As Congress debated -- if that's the word for it -- the bankruptcy bill that passed the House yesterday, we heard a lot of demonizing of Americans who find themselves in bankruptcy. When he introduced the bill in March, Republican Sen. Chuck Grassley said bankruptcy had become "a convenient financial planning tool where deadbeats can get out of paying their debt scot-free while honest Americans who play by the rules have to foot the bill." The American Bankers Association read from the same talking points when the House passed the bill yesterday. Edward L. Yingling, the group's executive vice president, issued a statement saying that, while the bill ensures that bankruptcy protection is "fully available for the neediest Americans," it will rein in "some filers who wrongly use the system as a financial planning tool."
In voting for the bill yesetday, 73 House Democrats either bought into that sort of thinking or were so blinded by the lobbying strength of the credit card industry that they never did much thinking about the bill at all. But you've got to wonder what they'll think on the morning after, as they check out this report in today's Washington Post. The story: When Americans emerge from bankruptcy, they're typically inundated with offers from credit card companies trying to get them hooked on credit all over again.
And who's there to defend this passing-out-cigarettes-in-the-cancer-ward treatment? The American Bankers Association, of course. "Just because someone files for bankruptcy doesn't mean they should be denied access to credit, nor does it mean that they cannot handle a credit card," Tracey Mills, a spokeswoman for the association, tell the Post. "People file for bankruptcy for many reasons," Mills said, including job loss, divorce and medical bills.
That's what we thought, too, but it was sure easy to lose sight of that amid all the talk -- some of it put forth by that very same American Bankers Association -- about the deadbeat dads, compulsive gamblers and habitual shoppers who abuse the bankruptcy system. Why would credit card companies want to take a second chance on such abusers and losers? A North Carolina bankruptcy attorney tells the Post that there's exactly one reason: Americans emerging from bankruptcy can't get their debts forgiven again for another six years. Under the bill that passed the House yesterday, a lot of them won't be able to get their debts forgiven at all.