NYTIMES: The Debt-Peonage Society (very scary, and sad)

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.

http://www.nytimes.com/2005/03/08/opinion/08krugman.html?ei=5070&en=9671fa76e1231df3&ex=1110949200&pagewanted=print&position=

and many red staters, who don't have a pot to piss in, voted for it.

"Bankrupt families lost more than just assets. One out of five went without food. A third had their utilities shut off, and nearly two-thirds skipped needed doctor or dentist visits. These families struggled to stay out of bankruptcy. They arrived at the bankruptcy courthouse exhausted, brought low by a healthcare system that could offer physical cures but left them financially devastated."


http://prorev.com/2005/02/medical-bankruptcy-even-insurance-may.htm

Keep those loopholes in place for those millionaires though. It makes one faint to magine what hardships they must be enduring. :eyes:

These paragraphs really struck me:

excerpts from OP NYT article

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.

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.

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I can easily see them allowing the poverty rate to skyrocket to 20+% before they change their ways. It hasn't been that bad since pre welfare days.

.. debtor's prison and the poorhouse....

Oh fun.

Sue

the credit card companies (MNBA is the largest GOP donor) are surely getting their monies worth now.

First they are allowed to raise interest rate on credit cards to an exhorbitant 30% after a late payment and now are making it impossible for average folks to ever get out from under debt. No ability to declare bankruptcy and get a clean slate even if catastrophic illness put you in financial ruin? And no rush on the congress's part to address lack of health insurance for the working poor either.

One amendment that was voted down was to cap punitive interest rates at 30%.

thanks for pointing it out.

those bastards - congress is totally putting the screws to the poor, the working poor, and the middle class...

how do kids manage to get a leg up these days? It's not like entry level jobs pay any better than they used to, but everything else is so much more expensive.

http://www.informationclearinghouse.info/article4305.htm

US Homelessness and Poverty Rates Skyrocket
While Billions are Spent Overseas on Occupation

By: Jay Shaft---Coalition For Free Thought In Media
7/30/03

As I watch far away images of body bags being filled, I see much closer images of bodies. I went by a local park the other day and it looked like a concentration camp crossed with a mass murder scene. There were people in rags and covered with filth lying scattered all over the place. At least twenty people were on crutches, had parts bandaged, or with open wounds not even covered. They were all hungry and a large majority was sick.

All around this city I live in, and nationwide, the level of homelessness and poverty is growing alarmingly. From the last counts and estimates nation wide, there has been at least a 35-45% increase in homelessness and poverty. The increases have come over the last two years with the biggest increases being in 2002 and especially in the first six months of 2003.

Add to that the barely subsisting or borderline homeless/poor and we start to see a very alarming trend that shows no sign of going away. Over 30% of Americans are on the borderline of poverty. A lot just do not quite make the cut to receive food stamps or some kind of benefits and live on a razor edge of desperation and starvation

In the last year it is estimated that there has been an additional 5-10 million additional people who are now in jeopardy of hunger and starvation. The government has a benign description of this situation, calling the hungry and starving "Food Critical.” The 2002 survey of 25 cities by the US Conference of Mayors recorded a 19% increase in the requests for emergency food has risen by 19% in 2002. 100% of the cities reported these increases. Requests for food by families increased by 17% while requests for food by the elderly increased by 19%. 48% of people requesting food were families with children. 38% were currently employed at the time of the request.

CON'T...

no matter our income - or lack of. The next step will be to allow the credit card companies to attach themselves to our houses and other assets.

Exactly what would happen to our economy, if we all were to operate on a cash only basis, except for large purchases like cars and homes? I don't use credit cards, but what would happen if nobody did?

the present economy would crumble immediately, since so many businesses depend on customers who impulse buy with their credit cards, or who are using cards to finance a daily lifestyle that they cannot afford.

I have always had a credit card or two, but I have never carried a balance, even when I was very poor and without health insurance. It felt like slavery to me then, and it does to me now, even though I now make plenty of money. I guess I have always felt that living way within my means is a type of freedom that feels very good to me.

future when the plastic starts to flow. The people who fall into that trap will never be free.

so I took my savings and paid them off and made a promise to myself that I wouldn't use them unless I could pay them off within a month. It hurt like crazy but it was such a relief. I did it just on time because I lost my job a couple of months later. Now at least, I don't have the credit card debt to worry about.

they claimed he owed almost $8,000...

even tho he works and pays taxes they claimed that they couldn't FIND HIM to tell him about the debt until they garnished his tax refund this year, and instantly they turned him over to a collection agency which added another $1500 IN FEES...

they said he should have CHECKED his credit report and he would have seen the debt. Now - who does that?

meanwhile - he was living paycheck to paycheck (barely) already. HE GETS
"PRE-APPROVED" CREDIT CARD OFFERS IN THE MAIL DAILY.

Let's see - his truck was voluntarily repo-d and the feds claim he owes INSTANTLY 1/2 of his yearly takehome... and HE is a getting tons of credit cards thrown at him???

Let's guess the strategy - give those who are struggling just enough rope to let the credit card companies indenture them for life.

I paid the balance off 5 years ago off mine, cut up all but one, and deadbeat off that one. Haven't carried a balance between months in all these five years.

What I really worry about is the medical system. Being a debt peon to a credit card bank is one thing. But being in hock to a hospital for life, because of plain bad luck or bad genes??

I'd rather commit outright fraud, or worse, then face that sort of fate. It's time to start studying how to 'disappear' and go underground, if that is the last option left to medical-debt peons.

...they get people hooked on easy credit, and then grind them into the ground with usurious interest payments. What they SHOULD do, instead of trying to punish people that they have enticed using nefarious means, is actually establish APPROPRIATE credit levels for people and limit the cards...but no!! They prefer to give some poor bastard making $20K a year a card with 15K worth of credit. One thing goes wrong--the debtor gets laid off, has an unanticipated tragedy or medical expense--and he goes for the credit card to solve his problem, which only makes it worse. If he didn't have the card, he'd have to find another way out of the problem--either welfare, family help, whatever....but all the credit card does is put the guy in a hole so deep he's probably worth more dead than alive.

It's insane. Congress is making a huge error here. Blaming the "addict" for the behavior of the crack dealers handing out credit cards with absurd lines of credit is just wrong. The companies that use poor business practices in determining who qualifies for credit get off scott-free, and don't have to account for their share of responsibility in all this.

Welcome to the Third World in America!