"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.