Congress held hearings today on the two-year anniversary of the Bankruptcy Code. Last night a woman who wasn’t invited to the hearing talked about how lucky she was. She’s a 72-year-old widow who filed for bankruptcy last month to try to save her home (more on the story below).
But here’s why she felt lucky: The mandatory credit counseling session that will cost her $75 and for which she will have to drive 60 miles to attend has been scheduled for the day after her social security check will be deposited. That way, she explained, she can use her “food money to pay for gas and the counseling.”
Gosh, what a lucky woman.
How did this woman (let’s call her Mrs. Norman — not her real name) end up in bankruptcy? She had lost her husband 18 years ago, and she had moved to another state care for her older sisters who had now passed on. She had a small house and was managing the mortgage and her other expenses just fine when she got a call from the nicest lady at the bank about three years ago. The bank lady explained that Mrs. Norman was “in the wrong mortgage” because it was fixed rate and “interest was low.” She said she could “switch” Mrs. Norman to a lower cost mortgage. The bank lady promised to call her when interest rates went back up and switch her back to the fixed rate mortgage. But, said Mrs. Norman, “she never called.” Now Mrs. Norman’s mortgage payments have shot up, and she is about to lose her home. So she filed for bankruptcy.
Of course, bankruptcy won’t be able to do much for her. She can’t make her mortgage payments and she can’t refinance, so she will lose her home. She thinks that soon she will be living in her car. But she was will be required to get approved credit counseling before she can get a discharge.
At today’s hearings, the credit industry representative trumpeted that the new credit counseling provisions were a sign of how well the bankruptcy bill is working. It will undoubtedly be a big help when Mrs. Norman’s credit counselor explains how she can improve her financial management from the front seat of her 19 year old automobile.
No one asked Mrs. Norman to testify. But if someone had asked her to go to Washington, perhaps she could have told Congress how lucky she was to get credit counseling instead of eating.
