As more people begin to look at the squeeze on middle class families, the impending changes in the bankruptcy laws look worse and worse. Both Republican Senator Vetter and Democratic Senator Feingold have proposed exemptions and modifications for Katrina victims. The details differ, but the central message is the same: bankruptcy is an essential middle class safety net, and the new amendments tear holes in that net.
Now a second movement is emerging: As Washington reflects on the impact of bankruptcy amendments that were written by credit industry lobbyists, states are recognizing that they have some power to help their citizens. Jason just noted that in a very quiet move, New York has just increased its homestead exemption from a laughable $10,000 to a more plausible $50,000 (and perhaps $100,000 for couples). The consequence is that a family can declare bankruptcy in New York and have a better chance of saving their home — even after the federal laws do their best to make bankruptcy harder.
In the peculiar amalgam of state exemption laws and federal discharge laws that make up consumer bankruptcy, it is good to hear that if one group is tearing apart the safety net, another group is trying to stitch it back up.
