I had a literal dream on Tuesday night when I crashed; literally fell over, at a debate party after Obama’s speech. I had been up since 4:00 a.m. and had been doing election protection all day in Central Islip on Long Island. I had a Republican operative call police on me twice to attempt to have me removed, it didn’t worked but it caused my GERD and my ulcer to act up just a wee little bit.
However, that’s not the point of this diary, my dream was more of a nightmare it was 2010 and Obama was president and it was election night and we were facing a repeat of the Republican House and Senate sweeps of 1994. Why were we in such an unlikely situation? Because we had failed to make substantive changes we had failed to live up to the rhetoric.
Therefore I have decided to begin a weekly series. The New things we should get done in our administration, because it is ours, Obama told us so. These series will ask for action but no money and will include the following: A change in federal legislation, an explanation of why that change is needed, what the change will do and what the specific statutes changes will be. Most importantly, it will also contain a sample letter for Kossacks to send to their Democratic Congress critter or Senate Dweller.
I personally will send letters to Tim Bishop (D-NY1), Charles Schumer (D-NY), Hillary Clinton (D-NY) and Barack Obama (D-USA) all of whom are those I respect and cherish as my elected representatives. Whether or not anyone else does.
Additionally, I would ask that if you think my analysis of any given law is faulty or that my proposed changes are unwieldy, ineffective or just plain wrong-headed please tell me. I will make changes that I agree with or that the community overwhelmingly agrees on I will make them. Finally, I don’t usually ask this but I will today please recommend this diary so it doesn’t get lost in the shuffle. More importantly please write the letter, because I already did and I don’t want to look like a lone nut. So without further ado I present our first topic bankruptcy.
Alright who groaned? Yeah, I know it’s boring. But it the Republicans did some things to our bankruptcy code that most people don’t know about that have contributed to the financial collapse and are incredibly burdensome on regular people.
Let me tell you the story: During the 2004, election VISA PAC USA made millions of dollars in contributions to President Bush, the RNC and Republican candidates to the House and Senate received millions of Dollars from VISA for their re-election campaign. On April 14, 2005 the Senate and Congress passed the Orwellianly entitled Bankruptcy Abuse Prevention and Consumer Protection Act.
Just a little more history; the Republican’s have been trying to get this law in since 1997, Clinton exercised a pocket Veto against it and during Bush’s first term Democrats threatened to filibuster it. During Bush’s "mandate" it was one of the Republicans first acts to reward their loyal supporters, the CEO’s of extremely wealthy credit card companies.
WHAT THE 2005 LAW DOES
The 2005 changes can be found under this link (Pub.L. 109-8, 119 Stat. 23, enacted April 20, 2005)
Here’s a link for the wikipedia entry.
Here’s what the 2005 does: It makes it harder to file bankruptcy altogether. That was what the Republicans were aiming for and that’s what this law does.
The 2005 law increases the amount of paperwork that someone filing for bankruptcy has to fill out, it increases the amount in fees that a debtor has to pay, and it increases lawyer liability, which consequently caused an increase in the lawyer’s fee. Additionally, the 2005 act requires that the debtor undergo credit counseling and increases the time between bankruptcies from 6 to 8 years.
The law also applies an increased level of bureaucratic compliance for small business undergoing Chapter 11 reorganization, it puts more burdens on struggling small businesses trying to go through Chapter 11. Additionally this provision only applies to small business, larger businesses are exempted. It’s nice to know that Republicans have their hearts in the right place.
The 2005 law pushes people to go from the charge off provisions of Chapter 7, which means that they take what you own and split it, then you have no debt, into Chapter 13, which is not discharge bankruptcy but payoff bankruptcy, you get put on a payment plan till your creditors get their money back. In the old law you would discharge some of your debts as a condition agreeing to a payment plan, the 2005 law limits the amount of debt you can discharge under Chapter 13, making it much more onerous to file a Chapter 13, aka I get to keep my stuff and pay off most but not all of my debt bankruptcy.
The 2005 law’s coup de grace is the "means" test, under the law if your gross income is greater then the median then you must undergo a Disposable Monthly Income analysis which basically sees if once you bay everything you owe you will have more or less then $100 left over then you do not qualify under Chapter 7, and must pay off your debts under Chapter 13. This means test is taken irrelevant of upcoming medical expenses or other unexpected and "non-formula" expenses, like school supplies, prescriptions and the list goes on and on. The net effect of this is that it benefits people like Donald Trump who have lots of property to secure their debts and harms middle class people who just have their house and are going through extreme difficulties. Oh yeah, since child support and alimony are non-dischargeable and fit that category of the formula, some of the people for whom this formula favors are Deadbeat Dads who owe lots of this money.
The law is extremely long and does lots of other things and I won’t go into them all but just a few more highlights
-The 2005 law does not require creditors which have been paid out of order because of aggressive debt collection techniques to turn that money back over for disposition between creditors thus increasing the incentive to harass people.
-The 2005 law makes it easier for credit card debt to be secured, thus people have to pay it back even after they go bankrupt.
-The 2005 law makes it more difficult for those who need bankruptcy most; the poor and distressed that have a history of filing multiple bankruptcies.
-The 2005 law puts credit card company’s claims in the front of the line, sometimes even in front of child support payments.
By the way the 2005 bill passed with a 302-126 vote in the house and 74-24 in the Senate.
Here are the links to the voting records:
House
Senate
WHAT THE NEW LAW SHOULD SAY
Primarily, Chapter 7 should be open to all, provided they satisfy the relinquishment of assets and do not intentionally hide assets.
Secondarily, Credit Card Companies need to get back in line and be treated like any other at will creditor. Child support payments, for example, need to be more important than paying off VISA.
Thirdly, the means test should be abolished the disposition of a person’s repayment ability should be in the discretion of the bankruptcy judge.
Fourthly, small businesses should be given a less bureaucratic approach to bankruptcy and large businesses only should be held to the stricter standards.
Fifthly, the fees should be reduced and the forms should be made as simple as possible thus reducing the cost to each bankrupt citizen of going through this humiliating process, and making it more accessible during this time of economic distress.
Sixthly, Predatory lenders and those with a certain interest rates, I think about 17% and up should have their credit interests completely discharged, they should receive nothing from those whose bankruptcy they directly contributed too.
Seventhly, we need to restrict these changes to the bankruptcy of persons not corporations. Truly failing businesses need to either go through total reorganization and sell-off people who are failing economically don’t.
THE LETTER
Dear Congressman Bishop:
I am exceedingly happy about the victory of our party in the last election. I wish to offer my congratulations for your re-election, and voice the support in words that I already showed with my vote. Thank you, for your kind letter of October 30, 2008 in response to my suggestions about the Wall Street bailout this letter contains some more of my suggestion for you as my representative.
I know that the new session of congress does not start until January, but we need to hit the ground running. I know that there are literally of hundreds of things that need to be done in order to fix the economy. However, in my humble opinion one of the important things we need to fix is the bankruptcy law that the Republicans broke by enacting the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, if that’s not an Orwellian title I don’t know what is.
The new Bankruptcy law was enacted at the request of the Credit Card Lobby and I am proud that you as my Congressman voted against it in 2005. Now that we are going to have solid majorities in both houses, this is something that we need to take back for the little people all over the country. This is something we really need out on eastern Long Island, the means test is especially tough in areas like ours where we have an extremely high cost of living and a "median" income may not really be all that much.
The disease is the economic downturn, the disease is poverty and unemployment, the disease is lack of health insurance and high medical costs. Bankruptcy isn’t even a symptom of this disease it’s Tylenol; a legal method that treats some of the worst symptoms of the people’s economic distress.
Here are my own humble suggestions feel free to steal them without crediting me and put them into legislation:
Primarily, Chapter 7 should be open to all, provided they satisfy the relinquishment of assets and do not intentionally hide assets.
Secondarily, Credit Card Companies need to get back in line and be treated like any other at will creditor. Child support payments, for example, need to be more important than paying off VISA.
Thirdly, the means test should be abolished the disposition of a person’s repayment ability should be in the discretion of the bankruptcy judge.
Fourthly, small businesses should be given a less bureaucratic approach to bankruptcy and large businesses only should be held to the stricter standards.
Fifthly, the fees should be reduced and the forms should be made as simple as possible thus reducing the cost to each bankrupt citizen of going through this humiliating process, and making it more accessible during this time of economic distress.
Sixthly, Predatory lenders and those with a certain interest rates, I think about 17% and up should have their credit interests completely discharged, they should receive nothing from those whose bankruptcy they directly contributed too.
Seventhly, we need to restrict these changes to the bankruptcy of persons not corporations. Truly failing businesses need to either go through total reorganization and sell-off people who are failing economically don’t.
With these changes in the bankruptcy code, we can help ordinary people to face this economic crisis when the worst happens and they have to throw in the towel. This is not Victorian England, we do not have debtors prison, bankruptcy is an important help to Americans who are facing the worst of possible economic conditions.
As President-elect Obama said on Wednesday morning on why we elected him and our Democratic candidates: "You did it because you understand the enormity of the task that lies ahead. For even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime - two wars, a planet in peril, the worst financial crisis in a century." This is but one suggestion on how to fix those problems and work towards our future.
Sincerely yours,
XXXXXXXXX
CC: Senator Hillary Clinton, Senator Charles Schumer
Let's get this out let's fix bankruptcy for regular American's. Let's put forward a new plan for the way we run this country, let's get rid of this Republican lobbyist POS law and get some decent common-sense regulation going.
Links
Senators
Representatives by State
Join me next week for my column and letter on a sexier subject for kids my age(25), let’s get the DEA out of Medical Marijuana in states that have it.