From: BStokes45@aol.com
Subject: SNET: Anti-Child Support Act
Date: 9 Aug 1998 16:20:44 -0400
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Visa and the Anti-Child Support Act
Call it the Anti-Child Support Act.
It is the product of a full-throttled campaign by the credit card companies
and financial services industry to rewrite U.S. bankruptcy laws.
Their goal: to make it harder to declare bankruptcy and to impose heavy
burdens on debtors who do fall into bankruptcy.
More than one million Americans declare bankruptcy each year. This should not
be a surprise: the credit industry sends out 2.5 billion solicitations each
year; credit card advertisements urge consumers, simply, to spend; and the
consumer culture encourages extravagant purchases and constantly upgrades the
measure of what is an "essential" versus a "convenience." All the while, real
wages have stagnated or dropped over the last 25 years for 80 percent of the
population.
When a person declares bankruptcy, they are required to undertake court-
supervised repayment plans. During a period of three to five years, with some
money set aside for essential needs like food and rent, they allocate their
income to pay off their debts as best they can. At the end of the repayment
period, their debts are wiped clean.
For the credit industry, of course, personal bankruptcies mean unpaid
accounts. That's why the industry wants to make it harder to declare
bankruptcy and more onerous to live through it.
The industry-supported "Responsible Borrower Protection Act" would force
debtors to litigate their right to be in bankruptcy, and impose expensive new
filing and other bureaucratic requirements -- just to get into bankruptcy.
Once in bankruptcy, debtors would be forced to stay in repayment plans for
five to seven years. The legislation would place payment obligations for
credit card debt on a par with secured debt on critically important items like
a home mortgage or a car loan.
It even would place credit card debt on equal footing with child support
payment obligations, says Gary Klein of the National Consumer Law Center.
In other words, debtor repayment plans could not prioritize paying off
mortgages -- enabling people to keep their homes -- or paying back child
support over payments on overdue Visa or Mastercard accounts.
The industry spin on this draconian legislation is that it would crack down on
"bankruptcies of convenience." The American Financial Services Association
argues that debtors routinely file for bankruptcy to escape debts when they
have the means to make payments. Bankruptcy is becoming a "financial planning
tool," the Association contends.
These claims ignore some inconvenient facts: Bankruptcy debtors have an income
40 percent below the national average, for example. And the existing
bankruptcy system imposes tough oversight provision on debtors, with strong
civil and criminal penalties for fraud and dismissal of claims by people who
can afford to pay their debts.
But the credit industry doesn't intend for facts to get in its way. It has
launched a massive PR and lobbying blitz to generate public support for the
Anti-Child Support Act.
Financial interests have banded together to form the National Consumer
Bankruptcy Coalition. Members of the coalition poured more than $700,000 into
federal candidate campaign coffers in the first half of 1997 alone.
The American Financial Services Association has hired a Dream Team of
lobbyists and consultants to push the Anti-Child Support Act. Among its hires:
Verner Liipfert, a law firm that is the current home of Bob Dole and Lloyd
Bentsen, former Treasury Secretary; Timmons & Co., run by William Timmons, a
top White House aide in the Nixon and Ford administrations; and former
Republican National Committee Chair Haley Barbour's law firm.
The industry's big bucks and lobbyist Dream Team are all working to sabotage
an institution that provides a modicum of fairness in the American economy.
There is no debtor's prison in the United States; when people fall on hard
times and into financial troubles from which there is no escape, we make them
pay what they can -- and then offer them a fresh start.
There is, of course, one serious issue of bankruptcy abuse -- big corporations
declaring bankruptcy to avoid liability payments for dangerous products they
sold. But somehow that problem hasn't drawn the attention of the self-
proclaimed advocates of "bankruptcy reform."
------------------------------------------------------------------------
Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter.
Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor.
COPYRIGHT ) RUSSELL MOKHIBER AND ROBERT WEISSMAN
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