The Bankruptcy Bill's Fine Print

The reality of the pending bankruptcy bill is almost unimaginable: Credit card companies and commercial banks, already enjoying huge profits thanks to usurious interest rates, remarkable late fees, and marketing strategies that take advantage of less savvy consumers, will do even better. Families hit by a job loss, divorce, or medical emergency that leads to financial crisis will find themselves with fewer options.

Yet as we dig into the fine print of the bill, we discover even more outrageous changes to bankruptcy law -- not surprisingly, changes that benefit corporations over people. For example, while debtors could never eliminate overdue child support and alimony payments via bankruptcy, an article in today's Christian Science Monitor notes that no priority is given to those payments under the proposed law. Credit card companies and other creditors would be on an equal footing with those who are owed child support. From the Monitor article:

Under current laws, noncustodial parents who file for bankruptcy cannot discharge their child support and alimony. Under the proposed new law, [Jill Miller, chief executive officer of Women Work! in Washington, D.C.] says, they still can't discharge those debts, but there's a difference. Claims to back child support and alimony would be on equal footing with the claims of credit-card companies. In some cases, "mothers will be coming in after other creditors have received their payment," Miller says. "It's absolutely terrible."

Indeed it is. (Read the Monitor story for a better understanding of how the bill will impact women and single mothers.)

Another noteworthy fact from Talking Point Memo's special bankruptcy bill blog is that 18 current senators who voted in 1991 to cap credit card interest rates at 14 percent recently voted against Sen. Mark Dayton's amendment to cap those rates at 30 percent. That's right: they opposed a cap of THIRTY PERCENT. Why the switch? A few million in campaign contributions from commercial banking interests is certainly worth considering. TPM has assembled a list of these senators, should you wish to send them a strongly-worded note.

There's much more to protest about this legislation, because it continues the transfer of "power to the powerful" through legislation cleverly disguised in a variety of faux populist and faux pro-consumer arguments. I'll write more about this soon, both here in the blog and in upcoming columns. It's not too late to stop this bad legislation with its host of awful consequences for working Americans.