# U.S. Bankruptcy Bill’s March of Triumph **URL:** \ **Category:** Great Debates\ **Created:** [March 9, 2005, 4:07pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679 "2005-03-09T16:07:50Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [March 29, 2005, 4:11pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/61 "2005-03-29T16:11:42Z")
> [@chairmanoftheboard](#): > > Agreed that that point is debatable, but there lets look at some of the other good things to come out of this bill. The change in the Homestead Act for example. You now have to live in a state for 3 years before declaring banruptcy, so no more moving to Florida at the last minute. Granted, that’s one good aspect of the bill: deadbeats can’t shop around for the best state to weasel out of paying their bills. And I don’t think anybody here is denying that there has been some abuse of the bankruptcy laws. But there’s so much bad in this bill that the good doesn’t even come close to outweighing it. The whole point of the new law is to deny bankruptcy protection to millions of people at all income levels who may badly need it to protect the profits of an industry that isn’t in any danger whatsoever. The “median income” requirement is a joke, as the new requirement to certify and document a filer’s claims to the _n_th degree will make attorneys’ fees prohibitively expensive for many if not most people. Look, if deadbeat filers became a problem in the last couple of decades, then the lending industry created the problem with bad or downright reckless lending practices and wants the government to protect it from its own stupidity and greed. And if deadbeats aren’t the problem, if the problem is people who have been financially ruined by catastrophic illness, divorce, etc. then the lending industry is basically preying on desperate people. Either way, it stinks. ---
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [March 29, 2005, 6:47pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/62 "2005-03-29T18:47:19Z")
> [@Kimstu's cite](#): > > Today, by contrast, medical-related debt is the second leading cause of personal bankruptcies, topped only by job loss. I’d like to know how it’s possible to know this? It seems logical that the causes of bankruptcy might be: 1. Job loss. 2. Medical bills. 3. Divorce. But, it also seems to me that this is impossible to prove, or even get any reliable data on. When you declare bankruptcy, does the paperwork you fill out ask you for a reason? Is this reason what we are making these assumptions from? If so, I’d say that’s unreliable info at best. Also, even if someone did lose their job or go through a divorce, that only causes a bankruptcy if you are already living beyond your means. I’d say that the average household carrying $7,000 of credit card debt is the leading cause of bankruptcy. Just because it takes a layoff or a divorce to nudge these people over the edge doesn’t make them innocent of making unwise financial decisions that truly led to the bankruptcy option. ---
**Author:** ![chairmanoftheboard](https://avatars.discourse-cdn.com/v4/letter/c/c5a1d2/32.png) [@chairmanoftheboard](https://boards.straightdope.com/u/chairmanoftheboard)\ **Post date:** [March 29, 2005, 6:47pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/63 "2005-03-29T18:47:40Z")
Again, I just haven’t seen an arguement for why those who are most needing would be denied protection from Chapter 7. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 29, 2005, 7:01pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/64 "2005-03-29T19:01:31Z")
> [@Debaser](#): > > I’d like to know how it’s possible to know this? > > It seems logical that the causes of bankruptcy might be: > > 1. Job loss. > 2. Medical bills. > 3. Divorce. > > But, it also seems to me that this is impossible to prove, or even get any reliable data on. When you declare bankruptcy, does the paperwork you fill out ask you for a reason? Is this reason what we are making these assumptions from? If so, I’d say that’s unreliable info at best. **Debaser** , bankruptcies list the creditors, and from that data you can determine which are medical expenses. Which is what [a recent study by Harvard University’s law and medical schools](http://orlando.bizjournals.com/orlando/stories/2005/03/28/story2.html) did and confirmed Kimstu’s claim: > [@](#): > > Researchers from Harvard University’s law and medical schools have found that medical problems contributed to about half of all bankruptcies in America last year. Applying those findings to personal bankruptcies in Florida, the researchers estimated 44,000 of the 87,000 bankruptcy cases filed in 2004 were caused, at least in part, by medical problems and the ensuing avalanche of bills. ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [March 29, 2005, 7:41pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/65 "2005-03-29T19:41:36Z")
> [@Debaser](#): > > Also, even if someone did lose their job or go through a divorce, that only causes a bankruptcy if you are already living beyond your means. I’d say that the average household carrying $7,000 of credit card debt is the leading cause of bankruptcy. Just because it takes a layoff or a divorce to nudge these people over the edge doesn’t make them innocent of making unwise financial decisions that truly led to the bankruptcy option. Nor does it absolve the lenders of foolishly and greedily granting unsecured loans to people with obviously shaky finances. Why are you so quick to let the lenders off the hook, but not the borrowers? It takes two to tango. Why should the lenders not suffer the consequences of irrresponsible lending practices? ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [March 29, 2005, 10:36pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/66 "2005-03-29T22:36:01Z")
> [@chairmanoftheboard](#): > > Again, I just haven’t seen an arguement for why those who are most needing would be denied protection from Chapter 7. I gather you are defining “most needing” as people with low incomes. In fact, the very poor have the least need for bankruptcy protection, since they will usually have no assets worth a creditor’s time and money to pursue. It is folks with a middle class income level who are most in need of bankruptcy protection if they are to get back on their feet again, and it is that group of people which this bill attacks. ---
**Author:** ![chairmanoftheboard](https://avatars.discourse-cdn.com/v4/letter/c/c5a1d2/32.png) [@chairmanoftheboard](https://boards.straightdope.com/u/chairmanoftheboard)\ **Post date:** [March 30, 2005, 4:47pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/67 "2005-03-30T16:47:12Z")
By most needing I wasn’t referring to income brackets, but people having to declare bankruptcy because of medical reasons, divorce, etc… ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [March 30, 2005, 4:59pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/68 "2005-03-30T16:59:21Z")
> [@chairmanoftheboard](#): > > By most needing I wasn’t referring to income brackets, but people having to declare bankruptcy because of medical reasons, divorce, etc… Chairman, I really do need an answer to this question: If this “crisis” is due to deadbeats who just don’t want to pay their bills, as the credit card industry insists, \*why should the state protect the credit card industry from its own reckless and irresponsible practices? \* ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [March 30, 2005, 5:37pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/69 "2005-03-30T17:37:06Z")
> [@Debaser](#): > > I’d like to know how it’s possible to know this? > > It seems logical that the causes of bankruptcy might be: > > 1. Job loss. > 2. Medical bills. > 3. Divorce. > > But, it also seems to me that this is impossible to prove, or even get any reliable data on. When you declare bankruptcy, does the paperwork you fill out ask you for a reason? Is this reason what we are making these assumptions from? If so, I’d say that’s unreliable info at best. > > Also, even if someone did lose their job or go through a divorce, that only causes a bankruptcy if you are already living beyond your means. I’d say that the average household carrying $7,000 of credit card debt is the leading cause of bankruptcy. Just because it takes a layoff or a divorce to nudge these people over the edge doesn’t make them innocent of making unwise financial decisions that truly led to the bankruptcy option. Hey, yeah, they’re bad people! We don’t have to care about bad people! Mayb e we can let the credit card companies enslave their kids or something … or just beat up on their kids until they pay off. Because we don’t have to care what happens to those who are affected by the poor decisions of bad people. We’re Amurricans. ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [March 30, 2005, 5:59pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/70 "2005-03-30T17:59:49Z")
> [@Evil Captor](#): > > Hey, yeah, they’re bad people! We don’t have to care about bad people! Mayb e we can let the credit card companies enslave their kids or something … or just beat up on their kids until they pay off. Because we don’t have to care what happens to those who are affected by the poor decisions of bad people. We’re Amurricans. Ya know, I was with you all the way right up until I read the last two words. I don’t see anybody waving the flag here or lambasting the anti-reform side with accusations of cowardice or anti-Americanism. If you turned the rhetoric down a few notches, you might find a lot more people would listen to you. Think before you post. ---
**Author:** ![chairmanoftheboard](https://avatars.discourse-cdn.com/v4/letter/c/c5a1d2/32.png) [@chairmanoftheboard](https://boards.straightdope.com/u/chairmanoftheboard)\ **Post date:** [March 30, 2005, 6:43pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/71 "2005-03-30T18:43:24Z")
> [@LonesomePolecat](#): > > Chairman, I really do need an answer to this question: If this “crisis” is due to deadbeats who just don’t want to pay their bills, as the credit card industry insists, \*why should the state protect the credit card industry from its own reckless and irresponsible practices? \* Its not about protecting the credit card companies, its about stopping abuse of Chapter 7. ---
**Author:** ![RTFirefly](https://avatars.discourse-cdn.com/v4/letter/r/c77e96/32.png) [@RTFirefly](https://boards.straightdope.com/u/RTFirefly)\ **Post date:** [March 30, 2005, 6:51pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/72 "2005-03-30T18:51:14Z")
> [@chairmanoftheboard](#): > > Its not about protecting the credit card companies, its about stopping abuse of Chapter 7. So the ‘victim’ of this abuse is Chapter 7 itself, and not the credit card companies? That’s hardly a problem in need of legislative remedy. Chapter 7 is some statutes written in the U.S. Code, and I daresay they’ll survive whatever abuse is directed at them. ---
**Author:** ![chairmanoftheboard](https://avatars.discourse-cdn.com/v4/letter/c/c5a1d2/32.png) [@chairmanoftheboard](https://boards.straightdope.com/u/chairmanoftheboard)\ **Post date:** [March 30, 2005, 7:24pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/73 "2005-03-30T19:24:08Z")
People are abusing the usage of Chapter 7 when they declare bankruptcy for no other reason than they spent more than they should have. As I have said before there are many legitimate reasonse to declare bankruptcy, and this legislation is not intended to curtail those. ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [March 31, 2005, 5:17pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/74 "2005-03-31T17:17:35Z")
> [@chairmanoftheboard](#): > > People are abusing the usage of Chapter 7 when they declare bankruptcy for no other reason than they spent more than they should have. As I have said before there are many legitimate reasonse to declare bankruptcy, and this legislation is not intended to curtail those. But what is the purpose of doing that, unless it’s to protect the creditors? And given that the new laws will greatly increase hardship for many individuals and families in the middle and lower classes, why should we protect the credit card companies if they aren’t going to exercise a reasonable caution in their lending practices–and, for that matter, make their practices less openly predatory? I mean, jeez, they could at least _pretend_ not to be cannibals … In any case, it has not been demonstrated that the old laws were being massively abused. ---
**Author:** ![chairmanoftheboard](https://avatars.discourse-cdn.com/v4/letter/c/c5a1d2/32.png) [@chairmanoftheboard](https://boards.straightdope.com/u/chairmanoftheboard)\ **Post date:** [March 31, 2005, 7:36pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/75 "2005-03-31T19:36:44Z")
I am not arguing that the credit card companies will not benefit from this legislation. But just because it will be good for them does not make it okay for people spending irresponsibly to take advantage of the system. Are you suggesting that just because banking is a profitable industry it is okay for people to essentially steal from the credit card companies? ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [March 31, 2005, 9:03pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/76 "2005-03-31T21:03:00Z")
> [@chairmanoftheboard](#): > > I am not arguing that the credit card companies will not benefit from this legislation. But just because it will be good for them does not make it okay for people spending irresponsibly to take advantage of the system. On what grounds do you maintain that this problem was so massive as to justify such Draconian measures? You keep dancing around and around this point. > [@chairmanoftheboard](#): > > Are you suggesting that just because banking is a profitable industry it is okay for people to essentially steal from the credit card companies? How did you get that out of anything I wrote? And if the credit card industry was highly profitable, then obviously there was no need to revamp the bankruptcy laws so drasticly. Are you aware that the credit card industry is guilty of deceptive marketing and usury on a grand scale? ---
**Author:** ![chairmanoftheboard](https://avatars.discourse-cdn.com/v4/letter/c/c5a1d2/32.png) [@chairmanoftheboard](https://boards.straightdope.com/u/chairmanoftheboard)\ **Post date:** [March 31, 2005, 9:43pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/77 "2005-03-31T21:43:29Z")
I don’t which measures you consider “Draconian”. What are some of the specific points you have problems with and we can discuss. ---
**Author:** ![LonesomePolecat](https://avatars.discourse-cdn.com/v4/letter/l/a88e57/32.png) [@LonesomePolecat](https://boards.straightdope.com/u/LonesomePolecat)\ **Post date:** [April 1, 2005, 12:00am UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/78 "2005-04-01T00:00:25Z")
> [@chairmanoftheboard](#): > > I don’t which measures you consider “Draconian”. What are some of the specific points you have problems with and we can discuss. One of the proposed measures requires bankruptcy attorneys to certify that all items in his clients papers (income, debts, assets, etc.) are accurate and true, making the attorney responsible if any items turn out to be inaccurate or false. This means that attorneys will find it necessary to bring in accountants, auditors, etc. to vet his client’s filing papers, all of whom will have fees of their own to charge in addition to the attorney’s. The attorney will have to raise his own fees as well to cover the additional risk he’s taking. \*\* This condition applies to everyone who files for bankruptcy, even filers whose incomes are below the state’s median income. \*\* Under present law, many attorneys can charge their clients sums such as $600 to $900 to help them file for bankruptcy. (Of course, the fees can get much higher depending on how complicated the bankruptcy is.) Under the new law, attorney’s fees will skyrocket to several thousand easily, effectively putting Chapter 7 bankruptcy beyond the reach of many if not most low income filers. \*\* This means that, because they will not be able to raise the funds necessary to file, millions of low income households will be denied bankruptcy protection as a means of debt relief. \*\* I certainly consider that draconian. Now, will you please explain how it is that the problem is so severe that the credit card industry is justified in forcing such a change in the nation’s bankruptcy law? Personally, I think it makes a lot more sense to tell the credit card industry to tighten up their lending practices and quit trying to bleed people dry. I applaud your deep concern for poor, oppressed bankers exploited by ruthless taxi drivers and hairdressers, but I’m of the opinion that Joe Sixpack types like me are in much greater need of protection from unscrupulous lenders. ---
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [April 1, 2005, 2:29pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/79 "2005-04-01T14:29:37Z")
> [@Fear Itself](#): > > **Debaser** , bankruptcies list the creditors, and from that data you can determine which are medical expenses. Which is what [a recent study by Harvard University’s law and medical schools](http://orlando.bizjournals.com/orlando/stories/2005/03/28/story2.html) did and confirmed Kimstu’s claim: OK. That makes sense. However, what about divorce and layoffs? I guess you could do a study which compares bankruptcy records to divorce and unemployment claims to see if the correlation is accurate also. I’m wondering if this is the case, or if we were just going off of what people claimed as a reason. (I’ve never declared bankruptcy, so I don’t know what paperwork is requried or even if they ask for a reason…) ---
**Author:** ![Debaser](https://avatars.discourse-cdn.com/v4/letter/d/3da27b/32.png) [@Debaser](https://boards.straightdope.com/u/Debaser)\ **Post date:** [April 1, 2005, 2:55pm UTC](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679/80 "2005-04-01T14:55:29Z")
> [@LonesomePolecat](#): > > Nor does it absolve the lenders of foolishly and greedily granting unsecured loans to people with obviously shaky finances. Why are you so quick to let the lenders off the hook, but not the borrowers? It takes two to tango. Why should the lenders not suffer the consequences of irrresponsible lending practices? > [@Evil Captor](#): > > Hey, yeah, they’re bad people! We don’t have to care about bad people! Mayb e we can let the credit card companies enslave their kids or something … or just beat up on their kids until they pay off. Because we don’t have to care what happens to those who are affected by the poor decisions of bad people. We’re Amurricans. WTF are you two talking about? My point is simple. Let’s look at Joe Smith, average American. He makes a typical salary of $35,000 a year and is carrying the typical credit card debt of $7,000 a year. He loses his job. As a result he can’t pay his bills anymore so he is forced to declare bankruptcy. I’m simply stating that the amount of credit card debt he is carrying is the primary cause of the bankruptcy, not the layoff. (Or divorce.) This is a valid point. I honestly have no idea how you have twisted it to somehow make me guilty of: - absolving the lenders of anything - saying the lenders should not suffer consequences of irresponsible lending practices - claming that those who declare bankruptcy are bad people - wanting their kids enslaved or beaten - being some kind of Amurrican, whatever that is It never ceases to amaze me how nutty the responses are some times on this board. I said nothing. Nothing even close to resembling all the crap that you two just slung at me. Where are you getting this from? [Previous page](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679.md?page=3) [Next page](https://boards.straightdope.com/t/u-s-bankruptcy-bill-s-march-of-triumph/293679.md?page=5)