CA-11 Blog | Policy Discussion Series | Bankruptcy BillAgainst overwhelming evidence that the majority of Americans file for bankruptcy protection as a direct result of debt from personal catastrophes like medical problems, divorce, or the loss of employment, Congress decided to make it extremely difficult (if not impossible) and costly for working families to file for bankruptcy. Congress fast-tracked the Bankruptcy Bill, which was literally written by the Credit Card Industry and deceptively framed the issue as reforming bankruptcy laws due to people abusing the system by going wild with credit cards and not paying their bills.
The Bankruptcy Bill has received widespread criticism from those aware of its existence. While trying to interpret this legislation which harms honest people who are going through a serious financial crisis, Federal Judge Frank Monroe, in a written judicial opinion, said the following:
"Those responsible for the passing of the Act did all in their power to avoid the proffered input from sitting United States Bankruptcy Judges, various professors of bankruptcy law at distinguished universities, and many professional associations filled with the best of the bankruptcy lawyers in the country as to the perceived flaws in the Act. This is because the parties pushing the passage of the Act had their own agenda. It was apparently an agenda to make more money off the backs of the consumers in this country."
1. Some see the Bankruptcy Bill as a prime example of how Congress has completely turned its back on working families. Do you think that's true?
Steve Filson: Yes. I believe the vote to pass The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) is a perfect example of lobbyists with big checks getting exactly what they wanted while working families and small business owners were ignored.
2. The Bankruptcy Bill garnered bi-partisan support, including vigorous support from Ellen Tauscher (D-Alamo). Do you think it was a mistake for some Democrats to support this Bill?
Steve Filson: I think it was a mistake for Democrats and Republicans to support the bill. While I have the utmost respect for Congresswoman Tauscher and the work she does for the 10th Congressional district, I disagree with her on this issue.
3. How do you view the Bankruptcy Bill's relationship to other issues like Health Care Reform or Campaign Finance Reform?
Steve Filson: I believe these issues are related because they demonstrate how Congress can be held hostage on issues important to the American people by very small groups of powerful special interests.
There should be an honest and open debate in this country about how we get health care for all Americans. But that debate can’t happen when the only ones in the room benefit from obscene administrative costs at the expense of coverage.
There should be an honest and open debate in this country on campaign finance reform and free speech. But the debate is being stifled by powerful media interests benefiting from the outrageous prices charged to candidates so they can get their message to voters.
Money can narrow the conversation about how best to address the issues we all face and can suppress the best ideas that can move American forward.
4. What impacts do you think the Bankruptcy Bill will have right here in the CA-11 District?
Steve Filson: The impacts will be widely felt.
Small business will be punished by the complicated rules surrounding business formations that need to co-mingle personal and business assets.
Consumers and new students will suffer because the law does not address the aggressive marketing of high interest, high fee credit cards to new graduates and low-income workers. The majority of bankruptcies are not caused by one’s “moral failings” but have their origin in catastrophic events and medical emergencies. The law strips away the financial second chance Americans deserve.
Perhaps most depressing is the effect this law will have on active duty troops and Reserve and National Guard members. In 1999, a General Accounting Office study analyzed bankruptcy filings and determined that 16,000 active-duty service members had filed for bankruptcy during the course of the last year. In addition, a 2002 Pentagon study found that 1/3 of military families experience a significant drop in income when a member was deployed, and for Reserve and National Guard members this figure rose to 40%. The men and woman who defend this country must have better.
Since the bankruptcy law became effective, the Republican majority in Congress continues to block any exceptions to the bankruptcy law for service men and woman as well as victims of last season’s terrible hurricanes.
These are times when Congress should side with working families and the men and women who defend our nation.