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New Bankruptcy Legislation
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| wolverine16 |
| quote: | Proposed Law on Bankruptcy Has Loophole
By GRETCHEN MORGENSON
Published: March 2, 2005
The bankruptcy legislation being debated by the Senate is intended to make it harder for people to walk away from their credit card and other debts. But legal specialists say the proposed law leaves open an increasingly popular loophole that lets wealthy people protect substantial assets from creditors even after filing for bankruptcy.
The loophole involves the use of so-called asset protection trusts. For years, wealthy people looking to keep their money out of the reach of domestic creditors have set up these trusts offshore. But since 1997, lawmakers in five states - Alaska, Delaware, Nevada, Rhode Island and Utah - have passed legislation exempting assets held domestically in such trusts from the federal bankruptcy code. People who want to establish trusts do not have to reside the five states; they need only set their trust up through an institution in one of them.
"If the bankruptcy legislation currently being rushed through the Senate gets enacted, debtors won't need to buy houses in Florida or Texas to keep their millions," said Elena Marty-Nelson, a law professor at Nova Southeastern University in Fort Lauderdale, Fla., referring to generous homestead exemptions in those states. "The millionaire's loophole that is the result of these trusts needs to be closed."
Yesterday in Washington, Republicans in the Senate beat back the first in a series of Democratic amendments aimed at softening the effects of the bankruptcy bill on military personnel, and the majority leader of the House vowed to get quick approval of the bill if the Senate did not significantly alter it.
"We will grab hold of it just like we did class action if it is a good and clean bankruptcy reform bill," said Representative Tom DeLay, a Texas Republican, referring to the quick action the House took last month on a measure limiting class-action lawsuits.
The Senate bill is favored by banks, credit card companies and retailers, who say it is now too easy for consumers to erase their debts through bankruptcy.
It is almost identical to previous versions that have been introduced in Congress, unsuccessfully, since 1998. Perhaps because the current bill was written so long ago, some legal authorities say, it does not address the new state laws that have allowed asset protection trusts to flourish.
"This is just a way for rich folks to be able to slip through the noose on bankruptcy, and, of course, the double irony here is that the proponents of this bill keep pressing it as designed to eliminate abuse," said Elizabeth Warren, a law professor at Harvard Law School. "Yet when provisions that permit real abuse by rich people are pointed out, the bill's proponents look the other way."
Senator Charles E. Grassley, an Iowa Republican, is the main sponsor of the bankruptcy bill. His press secretary, Beth Levine, said the senator's staff was unaware of the trusts and the loophole for the wealthy that they represented. "The senator is always open to suggestions for closing these loopholes," she said.
Money held in asset protection trusts can elude creditors because federal bankruptcy law exempts assets governed by "applicable nonbankruptcy law." Intended to preserve rights to property under state law, the exemption makes it difficult for creditors to get hold of assets that they would not be able to seize through a nonbankruptcy proceeding in state court.
Asset protection trusts have become increasingly popular in recent years among physicians, who fear large medical malpractice awards, and corporate executives, whose assets are at greater peril now because of new laws. The Sarbanes-Oxley legislation, for example, requires chief executives and chief financial officers to certify that their companies' financial statements are accurate; anyone who knowingly certifies false numbers can be fined up to $5 million. In addition, under Sarbanes-Oxley, executives may have to reimburse their companies for bonuses or other incentive compensation they received if their company's financial reports have to be restated in later years.
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Republicans once again helping the ordinary Americans that they claim Democrats are so out of touch with. Oh, and Democrats don't support the troops either, though in today's debate:
| quote: | The Senate rejected Tuesday an effort backed by Sen. Evan Bayh, D-Ind., to exempt service members from some of the tighter bankruptcy restrictions Congress is considering.Instead, the Senate approved a Republican-backed amendment that Sen. Dick Durbin of Illinois, the No. 2 Democrat in the Senate, said is not good enough.
"Is it too much to ask to give them a break if the bottom falls out while they're serving America?" Durbin said.
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"It's just not right (that) those who we have called upon to make the ultimate physical sacrifice -- loss of life or limb -- should also be forced to make the ultimate financial sacrifice," Bayh said. (Emphasis added.)
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Nice, looks like the soldiers & sailors act is going to be overturned after more than 60 years. |
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| MisterOpus1 |
| quote: | Originally posted by wolverine16
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Republicans once again helping the ordinary Americans that they claim Democrats are so out of touch with. Oh, and Democrats don't support the troops either, though in today's debate:
Nice, looks like the soldiers & sailors act is going to be overturned after more than 60 years. |
What what what? Republicans pissing on our military? Say it ain't so!
Seriously, this is another pretty big issue that the Dems. SHOULD stand up against. The trouble is they won't. This almost got passed back in '02 with a majority of Senate Dems. in favor had it not been for a last minute slip in the bill pertaining to abortion or something. This is unfortunately one of those issues where the corporate interests, or more specifically credit card corporate interests have successfully lobbied and continue to pull the strings for both sides of the aisle. Barring any last minute unrelated piggy-back bills, unfortunately this one will likely pass. |
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| smokeape |
Well, f*ck. Hope W has enough sense to veto the damn thing, but don't count on it since they've been pissing away the rights of soldiers and sailors ever since the war started.
:mad:
[[[smoke]]] |
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| MisterOpus1 |
Krugman on the bankruptcy bill, and why the Dems. shouldn't even think of voting for it:
| quote: | The Debt-Peonage Society
By PAUL KRUGMAN
Today the Senate is expected to vote to limit debate on a bill that toughens the existing bankruptcy law, probably ensuring the bill's passage. A solid bloc of Republican senators, assisted by some Democrats, has already voted down a series of amendments that would either have closed loopholes for the rich or provided protection for some poor and middle-class families.
The bankruptcy bill was written by and for credit card companies, and the industry's political muscle is the reason it seems unstoppable. But the bill also fits into the broader context of what Jacob Hacker, a political scientist at Yale, calls "risk privatization": a steady erosion of the protection the government provides against personal misfortune, even as ordinary families face ever-growing economic insecurity.
The bill would make it much harder for families in distress to write off their debts and make a fresh start. Instead, many debtors would find themselves on an endless treadmill of payments.
The credit card companies say this is needed because people have been abusing the bankruptcy law, borrowing irresponsibly and walking away from debts. The facts say otherwise.
A vast majority of personal bankruptcies in the United States are the result of severe misfortune. One recent study found that more than half of bankruptcies are the result of medical emergencies. The rest are overwhelmingly the result either of job loss or of divorce.
To the extent that there is significant abuse of the system, it's concentrated among the wealthy - including corporate executives found guilty of misleading investors - who can exploit loopholes in the law to protect their wealth, no matter how ill-gotten.
One increasingly popular loophole is the creation of an "asset protection trust," which is worth doing only for the wealthy. Senator Charles Schumer introduced an amendment that would have limited the exemption on such trusts, but apparently it's O.K. to game the system if you're rich: 54 Republicans and 2 Democrats voted against the Schumer amendment.
Other amendments were aimed at protecting families and individuals who have clearly been forced into bankruptcy by events, or who would face extreme hardship in repaying debts. Ted Kennedy introduced an exemption for cases of medical bankruptcy. Russ Feingold introduced an amendment protecting the homes of the elderly. Dick Durbin asked for protection for armed services members and veterans. All were rejected.
None of this should come as a surprise: it's all part of the pattern.
As Mr. Hacker and others have documented, over the past three decades the lives of ordinary Americans have become steadily less secure, and their chances of plunging from the middle class into acute poverty ever larger. Job stability has declined; spells of unemployment, when they happen, last longer; fewer workers receive health insurance from their employers; fewer workers have guaranteed pensions.
Some of these changes are the result of a changing economy. But the underlying economic trends have been reinforced by an ideologically driven effort to strip away the protections the government used to provide. For example, long-term unemployment has become much more common, but unemployment benefits expire sooner. Health insurance coverage is declining, but new initiatives like health savings accounts (introduced in the 2003 Medicare bill), rather than discouraging that trend, further undermine the incentives of employers to provide coverage.
Above all, of course, at a time when ever-fewer workers can count on pensions from their employers, the current administration wants to phase out Social Security.
The bankruptcy bill fits right into this picture. When everything else goes wrong, Americans can still get a measure of relief by filing for bankruptcy - and rising insecurity means that they are forced to do this more often than in the past. But Congress is now poised to make bankruptcy law harsher, too.
Warren Buffett recently made headlines by saying America is more likely to turn into a "sharecroppers' society" than an "ownership society." But I think the right term is a "debt peonage" society - after the system, prevalent in the post-Civil War South, in which debtors were forced to work for their creditors. The bankruptcy bill won't get us back to those bad old days all by itself, but it's a significant step in that direction.
And any senator who votes for the bill should be ashamed.
E-mail: [email protected]
http://www.nytimes.com/2005/03/08/o...print&position= |
Democratic Senator Joe Biden (DE) will likely vote for this bill, unfortunately. There's no mystery to his actions - many credit card companies enjoy their residency in his state, and have paid him well. |
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| MisterOpus1 |
Let's see if this will chase off some Republican Senators. It worked to chase them off in '02, it should scare them off again:
| quote: | A nine-year campaign by the finance industry for a crackdown on personal bankruptcies may hinge on two votes today on the floor of the U.S. Senate.
The first will come on what may seem like a side issue: an amendment barring antiabortion activists from using bankruptcy to escape penalties for damages they cause at abortion clinics. If the amendment passes, abortion opponents in the House may block the bill, as they have in past years.
If the amendment fails, the second key vote will come on a petition to end debate and bring the bill to a final vote.
http://www.nytimes.com/2005/03/08/p...ner=rssuserland |
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| MisterOpus1 |
Bastards. The bill passed 69/31.
Dems voting with the bill:
Lieberman, Nelson and Nelson, Biden, Carper, Stabenow, Salazar, Kohl, Lincoln, Pryor, Landrieu, Byrd, Conrad, Johnson
Byrd? That's a shocker. Salazar's already pinning himself to be a moderate conservative - but then again he has his constituents and state to answer to.
Lieberman and Nelson - just ing stop beating around the bush and put a ing big ass "R" by your name, will you FFS?!?
It truly amazes me how they, including almost all Republican Senators, can support bankruptcy privledges for violent domestic terrorists but not for the military men and women fighting terrorism abroad.
And the MSM is noticeably silent on this whole debacle. Anyone else notice this? |
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| Itarillė |
| quote: | | And any senator who votes for the bill should be ashamed. |
i didn't know the word "shame" has ever existed in the vocabulary of the world of politicians... |
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| wolverine16 |
| quote: | Originally posted by MisterOpus1
Bastards. The bill passed 69/31.
Dems voting with the bill:
Lieberman, Nelson and Nelson, Biden, Carper, Stabenow, Salazar, Kohl, Lincoln, Pryor, Landrieu, Byrd, Conrad, Johnson
Byrd? That's a shocker. Salazar's already pinning himself to be a moderate conservative - but then again he has his constituents and state to answer to.
Lieberman and Nelson - just ing stop beating around the bush and put a ing big ass "R" by your name, will you FFS?!?
It truly amazes me how they, including almost all Republican Senators, can support bankruptcy privledges for violent domestic terrorists but not for the military men and women fighting terrorism abroad.
And the MSM is noticeably silent on this whole debacle. Anyone else notice this? |
:sadgreen:
Well covering a story that actually has some impact in the lives of everyday Americans just can't fit in anywhere between war on terror reports, Martha Stewart and Michael Jackson.
Does anyone remember when the Gore/Lieberman ticket was called "too liberal" by some people outside the John Birch society? At least Gore grew out that beard and wised up after, actually moving to the left. Lieberman at least did sign onto the "dear colleague" letter on social security, but this is one bad bill for the average joe and G.I. joe. |
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| MisterOpus1 |
ME!!!
My ing DEMOCRATIC CONGRESSMAN, Dennis Moore just signed a letter to Denny Hastert asking for immediate passage of this bill!
What the hell is goin' on here?:
| quote: | The Honorable J. Dennis Hastert Speaker U.S. House of Representatives H-232, The Capitol Washington, DC 20515
Dear Mr. Speaker:
We write to encourage you to bring bankruptcy reform legislation to the House floor as soon as the Senate completes its consideration of the bill. The New Democrat Coalition has backed common sense bankruptcy reform in the past and helped in passing the bankruptcy reform bill by overwhelming margins in the House of Representatives during the 108th Congress.
Over the last several years, we have worked to advance reasonable and balanced legislation that would require individuals who have the ability to repay their debts to do so, while preserving the important safety net of bankruptcy under Chapter 7 for those who truly need it. We believe that responsible bankruptcy reform embodies the New Democrat principle of personal responsibility, while at the same time adding important new consumer protections such as requiring enhanced credit card disclosure information and encouraging participation in consumer credit counseling.
It is our hope that the House of Representatives will consider this important piece of legislation in an expedited manner. We stand ready to work with you and our colleagues on both sides of the aisle to pass bankruptcy reform into law.
Sincerely,
Rep. Ellen O. Tauscher
Rep. Adam Smith
Rep. Ron Kind
Rep. Artur Davis
Rep. Carolyn McCarthy
Rep. John Larson
Rep. Stephanie Herseth
Rep. Dennis Moore
Rep. Mike McIntyre
Rep. Joe Crowley
Rep. Jay Israel
Rep. David Wu
Rep. Diane Hooley
Rep. Melissa Bean
Rep. Jim Davis
Rep. Harold E. Ford, Jr.
Rep. Ed Case
Rep. Jay Inslee
Rep. Shelley Berkeley
Rep. Gregory W. Meeks
http://www.dailykos.com/story/2005/3/8/23562/72167 |
As Steve Soto states:
| quote: | Would it be too much to ask these Democrats to explain:
*Why over 50% of those who declare bankruptcy due to the failure of the current healthcare system when experiencing a major medical situation are not part of those who deserve a safety net?
*Why they believe that interest rates over 30% are legitimate and fair charges for those already struggling?
*Why those who are victims of identity fraud should not be protected from the credit card companies?
*Why our service personnel should not be cut some slack when they are serving?
*Why the very rich are exempt from these stringent rules? Are the rich the ones who truly need the safety net? |
This is ridiculous...
Added in Edit I already know the answer to my question, Conservatives, so you need not answer it - this is at the very heart of the continuing problem with the Democrats, or shall I say the "New"/Centrist/Carville/NewRepublic/anti-Dean/anti-grassrooters/whatever Democrats.
If they're not sucking up to their own special interest groups, they're attempting to break bread with Republicans who do nothing but eventually spit it right back into their faces.
If the Democrats are ever going to win back anything, THEY NEED TO STICK TO A MESSAGE AND NEVER, EVER DEVIATE FROM THAT. If they contend that they are all for the lower and middle class, then they need to ing stick to that at all times. This particular bill is a major case in point in hurting the lower and middle class while leaving a gaping loophole for the wealthy.
This is why the Democrats are continuing to get their clocks cleaned.
The Republicans have developed in lockstep fashion a machine that stays on point, EVEN if that message is erroneous or misleading at times. They stick to what they say and they repeat it over and over so it gets into the minds of the public. And even if that message is misleading, the public majority ends up appreciating the fact that they do not falter from their message.
The public wants conviction, even at the expense of logic or evidence.
Understand this, Dems. Learn it. Live it. AND ING DO IT, or you're toast, period.
/rant |
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| wolverine16 |
| quote: | Sincerely,
Rep. Ellen O. Tauscher
Rep. Adam Smith
Rep. Ron Kind
Rep. Artur Davis
Rep. Carolyn McCarthy
Rep. John Larson
Rep. Stephanie Herseth
Rep. Dennis Moore
Rep. Mike McIntyre
Rep. Joe Crowley
Rep. Jay Israel
Rep. David Wu
Rep. Diane Hooley
Rep. Melissa Bean
Rep. Jim Davis
Rep. Harold E. Ford, Jr.
Rep. Ed Case
Rep. Jay Inslee
Rep. Shelley Berkeley
Rep. Gregory W. Meeks
http://www.dailykos.com/story/2005/3/8/23562/72167 |
Well Adam Smith probably thinks the invisible hand will take care of people. (Sorry, bad economist joke)
Melissa Bean might as well have let Phil Crane keep the seat she just won from him here in IL.
I work with bankruptcy law and speaking in very general terms, the problem isn't people filing for bankrtupcy, the whole point of it is for people is to catch up and pay creditors depending on the chapter. In terms of mortgages, it's very rare that a lender will lose their interest in a house, the credit card companies may lose, but while bankruptcy was up 17% in 2003, CC companies posted 176% profit. The problem is really people trying to get back into bankruptcy when they are released or when a specific creditor is given permission to start collecting again. Judges have the ability to bar these people from refiling for a certain period of time, which could have simply been extended as a way to reform the system.
The most ridiculous part of all is "universal default." Charging people default interest on a credit card that was paid on time because their completely unrelated gas bill wasn't paid is insane. They argue that the person is a potential risk so they have to protect themselves by charging up to 20%+ interest? Yep, I'm sure it will be easier to pay next month when they'll have less money because of paying unwarranted charges.
This isn't about personal responsibility, it's not just that 50% of bankruptcies are caused by medical bills, when you include divorce and the loss of employment, it makes up almost 90% of all bankruptcies. These are mostly responsible people who had an unexpected increase in bills or recent loss of income and the whole point of bankruptcy is to give them the ability to read just and make payments. |
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| Spacey Orange |
| yes this pretty shameful legislation that will benefit creditors but at a greater cost to american society and is a good example of the reach of money influence in washington. |
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