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CentralMass

(15,265 posts)
Fri Feb 28, 2020, 12:00 AM Feb 2020

The Americans Joe Biden Left Behind on the Bankruptcy Bill

Note: The American Prospect is an independent voice for liberal thought founded by Robert Kuttner, Paul Starr, and Robert Reich.

https://prospect.org/politics/bidens-votes-on-the-bankruptcy-bill-middle-class-joe/

The article is about the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), it impact on the middle class, and Elizabeth Warrens long fight opposing it.

."The bankruptcy bill was perhaps the most anti–middle class piece of legislation in the past century."

"In 2005 amendments to the bill, Biden voted against borrowers drowning in medical debt, seniors, servicemembers, union members, and victims of deadbeat dads."
"As the Prospect detailed Tuesday, BAPCPA made it harder for consumers to file for Chapter 7 by imposing a “means test” for Chapter 7 eligibility, and by substantially increasing the cost of filing for bankruptcy. This caused debtors’ average total out-of-pocket costs for filing for Chapter 7 to rise from $600 to $2,500. The subsequent result was a permanent 50 percent drop in Chapter 7 bankruptcy filings. BAPCPA made bankruptcy too expensive for the most broke households, making financial stress, mortgage defaults, and foreclosures more likely, particularly after the 2008 financial crisis.

Not only did the law discourage bankruptcy filings, but it made it harder to wipe out credit card debt and student loans in bankruptcy. The result was greater profits for consumer lending businesses, many of which are based in Biden’s state of Delaware. Not surprisingly, then, by lowering the risk of bad lending decisions, the Biden bankruptcy bill unleashed a glut of aggressive private student lending, which has contributed to the massive rise in student loan debt.

The bankruptcy bill was perhaps the most anti–middle class piece of legislation in the past century."

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