No Relief for Hurricane Victims

My post from 9/14/05 mentioned that some members of Congress were pushing for a bill that would extend the effective date of the Bankruptcy Abuse and Consumer Protection Act (BACPA) for hurricane victims. Alas, it appears Congress has again disappointed. This proposed relief was defeated in committee. The Associated Press reported that Representative F. James Sensenbrenner Jr. of Wisconsin, the chairman of the House Judiciary Committee, rejected the notion of reopening the legislation, saying it already included provisions that would ensure that people left "down and out" by the storm would still be able to shed most of their debts. Lawmakers who lost the long fight over the law, he said, "ought to get over it." A White House spokesman, Trent Duffy, said the administration "doesn't see a lot of merit" in delaying the effective date of the legislation, but was considering making allowances for hurricane victims. Now hurricane victims find themselves in a Catch-22 because most of them can't even find local bankruptcy lawyers and lawyers may not have the records, thus making it impossible for them to get their case filed under the current laws. The current law, of course, does not require credit counseling prior to filing, it does not require a financial management course after filing, and it does not require means testing. Since most of these victims can't sign paperwork, get in touch with their attorney, have the means to come back to Louisiana for required court hearings, or have to file in their new "residence" after 90 days, many of them will be forced to file under the new legislation. Under the new legislation, hurricane victims will have to provide more paperwork to their bankruptcy lawyers. The new law puts more onus on debtor attorneys to verify information because the attorney now has personal liability if his client lies to him and he didn't "investigate" his/her clients' assertions sufficiently. Unfortunately, the flooding caused by the hurricane has decimated any records they may have had. While duplicates can be ordered from banks, the IRS, etc... there is still a burden placed upon victims to obtain the information and would delay potential relief because it takes time to get copies of these documents. The new legislation also does not make exceptions to the credit counseling requirements. Even for victims of a natural disaster that are looking to file for bankruptcy because of the major, unplanned and unavoidable event and not because of any financial mis-management. The credit counseling requirement must be fulfilled no matter the cause of the need for relief. Of course, even people who need bankruptcy because of major medical issues and not financial mis-management would also have to fulfill the credit counseling requirement before filing. I think the hurricane and medical issues illustrate a problem with the legislation. My post from 9/14/05 mentioned that some members of Congress were pushing for a bill that would extend the effective date of the Bankruptcy Abuse and Consumer Protection Act (BACPA) for hurricane victims. Alas, it appears Congress has again disappointed. This proposed relief was defeated in committee. The Associated Press reported that Representative F. James Sensenbrenner Jr. of Wisconsin, the chairman of the House Judiciary Committee, rejected the notion of reopening the legislation, saying it already included provisions that would ensure that people left "down and out" by the storm would still be able to shed most of their debts. Lawmakers who lost the long fight over the law, he said, "ought to get over it." A White House spokesman, Trent Duffy, said the administration "doesn't see a lot of merit" in delaying the effective date of the legislation, but was considering making allowances for hurricane victims. Now hurricane victims find themselves in a Catch-22 because most of them can't even find local bankruptcy lawyers and lawyers may not have the records, thus making it impossible for them to get their case filed under the current laws. The current law, of course, does not require credit counseling prior to filing, it does not require a financial management course after filing, and it does not require means testing. Since most of these victims can't sign paperwork, get in touch with their attorney, have the means to come back to Louisiana for required court hearings, or have to file in their new "residence" after 90 days, many of them will be forced to file under the new legislation. Under the new legislation, hurricane victims will have to provide more paperwork to their bankruptcy lawyers. The new law puts more onus on debtor attorneys to verify information because the attorney now has personal liability if his client lies to him and he didn't "investigate" his/her clients' assertions sufficiently. Unfortunately, the flooding caused by the hurricane has decimated any records they may have had. While duplicates can be ordered from banks, the IRS, etc... there is still a burden placed upon victims to obtain the information and would delay potential relief because it takes time to get copies of these documents. The new legislation also does not make exceptions to the credit counseling requirements. Even for victims of a natural disaster that are looking to file for bankruptcy because of the major, unplanned and unavoidable event and not because of any financial mis-management. The credit counseling requirement must be fulfilled no matter the cause of the need for relief. Of course, even people who need bankruptcy because of major medical issues and not financial mis-management would also have to fulfill the credit counseling requirement before filing. I think the hurricane and medical issues illustrate a problem with the legislation.