Posted by Todd Zywicki:
President Signs Bankruptcy Reform Legislation:
I was lucky enough to be invited to the Presidential Bill Signing
Ceremony for the Bankruptcy Reform Legislation on Wednesday, which
turned out to be a real treat. After eight years of seeing defeat
clutched from the jaws of victory, I half expected that the President
would get lost on the way over or that the pen would run out ink while
he was signing it. But everything went off without a hitch and it was
quite a festive occasion. Needless to say, I was the only law
professor in the room...
I thought the [1]President's remarks at the ceremony were right on
target:
Our bankruptcy laws are an important part of the safety net of
America. They give those who cannot pay their debts a fresh start.
Yet bankruptcy should always be a last resort in our legal system.
If someone does not pay his or her debts, the rest of society ends
up paying them. In recent years, too many people have abused the
bankruptcy laws. They've walked away from debts even when they had
the ability to repay them. This has made credit less affordable and
less accessible, especially for low-income workers who already face
financial obstacles.
And he concluded:
America is a nation of personal responsibility where people are
expected to meet their obligations. We're also a nation of fairness
and compassion where those who need it most are afforded a fresh
start. The act of Congress I sign today will protect those who
legitimately need help, stop those who try to commit fraud, and
bring greater stability and fairness to our financial system. I'm
honored to join the members of Congress to sign the Bankruptcy
Abuse Prevention and Consumer Protection Act.
The Washington Times also [2]noted yesterday that 73 Democrats voted
in favor of the bill in the House, one of the more bipartisan bills
among the important pieces of legislation enacted so far this session.
I sat next to a man and his son who own a small family-owned lumber
store in rural southern New Jersey (250 residents in their town). The
father testified before the National Bankruptcy Review Commission
almost 10 years ago in favor of reform. They said that for their small
family-owned business, losses due to bankruptcies often determines
whether they turn a profit or end up losing money in any given year.
They also talked about the unpredictability that they now face in
trying to determine whether a consumer is going to end up buying
lumber from them on credit (say to build a new deck) only to end up
stiffing them in the end by filing bankruptcy. A consumer who buys
$500 worth of lumber then doesn't pay up is a big loss for them, and
it isn't that easy for them to just raise prices to offset it when
they are competing against rivals like Home Depot and Loews.
A timely reminder that Citibank isn't the only creditor affected by
this legislation rebalancing the consumer bankruptcy system.
References
1. http://www.whitehouse.gov/news/releases/2005/04/print/20050420-5.html
2. http://www.washtimes.com/national/20050420-095356-2733r.htm
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