One Year Later, Bankruptcy Laws Still Unfair to Workers

[Omaha Steve]

http://blog.aflcio.org/2006/10/17/one-year-later-bankruptcy-laws-still-unfair-to-workers/

One Year Later, Bankruptcy Laws Still Unfair to Workers

by James Parks, Oct 17, 2006

It’s been a year since President Bush signed a so-called bankruptcy reform bill making it harder for America’s working families suffering severe financial setbacks to start over. Has the law done what its backers—big credit card companies and corporate interests—said it would do?

Hardly.

After hitting 20-year lows in the first quarter of this year, bankruptcy filings sharply rebounded in the second quarter of 2006 and continue to rise. The only reason the filings were down is that nearly 600,000 people, 10 times the normal level, filed in the two weeks before the law took effect. Now, according to United Press International, 68.5 percent of the lawyers surveyed by the National Association of Consumer Bankruptcy Attorneys say their bankruptcy filings are up in the third quarter of 2006, compared with the first half of the year. Some bankruptcy attorneys predict we’ll have pre-reform levels of filings by the law’s second anniversary in October 2007.

By caving in to the corporate interests, Congress ignored the real reasons for most bankruptcies: job loss, divorce or illness.

When the House passed the bill last year, AFL-CIO President John Sweeney said the vote sent a dangerous signal to working families that “Congress will systematically gut protections for workers who have lost jobs or face crushing medical bills.”

Sweeney also said the law unfairly punished workers who were victims of corporate abuse of bankruptcy laws:

Studies suggest that 90 percent of those filing for bankruptcy do so because of circumstances largely outside their control. In recent years, business failures and mass layoffs resulting from corporate fraud have led to innumerable individual bankruptcies.

Rather than correcting deficiencies in current law that fail to protect workers in these circumstances, the bill puts more pressure on working families when they are most vulnerable.

In August, the AFL-CIO Executive Council called for bankruptcy reform, demanding real reform of the rules that allow corporations to dump collective bargaining and take workers’ hard-earned pensions and benefits:

FULL story at link above.

[Totally Committed]

1. K & R

this was such a black day.... :(

TC

[bluestateguy]

2. A Democratic Congress should schedule a vote on repeal

I know, I know, a lot of DINO Democrats voted for it, but at the very least a Democratic Congress could hold hearings to investigate the law's effectiveness and possibly draft a new law.

[philly_bob]

5. Very high priority. 'Debt Management Plans' are indentured servitude.

You file for bankruptcy. That new law says you have to sign up for counseling with a debt counselor. Debt counselor signs you up for a 'debt management plan' -- you give your paycheck to the debt management company, they pay your debts.

Now, imagine yourself walking up to the debt counselor and saying you want to quit your job...

Oh no, you can't do that, the debt counselor says.

Look, lenders are responsible for making smart loans, to consumers who can pay them back. But in Bush world, lenders make crazy loans -- no-doc 50-year variable mortgages -- to consumers who can't afford them. The government shouldn't be serving as enforcer for irresponsible lenders.

[AtomicKitten]

3. on top of that

... banks are just screwing my college age son with interest rates. It's really horrible.

[hootinholler]

4. It might not be doing what they said, but,

It is doing what they wanted it to do.

-Hoot

[sandyd921]

6. Yep, just one more way

to impose wage slavery and exploit the working and middle classes. I agree with the comment on this thread about the Democratic congress re-opening this horrible, onerous bit of legislation from the credit card industry. It sure would be a strong signal to show that they are truly sympatico with middle class voters.