Bankruptcy Bill Rants Revised (let's be educated)

So I have been thinking over the past day about how I just laid down some large claims yesterday (i.e. "Bush outlawing bankruptcy" etc, etc.), but I didn't really back any of it up. So I shall do my best and put my money, or at least my credit report (as I don't have to real stuff) on the line and try to make my point clear.


The common person cannot lobby with the same effect as big business. In the last election I believe that for a $20 donation to the Howard Dean campaign you could get a coffee cup. However, I did not know that for $1, 341, 202.00 you could get your own legislation passed. Obviously MBNA did, MBNA being an issuer of Credit Card companies ; this fine company donated the overwhelming sum through 7 soft money donations. How kind of them; oh I forgot to mention that this big chunk of change went exclusively to the Republican Party. But have no fear MBNA is a bipartisan briber and also donated $50, 000.00 to the Democratic Party.
Now that I think about it I guess that I'm really not all that surprised that the legislation passed through the Senate 229-73. But it does make me question the few Democrats that are in the Senate. What the hell are they doing voting for something like that in the first place? Well according to someone I am glad I don't have the choice to vote for, Ellen Tauscher (D-Calif), who stated that she voted for the bill because she wanted to support her constituents who "work hard, pay their bills, live within their means." She then continues by stating that those that are going into bankruptcy are the same that are raising the costs of goods by living outside of their means. She also made the incredibly stupid observation/statement that "Let's (the democrats) keep our eye on the real foes here: the Republican majority who don't write good legislation and don't provide the minority the chance to offer alternatives." Good point woman! You should most definitely support the majority that is stepping on your constituents...oh but wait, she lives in that strange part of California, and the country for that matter, that doesn't contain the poor folks.
Which brings up the next point; who exactly are these "Poor Folks" in which I speak of? Well to be honest I can only think of one person that I know who has gone into bankruptcy, and that person shall go unnamed. However the majority of the people that do go into bankruptcy are those that have gone through one (or many) of the following: divorce, sickness, or loss of work. A recent study published by the Harvard Medical School and Law School showed that out of the 2 million bankruptcy claims in the U.S. in 2001 illness/medical expenses caused half. Another interesting fact is that studies also "show that only about 3% of bankruptcy filers could pay as much as a third of their debt," at the time of filing. However the bill was passed by a majority of people that were convinced that most of the cases of bankruptcy were by obvious “fakers,” just some lazy people trying to take advantage of the rest. It probably wouldn’t have anything to do with the increasing cost of living or with the poor economy; it’s really just about a declining work ethic in the United States.
Now that I have pointed out a few of the people involved, let's get onto the actual provisions of the bill. In the past post I mentioned that Bush was “outlawing bankruptcy,” this was far from the truth, and for that I am sorry. However I am now convinced that it would by slightly better if he were to outlaw the system as those that break the law can count on an equal punishment that will most likely be predictable and open. But instead they have created a system of tests and hoops to pass and jump through. If you were to look at the new Bill passed you would first find that it is largely difficult (at best) to understand. To me, the average (I can’t stress that enough) American, I could not find a clear way to understand what it is trying to say. However with the help of a few articles here is what I understand: before the bill was passed an individual could claim chapter 7 bankruptcy and his/her debts would be erased (with the lasting impact of a horrible credit rating, but at least with a clean slate to start again); however the recent bill has changed that so that instead of simply starting over an individual has to claim chapter 13 bankruptcy and is then placed on a repayment schedule that they will have to follow (thus guaranteeing that MBNA gets their money-now they have a sure thing). Also, “the bill applies a means test: if a debtor earmns less than the median income in the state where he lives, then his case will remain in Chapter 7, where, after he gives up certain property that he owned at the time of filing for bankruptcy, his debts will be cancelled.” To me this sounds as though they make sure that not only will you not be able to pay your bills but that you will also be left unable to pay for anything. To be below a median income in any given state is really to say that you are below the poverty level, which is already disgustingly low; and to take the only property that you own, like say, your car, means that you are left without some of the bare necessities required for work.
The easy assumption for most of us to make at this point is to simply shake our heads and say, “well Joe Blow (Mr. Bankruptcy) is simply living outside of his means. Perhaps this sort of bill is the only way of straightening him out.” In thinking this way we are simply blowing off our common man. Many people in the United States are brought up with poor money skills, not to mention overwhelming class differences (which only help to build a material dependency for the have-nots). But that’s another essay.
The other “individual” provisions of the bill include discussions over what is considered necessary for the individual’s home (i.e. cookery, electronics, toys, furniture, etc); as well as “luxury items” and “antiques,” (note to those about to claim bankruptcy, get rid of all tiffany lambs and related items, as they are not considered necessary). Child support is also discussed, but not before discussing repayment schedules for bill collectors (for it is better to trickle down then to water those in front of you). All in all, check it out online if you really want to; it can be found at: http://www.moranlaw.net (somewhere on there…).
Now for the other side. Who does this bill help? Well I have tried to make it clear that it doesn’t really help the common person; that is unless the common person is a member/stock holder of a large corporation. Now I know that it is a widely held belief that Republicans (who, again, passed the bill with overwhelming support) are always there to help big business screw over the above mention demographic (i.e. everyone else). Normally I do not agree with this; however, the Monkees put it best when they proclaimed, “…Now I’m a Believer.”
When a business decides that it has gotten to the end of it’s financial rope and about to chock they enter the lovely state of Chapter 11 bankruptcy. The best (and first definition of Chapter 11) that I could found is as follows.

“Chapter 11 is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers since it is far more complex and expensive to pursue. It allows businesses to reorganize themselves, giving them an opportunity to restructure debt and get out from under certain burdensome leases and contracts. Typically a business is allowed to continue to operate while it is in Chapter 11, although it does so under the supervision of the Bankruptcy Court and its appointees.”

Sounds nice. Why can’t everybody just “restructure?” Because we don’t have the money to shift around, or the resources (i.e. stuff to be looted) like businesses do (unless you are a small business owner, in which case Wal-Mart will trade you a lifetime of “Rolling Thunder” Soda in exchange for all tangible goods in stock, including half used rolls of toilet paper…big in China). Enough opinion already, on with the factoids:
1. New Bankruptcy Bill amends Section 507 of title 11 in the following ways: previously Chapter 11 mandated that corporations pay employee benefit plans for all services rendered within 90 “days before the date of filing of the petition or the date of the cessation of the debtor’s business, whichever occurs first,” it also stated that the business would have to pay $4, 000 less x the number of employee plans. This is a little confusing for me; I believe that they are referring to a break in the actual amount of money that they have to put into the benefit plans (i.e. take the number of employees that will be receiving the benefits and than multiply if by $4, 000 and that is the total break in actual payment that the corporation will have to pay out).
2. The changes implemented within this bill state that the total amount of the break (previously $4, 000) has been raised to $10, 000; therefore the businesses will have to multiply the number of benefactors by $10, 000 and pay that much less. However the period of time that the benefits could be claimed is increased to 180 days (double the previous). This is kind, but the math still works out to support that business and not the “about to be laided off” employee. Seems a wee bit unfair to me.

So the actual changes weren’t exactly the smoking gun for me either; but I did find some interesting point in the Chapter 11 text; such as the list of priorities for Businesses that are about to restructure themselves. Employees came 3rd of the list; doesn’t seem to bad. However the number of things ahead of these people is slightly astounding. Such as the administrators, lawyers, and accountants (the exact same people that should have been able to avoid going into the bankruptcy in the first place) are the ones to get paid first. Buried within the text of Title 11, Chapter 5, Subchapter I, Subsection 507 the list of “priorities” states firstly that, “The following expenses and claims have priority in the following order: (1) First, administrative expenses allowed under section 503 (b) of this title…,” which states, “(b) After notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under section 502 (f) of this title, including-
(A) the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case…” (i.e. those that are going to be sitting in the courtroom or in on the “Board” after everyone else has been laided off). It continues to state all other “administrative expenses” that shall be paid first; most of which included those that have had the power within the company. The most interesting language used in the Sub-chapter/section/conscious was in the second to last section of the test which stated that, “responable compensation for sevices rendered by an indenture trustee in making a substantial contribution in a case under chapter 9 or 11 of this title, based on the time, the nature, the extent, and the value of such services…” so really anyone within the “trustee” category can stake a claim to the company that they screwed up before an employee even has a chance. Nice backdoor fellas. In the end I find it sad that not only does the employee get screwed first, but that they can’t even understand most of the wording/meaning of this bill; guess that’s why the lawyers get paid along with the crooks first.
I’m no expert, just angry. So let’s move on to the state of the union and the great example that Mr. President is setting for our future generations and money management. You all should be happy at this point because in an attempt to keep this rambling slightly limited I will simply list the following point (#1-4 from Yahoo news, section on increased military allowance…sorry, I didn’t write down the story address. :
1. April 22, 2005-Senate votes to allow $81 billion for Afghanistan and Iraq
2. This year-+$3 billion for war/reconstruction
3. New bill only enough to last through September of this year (which is when the new budget begins); in 2006 the pentagon plans to ask for more
4. Only good point of this bill: the families of dead soldiers will now receive a $100,000 lump sum, instead of the previous $12,000.

Current National Deficit Figures (all figures from Terence Samuel piece @ http://www.cbsnews.com/stories/2005/04/08/opinion/main686839.shtml)
1. Current trend: annual deficit-$368 billion this year; 10 year projection (without figures for continued presence in Afghanistan/Iraq) $1.35 trillion
2. At the time Bush tool office there was a 10 year projected surplus of $5.6 trillion
3. Since that time there has been a trend of a +$400 billion/year deficit
4. The National Debt Limit has been raised three times since current president has taken office
5. Current projected deficit $7, 782, 816, 546, 352.00

I tire of the subject. It is all slightly depressing.
Bottom line: I once got a free hat for signing up for a credit card at a Cubs game. I gave it to my little brother (the hat that is). It’s good to know that I can give my children a sense of emotional and financial insecurity because I silently agreed to oppression and violence against the “Axis of Evil.”