, either before or after
bankruptcy that forces them into Chapter 13 to pay off debts they may not be
able to pay.

What then? If they cannot discharge their debts through Chapter 7 due to
this bankruptcy “reform” legislation, and if they cannot make the payments
under Chapter 13 reorganization, then what? If they still own a home at that
point they’re going to lose it! If they have any assets at all that can be
liquidated, they’ll lose those too.

“Good!” You say. This is a problem with morality in America. These people
shouldn’t have taken on the debt if they couldn’t afford to repay it, right?
Well, it’s not that simple. For example, 35% of the people who filed for
Chapter 7 bankruptcy protection, did so because of excessive medical bills
their medical insurance didn’t pay.

I’m in the insurance business, and I see inadequate medical insurance
offerings come across my desk all the time. Clients ask me if I have
anything to offer them, and I tell them I don’t, because I wouldn’t sell
that garbage to my worst enemy!

We’re in a health insurance crisis affecting millions of Americans, and as
Senator Durbin pointed out today on C-Span, instead of passing a medical
insurance reform bill designed to help all Americans, Congress rushed
through a bankruptcy reform bill designed specifically to protect the credit
card industry and slam the door in the faces of Americans who can’t pay off
the medical bills to save the life of their child!

A few years ago, I was traveling south on Interstate 5 in California, when I
spotted a couple of young boys who had gotten their car stuck on the
shoulder of the highway. I stopped to give them assistance.

It was so hot that day – probably 105 F or higher. The kids had stopped
their car because it was overheating. One tried to open the cap on the
radiator and it had burst open from the pressure, spewing boiling hot water
all over his forearms and bare chest. The skin was hanging off his arms!

I’ve never seen two kids in more pain and felt more helpless. I had no tow
chain to pull them up to the roadway. They said a California Highway Patrol
officer had happened by earlier, but they had no money for a tow, so he left
them there.

I gave the kids $60.00 cash and said I’d send them a tow truck.

I drove no more than one mile to a gas station that had a tow truck parked
in front of it. I told the station owner I’d given the kids $60.00, and all
he had to do was drive one mile and pull them onto the road. I told him how
seriously scalded one of the boys was.

To my dismay, the tow truck owner refused to go to their aid. He wanted
$85.00, and if they didn’t have a credit card to pay the balance, that was
just tough. They could stay there in that hot sun and die, for all he cared,
because in his words, “I don’t work for free!”

I returned to the boys to find another driver had stopped for them. The
driver had a tow chain and had just pulled them back onto the road. I told
them to keep the money I’d given them to get medical care.

I relayed that experience because I saw the same merciless, hard look in the
eyes of those Republicans hearing Senator Dick Durbin’s pleas today, as I
saw in the eyes of that tow truck owner. It didn’t matter why, and it didn’t
matter what circumstances were existent; they were going to fulfill their
campaign promises to those credit card companies, and nothing was going to
stop them.

It didn’t matter if it was an Army Reservist who had left his normal job and
been forced to serve two tours of duty in Iraq and was now returning home
missing a leg! If his family was faced with financial ruin, those senators
were not going to cut that family any slack in the Bankruptcy Reform Bill –
or for anybody else, for that matter.

Bankruptcy Reform is a done deal, folks. Keep your cash and equity handy if
you are one of the 3-4% of Americans who are fiscally wise and fortunate,
because homes are going to be auctioned off at pennies on the dollar. People
who think they’ve got nothing to worry about with the passage of this bill
today will find themselves hapless victims of it within ten years – mark my
words – and when you remember that the overall prosperity of Americans in
general benefits everyone in America, I can assure you everyone in America
will suffer in one way or another from the passage of this horrendous bill.

Take a gander at this except from the Los Angeles Times:


WASHINGTON - 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...


For those still encumbered by the “morality” issue of bankruptcy, try to
remember that Usury, the act of charging excessive interest on loans, is
also considered sin in God’s view. Carl F. Worden