Congress can change the bankruptcy laws, but those changes won’t keep people from going broke. And, at least so far, no matter how hard they try to say it is over, the supporters of the new laws can’t push bankruptcy out of the national conversation.
Eight years ago lobbyists described the bankruptcy bill as a speeding train that couldn’t be stopped. That was a savvy estimate because all the money was on one side and all the hurting on the other–a perfect prescription for a change in the law. Besides, bankruptcy law was supposed to pass below the radar screen and not attract much attention in the popular press. But the stories just keep rolling in.
The sharp rise in filings just before the law took effect, followed by the sharp drop in filings in the weeks following the law, caught a lot of attention last week. New lawsuits challenging the constitutionality of the provisions in the bankruptcy laws that restrict what lawyers can tell their clients and how lawyers must describe themselves are generating more interest. And even the academic literature is beginning to catch up. A note in the most recent Yale Law Journal points out that despite the claims of the bill’s supporters that the bankruptcy laws would help those trying to collect child support, no one has been fooled by the rhetoric; the new law undermines the relative position of support claimants.
Congress has not stayed out of the game. In the wake of Katrina, three bills have been introduced, two in the Senate and one in the House, all designed to give a better break to hurricane victims. Another new bill focuses on bankruptcy relief for people who are victimized by creditors who won’t negotiate about past-due bills. Corporate responsibility for asbestos victims and pension promises are also on the bankruptcy radar screen.
I don’t kid myself that Congress is on the verge of a big turn around, ready to renounce the credit card companies that paid for this legislation and try to help out ordinary working families. But I do wonder: The big time credit card lenders and their friends in Washington pushed this law through Congress, but could it be that the price they will pay isn’t over?
The harsh realities of economic life for millions of hard-working Americans who get sick, who lose their jobs, or whose spouses take off, will stay in the news. Small businesses will struggle with the fallout from floods, rising interest rates, or poor market conditions. All of these people will need a way to deal with collection calls and mortgage foreclosures, a reason to get up in the morning and go to work and a way to protect their children from debt collectors all afternoon.
The bankruptcy wars aren’t over.
