Bush’s New Bankruptcy Law, or How Credit Card Companies Plan to Milk Middle America Dry

Imagine your wife develops a serious illness and your family runs up huge medical bills.  Your debts are so great that you can never repay them.  Not only can’t you pay the doctors, but since your wife can’t work anymore you are having trouble keeping up with the mortgage, car payment and credit cards.  You fall behind on one of your credit cards and then all your credit cards write you to say you are a credit risk and that they are now going to charge you the “default rate” on your bills – which is around 30 percent.  Now what was once a bad situation has become unbearable.  There is no way you can stay afloat. 

Think bankruptcy is a way out?  Think again.

Thanks to President Bush and the Republican Congress, you as a consumer probably can no longer do what many businesses routinely do.  You probably can no longer get a truly fresh start by declaring bankruptcy and may find yourself chained to your debts for the rest of your life.

The Republicans have told us that the bill which Bush signed in April 2005 was needed to keep gamblers, compulsive spenders and other irresponsible types from walking away from their debts.  They told us that deadbeats that can pay they bills but who choose to game the system by filing for bankruptcy cost honest consumers millions of dollars extra in the form of higher prices and higher interest charges because businesses have to recover the money they lost because a few people manipulate the law to get out of their financial obligations.

The problem with this argument is that most people file for bankruptcy because they can’t pay their bills and not because they don’t want to pay.  Also most people who file got into trouble because of a life-changing event such as a major illness or involuntary loss of employment.  Yes, spendthrifts and deadbeats have gamed the system, but most people who file for bankruptcy have fallen behind due to no fault of their own.  What the Republican bankruptcy law does is deny honest people who have fallen on hard times the opportunity to start over again.