Bankruptcy
Reform: Designed to Protect Big Business
Who will benefit from the new bankruptcy reform laws? The financial
services industry and other big business groups, that's who.
These groups contributed millions of dollars to elect Bush and other
Republican candidates in 2000 and 2004, with the goal of overhauling the
bankruptcy system. They and other big business groups have continued to
spend millions, rage arguments and lobby persistently for bankruptcy
reform. In March 2005, with the House and Senate loaded top heavy with
Republicans, they succeeded.
The financial services industry includes the banks, credit unions,
the American Bank Association, credit card companies and retailers.
Big business groups pressuring for legislation include auto makers
such as the Ford Motor Company, General Motors, and DaimlerChrysler.
These groups were willing to pay millions of dollars and spend many
years lobbying for bankruptcy reform. The car makers, unhappy with the
way auto loans are handled when an individual files for bankruptcy,
pushed for reform.
Others who lobbied heavily for reform were car dealers, record
labels, and gaming interests such as casinos, many of whom represent
large corporations and prime lenders, such as MBNA Corporation and
American Express Company, who contributed millions not only to stack the
political odds in favor of the bankruptcy reform bill, but to elect
candidates sympathetic to their goals. MBNA Corp. and American Express
Co. are among the top beneficiaries of the bankruptcy reform.
Bankruptcy reform supporters argue that debtors seeking relief
through bankruptcy are either purposely gaming the nation's bankruptcy
system or they are irresponsible spenders who should pay at least a
portion of their bills if they are able to. In fact, about half of the
claims filed for bankruptcy are attributed to medical costs.
Bankruptcy reform will require most filers to receive credit
counseling and lessons on how to improve their financial management
skills. Bankruptcy reform states that filers pay for the counseling
themselves.
Included in the new bill is a provision requiring that credit card
billing statements include an example of the time it would take to pay
off the balance at a particular rate of interest. Billing statements are
also required to supply a toll free number for the consumer to call and
inquire about the length of time it would take to pay off the balance if
they are only making the minimum monthly payments.
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