Personal Bankruptcy Followup
I received some interesting Emails regarding Personal Bankruptcies Soar. I would like to share a few of them with you.
It's actually worse than you can possibly imagine. The purpose of the bill is to make sure that no one files a Chapter 7 (which forgives all debts) bankruptcy. Every page you turn in the bill has another "kick 'em when they're down" clause intended to make it more difficult, more expensive, and more time consuming. My wife is a bankruptcy lawyer, so I've heard it all.
But then, what would you expect? The banks and credit card companies spent $400 million on bribes...er, campaign contributions...over an 8 year period to get this bill. Lawyers from banks wrote the bill. It is a mean, nasty, vicious, unconstitutional bill that was bought and paid for. When Bush signed the bill, he turned to Charles Grassley (the senator who sponsored it) and said, "It's a done deal."
The AARP is the only organization that wins in this deal. In return for not lobbying against the bill, the law says Social Security (and unemployment benefits) cannot be counted as income. That will help retirees, currently choosing between food and drugs, to get Chapter 7 bankruptcies.
Today, just one week before the new bill goes into effect, no lawyer can file a case under the new law. There are no forms, no approved local credit counselors (three nationwide services, one in Texas and one in Florida, of course, but no local agencies), no software packages yet, and the bill has yet to clear the committee that is supposed to clean up all the inconsistencies. So, on October 17, nobody will be able to file bankruptcies -- the old law will have expired, and the new law won't be ready yet.
Look for lawyers to abandon their bankruptcy practices. The law is so complex and filled with penalties for lawyers, that it won't be worth it. Can you imagine telling defense lawyers that they can't advise clients about the best defense? Or making a defense attorney swear under penalty of disbarment that every document filed by the client is absolutely true? Or, as Mish said, "Another provision of the bill places the burden of proof for bankruptcy on the debtor's lawyer, requiring the attorney's signature on the petition and verification that they have investigated the claim sufficiently and found it to be solid." Bankruptcy lawyers have these and more dumb rules hanging over their heads, any of which can lead to disbarment. The purpose is to make it impossible to get a bankruptcy by making bankruptcy lawyers give up the profession and go chase ambulances or do divorces instead.
The bankruptcy bill is the worst piece of legislation ever purchased in the history of the United States. Not only is it a sham, it proves that the Congress and the Presidency are both for sale. Price for a bill these days: $400 million will get you whatever you want.
My wife isn't giving up her practice. She plans to expand it into fair debt collection. That's when a bank or credit card company harrasses a debtor in violation of the law, and my wife hits them with a big fat lawsuit. Not only is it poetic justice, it couldn't happen to a nicer bunch of vicious bastards.
By the bye, did you realize that increases in bankruptcy fees are going to pay tsunami victims? Not hurricane victims, mind you. You won't find that tidbit in the bankruptcy law, though. It was written into the Tsunami Relief Act to hide it from us.
Rich from Iowa
Very interesting article on bankruptcy. Candidates should be advised that it could be years before they can obtain a credit card. I was in bankruptcy last year for 6 months due to a 2 million dollar judgment against me. My credit was perfect. Citibank cancelled my card (it had no balance) and now they will not issue a new one. No one will give me a card.
From Sir Charles:
For once, fellas, I am speechless. About the only thing made in the US of A is whiskey and gunpowder anymore so no wonder the US of A is broke,,,so what should one do??? drink more whiskey or eat more gunpowder??? or both???
Sort of confused about that last one but it seemed interesting enough to post.
I didn't particularly have this planned, but then again gall bladder surgery with no insurance wasn't planned either.
With that hanging over my head, the news that my credit card's minimum payments would soon double was the final straw. I would have been stupid to delay my decision a minute longer. It took me awhile to accumulate the funds, but it is over. I kind of blind sided the credit card companies because I had never been late and had been attempting to pay the amounts down. They on the other hand tried to blind side me with a doubled minimum payment probably hidden in some find print.
What really bothers me is that I was charged four times more for uninsured gall bladder surgery than my friend paid who had insurance. The excuse the hospital gave me was so laughable I couldn't believe it. They tried to convince me my bill was higher because others pay an insurance company and the insurance company contracts to pay them 1/4 the cost? Since I wasn't paying an insurance company I had to pay four times that? Insurance companies contract, but they don't pay hospitals retainers, so this made no sense to me at all.
My work friend is filing today or tomorrow as she has insurance but her son's overnight emergency room bill was $8,000 more than her insurance paid? The medical field and HMO's are out of control.
I never thought about the credit card companies cutting their own throats with this new legislation. I like the idea. After missing one payment my interest rate went to 30.99 percent. Rotten SOB's. I bet Abraham Lincoln is rolling over in his grave. He thought he ended slavery.
Thanks for your thoughtful articles.
The New York Times reported on last minute filings in the October 15th article Debtors Throng to Bankruptcy as Clock Ticks
It may have looked like a frenzied rush for rock concert tickets, but the thousands of people standing patiently in line for hours outside federal courthouses were waiting to file for bankruptcy. It was the final workday before a tough new federal law takes effect.
"I have a lot of medical bills and, unfortunately, I can't pay them," said Mercedes Estrada, a legal assistant and single mother of three young children from the Bronx, who rattled off a list of more than $50,000 in debts. "It's overwhelming and stressful."
"This is a day of last resort," added Stephen L. Morris, a lawyer bringing his clients' bankruptcy petitions to the court in Lower Manhattan.
Through Oct. 8, consumers had filed more than 1.47 million bankruptcy petitions, a 19.4 percent increase over the same period in 2004, according to Lundquist Consulting, a company in Burlingame, Calif., that compiles bankruptcy statistics. Almost 103,000 petitions were filed in the first three days of this week alone.
"We have never seen anything like this," said Barbara J. May, a consumer bankruptcy lawyer in St. Paul. "We knew it would be an upswing, but this is pandemonium."
In Los Angeles, the lines were thin because clerks took completed petitions at makeshift outdoor stations to handle the more than 4,000 filings expected by the end of the day. Typically, the court receives 200 to 250.
"The law seems draconian to debtors," said Glenn Marston, while waiting in line at the bankruptcy court in Boston. "I don't know how it applies to me, but I didn't want to go through everything if it did."
Here is another fresh article on last minute filings. Crowds Race to File Bankruptcy Petitions
Facing a weekend deadline, thousands of people armed with bulging files of paperwork lined up at courthouses around the nation Friday to seek bankruptcy protection from creditors before a new law makes it much more difficult to shed debt.
The number of cases filed before the law takes effect Monday was expected to set not only a national record but individual records in a number of states. Some clerks said bankruptcy filing records were beaten every day this week.
In Denver, the line at bankruptcy court formed before dawn and quickly grew to more than 300 people as it stretched outside. Some pushed babies in strollers, while others sipped coffee and sodas.
Nursing assistant Colleen Christian brought her 14-year-old son to help her punch figures into a court computer after spending long days on Chapter 7 paperwork at her home in tiny Cotopaxi, 100 miles south of Denver. With credit card debt hovering around $25,000, she said she had no choice but to file before the law changed.
"It was a very hard decision because I've incurred these debts and I need to pay them," she said. "But it was such a weight."
In Chicago, people crowded the hallway outside a packed waiting room for their initial meeting with a bankruptcy trustee.
Substitute teacher Barbara Moore said she had been mulling a Chapter 7 filing for a few years when she heard about the pending law change. She was fearful medical expenses from a cancer diagnosis could add to her mounting credit card debt.
"That's when I decided to stop dillydallying," said Moore, 51. "It just sounds like it's going to be much more difficult and expensive later."
Since President Bush signed the law in April, the number of personal bankruptcy petitions has soared. Preliminary estimates expect a record 200,000 petitions to be filed this week alone, according to Burlingame, Calif.-based Lundquist Consulting, which compiles bankruptcy statistics. The firm said the current record of 102,863 was set last week.
Clerk Yvonne Evans at the U.S. Bankruptcy Court in Atlanta said all 123 employees were called in to help deal with last-minute filers.
"I can't even begin to tell you how extraordinary this is," she said. "The line is wrapped all the way around the 13th floor. It's wild."
Filings were allowed in person through Friday, though attorneys making electronic court filings have until midnight Sunday.
Christian, whose husband just found work nine months after losing his job, said bankruptcy will enable her to pay what she can. "I think everybody should be able to wipe the slate clean and start over," she said.
Similar stories could be heard at courthouses across the country.
"Similar stories could be heard at courthouses across the country" huh. Well fancy that.