Credit Card Debt Blog

On April 20, 2005, President Shrub signed into law the Bankruptcy Maltreatment and Consumer Protection Act, a piece of sweeping statute law that brought about the most sweeping changes in personal bankruptcy law in the last one-fourth century. This bill, which takes consequence in October 2005, passed with the overpowering support of both political parties of congress, claims, through its very name, to offer “consumer protection.” Makes it? How are consumers “protected” by this bill?

The intent of the new legislation, is to eliminate “bankruptcy of convenience”. Sponsors of the measure allege that most consumer bankruptcy cases affect irresponsible Spenders who have got shopped or gambled their money away and now make not wish to pay their creditors. They rightly point out that bankruptcy costs the credit card companies millions of dollars each twelvemonth and that those costs are passed on to consumers in the word form of higher interest rates. By making it harder for those with problem debt to register for bankruptcy, legislators state that more than people will pay their bills, the credit card companies will salvage millions of dollars, and the consequent nest egg will be passed on to consumers in the word form of lower interest rates.

The measure is lengthy, but cardinal points are as follows:

Those considering bankruptcy will have got to go through a “means test.” If their income is above a certain threshold, they will not be able to register under Chapter 7 of the Federal Soldier bankruptcy code, which rubs out debt and gives the debtor a fresh start. Instead, they will have got to register under Chapter 13, which set ups a five twelvemonth repayment plan.

There are no commissariat in the law for debt problems caused by occupation loss, unwellness or other traumatic events, despite surveys that show that these are the cause of most bankruptcy cases.

Attorneys will now be responsible for the truth of paperwork filed by their clients. This volition probably ensue in fewer bankruptcy attorneys, with those that go on to drill raising their fees substantially in order to offset their further liability.

In short, most consumers are no longer protected from occupation loss or unwellness by being able to register under Chapter 7 and they will have got less aid from competent attorneys owed to the new liability proviso of the bill. There is small to “protect” consumers in the Bankruptcy Maltreatment and Consumer Protection Act. The exclusive benefit for consumers resulting from this measure will be lower interest rates and fees from the credit card companies, who will salvage millions of dollars as a consequence of this legislation. Of course, should the credit card companies take to maintain the savings, rather than base on balls them on to their customers, then consumers will be left with no benefit or “protection” astatine all.