Bankruptcy After Katrina: Who Wins, Who Loses?

We now look at another economic policy that has an especially severe affect on Hurricane Katrina survivors. The Bankruptcy Abuse Prevention and Consumer Protection Act was passed in April and goes into affect on October 17th. Critics of the bill charge that it was crafted by lobbyists for the credit card industry and that credit companies stand to reap several billion dollars in profit from the law. Meanwhile the bill makes it harder and more expensive for people to seek bankruptcy protection and it give lenders and businesses new legal tools for recovering debts.

Four congressmembers led by Democratic Representative John Conyers of Michgan are calling for victims of Katrina to be exempt from certain provisions of the law. Conyers said that, "In today's lagging economy, far too many hardworking Americans are living paycheck to paycheck, just barely getting by. In that tenuous financial condition, many families are only one tragedy away from being devastated by debt. Many of the families who have now lost their homes, livelihoods, and personal possessions will soon be contacted by credit collection agencies demanding the next minimum payment on a credit card."

* Travis Plunkett, Legislative Director of the Consumer Federation of America.

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