Sovereign Immunity and Bankruptcy

[tccoyle]

The new law will give much more power to creditors to go after debtors, worse, the law will prevent debtors from obtaining protection. Yet, the creditors MUST use the system to get to the debtors...unless you are a State Government. Then, you don't have to use the bankruptcy system, as a matter of fact, the bankruptcy courts can not force States to engage in bankruptcy cases. Over the last couple of years, circuit courts have ruled that States are protected from the Bankruptcy court. That means a State can violate the stay, seize assets and ignore bankruptcy law with impunity. One court, the 6th Circuit disagreed and the case (along with several others) have been argued in the Supreme Court this month. The outcome of that is likely to further remove the States from the reach of the bankruptcy court. Why should you care? Because if one creditor can 'opt out' of the bankruptcy system, maybe others can also.

One of our clients receives a disability retirement income from the State. Upon filing bankruptcy, the State continued to withhold funds from that disability retirement income to repay a debt. They have claimed sovereign immunity from their violation of the bankruptcy law and they might win....

Their income is far below the median income but they are in a chapter 13 to try and save their home. If they lose (and any appeal will end the process - they do not have the money to fight) they will lose their home. They have NO unsecured debt.

No one wants to file bankruptcy, but when it happens, you have to have a level playing field...the States and soon creditors will get a field no consumer will have a chance on...

http://www.cazelaw.com/newlaw.htm
Tracy

[NVMojo]

1. And it's all thanks to Harry Reid, the sell out, along with his reprick

cronies.

[Wapsie B]

2. That's what so many repugs seem to want.

People just aren't going to sit down and take this for long. With the economy in the toilet for many of us bankruptcies are not going to go down in number. I just have to wonder what the fallout from all this will be? I'd love to think it will be something that bites the gop in the ass in a big way. But then I love to dream.

Welcome to DU!

[NickofTime]

3. C-Span's Washington Journal

Had a bankruptcy segment this morning. The new law is going to hit people who have an income above the median for their state, and who can repay at least $1,000 per month for six years the hardest. The credit card companies have never been more profitable. When someone declares bankruptcy, they write off the unsecured (i.e. credit card) debt. With this new law, they'll get back some of the money they wrote off, since more people will be forced into Chapter 13 (repayment) rather than Chapter 7 (discharge of debt, elimination of debt).

In short, times are tough, and they're going to get tougher. So, the tough had better getting going out of debt. You cannot live with the credit card companies on the playing field that will exist after the new bankruptcy law. Hard though it may seem, if you want to stick it to the credit card companies, boycott them.

Here's one blueprint for getting out from under debt.

http://clarkhoward.com/topics/credit_debt.html">Here's more good advice on paying off, i.e., boycotting, your credit card companies.

[TaleWgnDg]

4. Hey, Tracy, welcome to DU . . . n/t