Rushing to beat an October deadline when the biggest overhaul of the bankruptcy law in a quarter century goes into effect, rising numbers of Americans have filed for protection in the four months since the law was changed, seeking to have their debts erased.
Under the revised law, debtors who earn more than the median income in their state and who can repay at least $6,000 of their debt over five years will no longer be able to have their debts wiped out for a fresh start.
So, if you earn over the median income and can pay $100 a month, you can no longer file a BK, no matter how crushing your debt load is. Sure, people should pay back what they borrow, but what if, say, the breadwinner in a family dies or can’t work? These news laws allow no flexibility.
Instead, they will have to seek protection under Chapter 13, which requires a repayment schedule.
Which might well mean no way out. Most bankruptcies are due to medical expenses or job loss (not people gaming the system) so under these onerous new laws, debtors could pay forever, maybe not even keeping up with the interest charges, much less the principal.
Plus, these new laws give credit card companies billions in new profits by allowing them to raise interest rates to loan shark levels of 25-30% while it simultaneously insures consumers have few workable options. How cosy. The rich get richer, the poor and middle class get shafted.