Bankruptcy Reform-- another indicator of who fights for us

[andym]

The Bankruptcy Reform bill of 2001 was sponsored by the credit card industry to help them recover more money from debtors. The idea is that if you still had some income you wouldn't be allowed to file a Chapter 7 bankruptcy, which completely discharges your debt. Instead they would force you to file a chapter 13, whereby you would have to pay it off gradually, working like an indentured servant for the financial sector. Of course, there is a minority of people who do abuse the bankruptcy law, but the vast majority really need this kind of protection. For example when the economy turns sour and they have to take a lower paying job, these people could no longer completely discharge their debt. Also, under the new law, presumptive small businessmen would be less likely to use their credit cards to initiate a new business, if they thought that it would mean enduring longterm financial ruin. I believe it is a very telling indicator of how a candidate feels about excess corporate influence and how much they support the average citizen. BTW, President Clinton vetoed a similar bill in 2000.

I know the IWR vote and the Patriot Act are popular indicators of fighting for the people against Bush, but I think this bill is also a very good indicator.

Now what is the position of the candidates on this bill:

Kerry voted against it. He gets points in my estimation.

Edwards voted for it. Surprises me that he did. Does he still feel it was the right decision?

How does Dean feel about this? Clark? Kucinich? Sharpton?

Update: Kucinich opposed it!

[gulfcoastliberal]

1. Good Point...

I agree; this is very pro-business/anti-family legislation.

[lcordero]

2. This is what I could find

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=107&session=1&vote=00036

http://thomas.loc.gov/cgi-bin/bdquery/z?d107:HR00333:@@@X

http://clerk.house.gov/evs/2002/roll484.xml

It hasn't passed through but these are some of the votes related to it.

[andym]

3. Wow, from the senate vote very few opposed it!

Wow, from the senate vote very few opposed it!

BTW Feingold and Wellstone did oppose it!

Kucinich opposed it!

[loftycity]

6. This bankrupcty thing scares me.

I think they want debtor's prison back...and they will get it.
If the fianiancial markets thought about this.. they probably have.
Most people file because of lack of health insurance.
The insurance industry--not insuring anyone for Health is just plain murder. Just is...

[MAlibdem]

18. The insurance companies suck

Big time. Even when they cover people it's never the full amount (I'm talking 50% deductibles.) I f***ing hate them. I do my dad's insurance billing (he's a psychologist) and they screw him and his patients out of hundreds of dollars a year, per patient.

My "life plan" at this point is get my law degree, get admitted to the bar, and sue insurance companies. So gratifying.

[Virgil]

4. That bill was a long time in the works

I really think what killed it though had something to do with judgements against people that violated the law at abortion clinics not being able to escape payment by using bankruptcy. Maybe someone knows more. That was a totally bad concept because it defeats the whole purpose of bankruptcy which is to be able to start over at $0. I cannot believe it every made it to a vote, but when industry talks, Congress listens.

[salin]

10. Schumer kept slipping that in as a poison pill...

so that it would be voted down.

Back then occaisional manevuers could be done by dems - as they had chairs of the committees. The talk of reviving this legislation - that they have been trying to pass since 1998 - and we do not have a president to veto it (as first happened) or a senate majority to amend it/control the debate on it.

[Edwards4President]

5. More info

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=99819#100744

mbali (599 posts)
Sun Jan-11-04 01:32 PM

This was far more complicated - and less damning - than made to appear ...

Edwards voted for the Senate version of the bill, but there's more to the story.

Edwards joined most Democrats, including Kerry, Schumer, Wellstone, etc. in attaching an amendment, authored by Wellstone himself, that made the Senate version much harsher on the banking industry and easier on individual debtors. At that point, it became a judgment call whether to vote for the bill or against it since voting for it, with the amendment, would force the bill to conference and increase the likelihood that it would die in conference or that conference would produce a version more favorable to individuals than it otherwise would have been. The odds of this were excellent since Leahy, Kennedy, Feingold, Schumer, Durbin were among the Democratic conferees. The banking industry and corporate interests hated this version, by the way.

And, yes, Kerry, Wellstone and 14 other Democrats voted against final passage. But all of the other Democrats, including Clinton, Cleland and Edwards, voted for final passage, largely because they knew that the version the Dems had forced would probably eventually scuttle the bill. And it has. The bill died at the end of the 107th Congress.

It's important to know all of the facts before condemning anyone for one particular vote. Senate procedure and strategy is extremely complicated and just looking at a yea or nay does not always tell the story. That's why it is sometimes misleading to try to characterize anyone's motives or views just by looking at one vote.

[andym]

7. The question is, does Edwards oppose it now

The question is, does Edwards oppose it now? I like Edwards, I think he has a reasonable chance of winning. I would like for him to repudiate his vote. The final version of that bill was still not "for the little guy".

That so many good Democratic senators voted for it is not heartwarming. I was very dissapointed with Hilary Clinton.

[Edwards4President]

13. I don't think you understand

Edwards, Clinton and the others voted for the version of the bill that they knew would never get through. The final version of the bill may not have been for "the little guy," but they put enough stuff in it that WAS for the little guy and against the banks that the Republicans who were pushing the measure would never agree to the final version that Edwards forced through. It was an extremely clever maneuver to kill the bill and it has worked since the bill is now dead and is unlikely to be revived in this session of Congress.

There's more than one way to stop something in Congress and sometimes this is the way to do it.

[andym]

14. So Edwards would veto this bill if he were President?

So Edwards would veto this bill as President?

Good.

Has he stated this publicly?

[flpoljunkie]

16. Actually, Tom Delay is scheduled to reintroduce bankruptcy bill very soon.

in the House, if he hasn't already.

Edwards voted for the first bankruptcy bill in March 2001, when the abortion protester provision was not included in the bill.

I sincerely hope he has changed his mind about this punitive bill which is an egregious giveaway to the banks and credit card companies. I do feel that it will go nowhere in the Senate with the November presidential election looming.

The maneuver Andym describes is what Delay has engineered--an end around the legislative process to get this bankruptcy bill passed.

[FloridaPat]

8. With credit card companies charging 20-35% you can sure

bet congress is not concerned about the middle class. That should be a crime. It is a crime in most state if I charged someone that. But since I'm not a back I go to jail.

[Edwards4President]

19. Edwards has been fighting predatory lending & credit card company abuses:

Financial Companies Add to Many Families' Struggles:

Predatory Lenders Steer Families into Bad Deals. Subprime loans extend credit at higher interest rates to borrowers who are more likely to default, which can be a valuable service for individuals with poor credit histories. However, according to the CEO of Fannie Mae, half of Americans with subprime loans could qualify for prime loans and save thousands in interest and fees. On refinanced mortgages, predatory lenders use deceptive terms and abusive interest rates and fees to strip away families' equity, reducing the amount of wealth they have saved in their homes and sometimes depriving them of their homes entirely. As a result of predatory lending, Americans lose more than $9 billion each year.

People on the Edge of Trouble Targeted for Consumer Debt. Credit card companies target people least able to pay and then raise interest rates when people miss a single payment after losing their job. Almost half of all Americans pay the minimum balance or less each month, running up large interest debts. In fact, some in the credit card industry call people who pay off their balance every month "deadbeats" because they are far less profitable. Late fees alone rose from $1.7 billion in 1996 to $7.3 billion in 2001.

African-Americans, Minorities, and Senior Citizens Suffer. Minorities remain far less likely to own their home and racial discrimination endures in lending. Homeowners in high-income African-American neighborhoods are twice as likely as homeowners in low-income white areas to have subprime mortgage loans. Elderly homeowners also often bear the brunt of predatory lending. . . .

The Edwards Agenda: Helping Working Families Get Ahead

Fight Credit Card Rip-Offs: Edwards believes that credit card companies have a responsibility not to exploit families by engaging in abusive practices or burying loan terms. A bump in the road like an illness or a job layoff shouldn't lead to spiraling debt and the threat of losing a home.

End Abusive Practices that Kick Families When They Are Down. To protect families under heavy pressure from massive interest rate hikes, Edwards will require credit card companies to: (1) restore the 14-day payment grace period before late fees are imposed; (2) notify customers at least 15 days prior to unilaterally raising rates, giving consumers an opportunity to change cards; (3) determine payment due dates based on the date of the postmark, not the date of receipt of the bill by the company; (4) charge no late fees larger than the outstanding balance; and (5) restrict bait and switch practices when customers are pre-approved at one rate but then offered a credit card at a higher rate.

Require Full Disclosure and Honest Advertising. Edwards will require companies to disclose key terms in one paragraph written in plain English; disclose the limits on introductory rates and other incentives, with adequate notice so the borrower to cancel the card if desired; and disclose the full consequences of making only minimum payments, including the number of years and total dollars it will take to pay off the debt. Some have estimated that 40 percent of Americans make the minimum payment on their credit cards each month; an individual with a $10,000 balance, an 18 percent interest rate, and minimum payments of 2 percent a month would need 58 years and over $28,000 to pay off the debt.

Protect Young People from Runaway Debts. Edwards believes that we should take reasonable steps to protect young adults, in their first experiences with credit, from running up large debts. Credit card companies should only issue credit to people under 21 if they have a cosigner, an independent means of support, or have completed a financial literacy course. When credit card companies pay colleges millions of dollars to market cards, Edwards will require them to use some of the funding for financial literacy courses for the students, with reduced interest rates for students who complete them.

To read Edwards' whole plan, go to: http://www.johnedwards2004.com/helping-families-save.asp

[andym]

20. This is OK, but would it really be so difficult to go a little further

For example, off the top of my head:

1) limit the maximum rate charged to under 20% to eliminate legal usury
2) limit late charges and overlimit fees to say a maximum of $10
3) prevent credit card companies from charging customers fees that bring their total debt to more than their maximum line of credit if they are behind in their payments and mandate that the credit card companies work with their customer to help them pay off their debt, and create an optional arbitration system which defends consumers rights in such circumstances
4) limit the ability of credit card companies to change the terms of their credit agreement to at most once every say 3 years.
5) maintain the current bankruptcy law that allows people to discharge all of their debt.
6) Require that cc companies notify the consumer whenever they attempt to share consumer info AND require consumer consent each time before any info is shared.

Now, if I can think of a few common sense solutions, why can't many of our public servants?

The credit card industry is a very profitable one and I don't believe that they would have problem maintaining reasonable profits even with my suggestions. For example, under the current prime lending rate, cc companies would still make out like bandits with a max 20% interest rate.

BTW, #3 is key. You may have a $1000 credit line and with late fees and penalties end up owing $10000.

[Edwards4President]

21. Jeez - talk about making the perfect the enemy of the good!

John Edwards may not be taking this as far as you want right this minute, but he's pushing the issue and coming up with common sense solutions. The ideas that you have are good, but they're details - no candidate is going to propose anything in such minute detail at this point. That comes in the implementation, not in the initial proposals.

Is anyone else - either in the race or otherwise - doing anything even close to what he's trying to do? Give him som credit (no pun intended) for what he's already doing on this.

[andym]

22. As I wrote, his proposals are OK...

As I wrote, his proposals are OK. I have nothing against Edwards. I think he is a good candidate. BUT, at a minimum from any candidate, I would love to hear that not only will they do something, but they will return to this issue with a vengeance once elected. It really impacts people, as much as or more than any tax proposal, and it would cost the federal govt far less to implement real reform such as I just suggested. Such reform would really help alot of people wallowing in debt. Of course, it would face a firestorm of opposition from the credit industry.

[Edwards4President]

23. I hear you . . .

[andym]

9. Seems like the Republicans are trying to sneak it through right now

From Senator Wyden's (D-Oregon) home page
January 22, 2004

House Republicans apparently plan to use a procedural move to circumvent the Senate entirely on the Bankruptcy Reform Bill. We are told that they will take the temporary extension of ch. 12 passed by the Senate (family farm bankruptcy)and add as an amendment the language of the House-passed bankruptcy bill H.R. 975 (last year's conference report, minus the Schumer/Hyde FACE language.) They will then demand a conference.

This would avoid both the Senate Judiciary Committee and Senate floor debate.

Please do what you can to ensure that regular
order is observed, with the bill going to the Senate Judiciary Committee.

[salin]

12. The candidates - esp the senators - should sieze this and make it an

issue on the campaign trail. They should frame it as NOT being a good time to tinker with this - given the fragile economy and the number of struggling families. But if they get it talked about - there will be more counter pressure against congress to act on this bill now. As with some other issues - it needs to have the sunshine all over it so the public can keep seeing who and what are represented by the GOP.

[andym]

11. For Dean, the most I could find is that in 2001 he supported a version

For Dean, so far I found that in 2001 he supported a version
of bankruptcy reform. I'm really not happy with his stand favoring point 1. The state's rights provisions that he favored at least may dilute the power of the bill somewhat.

http://www.issues2000.org/2004/Howard_Dean_Budget_+_Economy.htm

Dean adopted the National Governors Association policy:

1. The Governors are particularly concerned that bankruptcy reform legislation address the following issues: Prevent Chapter 7 Use by Those with the Ability to Pay: Present bankruptcy law does not prevent use of Chapter 7 by those with ability to repay, nor does it require that debtors use Chapter 13, which would require them to repay creditors what the debtor can afford. The Governors strongly support federal efforts to prevent debtors from using Chapter 7 when they are financially able to pay some or all of their unsecured debts.
2. Encourage Payment of Domestic Support Obligations: Bankruptcy interferes significantly with states’ ability to assist citizens owed domestic support and to collect unpaid domestic support owed them. The Governors strongly encourage Congress to ensure that any federal bankruptcy reform requires that domestic support obligations have the highest possible repayment priority, that all domestic support obligations be nondischargeable, and that commencement of bankruptcy not prevent the continued collection of child and other support obligations.
3. Give State Claims Parity with Federal Claims in Bankruptcy: Today, bankruptcy rightly gives certain preferences in payment to federal claims against the bankruptcy estate, but similar treatment is not always accorded state claims. The Governors strongly support congressional efforts to reform the treatment of state claims in bankruptcy to provide parity of treatment with federal claims.
4. Protect the State Role: The Governors oppose efforts to preempt state authority to determine exemptions under state bankruptcy law. Currently, debtors have a right to choose between federal and state exemptions. The Governors support efforts to shape bankruptcy reform policy that protects the rights of states to determine their own standards instead of having uniform federal regulations imposed without regard for individual state needs.

[Lydia Leftcoast]

15. In Japan, where it's nearly impossible to file for personal bankruptcy,

people either commit suicide or disappear into the underground economy.

[andym]

17. Why do the Japanese tolerate this?

Why do the Japanese tolerate this? Because of the "dishonor" of
bankruptcy?

[andym]

24. Does anyone know Clark's position on Bankruptcy Reform?

EOM

[fujiyama]

25. .

[Toucano]

26. Edwards also voted against the Wellstone amendment.

That would have exempted filers who could make a case to the judge that their filing for bankruptcy was due to medical expenses.

Maybe he had a good reason, and his wasn't a deciding vote. But it seems odd to me.