A large, bipartisan group of law professors who teach bankruptcy law have drafted a letter (pdf) to be sent to the House Judiciary committee, where the bill currently resides. They strongly oppose the bill - it's worth a read if you want a methodical outline of the case against this bill.
The bankruptcy filing rate is a symptom. It is not the disease. Some people do abuse the bankruptcy system, but the overwhelming majority of people in bankruptcy are in financial distress as a result of job loss, medical expense, divorce, or a combination of those causes. In our view, the fundamental change over the last ten years has been the way that credit is marketed to consumers. Credit card lenders have become more aggressive in marketing their products, and a large, very profitable, market has emerged in subprime lending. Increased risk is part of the business model. Therefore, it should not come as a surprise that as credit is extended to riskier and riskier borrowers, a greater number default when faced with a financial reversal. Nonetheless, consumer lending remains highly profitable, even under current law.
The added risk of Chapter 7 bankruptcies is already built into their financial models. This bill rescues no one.
Posted by tunesmith at March 13, 2005 10:15 PM
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