New York Times
October 3, 2005
What perfect timing: the bankruptcy law set to go into effect Oct. 17 is arriving just in time to inflict more pain on Louisiana, Mississippi, Alabama and Texas residents who have been hit by the gulf hurricanes. They lost their homes, businesses and even loved ones and now may face financial ruin without the protection of bankruptcy.
Robert Lawless, a law professor at the University of Nevada, found in a forthcoming Nevada Law Journal study that bankruptcy filings rose about 50 percent faster in states affected by hurricanes than in those unaffected. That the Hurricane Katrina victims would suffer under the draconian new law is hard to swallow. Their plight also raises the question of whether anyone at all should be punished by this unfortunate piece of legislation.
The banking and credit-card companies that bankrolled the new law - both in campaign contributions and lobbying muscle - want us to believe that it is designed to capture wild spenders who finance lavish lifestyles before ducking behind the protection of bankruptcy when the bills come due. But this contemporary retelling of the myth of the welfare queen dissolves under scrutiny.
What most bankruptcy filers have in common is a huge setback beyond their control, like illness, the death of a loved one, divorce or layoffs. Most Americans view bankruptcy as a last resort, even after a traumatic event. Mr. Lawless's study, based on 18 major storms between 1980 and 2004, found that the peak in bankruptcy filings was not right after a storm but two to three years later. That means victims made every effort to rebuild their lives before seeking help.
F. James Sensenbrenner Jr., the Wisconsin congressman who was a sponsor of the bankruptcy law in the House, told The Milwaukee Journal Sentinel last month that those who had lost the fight against the new rules needed to "get over it." Easy for him to say. His Congressional salary of more than $160,000 this year is nearly quadruple the median United States household income last year, which was less than $45,000. His great-grandfather was one of the founders of the company that brought us Kleenex and Huggies, making him an heir to the Kimberly-Clark fortune. He even once won $250,000 in the D.C. Lottery, for him just a cherry on top of a fortune reported at more than $10 million. It's a shame that Mr. Sensenbrenner, who has to be one of the luckier people around, can't spare a little sympathy for the less fortunate.
Sorry, Jim. We can't get over it.