Posted on 04/20/2005 1:22:05 PM PDT by atrocitor
NEW YORK (CNN/Money) – President Bush on Wednesday signed into law a bankruptcy reform bill that will make it harder for individuals to clear their debts through bankruptcy.
So, experts say, if you were thinking about filing for bankruptcy, you might think twice -- or act twice as quickly, since major provisions of the law will go into effect six months from the day the law is signed.
(Excerpt) Read more at money.cnn.com ...
I taught my kids cause and effect from an early age. They were taught to make decisions for themselves before they started school. They were taught when they could make a decision and when they should question authority and how to do it. I was blessed with two very logical children. Other parents used to ask me what I did to make my children so mature. I told them that I treat them like adults except they are junior partners. Then I would explain the process. Those who tried it and stayed with it saw that it worked wonders.
You owe it to your children to engage them in financial matters at an early age and continue it until they are on their own. Sex, drugs, and other issues can really be breached with preschoolers and it will help you,( rather than the system ), influence the child's development. I have a 25.5 year old daughter with a BS degree and a good job. She married her high school sweetheart who is now an engineer and they plan to make me a grandpa and my daughter will be a stay at home mom. My son will be 24 in May and has his masters in accounting and has passed all his boards, just waiting to finish the 2 year requirement for his CPA.
I hope you are successful with your children too. Mine will talk to me about anything and like to get my input on tough decisions. Why? Because they are used to it!
Prayer and hard work will pay dividends. You are on the right track.
Go to post 56 bro...I was just kidding. :)
Well, it was Judaic law...so I am guessing yeah. I wonder what the collection enforcement would be though. Do you go out and reposses his cow up until the 7th year and then give him the cow back? Not sure...I am sure there were many cases brought up to the judges back then. Or loans just were not made that would take over 7 years to pay back.
thanks
They get no discharge and their case gets dismissed. They just get a bankruptcy filing on their credit report and any payments they had made to the trustee towards the Chapter 13 plan, and the filing fee and the attorney's fees, and now under the new law the credit counseling fees and money management class fees, are gone. They would all have to be paid from scratch all over again if the debtor wanted to try again assuming the second filing was challenged as an abusive serial filing. I think under the new law the 70% failure rate will climb and I think that is in part by design by the drafters.
As a lawyer who works with this stuff I will end up making more money off of the new bill. But I still think its bad for the efficient operation of our economy to have now 80%-90% of these failed Ch 13 debtors to be locked in a permanent indebtedness cycle. These people are not going to be able to function in the economy and that is not good for the rest of us. Its in the rest of our self interest to not have these people permanently trapped and not operating at an optimum level.
Many third world countries have no problem with permanent indebtedness and debt slavery (yourself or you can substitute a relative such as a child), but I submit that that practice is ineffecient for their macroeconomy (I'll let others worry about the morality) and one of the reasons they are still a third world country.
Who cares what moveon.org thinks. The new law is bad for reasons on its face, not because moveon.org says so. And besides, MBNA et al owns dems just like it owns reps. Bidet led the charge to get the new law passed. He was disgraceful in his pro CC industry examination of Elizabeth Warren where she shoved every one of his rhetorical pro CC industry points down his throat.
Who cares what moveon.org thinks. The new law is bad for reasons on its face, not because moveon.org says so. And besides, MBNA et al owns dems just like it owns reps. Bidet led the charge to get the new law passed. He was disgraceful in his pro CC industry examination of Elizabeth Warren where she shoved every one of his rhetorical pro CC industry points down his throat.
"Its in the rest of our self interest to not have these people permanently trapped and not operating at an optimum level."
I agree with your reasoning and the above conclusion, however, I think that the same reasons that you articulated will have a profound effect on those who would incur debt with no intention of payback - I submit that at some point (some nearer to the end than others) a large proportion of pre-filing behaviour becomes just that kind of fraud....
Society benefits from me having a license to drive, however, if I refuse to drive sober, society has no choice but to revoke my license. (a hypothetical, mind you!)
I also submit that you have a very good point....why make laws that will not be followed, especially if society has no intention of forcing compliance in some manner?
Again, I have to say that you have submitted the only reasonable argument against this change in the law, and I've read a ton of them over the past few months.
If someone enters into a debt contract with the present intent of not repaying the loan that is fraud. Under the existing law (pre-new law) if that party files a bankruptcy the defrauded creditor can sue that party in bk court to except their debt (incurred by fraud - sec. 527(a)) from the discharge rendering it permanent. Creditors have done this all the time and I am prosecuting and defending several such actions right now. Under current law if you lie about your assets in your bk pleadings, your entire discharge can be yanked (sec. 727) and you can be charged with a federal bankruptcy crime. Under current law if debtors file a chapter 7 but have substantial disposable income, the Justice Department can bring an action in bk court to dismiss that bankruptcy for bad faith. All these anti-abuse protections currently exist without the new law.
That is in part why I say that the key feature's of the new law (the means-testing and forcing people into Ch 13's, the attorney personal guaranty provision, the credit counseling certificate requirement ect.) are designed to break the current system, ie. force people into and increase what is already a 70% failure rate. Why is it so high? This is speculation, but if these debtors experience any expense spikes during the pendency of the 3-5 year plan (such as an illness, injury, property loss) or income loss (lay off) they will default on the Chapter 13 plan because there is no room in these plans for any such spikes or losses. I submit that most people experience such spikes during a 3-5 year period, and if all of your disposeable income is being siphoned off by a Ch 13 plan you have no ability to create any contingency fund to plan for the spike. That's why there's the need for the Ch 7 "fresh start".
But the practical debate is over and the law is passed. Hopefully I am wrong about my conclusions as to the new laws effect on the economy. Unfortunately I do not think I am. At least I will get to make more money. Thanks for considering the arguments.
Well, I got a giggle out of the thought of them pouring more money down a 'Rat hole :)
At first it looked kinda...well, French. But then I saw you were armed. Definitely NOT French.
Quick question.....what happens (legally, practically)when you have a non-discharged bankruptcy on your record?
I'm guessing that even the riskiest of lenders would not take a chance on someone with a non-discharged bankruptcy - (would THEY have any recourse if they did loan money to someone in that situation?)
Thanks for your time.....
Legally there's no bar to anyone lending you more money. Practically, you would think that the bk filing along with all other old debt should serve as a market bar for cc lenders extending more credit, though who knows if the more aggressive ones might not still solicit balance transfers. The creditor's recourse for collection would be wage garnishments though they may end up competing with other creditors for that.
I think the more likely scenario would be, if the debtors sought more credit, would be through the new pay day lending networks set up by the major CC lenders under different names. They use post-dated checks, direct access to debtor's bank accounts, and threat of criminal prosecution for a bad check if there are insufficient funds in the account. I am told the pay day lenders fees and rates dwarf regular CC fees and rates though I wonder how that could be possible.
Whether the debtor seeks more credit from payday lenders or not, the prior creditors will ultimately get judgments and start garnishing wages (in my state up to 25% of the check). With default fees and penalties and attorney's fees and costs, these people will most likely never be able to payoff the principal of their indebtedness and that is why I describe them as trapped and not functioning at an optimum level.
"....prior creditors will ultimately get judgments and start garnishing wages"
I see now.
Nothing prevents a creditor from garnishing wages if you don't follow Chap 13 to the letter.
That's what will bet the growing industry....Wage garnishment from folks who didn't fulfill Chap 13 obligations - so he who garnishes first, garnishes most?
The creditors will get the money before anyone, and there won't be a choice, like I suppose there is when deciding whether to meet Chap 13 obligations.
These folks will have every reason to drop out of the economy, work under the table, and/or go on welfare, because they'll live better than they otherwise would, but not as well as when they were living on credit.
I don't know how I feel about this, truthfully. On one hand, they'll serve as examples, on the other, they could potentially be supported by society, and perhaps at even greater cost than a Chap 7.
I don't tend to want to give folks who take advantage the benefit of the doubt in this case...... if they get this far down the line, the courts have decided they don't deserve the opportunity to walk away from their debts. I'm ok with finding out what happens under the new revisions.
Well I think you do see most of the core issues, but I would only add it wasn't courts that have under the new law decided these people can't get a discharge, its congress and potus. My anecdotal experience as to how many bk cases I see are abusive for one reason or another is about 5% and they were subject to the sec. 527 and 727 remedies I described before. The balance of the cases I see arise from the following in descending order: divorce, illness, injury, lay off and entrepreneurial failure. I do not see how punishing these people to get at the 5% of abusers with the new law (when you already had remedies to go after that 5%) accomplishes anything other than reducing the efficiency of the economy.
If my predictions as to harm to the economy bear out, this law will still not be changed. There is no debtors driven underground lobby to propose the change and the MBNA et al lobby will be in place strong as ever, with its bought and paid for dems and reps, to make sure no such proposed change ever occurs.
"....but I would only add it wasn't courts that have under the new law decided these people can't get a discharge, its congress and potus"
There is always judicial discretion, is there not? There is a judgement call - does a case fall within the 20% that should be forced in to Chap 13 (not my statistic, but I can't provide a citation), or does it not? This law hardly ELIMINATES Chap 7, just provides another standard of hardship to get to Chap 7, from my non-legal reading of it's implications.
The basket-cases will still get debts discharged via Chap 7.
It seems like you are assigning a greater impact to the relatively few cases that get tossed to Chap 13 than may be warranted, unless I am missing something.
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