Gross! How to take a horrible bill and make it
genuinely loathsome. Look at this -- look at what they are doing with this
The bankruptcy bill was a gift to big bankers and credit card
companies to begin with, in return for copious showers of campaign
contributions to our very own elected representatives in Congress. Same old, same
The big lenders, the kind who can legally jack up your interest rates
at any time for any reason (read that fine print, folks), have a
problem. More and more Americans are going broke. So they declare bankruptcy
under Chapter 7, which wipes out their credit for 10 years, but gives
them a chance to start over without debt. So, naturally, the banks want
to make it harder to declare bankruptcy by forcing people to file under
Chapter 13, only a partial diminution of debt.
According to a study by two associate medical professors at Harvard,
published in Health Affairs, bankruptcies are indeed shooting up.
Between 1981 and 2001, personal bankruptcies rose by 360 percent, but those
caused by medical debts rose an astronomical 2,200 percent. Only job
loss now slightly leads medical crisis as the reason for bankruptcy --
it's ahead of divorce.
Another cause, as well the usual usury, is that the card companies
push accounts on people whose credit is only marginal -- your teenager has
doubtlessly been offered several. Ooops, it turns out many of those
with shaky credit can't pay (!), so of course the banks want the law
changed even more in their favor. Poor little card companies -- only $30
billion in profits last year.
If you have not lived long enough to know that anyone can be hit by
financial catastrophe, just wait. Your job, too, can be outsourced. And
if you think health insurance can keep you out of financial trouble if
you get sick -- surprise! Three-fourths of those who filed for
bankruptcy because of medical costs had health insurance.
The study in Health Affairs reports that the middle class actually
suffers most from the health crisis, accounting for 90 percent of all
medical bankruptcies: Drug costs alone drive many into bankruptcy.
In a classic example of moral accounting, Sen. Charles Grassley,
R-Iowa, the bill's chief sponsor, said, "People who have the ability to
repay some or all of their debt should not be able to use bankruptcy as a
financial planning tool so they get out of paying their debt scot-free,
while honest Americans who play by the rules have to foot the bill."
That's a startling example of the "straw-man" school of argument. The
study by the Harvard profs shows that in the two years before filing
for bankruptcy, 19 percent of families went without food, 40 percent had
their phone service shut off, 43 percent could not fill a doctor's
prescription and 53 percent went without important medical care.
So, who are these feckless, irresponsible moochers using bankruptcy to
avoid paying legitimate debts? Why, look at this: The New York Times
reports "legal specialists say the proposed law leaves open an
increasingly popular loophole that lets wealthy people protect substantial assets
from creditors even after filing for bankruptcy."
What, our Republican Congress passing a bill that favors rich people
at the expense of "honest Americans who play by the rules and have to
foot the bill"? If you have a lot of money (most people filing for
bankruptcy don't have this problem), you just put it in an asset protection
trust and walk away. You don't even have to set up the trust offshore
anymore -- five states have made it legal to set them up in their
borders, and you don't even have to live in any of the five to do it.
If you don't like that feature of the bankruptcy bill, try this one:
You may have read of the hardship on the families of those who have been
called to fight in Iraq, including, of course, severe financial stress
leading to many bankruptcies. Democrats in the Senate tried to put an
amendment on this bill exempting military personnel, and the Republicans
voted it down.
Elizabeth Warren, a Harvard law professor, pointed out in testimony
before Congress that the bill assumes everyone is in bankruptcy because
they're spendthrifts. "A family driven to bankruptcy by the increased
cost of caring for an elderly parent with Alzheimer's disease is treated
the same as someone who maxed out his credit cards at a casino. A
person who had a heart attack is treated the same as someone who had a
spending spree at the shopping mall. A mother who works two jobs and who
cannot manage the prescription drugs needed for a child with diabetes is
treated the same as someone who charged a bunch of credit cards with
only a vague intent to repay."
But hey, that's the conservative idea of justice -- treat 'em all the
same, except for the rich.
Molly Ivins is the former editor of the liberal monthly The Texas Observer. She is the bestselling author of several books including Who Let the Dogs In?
© 2005 Creators Syndicate