Forgive Us Our Debts

As a new lawyer in the 1960's, working in an inner city law office with blue collar clients, I learned about bankruptcy from the debtor point of view. Unpaid medical bills, job loss and inability to support two households after a divorce were the main reasons people went bankrupt. The ordinary bills of life were enough to sink people if one of the above waves hit. Spending sprees were hard for a working man to finance. Credit cards were non-existent, bankers gave soundly conservative advice about avoiding debt, and finance companies were the only thing approaching the predatory lenders of today.

Today, personal bankruptcies are at all time highs. The Republicans are in control of the Federal government and they have a solution to the financial woes that are driving so many Americans into bankruptcy. You might think the solution to unpaid medical bills is to make insurance more readily available - but the Republicans don’t. You might think the solution to job loss is to stem the flow of jobs overseas and provide meaningful job upgrade training - but the Republicans don’t. You might think part of the reason for the high divorce rate is the stress caused by worrying about not having health insurance or a job - but the Republicans don’t.

The Republican solution to the unbearable debt of the overloaded American is to change the Bankruptcy law to require people to work harder and longer to try to pay more and more of the debts, without the Bankruptcy Court saying too much is too much and discharging the debts. Anyone who has filed bankruptcy knows it is not a picnic. Psychological consequences can result and future availability of legitimately needed credit is extremely limited for a period of years after filing. But the Republican focus, as always, is on the business person, in this case the money lenders, and not on the American worker and consumer of credit.

The money lenders are responsible for creating a new breed of overspending Americans. They have been running amuck in a feeding frenzy, each one of them trying to sign up as many Americans as possible to the highest debt amount, for the highest fees, with the most exorbitant interest rate. Spending fortunes foisting unsolicited cards en masse, moving to small states where the laws allow excessive fees and interest rates, and encouraging card users to constantly run up more charges while only paying the monthly minimum, these greedy predators are free of any truly meaningful legislation to stop this foolish frenzy. Add in such stupidities as "payday loans" and "rent to own" and you see how many sharks are now in the pool.

This new breed of debtor, created by the predatory lenders, is the chief target of the Republican proposal. Under the guise of protecting poorer folks, Republicans propose to limit their targeting to the debtors in the top half of the income range [the "bloody turnips" as opposed to the turnips out of which one cannot get blood]. Republicans say these debtors are the ones at fault, not the lenders, because the debtors are free to decide how much debt to incur. Funny thing about debt though, it has a life of its own and a way of sucking debtors in more and more, kind of like quicksand or Brer Rabbit and the tar baby, where the more you resist, the bigger the problem becomes.

As a proponent of the vast rich elite conspiracy theory, I believe predatory lending and tar baby like Bankruptcy law changes are intended to trap as many people as possible in a lifelong quagmire of indebtedness, compelling them to keep working as long as possible to service the never ending debt. Maybe some of my belief is based on my experience in the 1960's before true reforms improved the law for debtors. Back then, people who had filed bankruptcies, with proper notice to creditors, and had the Court declare their debts discharged, often would find their pay check had been garnisheed by one of the creditors after the Bankruptcy case was closed. What happened was that upon receiving the notice of filing for Bankruptcy, the creditor had ordered a credit report on the debtor and compared it with the debts listed in the Bankruptcy. If the debtor had failed to list one unpaid debt, even one to a different creditor, that was grounds under the law for considering the Bankruptcy discharge invalid as to all creditors. The creditor did not have to object in the Bankruptcy proceeding, and could just lay in wait to seize the wages of the unsuspecting worker after the Bankruptcy case was closed. The snakes in the grass of those days are the predatory lenders of today.

If the lending community had its way, I suspect they would make it legal to move their operation offshore to some place where there is no limit whatsoever on what fees and rates they charge. They might even be able to get debtors prison reinstated there and enter into an extradition treaty with the US to ship over deadbeats for use as forced labor in their operations.

Meaningful regulation of predatory lending is what is really needed. We should not be worrying about protecting predatory lenders from deadbeat debtors as the Republicans propose, but rather protecting honest Americans from predatory lenders. Bankruptcy law is Federal and Federal regulation to limit lending practices, interest rates and fees nationally is needed. Meaningful regulation likely would put many predatory lenders out of business, a prospect which prompts Republicans to suddenly start thinking about the working man and point out that these businesses all have employees who will lose their jobs if their employers are regulated out of business. The Mafia and al Qaeda also have employees who will lose their jobs if they are put out of business. Remember - all legislation is about drawing lines between matters of degree.