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WASHINGTON (AP) -- President Bush signed the biggest rewrite of U.S. bankruptcy law in a quarter century on Wednesday, making it harder for debt-ridden Americans to wipe out their obligations. "Bankruptcy should always be a last resort in our legal system," Bush said. "If someone does not pay his or her debts the rest of society ends up paying them."
Many debtors will have to work out repayment plans instead of having their obligations erased in bankruptcy court under the law, which will go into effect in six months. The 500-page legislation won final congressional approval last week after being pushed for eight years by banks and credit card companies.
The measure would require people with incomes above a certain level to pay some or all of their credit-card charges, medical bills and other obligations under a court-ordered bankruptcy plan.
Bush said the new law makes the financial system fairer for debtors and creditors.
"The act of Congress I sign today will protect those who legitimately need help, stop those who try to commit fraud and bring greater stability and fairness to our financial system," Bush said.
Those who fought the bill's passage said the change will fall especially hard on low-income working people, single mothers, minorities and the elderly and will remove a safety net for those who have lost their jobs or face crushing medical bills.
The financial services industry argued that bankruptcy frequently is the last refuge of gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires who buy mansions in states with liberal homestead exemptions to shelter assets from creditors.
"In recent years too many people have abused the bankruptcy laws," Bush said. "They walked away from debts even when they had the ability to repay them."
New personal bankruptcy filings edged down from 1,613,097 in the year ending June 30, 2003, to 1,599,986 in the year ending last June 30, breaking an upward trend of recent years.
Between 30,000 and 210,000 people -- from about 4 percent to 20 percent of those who dissolve their debts in bankruptcy each year in exchange for forfeiting some assets -- would be disqualified from doing so under the legislation, according to the American Bankruptcy Institute.
Those people have six months until the law takes effect to escape the tougher guidelines. Bankruptcy attorneys have said they anticipate a rush to the courthouse.
Under the current system, a federal bankruptcy judge determines whether individuals must repay some or all of their debt.
Under the new law, those with insufficient assets or income could still file a Chapter 7 bankruptcy, which, if approved by a judge, erases debts entirely after certain assets are forfeited. Those with income above their state's median income who can pay at least $6,000 over five years -- $100 a month -- would be forced into Chapter 13, where a judge would then order a repayment
Posts: 396 | From: Blue Springs MO USA | Registered: Oct 2004
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posted
lawyers been fighting against this for a while, so he ruled against lawyers hmmmm...
Posts: 9110 | From: boston, ma | Registered: Jan 2004
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I actually think this is a rare good idea from Bush. If you can't pay back your debt, you shouldn't have spent the money in the first place. If its for a damn good reason, let them declare bankruptcy and then repay it later when they are on their feet. If its not for a good reason, too bad.
Posts: 270 | Registered: Aug 2004
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im personally glad that its harder to file bankruptcy, ive said before i work with a group of about 15 other younger guys (mid 20s)... and we all make about 40,000 a year and 9 of those 15 have filed for bankruptcy in the last 3 years, all the while going to casinos, parties, buying tons of clothes, stereos, tvs etc. but wont pay back their loans. Its nonsense and people need to learn proper money management skills. Maybe part of the no child left behind act should be several semesters on money management and savings classes. Add this rewrite to the total of 2 things bush has done that i like, the other including the lowing of captial gains taxes (which im sure benifits him and his buddies more than me)
-------------------- "Gentleman, you have come sixty days too late. The depression is over." Herbert Hoover 1930 Posts: 678 | From: currently in hiding due to investigation | Registered: Oct 2004
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Haven't read the new bankruptcy law, but what happens with all the corporations that Bush favors under said law when they file bankruptcy?
Posts: 3607 | From: NJ - Outside Phila. | Registered: Mar 2004
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I don't think you guy understand here. Consumer protection laws seem now a thing of the past. Credit card companies are now being allowed in most states to charge you 30% interest. They also have begun pulling their customers credit reports in an effort to find the smallest flaw in order to raise your once thought 9% for life account the the magic number of 30. Let me spell out exactly what is going on here the credit card companies you are dealing with will begin to pull your credit file if they see you have so much as one late payment to any of your creditors that then gives them the right to blast you with new charges. Bankruptcy may be your only escape if our loyal congress and president had not passed this law enslaving you to corrupt creditors
Posts: 396 | From: Blue Springs MO USA | Registered: Oct 2004
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The answer is easy. Throw those cards away. You would be surprised how much better your life will be. Not to mention more buying power from the interest your now not donating to some credit leach of a banker. Sorry people, I don't like banks or insurance companies. I have had more problems with both than any other businesses in my life. America is addicted to both. "We can't live without credit" or "We all need insurance". Want to make a bet? We don't need either one and its time to take a stand! You can do it. Pay off those debts and use cash.
Posts: 474 | From: Central PA | Registered: Oct 2003
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quote:Originally posted by Sgt. Steiner: I don't think you guy understand here. Consumer protection laws seem now a thing of the past. Credit card companies are now being allowed in most states to charge you 30% interest. They also have begun pulling their customers credit reports in an effort to find the smallest flaw in order to raise your once thought 9% for life account the the magic number of 30. Let me spell out exactly what is going on here the credit card companies you are dealing with will begin to pull your credit file if they see you have so much as one late payment to any of your creditors that then gives them the right to blast you with new charges. Bankruptcy may be your only escape if our loyal congress and president had not passed this law enslaving you to corrupt creditors
The reason interest is high is because of, guess what...BANKRUPTCY. Just like the reason insurance is where it is, yep you guessed it, frivolous law suits.
I had a friend of mine who had a side business that failed and an attorney told him to get ALL his debts and just file for bankruptcy. Told him people are doing it all the time, no big deal. There's your problem.
-------------------- Roll Tide Posts: 46 | From: Mobile, Al USA | Registered: Feb 2004
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interest rates are high because fools will pay them...got nothing to do with costs... they won't go down now, the profits at the credit card co's will just go up....
bankruptcies last year cost 400$ per credit card holder....
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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Credit card profits in the last three months of 2003, topped $7.0 billion and may have exceeded $30 billion for the year. Among the nation's largest issuers, profits grew 17% on average in the fourth quarter.
According to R.K. Hammer Investment Bakers, credit card profits hit their highest level in fifteen years during 2003, driven primarily by lower cost-of-funds. The average pre-tax, return-on-assets for credit card portfolios last year is projected to reach 4.4%, compared 4.2% for 2002, and 4.5% for 1988. Hammer says its data show that charge-offs continued to increase during 2003, but the impact has been reduced by the lower cost-of-funds
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In 2003, US consumers spent $1,530 billion on credit and charge cards and had outstanding debts in excess of $650 billion.
one of the things that keeps popping on my searches is the number of COLLEGE students carrying high card balances... they average above 2000$ ...these are people who shouldn't be getting any credit at all yet....right?
according to :Suze Orman at yahoo, The average credit card balance these days is pushing $8,000 and the typical interest rate is about 18 percent, with many folks paying even more. Can we do some simple math here, my friends? An 18 percent interest rate on an $8,000 balance is $1,440 a year.
somewhere else i found the average credit card holder has 2.8 cards...so that comes to over 20K/yr in credit balances and over 3k$/yr in interes payments...no wonder these people are going bankrupt... ..
[ April 24, 2005, 00:11: Message edited by: glassman ]
-------------------- Don't envy the happiness of those who live in a fool's paradise. Posts: 36378 | From: USA | Registered: Sep 2003
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The fact is! Credit card companies give credit to folks who should never have had it. The result is. Those who deserve it and take a risk are no longer allowed to start over.
Posts: 3417 | From: Cleveland, Ohio | Registered: Jan 2000
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The bankruptcy bill that the Senate passed earlier this month is a good news/bad news bill. It's good news for big business, and mostly bad news for financially troubled consumers.
In the not-too-distant future, consumers will have a harder time erasing their debts by filing for bankruptcy. The sweeping new provisions to the bankruptcy code will prevent many Americans from qualifying for a "fresh start" Chapter 7-style bankruptcy, in which debts are discharged. Many instead will be forced to file Chapter 13, which requires payment toward debt under a court-ordered payment schedule over three to five years.
The legislation is expected to sail through the House of Representatives in early April, land on President Bush's desk, and promptly get signed into law.
Not surprisingly, banks, credit card companies and retailers have lobbied for its passage for eight years, in an attempt to stem "abuses" from consumers who fall deeply into debt and then look for an easy way out. Their argument: The number of bankruptcy filings has skyrocketed in recent years. Roughly 70 percent of bankruptcy filers go for Chapter 7 because it effectively wipes the slate clean for debtors, though it stays on their credit records for 10 years from the date filed.
Last year, more than 1.1 million consumers filed under Chapter 7, while only half that number did in 1994, according to the American Bankruptcy Institute, a research group.
This is not a clear-cut story of right vs. wrong, where protagonists and antagonists can be clearly identified. Surely some consumers use credit cards to spend, spend, spend without any intention of repaying their debts. But I don't believe this is usually the case, and I'm not inclined to see this as the story of greedy, deadbeat consumers who have been abusing the hapless credit card industry. In fact, I would tend to cast the credit card industry in the role of evil villain, mainly because of its widely adopted universal default policy that jacks up interest rates to 25 percent and higher if consumers make one billing misstep with an unrelated creditor.
But credit cards are a necessary evil these days, one that we should do everything in our power to control. We should all deal with debt responsibly -- by not taking too much on and by paying it off promptly.
However, sometimes life throws unexpected financial hardship our way, whether it's in the form of high medical bills, job loss or divorce. Critics of the legislation say that it will remove a safety net for Americans who suffer from such calamities, and will keep them mired in debt for life.
Posts: 396 | From: Blue Springs MO USA | Registered: Oct 2004
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Where in the Constitution does it say that we should protect your right to have fiscal irresponsibility?
-------------------- Long term investments are simply day trades that didn't work. (except QBID :P) Posts: 292 | From: Worcester, MA | Registered: Apr 2005
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