During the week of Feb. 28, this week, the U.S. Senate has scheduled debate on S.256, a bill that is designed to make it more difficult for people in financial distress to file for bankruptcy relief. The proponents of this bill contend radical changes in consumer bankruptcy law are needed to counter an epidemic of fraudulent credit card borrowing by people with the means to repay their debts.
As an attorney representing people forced by adverse circumstances to file for bankruptcy, I know that abuses are the exception, not the rule. In many cases, people have turned to easy credit offered by the credit card industry at extraordinarily high rates of interest, penalties and fees, and have struggled for years to pay their debts until overwhelmed by the accumulated weight of their financial problems. Most often, the cause of bankruptcy is not fraudulent borrowing, but loss of income, unexpected medical expenses or other financial reverses beyond the borrowers control. I have yet to see and represent anyone who was happy about filing for bankruptcy protection; most people agonize over the decision, often after enduring months or even years of telephone calls from abusive collectors before seeking bankruptcy protection. S.256 is deeply flawed for more reasons than can be expressed in this column given the limitations of time and space (an in-depth critique of the bankruptcy reform legislation can be found at nacba.com/legislation/index.asp). However, one provision of this legislation worth noting would require consumer bankruptcy debtors to provide to any creditor, upon request, a copy of the debtors current federal income tax return, upon penalty of dismissal of the bankruptcy case. This means any creditor will have access to highly confidential information, which often includes the names, ages, addresses and Social Security numbers of the debtors minor children. Because consumer debt is frequently assigned from one entity to another, tax returns may fall into the hands of unscrupulous collectors such as Camco or other entities that might use the information for identity theft or other criminal purposes.
While I doubt Congress would knowingly pass legislation with indifference to legitimate privacy concerns, the pending bankruptcy legislation was not drafted by Congress; it is the product of a lawfirm hired by the credit card lobby to produce a bill favorable to the lenders interests, with little regard for the consequences to consumer debtors and the legitimate purposes of bankruptcy.
The citizens of Illinois and this congressional district did not elect senators Dick Durbin and Barack Obama, and Rep. Don Manzullo, so that they might surrender their legislative responsibilities to the powerful national credit card companies and allow those companies to write their own legislation. I urge the citizens of this state and this congressional district to contact their senators and representative to express opposition to the pending bankruptcy legislation.
Gary C. Flanders is a local attorney who arranges Chapter 7 bankruptcies and Chapter 13 debt consolidations. He can be reached at 962-7084.