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Copyright 2000 The Baltimore Sun Company
THE BALTIMORE SUN
August 30, 2000, Wednesday
,FINAL
SECTION: EDITORIAL
,21A
LENGTH: 592 words
HEADLINE: Don't change bankruptcy law
BYLINE: Charles Shafer
BODY:
ARE THOSE bankers I see hiding behind the women's skirts?
The consumer finance industry is conducting an expensive publicity campaign to
promote bankruptcy law changes. It's no surprise to see them exaggerate the
amount of money lost to dishonest consumers abusing the system. And it's not
surprising that they would try to mislead us about the consequences of rules
they champion.
But it is particularly galling when the promoters of this legislation pretend
it will help unfortunate women who are owed alimony and child support by
deadbeat dads.
The sponsors rightly sense that it's hard for us to work up much compassion
for a trillion dollar industry that every year stuffs our mailboxes with over 3
billion enticements to borrow more. So now they want us to believe they are
really fighting for the needy.
This was Delaware Gov. Thomas R. Carper's message in a column
"Congress must help ensure child support payments," (Opinion
Commentary, Aug. 7). Governor Carper said that the proposed
Bankruptcy Reform Act stresses the importance of parents' obligation to financially support
their children.
Isn't it odd that this legislation is opposed by every woman's group in the
country that has looked
at it?
Either 30 women's organizations don't know what's good for them or Governor
Carper needs to review this bill more closely.
The current bankruptcy law already provides considerable protection for women
(and men) who are owed alimony and sup- port.
For example, alimony and child support is not dischargeable. That means that
no matter how many times a man files for bankruptcy he cannot get out of the
legal obligation to pay those debts.
Another protection is that a woman with alimony and support claims may
continue to try to collect from her ex-husband even after he has obtained
bankruptcy protection. Almost all other creditors must cease pursuing the
debtor once the petition is filed. And alimony and support have priority in
bankruptcy. Those debts must be paid in full before any money goes to
other creditors.
Supporters of the bill often point to provisions they claim will help women.
But those provisions are worthless.
For example, the proposed law grants women with alimony and support top
priority. Currently they have seventh priority. This sounds great. Who wouldn't
want to be number one? But the provision is a sham.
Most of the creditors which now have higher priority are rarely involved in
consumer bankruptcies. But the move to first priority would put women ahead of
the trustees, those who administer the bankruptcy proceedings.
This provision is harmful to women because it will discourage the collection
of money.
Not only does the legislation offer no real benefits to women, it boosts the
status of lenders to make them more powerful competitors for whatever money is
available.
Large amounts of credit card debt could not be discharged and lenders would
have more leverage to get reaffirmation
agreements that require the debtor to pay after the bankruptcy is over. As the
credit industry collects more, support claimants will collect even less.
Finally, women in financial distress as a result of divorce (who make up about
one-third of all bankruptcy debtors) would be hamstrung by the many
pro-creditor changes. The statute's
"means test" is aimed directly at working families, making it harder for them to file for
bankruptcy and making bankruptcy more costly and time consuming.
Charles Shafer is a professor of law at the University of Baltimore Law School.
LOAD-DATE: August 31, 2000