Judge takes Congress to task in bankruptcy case

Austin American Statesman ^ | February 5, 2006 | Robert Elder

[kms61]

FREDERICKSBURG — Alfonso Sosa, a house painter here who made about $20,000 last year, filed for bankruptcy the morning of Dec. 6, hoping to avoid the foreclosure on his family's mobile home scheduled for later that day. Judge Frank Monroe of Austin rejected the case 16 days later — with a bang.

In his ruling, Monroe said the new federal bankruptcy law is full of traps for consumers, calling some of its provisions "inane," "absurd" and incomprehensible to "any rational human being."

He stopped just short of accusing Congress of being bought and paid for, dryly noting, "Apparently, it is not the individual consumers of this country that make the donations to the members of Congress that allow them to be elected and re-elected and re-elected and re-elected."

[Dasaji]

The mimimum payments are authorized to go up.

EXACTLY - that is the death knell right there.

Almost impossible to declare bankruptcy, minimum payments went up, natural gas expenses have eaten into many folks' grocery budgets, gasoline prices the same, trickle down makes everything ELSE expensive. . . tell me this isn't the perfect way to screw Middle America.

[varon]

Responsibility people Responsibility.

That holds true for the lending institutions as well.

If you can not handle credit do not take it.

The inverse holds true for lending institutions; "if they are not credit worthy, don't make offer".

The government is not your mommy and daddy.

Neither should it be a collection agency for the negligent lender. Under the new bankruptcy law, the borrower is not only liable to the lender under contract law but on top of that, the repayment will be enforced by the bankruptcy court. How cool is that? /sarcasm

[THEUPMAN]

Bad things happen to people. It is morally right to excuse such types of debt.

?

Doesn't that just transfer your bad fortune to someone elce?

Or do think everyone in "the village" should suffer a little rather then you suffer a lot.

It may be moraly right to excuse the debt but is it moraly right to FORCE the lender to be moraly right?

So now we come to the issue ... is everyone "entitled" to the best health care ( food, housing, big screen tv,fill in item here, child care, education, ..)that money can buy ... EVEN IF THEY DON'T HAVE THE MONEY?

[AmericaUnited]

If lenders were losing too much money due to bankruptcy, why didn't they stop issuing 35 credit cards to every man, woman, child and pet in this nation?

Would you be quiet?! I don't want my trip to Hawaii, paid for by my dog's generous credit lines, to be jeopardized...

[doc30]

Not lower rates, but credit card minimum payments doubled. The banks agreed to do this to try to get people out of debt faster and to preven bankruptcies from being filed. I guess tey never looked at cash flow in families and not just total debt.

[doc30]

If you can not handle credit do not take it.

There are two parties in any credit arrangement. The lenders must also accept losses if they grant credit. Sadly, the CC companies want high risk borrowers so they can charge fees and high interest rates. Miss one payment and your APR become 25%! COngress should never have enacted a civil bankruptcy law that favors one party over the other.

[doc30]

The judge wasn't being activist. He simply interpreted the new law and denied bankruptcy for the family. So what if they lose their home and, because they didn't take credit counselling, may be barred from filing. Just throw the bums out on the street.

Actually this judge sounds like he understands what bankruptcy means and how it affects people in real life. COngress just wanted to protect lenders against high risk borrowers.

[WhiteGuy]

"Apparently, it is not the individual consumers of this country that make the donations to the members of Congress that allow them to be elected and re-elected and re-elected and re-elected."

Well put.

[bert]

....Responsibility people Responsibility......

You have it corrrect. The logic of many posters would blame McDonalds or Budweiser or Sarah Lee for the health problems of fat people.

[KDD]

That is on top of the package of $5 billion US government gave each year to Israel, Egypt and Jordan.

Treaty obligation...Blame Jimmy Carter.

[Mind-numbed Robot]

Congress just wanted to protect lenders against high risk borrowers.

Which is counter to my philosophy. If someone is dumb enough to lend me money they don't deserve to be paid back. My credit is so bad some people won't accept my cash. Bada bing!

[marktwain]

"People in the midwest are paying 50-75% more for natural gas this winter. Yes, they are maxing out their charge cards to pay for heat. Michigan has the highest unemployment rate in the country. For every auto manufacturing job lost, another 5 are lost as well--supply chain jobs to Mabel at the diner."

In other words, people who never learned to save a dime are in financial trouble because they always thought (if they thought at all) that someone else would bail them out.

In Arizona, construction jobs are booming, we can't find enough workers, and the boom is projected for the next 20 years.

I recall back when I was in graduate school, working my butt off supporting a family and getting an advanced degree, the whiny automobile workers who had been working for 30 years at twice the salary I expected to make as an engineer - and they had *nothing* to show for it. The same people spent as much money on smoking and drinking over 20 years as the amount that I paid for my first house.

There is a point when the cost of irresponsibility comes home.

[marktwain]

"Neither should it be a collection agency for the negligent lender. Under the new bankruptcy law, the borrower is not only liable to the lender under contract law but on top of that, the repayment will be enforced by the bankruptcy court."

It is one of the basic functions of government to enforce contracts.

[KDD]

The U.S. Government, as a third party, stepped into existing private individual contracts between lending companies and their customers to modify their contracts to benefit one party over the other. Any agreements entered into prior to the new law taking effect should not be bound by this new law. Bankruptcy laws in effect at the time that contracts are signed are part of the calculus used to project risk in accepting its terms. A third party stepping in to modify terms of a contract after the fact should be an illegal act.

[Don Joe]

Bush himself proclaimed those "lower rates" when he signed the bill. Where are they?

They're in "the penumbra". (You see, the Republicans were so jealous of the Democrats creating "rights" (like the "right" to kill one's preborn child) via "the penumbra", that they had to come up with one of their own. This is the result.)

[BraveMan]

Poor Alfonso Sosa missed four payments on his residence, three payments on his truck and owes his supplier over $8,000.00. He waited until the last possible moment before doing anything about it, and we're supposed to feel sorry for him and give him a pass? You are so quick to blame the evil credit lobbyist and those evil credit card companies, yet perfectly happy to let this guy walk; great, just great.

Credit card companies aren't the only ones who suffer when someone decides their debt load (which they took on willingly) is too much to handle. Often it's the 'little guy' who ends up holding the feces filled bag. Here is a novel idea; don't buy it if you can't afford it!

Way, way too many people are using Chapter 7 to pay for their indulgences. They know they can run up all kinds of debt and not be held responsible for any of it, so it's off to Crazy TV Lenny's to buy that 42" Plasma Big Screen on credit.

You want real credit reform? Bring back the debtor's prison!

[CodeToad]

Representing one's self in bankruptcy would seem to have the same civil rights protections to the courts. Adding that a person cannot use the courts until they have paid a trade union, read:lawyers, seems to violate a person's civil rights to equal representation under the law for a variety of reasons.

[PUGACHEV]

This case points out one of the more absurd aspects of the bankruptcy reform act. On one level, a requirement for pre-bankruptcy credit counseling seems reasonable, but when you see how it's actually done, you understand how corrupt the whole process is.

To begin with, who does the credit counseling, and how are their programs evaluated? As it turns out, credit counseling may only be given by agencies approved by the regional office of the United States Trustee, a orphan branch of the justice department used a source for patronage positions. The agencies selected have no particular skill or aptitude in counseling debtors, they have only the ability to navigate a patronage-diven bureaucratic maze to win approval. The individual counselors have no training, experience, or aptitude that qualify them for their job, and there is no standard method or syllabus for their counseling: some counseling sessions may take hours at one agency, while the same session may take twenty minutes at another. In short, the whole thing is absurd boondoggle that produces nothing of value. It's just one example among many of how sanctimonious and hollow these so-called reforms are, and how lazy and intellectually corrupt the legislators who supported them were.

[Don Joe]

The Judge denied a Chapter 13 plan? In only 2 weeks? Things are really bad out there.

He nailed 'em on a technicality. They didn't request Credit Counseling prior to their Bankruptcy filing (even though they had completed it prior to their court appearance). Simon Sez.

The judge simultaneously ripped the new law and its victims "a new one", without having the cohones to "make case law" (or "nullification", if you will), by declaring the law -- which he declared absurd -- to be unconstitutional.

[longtermmemmory]

THe judge is 100% correct.

The new bankrupcy bill is absolutly ridiculous. Ch 7 and Ch 13 have provisions in conflict with each other. Whoever wrote much of it has not concept of the US constitution, constitutional law, or even the law in general.

People forget that bankruptcy courts are provided in the constitution, they are not mere statutory creations.

There are many in the field who are chomping at the bits to take the abomination to court.

Reform may have been needed but this is a joke.