New Bankruptcy Bill Flawed-weakens system/current debtors replayments stop

[papau]

"If you're confronted with a mountain of debt and have no hope of getting out from under it, you're either going to go underground or turn to crime," said Kenneth N. Klee, a former Republican congressional staffer

http://www.latimes.com/news/nationworld/nation/la-na-bankrupt29mar29.story

Judges Say Overhaul Would Weaken Bankruptcy System
By Peter G. Gosselin
Times Staff Writer

March 29, 2005

WASHINGTON — For nearly a decade, proponents of overhauling the nation's bankruptcy laws have described their aim as ensuring that Americans who enter bankruptcy court do not escape bills that they can truly afford to pay.

But only weeks before Congress is likely to approve the long-sought overhaul, bankruptcy judges across the country warn that the measure would undermine the very section of the law under which debtors are now repaying more than $3 billion annually to their creditors.

These judges say the effect of the overhaul would be to discourage most forms of personal bankruptcy, which for nearly two centuries has served as a safety net for people in economic trouble.

<snip>The result, the judges said, would be the collapse of more repayment plans, forcing debtors out of bankruptcy court protection. Creditors then could try to force debtors to pay the full amount owed — not the reduced amount a judge had ordered — by moving to repossess their belongings or bringing legal actions. Many people would have to pay creditors far into the future, the critics said, and thus be unable to restart their economic lives, a long-held aim of bankruptcy.

Repayment plans "are pretty fragile documents to begin with, but they're going to get a lot more fragile under these conditions," said Ronald Barliant, a former bankruptcy judge from the northern district of Illinois in Chicago.

"It's going to take away of lot of the incentives" for people to enter repayment plans, said David W. Houston III, a bankruptcy judge from the northern district of Mississippi in Aberdeen.<snip>