The Wall Street Journal This Morning is a 1-hour broadcast
syndicated on 70 U.S. radio stations.
Today host Mark Mills interviewed Jordan Goodman of MoneyAnswers.com on the effects of the bankruptcy bill.
Some of the language is chilling.
I emailed producer Chuck Fishman for a transcript; he emailed an mp3 and assigned permission to post it here, confiding, "I am worried about criticism of our guest and our program," and "please don't politicize our content."
So he'll be reading. And someday, WSJ Radio will do a story on "citizen journalism." Hopefuilly, they'll focus on dKos, which (from my email to him) "has 45,000 registered users and documents more than 300,000 site visits per day, so I would like to quote both your interviewer and your expert as accurately as possible..."
Much of the transcript is posted below. Here's a taste:
Under this new bill, about 80 percent [of bankruptcies] will be Chapter 13's, where people would be strung along in what I call debt purgatory for the rest of their lives.
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Published by Dow Jones Corp., the Wall Street Journal is a substantial current within the mainstream media. When even they see the onerous implications of this legislation - and describe it in such ominous terms as these - the more virulent outbursts diarists have unleashed here at dKos seem more than easily justified.
I've highlighted the hot points of the interview below. Balancing fairness against bandwidth, I've published most, but not all of the transcript and summarized the rest.
The transcript:
Mark Mills: The biggest rewrite of bankruptcy laws in 27 years is about to turn the path to a debt-free second start undertaken by more than a million Americans each year much more difficult.
A bankruptcy overhaul bill passed the Senate yesterday, 74-25 was the vote. It would require people with incomes above a certain level to pay their outstanding credit card charges, medical bills and other obligations under a court-ordered bankruptcy plan.
Some say if you make an income of about $50,000 and live in a major city, you'll now be unable to write off all your old debts when this bill takes effect, and it is expected to pass soon. The House will likely pass the bankruptcy reforms, and then it is expected to be signed into law by President Bush.
Jordan Goodman of MoneyAnswers.com is here to help us understand the new legislation. Jordan, what's the bottom line with the new bankruptcy reform?
Jordan Goodman: In fact it'll make it almost impossible for the average American to get a Chapter 7 bankruptcy, which is liquidation of their debts, instead they'll have to do a Chapter 13, where they reschedule their debts over a longer period of time.
Mark Mills: Jordan, what would the terms be to decide if you could go Chapter 7 or Chapter 13?
Jordan Goodman: Well, the new bill would impose what's called a "means test," which is, for example, if your income is at or above the median in your state, you would not be allowed to do a Chapter 7 under almost any circumstances. You'd have to be in Chapter 13, and what Chapter 13 means is you're paying your debts for a very long period of time. You're not being relieved of them, you're just stretching out over a long period of time how you repay them.
Today, 80 percent of bankruptcies are Chapter 7, kind of a liquidation where people get a fresh start. Under this new bill, about 80 percent will be Chapter 13's, where people would be strung along in what I call debt purgatory for the rest of their lives.
Mark Mills: And it would last that long? The rest of your life?
Jordan Goodman: Well, until you've paid it off. If you're in that situation of Chapter 13, you pay extremely high rates - high interest rates - high fees, and of course if you're already strapped for money, that makes it even harder to get out of the situation. So yes, it would probably be the rest of most peoples' lives. Not going to be any great deals, typically, on that....
Goodman then recommends that debt-ridden borrowers seek help from organizations such as the Debt Relief Clearinghouse, which will help:
...consolidate all your unsecured debt, like credit card bills and medical bills right there at lower interest rate and then you can pay it off and not have to deal with the bankruptcy system which is already overburdened today - we had about 1.5 million bankruptcies last year, and under the new system will be even more overburdened.
Goodman then offers more consumer advice, and even recommends non-profit organizations over commercial debt settlement companies. Mills ends the interview with a candid assessment:
...overall,
about 90 percent of bankruptcy filings result from either large medical bills, divorce or loss of a job according to Elizabeth Warren, a professor at Harvard Law School...
But there is some good news - under the bill, these assets would be exempt from being used to repay your consumer debts if you file: up to $1 million of your retirement benefits and your home, if you've owned it for more than 40 months.
Anyone care to offer Wall Street Journal Radio some advice?