Mr. Furious on the Bankruptcy “Reform” Bill

Mr. Furious has an inspired rant on the topic of the odious bankruptcy “reform” bill that finally passed Congress last April. (The thing had died more deaths than Rasputin). In particular, his wrath is directed at those relatively few Democrats who voted for the bill, creating a figleaf of bipartisanship, most notably Joe Biden (D-MBNA).

…no one had the victims of Hurricane Katrina in mind…”

Bullshit. For the NY Times to pull a Bush “no one cold of imagined this…” is absolutely, fucking outrageous.

Perhaps they didn’t know what the name of the hurricane would be, but plenty of people had exactly this kind of scenario in mind when tring to stop this odious piece of corporate shit legislation. Natural disasters and a whole host of other unfortunate situations beyond the contol of people in financial straits are now meaningless, and those folks are shit out of luck.

Hurricane swept away your life? Tough. Guard or Reserve family decimated by the breadwinner being deployed in Iraq for nineteen months? Thanks for your sacrifice, get lost. Giant medical bills because you left a goddamn leg in Fallujah? Too fucking bad. You had cancer and had to stop working? Cry me a river. Someone stole your identity from a negligent credit company and ruined your life? Hope you can work that out…

Go check it out. Excellent stuff.

I’m a collection attorney, not notably all warm and fuzzy on the subject of how people got into debt in the first place. My primary concern is more practical. Maybe the difference is the sorts of debts I pursue, but it is very, very rare that someone I’m chasing has any significant income or assets but gets off the hook by filing Chapter 7. I wonder if the folks pushing this law have actually run the numbers to figure out if they’ll make any more money because of it. Or maybe it was some higher-up with no clue how things look on the ground who just takes as a matter of faith that if you make more people pay into a Chapter 13 plan, you’ll collect more on your particular debt. As a theoretical matter, it certainly sounds logical. But, just from my perspective, it doesn’t seem like there is any more money to wring out of these folks. You’ll probably be forcing more people into the social safety net, such as it is. Not to mention, the failure rate of Chapter 13s are pretty significant as it is. That is only going to increase. So, you’ll have a lot of time and money wasted getting these Chapter 13s started only to have the bankruptcy dismissed with no discharge, putting the debtors and creditors back in the same position as before the bankruptcy was filed.

I also tend to think that the bankruptcy law will make the next recession tougher to shake off. Your typical small business owner has to sign personal guarantees for any credit extended to his business. Recession comes. Business goes under. Business owner is on the hook for the business debts. Now, instead of being able to get a fresh start after a few months through a Chapter 7, he’ll have the anvil of a Chapter 13 hanging around his neck for 5 years. There are probably going to be a lot of entrepreneurial types alongside the genuine deadbeats in Chapter 13 plans.

Anyway, Mr. Furious is much more entertaining on the subject.