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NewMexiKen — "I heard Tom DeLay's blood was in the water and the sharks were circling him, but unfortunately, it turned out to be a metaphor." — The Onion | What Do You Think? ...

UNDERNEWS — PROGRESS REPORT - The credit card industry, which took in $30 billion in profits last year and doled out more than $7.8 million to candidates in the 2004 election cycle, has lobbied relentlessly for the bankruptcy bill, pushing the fiction that bankruptcies occur because of "irresponsible consumerism" (in bill sponsor Charles Grassley's (R-IA) words). In fact, "ninety percent of all bankruptcies are triggered by the loss of a job, high medical bills or divorce." In recent years, personal bankruptcy rates have shot to record highs amid a weak labor market and declining health insurance coverage. The bill is set to create several "new hurdles" that will make it harder and more expensive for Americans to recover from such episodes, while failing to stop the actual abuses that plague the system.

In Canton, Ohio, debtors awaiting bankruptcy hearings told the Akron Beacon Journal that "they're getting a raw deal now and the proposed new rules will only make life tougher for working families who often are struggling just to get by. . . Debtors talked of layoffs, pay cuts, high medical bills and a growing sense that it's impossible to get ahead." From a survey of academics and bankruptcy lawyers, the Baltimore Sun concludes the bill will allow the credit card industry to "squeeze more payments and fees from debtors before they can enter bankruptcy court protection. . . . Debtors are likely to face more hurdles and higher costs, and have fewer lawyers to help them." Earlier this week, conservative columnist Debra Saunders slammed supporters of the bankruptcy bill for "toadying to big business." She said the bill amounted to "welfare for usurers."

At the center of the bill is a new "means test," requiring some debtors earning above the median income in their state to pay back some of their debts. The test is inflexible - it cannot be waived, for instance, "even if the debtor is seeking bankruptcy relief because of some terrible circumstance beyond his or her control" - and will force many debtors to go through a litigious process they cannot afford. Besides the means test, the bill penalizes honest debtors by introducing a number of "new hurdles" that will make it harder for Americans to recover from financial misfortune. "Those hoops include a requirement that consumers pay for credit counseling within six months prior to filing for bankruptcy and complete a financial management course before a judge could wipe out any debts." The law also will "raise certain filing fees, require more documentation and trips to court, and is projected to boost attorney fees."

While the bill creates major new hurdles for Americans in debt, it places no restrictions whatsoever on the credit card industry. According to the National Consumer Law Center, "the bill doesn't address the primary ways in which credit card companies take advantage of consumers: high fees; deceptive promotions and disclosures; and unfair practices such as universal default." For instance, the bill allows creditors to "post inaccurate and hard-to-find rate information in Internet credit card solicitations," often targeted at college students or low-income Americans. The bill also shields credit card companies from liability and weakens legal protections from predatory interest rates - "as high as 36 percent in some cases" - as well as exorbitant late fees and over-limit penalties.