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"Laws Can Be Written Again"

Although mainstream television news has been remarkably silent on the aspects and implications of the bankruptcy law, print and online media have been anything but. The opposition to S.256 has cut across political boundaries and professional borders, with authors, pundits, and reporters pulling no punches in discussing the many flaws and difficulties of the legislation.

• Consumer Bankruptcy Filings At Highest Level In Nearly Four Years • Bankruptcy "Reform" Fails to Deliver • Bankruptcy Filings Top 100,000 in October • Personal Bankruptcies On the Rise • New Bankruptcy Law Hurts Consumers and Lenders, Report Finds • Obama Calls for Bankruptcy Law Reform • Bankruptcy Recovery Time Longer than Many Expect • Bankruptcy Rates Rise Among Older Americans • Consumer Bankruptcies Up 47% from Last Year • Bankruptcy Filings Soared in February • Senate To Debate Bankruptcy Law Changes • Dodd Announces Bankruptcy Reform Legislation • Bankruptcy's Early Warning Signs • Credit Counseling Not Helpful in Bankruptcy Cases, Study Finds • New Bankruptcy Law, One Year Later • Bankruptcy Filings Set Record in 2005 • Consumer Borrowing Plunges In October • Lawsuit Challenges New Bankruptcy Law • New Bankruptcy Law Tightens Rules, Adds Paperwork • Bankruptcy Filings Surge Ahead Of New Law • IRS Plans to Yank Tax-Exempt Status of 20 Credit Counselors • Credit Cards Ensnare, Victimize Working Families, Report Finds • Congress May Modify Bankruptcy "Reform" that Penalizes Katrina Victims --- Related Stories • Red & Blue United • A Test of Means or A Mean Test? • Cui Bono? (Who Profits?) • Long View, Long Road • "Laws Can Be Written Again" • What You Can Do • Senate Passes MBNA's Bankruptcy Bill • Congress Ready to Tighten Bankruptcy Law • Medical Bills Leading Cause of Bankruptcy, Harvard Study Finds

The Talking Points Memo "Bankruptcy Blog" (sponsored by writer Joshua Micah Marshall and co-authored by Prof. Warren) has been providing a weekly stream of insights and revelations regarding S.256. As contributor Jason Spitalnick puts it, "Politicians in Washington are practically stepping over each other to advance finance industry interests at the expense of American taxpayers."

Adam Levitin, a member of the Harvard Law School Federalist Society -- no tree-hugging group of peaceniks by a long shot -- decries the bill as "a pretty naked example of an industry buying legislation against most social benefits and policy considerations."

Cathleen Moran, bankruptcy attorney and head of the Moran Law Group based in Mountain View, California, states that "Our country does not benefit by having debt ridden, disheartened citizens with no real prospect of ever paying off mountains of debt incurred in part because our consumer society urges instant gratification."

But despite the rising outcry against S.256, it seems nearly certain that the credit and financial industries' monetary muscle -- and Congress' go-along, get-along attitude -- ensure the bill's passage. However, that doesn't mean the fight is over.

"Laws that are written can be written again", as Prof. Warren states. Once bankruptcy claimants realize how disastrous this new law can be for them, the potential for an electoral shakeup in Congress could come as early as the next election -- which could account for Congress' incredible haste.

Further, most experts interviewed for this article agreed that the bill is "a tangle," and even creditors will be clamoring for changes once it becomes apparent that consumers won't be able to carry the heavy load creditors are demanding.

On one point, everyone agrees: consumers must become more financially literate, save more, learn to manage their money and big quicker to consult reputable professonals when financial problems loom.

"Learn to live within your means", admonishes Jeffery Morris. "It's important to increase your level of savings for unexpected catastrophes." Morris also urges against attempting to file for bankruptcy "pro se," without a lawyer.

After Bush signs the bill, there will be a six-month period wherein claimants can file under old rules, so one can expect a flurry of filings before S.256's provisions take effect. It's essential to get help from proven experts in the field, as there will be no second chance once S.256 is in full force.

Elizabeth Warren has written several treatises on financial planning and how to handle the rising costs of life in America. Her newest book, "All Your Worth: The Ultimate Lifetime Money Plan", is a plan for "what you can do to move back from the edge ... it's a slightly subversive theory" on "what you can do to help yourself in a really scary time," she said.

Katherine Colgan, by contrast, believes that Americans can find financial relief by banding together in professional trade groups and community associations.

A common thread linking diverse opinion on S. 256 is that bankruptcy is not an indulgence or a "get out of jail free card," but a necessary evil that the Constitution enshrined as a protected right. (The Constitution empowers Congress to "establish ... uniform Laws on the subject of Bankruptcies throughout the United States.")

Despite what Sen. Grassley may argue, filing for bankruptcy isn't fun, and few feel good about it. Numerous studies have shown that the majority of bankruptcy claimants aren't criminals, delinquents, or scam artists (though some, no doubt, are, just as some politicians are). One of the more recent studies, conducted by Harvard researchers, found that illness and medical bills caused half of the 1,458,000 personal bankruptcies in 2001.

Most of the medical bankruptcy filers were middle class; 56 percent owned a home and the same number had attended college. In many cases, illness forced breadwinners to take time off from work -- losing income and job-based health insurance precisely when families needed it most.

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