The new bankruptcy laws

I’d heard the new bankruptcy laws were onerous. Maxed Out, which I’m reading, details just how hideous they are.

If your income is at or above the median income for your state, you are assumed to be defrauding your creditors and thus are not allowed to file bankruptcy. No, I am not making this up.

If you are allowed to file, you must go to credit counseling first. That’s private, not governmental, credit counseling, and it’s unregulated. All manner of jackal and scammer will be lurking in wait for the desperate debtor, no doubt.

And regardless of if you can file or not, you will undoubtedly get offers for new credit cards while the process is going on. Often from the same companies you owe money to.

Another tidbit. If you default on a student loan, they can now take it out of your Social Security payments. If you didn’t know, a student loan is not dischargeable by anything, not bankruptcy, not illness, nothing.


  1. Not quite true… student loans are dischargable by death. BTW, credit counseling scams have been with us for decades. For those needing it, Consumer Credit Counselors is the only one I’ve ever heard good things about.

    And while Congress hoses unsuspecting consumers, they get off scot free on the government’s debt– just have Treasury print some more money!

  2. Wheels coming off implies momentum (physics is everthing), momentum implies anticipation of where the wheels will go. The Usury industry has shot itself in the knee playing quickbuck – now just one more straw breaking the public’s back. This is the stuff revolutions are made of.

  3. I don’t know if this is still true or not, but back in the 80’s, I had my student loan forgiven because I was teaching in a low-income neighborhood.

  4. I had that clause in some of my loans in the 90s– in the Perkins loans, but not the Stafford.

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