Copyright 2002 Globe Newspaper Company
The Boston
Globe
May 9, 2002, Thursday ,THIRD EDITION
SECTION: EDITORIAL; Pg. A18
LENGTH: 467 words
HEADLINE:
CARD SHARKS
BODY:
FOR THE PAST five years, credit
card companies and banks have used generous campaign contributions to lobby
Congress for a new bankruptcy law that would make it tougher for consumers to
get relief from their debt. At the same time, the industry rejects any
suggestion that it stop encouraging irresponsible credit practices by showering
the public with pitches for more credit cards.
All of the companies'
investment in Congress is on the verge of paying off. The only issue holding up
conference committee agreement on new bankruptcy legislation is
a provision from the Senate side forbidding the use of
bankruptcy by abortion opponents to protect
themselves from court-imposed fines or damages for violent protests at clinics.
The House version of the bill has no such language, and
prolife House members are balking at approving a bill that would penalize
abortion opponents. While it is wrong for antiabortion groups
to use the bankruptcy law this way, it is not good policy to
single out one group. What should doom the bill is the burden it places on
struggling families.
The terms agreed upon in conference commitee do
nothing, for instance, to redress the unfairness of requiring onerous payments
from low-income families in trouble while letting someone like Burt Reynolds
protect a $2.5 million house even after running up
$10 million in debts. The Senate wanted to cap at
$125,000 the equity value of a home that a debtor can protect
in the seven states, including Florida and Texas, that have generous homestead
allowances for mansion-owning bankrupts. But the House wouldn't hear of it.
The thrust of the legislation is to make it more difficult for consumers
to file for Chapter 7 bankruptcy, which lets them get out from under credit card
debt and other unsecured loans. More would have to file under Chapter 13, which
can require stiff repayment schedules. Advocates for children worry that child
support claims would take a back seat to debt repayments after a debtor parent
went through a Chapter 13.
Promoters of a revised bankruptcy law warn
that the current law is being abused by wealthy deadbeats. In fact, a 1999 study
by federal bankruptcy judges found that the median income of debtors seeking
bankruptcy protection was $21,500. A recent upsurge in filings
is an accurate reflection of the impact that layoffs, divorces, and medical
emergencies have had on the bankruptcy rate.
According to the Consumer
Federation of America, the credit industry flooded consumers - including college
students with no independent support - with 5 billion solicitations in 2001, an
increase of 43 percent over the 3.5 billion in 2000. An industry that really
favored more responsible credit practices would start by being more selective in
its marketing.
LOAD-DATE: May 11, 2002
