"The Associated Press
WASHINGTON (March 15) - The Senate voted Thursday to make it harder for people to erase their debts in bankruptcy courts and close a loophole in present law that allows wealthy debtors to shield their assets in luxury homes."

Bush has said he will sign it. Bankruptcy lawyers are panicking.

If it one day helps to lower interest rates then it sounds good to me.  If people can't just have all their debt absolved so that they can walk away from it maybe credit card companies won't have to charge so much interest so they can regain monies lost when idiots walk away by just declaring bankruptcy.

Not only that but I just don't think people should be able to do that.  Bankruptcy is about getting relief from your debt not making it possible to just walk away from it and leave the creditor high and dry.

Gotta have a good lawyer that can allow you to do that though, it's nice to see the lawyers sweat it out a little.

This is one area where I'll have to disagree with George W. and the G.O.P.  I represent both debtors and creditors in BK cases in the Northern and Eastern Districts of Texas.

I can't see any great amount of 'bankruptcy abuse' going on.

Peolpe seem to forget that once the debtor has been discharged from his debts, he is left with only his exempt property.  All of his nonexempt property has been taken for liquidation to pay the unsecured creditors.  In some states, the amount of exempt property is quite a lot (such as in Texas), in others the amount of exempt property is little or nothing (such as in most New England states).

The new provisions call for a limitation of $125,000.00 in equity in a homestead.  This is the maximum, if your state protects less (most do), then whatever the state law says prevails.

I have represented quite a few individuals, who, through no fault of their own, have lost jobs, suffered catastrophic illness, been in business with unscrupulous partners who have taken the money and absconded, suffered at the hands of the IRS, been ripped off by an ex-spouse in a divorce proceeding, and on and on.

There are plenty of provisions already in the law that prevent an abuse of the bankruptcy laws, most creditors just don't seem to know how to use them.

No, this is just 'pay back' time for the banks and other lending institutions that spent a great deal of money in the last two election cycles.

And I just know that the 'savings' that these lenders receive through the tightening of the the so-called bankruptcy law loopholes will absolutely show up in the form of [u]reduced interest charges[/u] for those who do pay their just and lawful debts!

[b]Yeah, right[/b].  And if you believe that, I've got a Colt AR-15 SP-1, new in the box, that has never been fired.  

EricTheHun

People abuse the laws that allow them to shield their home, car and personal possessions. That is bad enough but then most of them brag about how they maxed-out their credit cards, blah blah blah. Anyone that pays their bills should be glad to see an end to it.

Eric, good post.  FWIW, I've been fortunate to never miss a payment on any loan.  But this new federal law sounds like it won't really do much.  Political grandstanding more or less.

Though I share the concerns as to the root and auxilliary motivations of this, I DO LIKE that ch.7 will be more difficult.  When I was 19 years old, I foolishly got myself into a mountain of debt that I could not pay.  I went to a bankruptcy lawyer, who advised me to do a ch.7, but I would not.  I endured 3 years of PAYING THE DEBT I RIGHTFULLY OWED, and it tought me an invaluable lesson.  It took years, but I have enjoyed outstanding credit and the wisdom to use it for years now.  Simply dismissing my debt would have been irresponsible, and would not have carried with it the lesson.

Sorry, but I gotta make one more post on this subject.  Admittedly, I am biased in this matter as I've been filing bankruptcies for people and businesses since Jimmy Carter was in the White House.  There are quite a few people who do indeed abuse the Bankruptcy laws, but they are a small in comparison to the number of those described in my original post.

Just to see whose ox is being gored, tell me the effect that the new reformed bankruptcy laws would have on business bankruptcies, you know, the ones where the Board of Directors met behind closed doors with their attorneys and accountants, without shareholder notice or approval, without telling the 'guys on the loading dock' that their jobs would be lost,
without informing their employees that their unfunded retirement benefits would vanish in the twinkling of an eye, not bothering to call up the companies' suppliers and cancelling any further deliveries, 'forgetting' to inform anyone that they had just received a 'buyout' proposal from another company that could have saved the 'little people' but instead allowing the other company to pick up the assets after the little people were too busy desperately trying to find their next job to notice the transfer for next-to-nothing, and, with a nod and a wink, the Directors were being offered plum positions in the new company???

Oh, I almost forgot, the old Board of Directors provided themselves with 'golden parachutes' prior to voting for Chapter 11 Reorganization, which everyone at the table knew, lawyers included, was simply a stalling tactic to make certain that there would be sufficient time between the transfer and the actual Chapter 7, to avoid any preferential or fraudulent transfers that might have to be set aside.
You see, nationally, only about 5-10% of all Chapter 11s end in a successful reorganization, the rest are dismissed or converted to 7 cases.

[b]Well, what will the new laws do to alter that scenario?[/b]

I'll give you a hint - nothing, nichts, nada,
nyet, non, nullum, negative, 'that's a no-go',
no dice, not on your life, no way!

When Banks and other large institutions merge, and thousands of jobs are lost, we say 'well that's just business.' Right you are.

If anyone thinks that bankruptcy is immoral, then explain Chapter 15 of Deuteronomy, which is 'Mosaic bankruptcy law' and, IMHO, divinely inspired.  This is the source of the Bankruptcy law's prohibition against a discharge in bank- ruptcy within seven years of a prior discharge.

Lest anyone think of bankruptcy as a simple expedient, or even an acceptable course of action, in dealing with your debts, remember that approximately one-third of the teachings of our Lord dealt with the wise stewardship of money, which is a blessing from the Father.

In closing, the French have a good expression for what will happen next, after the passage of the new reforms in Bankruptcy:

[i]Plus ca change, plus c'est la meme chose[/i]

[The more things change, the more things remain the same.]

EricTheHun, Esq.

Don't think for a minute it will lower CC interest rates!

Lots of peaple loose jobs and get sick without giving their creditors the shaft. If you loose you job and cant pay your bills you better start selling off your property to pay those bills. Its the right thing to do.

Its all about personal responsibility.

I would live in a cardboard box & eat in soup kitchens before I would file bankrupcy.

Yeah, sorry about that, don't know what I was thinking.  Guess I was off in fantasy land again.

You'd think I'd know better.


The post was probably made shortly after one of my many fantasys of the day when the 1994AW ban will sunset and our "evil" features will be returned to us.

I was also probably thinking that one day bipartisan politics will actually happen and that the democrats will actually live up to a bargin rather than try and use the term to attack republicans.


I would just hope that if a law is gonna be made that some benefit to the consumer would come out of it, hopefully being in the form of slightly lower intrest rates.

Just like hoping that one day all the truely stupid gun laws will be overturned and the legislators who were responsible for them will be thrown out on their collective asses.

The banks are just getting ready for all of those people who are going to be broke after the stock market collapses. That way it will be easier to populate the debtors work prisons.