Bankruptcy Legislation? More Like a big F-You to Middle Class America

The Rude Pundit is pissed off about this, and you should be, too.

The Senate is teeing up to pass the so-named "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," which, if we were living in a reality based community, would prevent abuse of bankruptcy laws and protect consumers. But we aren't living in a reality based community, and this bill is about nothing but screwing over the little guy, again.

This bill shifts the idea of debt from one that says you can discharge your debt through bankruptcy, to protect your future earnings, to one that says that your future earnings are fair target for your creditors, even if bankruptcy is declared.

In addition, some experts say, the changes proposed in the Senate bill would fundamentally change long-standing American legal policy on debt. Under bankruptcy laws as they have existed for more than a century, creditors can seize almost all of a bankrupt debtor’s existing assets, but they can’t lay claim to future earnings. The proposed law, by preventing many debtors from seeking bankruptcy protection, would compel financially insolvent borrowers to continue trying to pay off the old debts almost indefinitely.

“Until now, the principle in this country has been that people’s future human capital is their own,” said David A. Moss, an economic historian at Harvard University. “If a person gets on a financial treadmill, they can declare bankruptcy and have what can’t be paid discharged. But that would change with this bill.”

Sounds good, huh? As it is, I'm only scratching the surface here. This is a 500 page bill, with tons of crappy ideas for hurting the little guy, so please read on through the links, and also DailyKos, which is doing a typically fine job dismantling the nuts and bolts on this issue. But let me sum up with a choice quote from the Rude guy:

"The bankruptcy bill is class warfare in its purest form: it states that the poor and middle class are bad and that the rich are good. And maybe it's time to start considering how we respond to such blatant, intentionally barbarous acts by those in power."

P.S. - TPM has a special section up with blanket coverage of this issue... including posts by Justin Spitalnick, who I went to college with, so check it out.