I would agree--except that the credit-card companies are "co-conspirators" here, in that they entice people with low "teaser" rates; the present bankruptcy law was written
by credit-card industry lobbyists
for the credit-card industry; and about ½ of all personal bankruptcies in the U.S. are due to monumental medical bills. Is there any doubt that it's time for universal health care?
Among other things (regarding the present bankruptcy law, enacted in 2005),
http://www.commondreams.org/headlines05/0312-03.htm> The Senate rejected more than 25 Democratic amendments to soften the bill's impact on bankrupt Americans. Including one that would have helped people keep their homes when they are driven into bankruptcy by medical expenses.
> . . . divorced women are 300 percent more likely than single or married women to find themselves in bankruptcy court because of the combined effects of lower wages, reduced access to health insurance, and the financial strain of rearing children alone.
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> ''The proposed bill [now law] would harm hundreds of thousands of women and children who are owed child support or alimony by forcing them to compete with credit card issuers and therefore making it less likely that support payments will be made to those in need,'' the group said.
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> African American and Latino home owners are 500 percent more likely than white homeowners to find themselves in bankruptcy court . . . largely due to discrimination in home mortgage lending and housing purchases and to inequalities in hiring opportunities, wages, and health insurance coverage.
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> According to a recent Harvard study, around half of all personal bankruptcies are the result of illness or medical bills.
http://www.commondreams.org/views05/0313-31.htm> The bill [now law] is a fantasy come true for credit card companies, which have been pushing it for years. But it's not as though they're suffering. They made $30 billion in profits last year.
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Half the people who file for bankruptcy do so because of sky-high medical bills, and another 40 percent due so because of disability, job loss, family death, or divorce, according to the National Consumer Law Center. (my emphasis) If you make more than the median income in your state, no matter how high your bills are, you can't wipe the debts clean.
>
> As a result, debtors will be [are now] at much greater risk of losing their cars or their homes.
> And even if your debts are the consequence of identity theft, of someone stealing your credit card and running up charges, you still are on the hook for them, as the Senate amazingly voted down an amendment to shelter victims of identity theft.
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> Yet at the same time, the bill assigns guilt to consumers who are doing perfectly understandable and legal things. "The bill presumes that a struggling family that spends more than $42 a week on credit card purchases before declaring bankruptcy is guilty of fraud," according to the Consumer Federation of America.
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> The bill also requires anyone filing for bankruptcy to get credit counseling beforehand. But as Senator Russ Feingold pointed out, there are some people who need to file for bankruptcy who can't get that counseling. He mentioned a person with Alzheimer's, for instance. "Do we think anything is to be gained by requiring a debtor who is ill with a terrible, incurable disease, not even competent to sign legal papers anymore, to take a credit education course?"
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> He also mentioned U.S. soldiers fighting in Iraq or Afghanistan. Some of them are going broke because their military pay is much less than they were earning at home. On the Senate floor, Feingold again asked: "Do we want to require a soldier to sit down at a computer and take a credit counseling or credit education course while they are in Iraq in order to protect his or her family back home from financial ruin?"
> Meanwhile, the new bill won't do anything to force the credit card companies to stop their predatory lending, nor will it even make them come clean on how much interest or penalties they are charging to consumers who pay only the minimum balance or who pay late.
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> Middle class debtors are the ones who are going to suffer the most under this bill.
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> The poor will still be able to get Chapter 7 protection, which releases them from most of their debts. And the indebted rich can still shelter their property if they get a good lawyer to draw up an asset protection trust in states where that's allowed. And many affluent debtors could still declare bankruptcy and still keep their mansions. On top of that, corporations like Enron could still file bankruptcy to avoid paying their employees.
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> But if you're struggling to keep your head above water, this bill has one piece of advice for you: drown.
http://www.commondreams.org/headlines/042700-03.htm> Ruinous health-care costs, not profligate spending, are the leading cause of personal bankruptcy among Americans, a new study has found.
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> "The American middle class is solid and secure and prosperous -- we are unlike anything ever known in history -- yet American families live just one illness or accident away from complete financial collapse," one of the study authors, Elizabeth Warren, said yesterday.
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> About 500,000 people sought bankruptcy protection in the United States last year because of the crushing burden of medical expenses, says the study, to be published next month [published in 2000] in Norton's Bankruptcy Adviser, a specialty periodical for lawyers.
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> The number equals about half the one million Americans who filed for bankruptcy protection last year [1999].
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> Prof. Warren, a professor of law at Harvard Law School, said the results are a direct consequence of the U.S. health system, which requires each family to deal individually with its health problems and pay the price.
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> The survey, carried out with Teresa Sullivan of the University of Texas and researcher Melissa Jacoby, looked at bankruptcies in eight federal judicial districts across the United States, from California to Pennsylvania.
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> Its findings are published as the U.S. Congress is considering legislation [now law] that would make it harder to sweep away credit card and other debts by seeking the shelter of bankruptcy.
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> Prof. Warren has studied bankruptcy for 20 years and was an advisor to the National Bankruptcy Review Commission, which was set up by Congress in the mid-1990s to consider bankruptcy reform.
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She said her research painted a very different picture from the image presented by the credit card companies of lavish spenders trying to escape the consequences of their debts. (my emphasis)
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> Although joblessness remained the main cause of bankruptcy, she pointed out the "echo" effect in that "when people lose their jobs, they also lose their health insurance. The combination creates a blow that families cannot recover from without bankruptcy."
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> The implications are that if such families are not allowed to wipe out their debts in bankruptcy, some will lose their homes and many will face collection agencies for the rest of their lives.
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> Seniors, women and families headed by single women are the groups hardest hit by medical expenses. Lack of medical insurance did not appear to be a significant factor, although more than 40 million Americans have no medical insurance at all.
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> More often the problem is "under-insurance" -- families have some insurance, but not enough to handle a major illness, or the financial fallout caused by one.
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> Those filing for bankruptcy were a cross-section of middle-class America, dentists, computer programmers, school teachers, accountants.
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> In addition, Americans are paying for the amazing progress in medicine, which has given them the illusion that almost anything is possible, said Prof. Warren.
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"It was very unlikely 30 years ago that an ordinary family could run up a half-million dollar medical bill, yet today that can happen in a matter of weeks in a major medical centre," she said. (my emphasis)
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> "We can do extraordinary things -- we can save tiny little babies born with defective hearts or older people who can live many more productive years -- but the price is more than middle-class families can afford."
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> William Binzel, a spokesman for MasterCard International Inc., said the study's finding agree with others he has seen.
http://www.commondreams.org/headlines05/0312-03.htm> . . . the bill ''rewards a $30 billion industry for egregious behavior.'' The legislation [now law] would do nothing to rein in credit card solicitations or put caps on interest rates or late fees, over-the-limit fees and other penalties . . . yet these were among the reasons people were forced to declare bankruptcy in the first place.
