SharksWithLasers -- Seth Cooper

A CUTTING-EDGE BLOG FOR THE WORLD OF THE 21st CENTURY, Currently operated by Seth L. Cooper, a 27 year-old attorney in Seattle (sethlcooper at comcast dot net)

Tuesday, March 15, 2005

VINDICATING BANKRUPTCY REFORM. Today at NRO, Volokh Conspirator and George Mason Law School Prof. Todd Zywicki has a must-read piece entitled "Bankrupt Criticisms," discussing the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The bill recently passed the Senate. A House vote is expected soon, with President Bush's signature to follow. Following the recent passage and signing of the Class Action Fairness Act, this would be the second important legislative achievement of the Bush Administration in the second term.

Zywicki has been voice crying in the wilderness on this subject, as leftwing blog after leftwing blog describe the bankruptcy bill as if it would somehow usher in a dark era of feudalism in America. In his recent Volokh Conspiracy posts (available on one page, here) and now in his NRO article, Zwicki sets the record straight: few persons filing for bankruptcy are impacted by this bill, those who cannot afford to discharge any of their debt will not be affected by the legislation, and the reforms carefully target abusers of the system.

The much-discussed means-test provision of the bill is entirely reasonable and sensible. Those persons making above the medain level of income in their region, after taking into account their many expenses, are presumed to be able to discharge some of their debt under Chapter 13. And even then, such persons may rebut the presumption.

Importantly, Zwicki identifies the persons who are most harmed by bankruptcy fraud and abuse:

...Those victims include the unsuspecting divorcee who is sandbagged by the bankruptcy system when she learns that her property settlement has been discharged. They include small businesses that are forced to raise prices, curtail services, or lay off workers to compensate for losses resulting from bankruptcy filings. They include hospitals that are unable to buy new equipment or hire another nurse because of unpaid bills discharged in bankruptcy. They include young and low-income workers who are unable to buy a car because, thanks to our out-of-control bankruptcy system, they can’t get a loan.


And:

They include every American who is forced to pay more for credit, goods, and services, because others file bankruptcy and walk away from debts they could pay but choose not to...


Another good resource on this topic is the American Bankruptcy Institute's page on the bill, which can be found here. The page contains various amendments that have been added to the bill, as well as the committee testimony of several experts, including Zwicki and Phillip Strauss.

A real reform measure that reduces bankruptcy abuse, this bill is just and will serve to help our nation's economy further along.

(North Seattle--Green Lake, WA)

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