The new law strengthened bankruptcy laws not for we the people, but for creditors who make it a business practice to exploit American consumers for the purpose of profit and gain.
Assault on the Middle Class
I have never wondered why our congressmen and women are called “Representatives,” not is it a mystery as to why the body of government to which they are elected is called the “House of Representatives.” It is our Congress’ sole duty to serve the interests of the people who sent them to Washington.
The framers of our Constitution gave Congress the power “to establish… uniform Laws on the subject of Bankruptcies throughout the United States, (Article I, Section 8)” not for the protection of creditors, but in order to protect hard working citizens. However, the BAPCPA is a perversion of ideals.
His words could not be further from the truth. Less than 2% of all bankruptcies filed were filed under fraudulent motives.
Unlike when they issue credit, the credit companies perform a number of income, asset and debt verifications when a consumer files for bankruptcy. They have the right to interview the consumer, while under oath, and they receive a representative from the US government to look out for the interests of the creditors during the bankruptcy proceedings. All of this before the BAPCPA.
BAPCPA Constrictions: Income as a litmus test to file Chapter 7
As a former professional credit counselor, I was a training specialist for the largest non-profit credit counseling agency in the country. I developed training material to ensure that my agency was certified by the Executive Office of the United States Trustee (EOUST). At one time, I referred several of my clients to seek legal advice regarding a Chapter 7 bankruptcy on a daily basis. I am intimately familiar with the circumstances surrounding bankruptcy and the provisions of the BAPCPA.
A Chapter 7 Bankruptcy allows a consumer to receive full debt relief from creditors, and write off unsecured debts. If the debtor owns assets, the assets may be used as compensation to creditors.
The BAPCPA prevents average Americans who need creditor protection under the full extent of the law from receiving this right that the framers of the Constitution clearly envisioned by requiring applicants to earn less than the median amount of income for the state. Taking into account even part-time employment, this number is always below any livable wage, often times less than $19,000 a year. All other consumers are forced into a constrictive Chapter 13.
In a Chapter 13, consumers are forced to pay all income that is in addition to their housing and food costs to a trustee, who in turn disburses it to the creditors. This provides no emergency income in the event of the smallest surprise, such as a flat tire. As a result, two thirds of Chapter 13 bankruptcies fail in the first year.
The typical scenario…
Suppose a two income family (the Johnsons) has an income of $100,000 a year. The husband makes $50,000 a year at the Post Office, while the wife makes $70,000 a year as a programmer. They have two children, two cars, and a mortgage. Their savings, debts, and expenses are reasonable for their income.