BBC: New debt fear for Katrina victims

[SillyGoose]

New US bankruptcy laws could add to the woes of Hurricane Katrina victims as they struggle to rebuild their lives, a politician has warned. Bankruptcy Code changes which make it harder for Americans to wipe out their debts take effect in a month's time.

Democratic Senator Russ Feingold says people driven to bankruptcy by hurricane damage should not be "test cases" for the new code.

He is proposing a bill that would give them another year under the old law.
...

However, the idea is opposed by the Republican chairman of the House of Representatives' judiciary committee, James Sensenbrenner, who is responsible for deciding whether the bill will be considered in the House.


(continued at link) http://news.bbc.co.uk/2/hi/business/4245264.stm

[Kagemusha]

1. So, the big question. Will we be calling this indentured service,

or something worse?

[MarsThe Cat]

2. Equal Protection under the law...

if the hurricane victims get an extra year, then so should EVERYONE.

[Kagemusha]

3. That's making Sensenbrenner look smart.

Gives him an iron clad political reason to make the lives of the hurricane victims hell.

(edited for snippiness)

[MarsThe Cat]

4. What if somebody in Vermont had major contracts in New Orleans...?

or maybe their employer did...now they lose their income, their jobs, but they shouldn't get a break too?

the bankruptcy bill was morally bankrupt and should be totally scuttled anyway...

BTW- I'd be willing to bet that the wealthy, probably republican, citizens of NO would benefit A LOT more than the poorer residents if such an extension is given.

[Kagemusha]

5. My point is your argument is the very definition of slippery slope.

Which makes Sensenbrenner... (grits teeth) look good.

Ugh.

[MarsThe Cat]

6. fair is fair.

it's not like the people who CHOSE to live in New Orleans never heard of hurricanes.
and the losses/need for bankruptcy due to Katrina won't be limited to gulf coast residents.

[Mountainman]

7. Geez, what conservative compassion. I know it when I see it!

How is it that so many people have no feelings in their hearts for people who are in trouble?

If you ever get destitute do you want everyone to say, "tough shit, die fucker! What's fair is fair."

[MarsThe Cat]

9. ????

why DO YOU feel that wealthy New Orleanian slumlords should get a break because they've lost the tenents in their tenements, while small businesses half-way across the country who depended on New Orleans for the bulk of their business get the shaft...?

Huh?

[Mountainman]

22. That question has no relevance to what I said.

I'm saying that you should care about those poor souls who lost everything get it??????????????????????????????????????????

Why the hell don't you folks use real logic when you try to argue a point?

[SillyGoose]

8. But they still have a house and furnishings and clothes, etc. Most of

those in New Orleans lost everything. Everything. Think about that.

[MarsThe Cat]

10. LOTS of the people who lost EVERYTHING won't be affected...

by the bankruptcy bill, or an exception.

the ones who stand to gain the most are the NO slumlords who have lost the renters in their tenements.

[SillyGoose]

11. Why would a wealthy NO slumlord benefit from this? They carry insurance

to cover their losses. My response to you was about the contractor from Vermont or their employees, though.

[MarsThe Cat]

12. slumlords have lost their income stream.

most of which was probably in the form of cash.
their insurance may or may not cover their property losses, but it probably won't make up for lost rental income...bankruptcy bill exception to the rescue!!

If a contractor in vermont gets most of it's business supplying a business/bussinesses in NO that no longer exist- they lay people off, and those people are now out of work, can't pay the mortgage or bills, etc...

tell me this- how exactly will a local exception of the bankruptcy bill help an impoverished New Orleanian renter who didn't have a car or any credit cards? (and that covers A LOT of those people who you have pointed out as having lost everything).

[SillyGoose]

14. I see where you're coming from. I am assuming the landlords are

properly insured with homeowners and flood insurance. I have multiple rental properties. If I were to find myself in this position my insurance would cover my property losses but not my rental income loss. That would be taken as a loss on my income tax. I wouldn't have to file bankruptcy.

My point was that a contractor or employee of a contractor in Vermont is in a much better position should he or she lose a job or contract as a result of the storm since they have not suffered a catastrophic loss like the Katrina victims. There is a difference there.

(edited for clarity)

[MarsThe Cat]

20. you still haven't answered the question-

how exactly will a local exception of the bankruptcy bill help an impoverished New Orleanian renter who didn't have a car or any credit cards? (and that covers A LOT of those people who you have pointed out as having lost everything).

and as to the vermont worker living paycheck-to-paycheck w/credit card bills and kids to feed who loses their income...YOU tell them that they're in a much better position that the NO slumlord with insurance.

so- if your main "legal" income was cash rent from your tenements which are now destroyed and you didn't have flood insurance, and you won't have any more tenants for months or years if ever- you wouldn't have to file bankruptcy?

BTW- LOTS of people who file for bankruptcy don't "HAVE" to do so...but they do anyway.

[SillyGoose]

23. This bill exception isn't aimed entirely at New Orleanians and wouldn't

apply to those who had nothing to start with. Those who have nothing to start with and no bills or debt to speak of would not benefit from the exception because it would have no bearing on their situation.

How about the regular joe working class family with cc debt struggling to make ends meet who suddenly find themselves with no car, no house, no clothing, no nothing living in a shelter? They are the people who would benefit from this bill exception and they are not on equal footing with the Vermont worker because the Vermont worker still has his/her possessions, home, car, clothing etc. Its a matter of finding a job versus starting over from scratch completely.

In my area flood insurance is mandatory for properties at certain low elevations if you carry a mortgage and I doubt its any different there. I would assume that a property owner who relies on rental income in a city below sea level would have flood insurance even if he had no mortgage. If that landlord is holding all these properties mortgage-free then he or she is not in too bad shape because he or she will collect his or her insurance payout and go on with life.

Yes, I agree there are people who file for bankruptcy that don't need to but its probably a very small percentage of the people covered by this exception.

[MarsThe Cat]

24. you assume a lot...

just because flood insurance is "mandatory", it doesn't mean that a slumlord will carry it. in a lot of these cases, the value of the property is generallly more than the value of the buliding(s) on it- so why worry about flood insurance.

my original objection to the B-Bill exemption still stands- equal protection under the law...those people chose to live where they did despite the hurricane threat...there are people who "lose everything" due to some type of catastrophe, small or large, on a daily basis in all parts of the country- where's their exemption?

[SillyGoose]

25. I agree the bankruptcy bill should have had a catastrophic

event clause in it and Congress should look into adding one to it. Its not fair to exempt some who experience catastrophic events and not others, but I do think this exemption is appropriate for the Katrina victims.

If flood insurance is mandatory that means you can't get a mortgage without it. That's a fact, not an assumption. On the other hand, a landlord that would be so clueless that they wouldn't bother with flood insurance on a fully paid for property that they rely on for their income in a city under sea level probably should find another business to be in.

[livefrom]

26. However, the flood insurance covers the landlord's house,

not the tenant's property. So to the tenant without renter's insurance, it's still a total loss.

[MarsThe Cat]

28. 40% of New Orleans property owners have flood insurance.

less than half- and as far as being mandatory to GET a mortgage- true enough...but once that mortgage gets gotten- a lot of the mortgagees let that coverage lapse- although if the lien-holder finds out that mandatory insurance is lacking- they'll get you some- and charge you for it.

http://www.msnbc.msn.com/id/9170157/

...Few insured
But only 85,000 residential and commercial policies have been sold in Orleans parish, in which the city is located, by the NFIP, according to latest figures — while the U.S. census lists about 213,000 housing units in the city in 2002.

“We estimate about 40 percent of properties have flood insurance — and virtually all the damage caused in New Orleans was by floods, not winds,” a FEMA spokesman said.

The NFIP program also only offers up to $250,000 for homeowners to rebuild damaged properties, and up to $100,000 to replace contents.

Risk modeler Risk Management Solutions has estimated that 150,000 properties have been flooded in New Orleans....

in regard to the Bankruptcy Bill exemption given to katrina victims-
I had the same disdain for the million-plus dollar payouts given to the victims survivors- people die in tragic ways EVERY DAY- people lose loved ones and breadwinners to tragic occurrances EVERY DAY- and without getting a 7-figure government bailout check.

[SillyGoose]

29. Thanks for posting that article. Its surprising to me that only 40%

of properties carried flood insurance in New Orleans. Its relatively inexpensive insurance to maintain and it just makes good sense to have it in a vulnerable area like this.

When Cheney was in Mississippi last week he said something that caught my attention. He mentioned looking into standard homeowners insurance policies that don't cover flooding caused by a hurricane even though the policies include hurricane coverage. Many homes outside of New Orleans flooded from storm surge but they didn't have flood insurance because they were well outside of a recognized flood zone...their homeowners insurance is not going to cover their losses.

Like I said, I understand where you're coming from on this bankruptcy bill exception. I still think its appropriate for the Katrina victims due to the catastrophic losses they suffered as a result of the storm but I would have liked to see a catastrophic event clause in the original bill to cover anyone who suffers a catastrophic loss.

The 7 figure federal payouts to the 9/11 families bothered me, too, for the reasons you mentioned. However, I think it was really an incentive to keep them from initiating lawsuits against the government.

Bereaved relatives who apply to the federal compensation scheme must, in any case, sign away their rights to sue the government, air carriers in the US, and other domestic bodies - a condition that has prompted some of them to call the government compensation "hush money".
http://www.guardian.co.uk/print/0,3858,4505119-105806,00.html

[MarsThe Cat]

30. The main reason for the 9/11 payouts-

(and thanks for realizing that's what i was referring to- i guess i forgot to type the "9/11"...)

was DEFINITELY to keep the people from suing the airlines into bankruptcy...which, in a supposedly free-market capitalist system makes it even more egregious.

there was also the matter of keeping as much information out of public scrutiny in the light of day as possible- this regimes bread & butter.

[kestrel91316]

27. Guess the slumlords will have to get a job and work for a living like

the rest of us, eh?

[pitohui]

17. new orleans is overwhelmingly DEMOCRAT & voted for kerry

if i see one more idiot who should know better shit on the good ppl of new orleans, who voted for kerry in a landslide, something like 67 percent in his favor, in the words of mary landrieu, "i might just have to punch somebody"

yes, the bankruptcy bill stinks

but don't blame the ppl of new orleans for it

[MarsThe Cat]

21. I'd be willing to BET that the vast majority of NO bankruptcy filers...

are not Democrats who voted for Kerry.

didn't NO have something like 30% of it's people living in at/below the poverty line? what good is bankruptcy for them? (no car, no credit cards, DEFINITELY not property owners)

[WildClarySage]

13. What about someone like my dad, who lost everything in a house fire?

Is he going to get the exception? No, we're in WV, we weren't hit.

Or the single mom who lost her job (and insurance) to take care of her sick child? She's out of her home, and has huge medical bills and no income. She doesn't deserve any consideration because she wasn't affected by Katrina.

How about the family that lost their income when the breadwinning dad lost his job to an overseas worker because the toy company he worked for figured they could up their profit margin by %40 by relocating and establishing offshore accounts structures? This guy's been paying for everything by credit card hoping for months that something would come along, but after all this time, nothing has and his unemployment's run out and there's nothing to pay the bills with. His problem wasn't a hurricane, does he get a break?

[pitohui]

16. ok so what are you saying

because feingold can't help everyone he shouldn't help anyone

where's the logic there

this storm is big enough to completely destabilize the economy if they don't work fast

this is why auto lenders, mortgage lenders, credit card companies are VOLUNTARILY, without waiting for any stupid congresscritter to step up, they are already allowing ppl to defer payments

they also quietly did this in my area for the may 10, 1995 flood

it doesn't help yr dad to keep me homeless alongside him, does it

i agree all ppl in the cases you described should have the option of bankruptcy

i also believe politics is the art of the possible

better something than nothing

[WildClarySage]

19. I'm saying that our fearless leaders in the democratic party

should fight to have the whole bankruptcy law overturned, retracted, discombobulated, whatever. The entire mess is an insult to the American people. If the people affected by Katrina are worthy of an exemption to this law, well, there are people everywhere who are worthy of an exemption to it. There have to be better ways to address corruption or abuse of the bankruptcy protections than to eliminate them for everyone except those who are given this one-time protection. Everyone deserves protection from predatory lending companies who have effectively managed to eliminate risk from the lending process without eliminating the vast interest rates that we've grown accustomed to. Caveat Empetor, indeed. There's no protection for consumers anymore while the credit card companies are raking it in, and to give a temporary relaxation to the rules for a few is fine in and of itself, but it's not helping the rest of us who also deserve consumer protections. Katrina exposed the real flaw in the bankruptcy legislation, but this proposal is a half-baked attempt to stem the tide of criticism when the legislation itself is the problem.

[pitohui]

15. it will go thru, good for feingold

i feel confident that the credit card & mortgage cos. do want this to be changed

they don't want us bankrupt

they want us to be able to recover so that ultimately we will pay them more money over time because we have stable lives & can earn more money

i have been impressed at how lenders have stepped up to the plate to automatically defer loans

for instance i did not ask but i noticed that my credit card company immediately placed a credit on my bill so that i would not owe any late fees

my new bank waived all fees & gave me a special free acct

many other lenders are waiving payments for 90 days

yes, lenders want to make a profit but there is no profit in driving ppl into bankruptcy

[The_Casual_Observer]

18. If the law is no good for them, it's no good for everybody else too.