In 2005,
President Bush signed into law one of the most cruel and unfair bankruptcy “reform”
laws ever passed, which made it much more difficult for Americans to declare
bankruptcy - even if they went deep into debt as a result of an accident,
illness or loss of a job. Credit card
companies lobbied hard for the new law, eager to get people to
sign up for credit cards, charge high rates that many consumers couldn't afford,
but nevertheless be able to access families’ assets should consumers default. In Congress, a
shameful coalition of conservative and “progressive” politicians, awash in
campaign contributions from the credit card companies, triumphantly proclaimed
that the era of “easy” bankruptcy was over.
Not so. A new
report released today reveals the bankruptcy rate has risen sharply for two
years in a row, already reaching levels as high as those seen in the recession
of the early 1990s. That bankruptcy rates are back on the wrong track despite a
conscious legislative effort to force families to struggle longer with
unsustainable debt obligations than they can afford speaks volumes about
today's enveloping financial squeeze. And chances are high that personal
bankruptcies will increase even further given current economic trends of weak
income growth, high levels of debt, and rising prices.
-
Hugh
