It’s been four months since Katrina hit, and the people of the Gulf Coast are struggling to put their lives back together The 90-day moratorium that many home mortgage lenders offered is up, and payments are due–even if the house isn’t livable and the insurance company hasn’t paid up. As they face the hard choices about whether to rebuild or move on, Katrina victims may be thinking about bankruptcy as one way to dig out of the debts and get back on their feet financially.
Past hurricanes, not nearly so destructive, have pushed bankruptcies up by about 50% in states that have taken a direct hit. But with the bankruptcy laws rewritten by the credit industry, that same help won’t be available for Katrina victims unless the law is changed. In the weeks after Katrina hit, there was much talk about a special amendment to the new bankruptcy laws to give protection to hurricane victims. What came of all that talk?
There was one bill proposed in the House and two in the Senate to give the people in hurricane-ravaged areas some help. But those bills have gone nowhere. And now, no one even seems to be talking about them. Instead, the idea among the power-brokers in Washington seems to be that if they don’t help for long enough, the public will lose interest, the stories will focus on something else, and there will be no need for Congress to change the laws and provide some real help. Wait long enough, and no one will care.
In the case of the bankruptcy laws, this is a particularly apt approach. After all, if there were special relief for people who were victims of hurricanes, what about victims of cancer? And victims of heart disease? And people with other illnesses or accidents? And if those people get some help, that means half of all the filers would have access to better bankruptcy protection. And if the people driven to bankruptcy by medical problems could get special relief, then how about the people who lost their jobs or whose small businesses were wiped out? That would push up the number of people with special protection to two-thirds of those filing. And then what about the people left behind when husbands ran off or when wives died? Now we’d be at about 90% with real protection. Where would it stop?
The problem with offering some meaning bankruptcy protection for families laid low by natural disasters is that there are hundreds of thousands of other families who need bankruptcy help because they have been hit hard by other disasters too. Their disasters may be more personal–medical, jobs, family breakups–but they can be equally devastating.
If the point of the law is to squeeze people regardless of the reason they got into financial trouble, then there is no reason to show mercy for the hurricane victims. Doing nothing seems to be exactly the policy plan.
