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Jewish World Review
April 21, 2005
/ 12 Nisan, 5765
Bankruptcy law overhaul long overdue
By
Dan Abrams
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http://www.JewishWorldReview.com |
Remember when it used to be shameful to declare bankruptcy? It was something only a compulsive gambler, or a father who didn't want to pay child support, would do. Having to admit that one couldn't pay any of his or her debts had a stigma attached to it.
Well, over the past two decades, "going bankrupt" has become just another business decision. Nearly 1.6 million Americans filed for bankruptcy in 2004, more than double the number who filed a decade ago. It just seemed all too easy to decide you can't pay anybody back and so you file for personal bankruptcy under Chapter seven, which means your debt is wiped clean. It's left those of us who pay our credit bills on time, or don't miss a car or mortgage payment, to foot the bill in the form of higher interest rates and excessive banking fees, as much as $400 each year. Change is long overdue.
Congress wisely voted to change that last week, passing the largest overhaul of U.S. bankruptcy laws in over 25 years. Under the new law, whether someone can wipe their debt clean depends on how much money he or she makes. If you make enough to afford at least $100 a month, you're on the hook for at least part of your debts.
The American Bankruptcy Institute says up to 20 percent of bankruptcy filers will be affected by the new law. Certain Democratic opponents argued the bill is going to hurt working class people who have suddenly lost their job, have gotten a divorce, or have unexpected medical bills. They claim the new law is just an effort to protect credit card companies and banks.
But regardless of the motivation, it's good policy. It is about personal responsibility: You buy the goods, you got to pay. The laws are being abused, making it too easy to declare bankruptcy and just wipe away debts. Someone has to pay for the money that was owed.
With any change, there will be some honest people who would have been better off under the old system. But remember, if you don't have enough money, the new law won't change the protections already afforded by bankruptcy.
I don't want to hear about any more people having their debts wiped away and still keeping the Lexus. This new legislation will help prevent that.
Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
JWR contributor Dan Abrams anchors The Abrams Report, Monday through Friday from 6-7 p.m. ET on MSNBC TV. He also covers legal stories for NBC Nightly News with Tom Brokaw, Today and Dateline NBC. To visit his website, click here. Comment by clicking here.
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