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The more I read about this the more I am outraged at how Republicans have royally screwed the middle class on this new bankruptcy bill. The local San Diego Weekly Reader, a free weekly perodical which survives by putting a few good articles amongst a virtual book full of ads, has a great article in this week's issue. This new law is bad, bad news.
Previously people could easily file for chapter 7 bankruptcy which allowed them to start fresh and simply walk away from all their debts. Now it is much more difficult to qualify for chapter 7 and the majority of people will instead be forced to file chapter 13 bankruptcy which requires people to pay as much as possible. Congress also changed the rules so that mortgage lenders can write in an anti-bankruptcy clause (and nearly all will); before if you declared bankruptcy you'd almost always at least keep your house since the government didn't want people becoming homeless, however, this new mortgage clause allows banks to take ownership of houses when borrowers declare bankruptcy.
It gets worse. The automotive lending industry got Congress to write a special rule just for them which now makes it illegal for anyone filing chapter 13 bankruptcy (which will now be virtually everyone remember) stating that car loans must always be paid in full even if the value of the car is less then the loan and even if the car gets repossessed. You are literally stuck with it no matter what.
Next the bankruptcy law always changes the minimium payment for credit cards (why this got tied into bankruptcy law I don't know) so that instead of a 2% minimium payment there will now be a 4% minimium payment. That doesn't sound bad right? Besides it will be better for people to make larger payments right? Yes, if they can afford it, unfortunately, the average American family lives month to month and spends every cent they make. The average American owes $9000 of credit card debt and 40% of them pay the minimium monthly payment which averages $180 per month. Next month the minimium will go up to $360 per month. Most people haven't budgeted for that and don't even know these financial blow is coming next month so 40% of the American population are going to be owing $180 per month more then they thought they owed.
That's going to push a lot of people over the financial edge and now they won't have a way to make a fresh start. This is just evil. Especially since last year was the most profitable year for banks in history so it isn't like they need all this special anti-consumer activism from the Republicans.
Previously people could easily file for chapter 7 bankruptcy which allowed them to start fresh and simply walk away from all their debts. Now it is much more difficult to qualify for chapter 7 and the majority of people will instead be forced to file chapter 13 bankruptcy which requires people to pay as much as possible. Congress also changed the rules so that mortgage lenders can write in an anti-bankruptcy clause (and nearly all will); before if you declared bankruptcy you'd almost always at least keep your house since the government didn't want people becoming homeless, however, this new mortgage clause allows banks to take ownership of houses when borrowers declare bankruptcy.
It gets worse. The automotive lending industry got Congress to write a special rule just for them which now makes it illegal for anyone filing chapter 13 bankruptcy (which will now be virtually everyone remember) stating that car loans must always be paid in full even if the value of the car is less then the loan and even if the car gets repossessed. You are literally stuck with it no matter what.
Next the bankruptcy law always changes the minimium payment for credit cards (why this got tied into bankruptcy law I don't know) so that instead of a 2% minimium payment there will now be a 4% minimium payment. That doesn't sound bad right? Besides it will be better for people to make larger payments right? Yes, if they can afford it, unfortunately, the average American family lives month to month and spends every cent they make. The average American owes $9000 of credit card debt and 40% of them pay the minimium monthly payment which averages $180 per month. Next month the minimium will go up to $360 per month. Most people haven't budgeted for that and don't even know these financial blow is coming next month so 40% of the American population are going to be owing $180 per month more then they thought they owed.
That's going to push a lot of people over the financial edge and now they won't have a way to make a fresh start. This is just evil. Especially since last year was the most profitable year for banks in history so it isn't like they need all this special anti-consumer activism from the Republicans.
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