Bankruptcy Bill is a sham

Michelle Singletary reports in the Washington Post:

In what will undoubtedly be the first of many “I told you so” reports, the National Association of Consumer Bankruptcy Attorneys has found that, overwhelmingly, people who file for bankruptcy protection aren’t deadbeats who went on shopping sprees with the intention of shirking their debts.

That’s quite contrary to what was being claimed by supporters of the new federal bankruptcy law that went into effect last October.

For years, those proponents argued that billions of dollars were being lost because people were simply being allowed to walk away from their debts.

Four out of five filers felt forced to seek bankruptcy protection because of a job loss, catastrophic medical expenses or the death of a spouse, according to the report, “Bankruptcy Reform’s Impact: Where Are All the Deadbeats?”

One in 30 consumers (3.3 percent) was a candidate for paying off what he or she owed under a debt management plan (DMP), the report indicated. With a DMP, a debtor makes one monthly payment to a credit-counseling agency. The agency then distributes the funds according to a payment schedule it has worked out with the person’s creditors.

True, NACBA clearly has an agenda in all this (being bankruptcy lawyers, it behooves them for individuals to be able to file for bankruptcy), but even with the requisite grain of salt, the study should really trouble the lawmakers who gave birth to this regressive piece of legislation.