My (form) letter from Ben Chandler, Buddy of the people
I'm mildly politically active. I often participate in email campaigns for/against various legislation. The most recent thing I emailed Congress against was S. 256, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. What follows is the form letter I received back from Ben Chandler, my representative, then I'll break down the numbers for you.
Dear Mr. Hosler:
Thank you for taking the time to contact me with your views regarding S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. As your representative in Congress, I appreciate the benefits of your views.
S. 256 represents an attempt to reform U.S. bankruptcy laws in response to the rapid increase in bankruptcy filings, which have increased by over 400% in the past two decades. The House of Representatives passed S. 256 on April 14, 2005 by a margin of 302-126.
S. 256 will require debtors with higher than average incomes to meet a series of conditions prior to filing bankruptcy under Chapter 7, which allows debtors to liquidate most debts. If debtors with average incomes are able to repay $6,000 in debts over a five-year period after subtracting living expenses such as mortgage payments, health insurance, food expenses, and other necessary expenses, then they cannot file for bankruptcy under Chapter 7. Instead debtors must file for bankruptcy under Chapter 13, under which they enter into an agreement to repay most of their debts within a five-year period under the supervision of a bankruptcy trustee. After completion of the five year plan, creditors will forgive whatever debt remains.
After significant input from constituents like you and careful consideration, I joined a bipartisan majority of my colleagues in the House of Representatives in voting to pass S. 256. This bill preserves the ability of truly distressed debtors to liquidate their debts under Chapter 7 while preventing individuals who can afford to repay their debts from exploiting loopholes in the bankruptcy code from avoiding debts they are capable of repaying. Passage of this bill will promote personal responsibility and should help to lower interest rates as creditors no longer have to pass the costs of unpaid loans onto other customers. Please rest assured I will closely monitor the implementation of this bill as I continue working to promote personal responsibility and financial literacy.
Thank you again for your comments, and please feel free to contact me anytime I can be of assistance to you and your family.
Sincerely,
Ben Chandler
Member of Congress
Now, if you break down that $6000 that Mr. Chandler mentions, you'll see that this means that if you make $100/month over paying your basic necesseties, you no longer qualify for Chapter 7. That means that after you pay the utilities, food, gas, insurance (if you have it), and a small clothing allowance if you have at least $100 left you are going to have to continue to pay for at least 5 years after you file chapter 13 instead. Look back over all the little extras that you've paid for in the last month: the movies you went to/rented, the times you ate out, the presents you bought, your internet access (and probably tv as well), car washs you paid for, candy and non-essential food you bought. If all of that adds up to $100, guess what? You no longer qualify for instant relief of excessive debt through Chapter 7.
The thing that really chaps my ass about all this though, is that the really wealthy, they aren't affected by this. There are offshore accounts and trust funds that can be setup where you still have access to the money when you need it, but it isn't officially in your name any longer. There are alot of multimillionaires out there that can still declare bankruptcy if they need to escape responsibilty for some bad investment, but because it costs a pretty penny to setup these kind of funds and shelters, all of us middle-class suckers now no longer have the protection of bankruptcy to fall back on if we have an unexpected medical emergency or other financial disaster and suddenly find ourselves swamped in debts that we can longer handle.
Dear Mr. Hosler:
Thank you for taking the time to contact me with your views regarding S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. As your representative in Congress, I appreciate the benefits of your views.
S. 256 represents an attempt to reform U.S. bankruptcy laws in response to the rapid increase in bankruptcy filings, which have increased by over 400% in the past two decades. The House of Representatives passed S. 256 on April 14, 2005 by a margin of 302-126.
S. 256 will require debtors with higher than average incomes to meet a series of conditions prior to filing bankruptcy under Chapter 7, which allows debtors to liquidate most debts. If debtors with average incomes are able to repay $6,000 in debts over a five-year period after subtracting living expenses such as mortgage payments, health insurance, food expenses, and other necessary expenses, then they cannot file for bankruptcy under Chapter 7. Instead debtors must file for bankruptcy under Chapter 13, under which they enter into an agreement to repay most of their debts within a five-year period under the supervision of a bankruptcy trustee. After completion of the five year plan, creditors will forgive whatever debt remains.
After significant input from constituents like you and careful consideration, I joined a bipartisan majority of my colleagues in the House of Representatives in voting to pass S. 256. This bill preserves the ability of truly distressed debtors to liquidate their debts under Chapter 7 while preventing individuals who can afford to repay their debts from exploiting loopholes in the bankruptcy code from avoiding debts they are capable of repaying. Passage of this bill will promote personal responsibility and should help to lower interest rates as creditors no longer have to pass the costs of unpaid loans onto other customers. Please rest assured I will closely monitor the implementation of this bill as I continue working to promote personal responsibility and financial literacy.
Thank you again for your comments, and please feel free to contact me anytime I can be of assistance to you and your family.
Sincerely,
Ben Chandler
Member of Congress
Now, if you break down that $6000 that Mr. Chandler mentions, you'll see that this means that if you make $100/month over paying your basic necesseties, you no longer qualify for Chapter 7. That means that after you pay the utilities, food, gas, insurance (if you have it), and a small clothing allowance if you have at least $100 left you are going to have to continue to pay for at least 5 years after you file chapter 13 instead. Look back over all the little extras that you've paid for in the last month: the movies you went to/rented, the times you ate out, the presents you bought, your internet access (and probably tv as well), car washs you paid for, candy and non-essential food you bought. If all of that adds up to $100, guess what? You no longer qualify for instant relief of excessive debt through Chapter 7.
The thing that really chaps my ass about all this though, is that the really wealthy, they aren't affected by this. There are offshore accounts and trust funds that can be setup where you still have access to the money when you need it, but it isn't officially in your name any longer. There are alot of multimillionaires out there that can still declare bankruptcy if they need to escape responsibilty for some bad investment, but because it costs a pretty penny to setup these kind of funds and shelters, all of us middle-class suckers now no longer have the protection of bankruptcy to fall back on if we have an unexpected medical emergency or other financial disaster and suddenly find ourselves swamped in debts that we can longer handle.