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Legislative History and Bankruptcy Politics


Legislative History.

The BAPCA of 2005 is largely based on a law proposed in 1999. 1999 Bankruptcy Law . The credit card and banking lobby worked very hard over a long period of time to get this bill passed. The 1999 proposed law, was "like a vampire," it would not die despite efforts by debtors counsel lobby to kill it.

Congress passed the Bankruptcy Reform Act of 2000, which is essentially the same law that was enacted in 2005, but president Clinton used a pocket veto to kill the measure. It is said that a meeting between Hillary Clinton and Senator Elizabeth Warren was instrumental in killing this bill in 2000.

Changes in the 2004 election season helped breath life back into the bill, which was proposed but shelved in each year from 2000-2005.

BAPCA was introduced by Senator Chuck Grassley of Iowa, chairman of the Senate Finance Committee. The bill was supported by President George W. Bush and Tom Delay. The bill passed by large margins 302-126 in the House and 74-15 in the Senate. Support for the bill came mostly from banks, credit card companies and other creditors interests.

The cost of consumer credit has not decreased owing to the legislation. Credit card companies are reaping record profits and have not generally passed any savings (in reduced bankruptcy) discharges on to the consumer. 
   
Opposition to the bill largely focused on the false premise that bankruptcy fraud was widespread, and that too many persons would be forced into Chapter 13 where some debt is repaid over a 3-5 year period as opposed to Chapter 7 where most debt is eliminated. Bankruptcy judges, law professors and consumer lawyers. The causes of bankruptcy are mostly medical debt and job loss. The extensive study by Elizabeth Warren, now a US Senator from Massachusetts but then a bankruptcy law professor at Harvard, though controversial as been used to argue against tightening bankruptcy law for decades. Causes of Bankruptcy Study