How can bankruptcy changes be retroactive?

[Tactical Progressive]

for debt incurred before the changes? Seems to me all the agreements effectively signed on to at the time the debt was incurred include the existing state of bankruptcy law. Nobody who took on debt in that time agreed to the debt under the newer, more unforgiving legalities. Shouldn't those debts be 'grandfathered' in under the law existing at the time they were agreed to?

I would think that, say if the new debt laws go into effect on July 1, 2005, that any debt taken on after that time would be subject to the newer laws, but debt taken on before July 1 could only be subject to the law as it was before July 1.

[MikeG]

1. No. In fact they won't take effect for 6 months after enactment.

My guess is it will pass in October and take effect in March, 2006.

[Tactical Progressive]

4. I'm not talking about when the law takes effect.

I'm talking about when the debt was incurred.

That debt was taken on under a different set of legalities. It was essentially agreed to under different terms, including potential discharge under the worst-case-scenario of bankruptcy.

[MikeG]

9. The debt is dischargeable no matter what you agreed to.

[KharmaTrain]

12. Read The Contract CAREFULLY

Frontline just did a great story on this issue...must see for anyone who doesn't know how the credit card and reporting system works. This is worth watching just to learn about Checkpoint, Trans-Union and Equifax and the power they have on your lives.

Some card contracts may have hidden language written just in the event this law (which has been cooking around for nearly a decade) would become law...and yep, to trap those with past debt into having to pay penalties or forced to make other forms of restitution if the card holder wanted to go after past debts.

This is a stacked deck here since the people who control the money and the credit are also the people who judge a person's worthiness and now the politicians who can "break knee-caps" to ensure this industry's obscene profits go unchecked, unregulated and highly profitable.

While I doubt MBNA will send Cousin Vinnie to break your knee-caps, the ability for this company to seize assets or garnish wages becomes even greater thanks to the fine work of this law.

[Deja Q]

2. That shouldn't be legal. As I recall there's a law or amendment stating

that new laws CANNOT be used retroactively.

[MikeG]

10. There can be no retroactive effect. It is illegal.

[napi21]

3. I suspect it depends of the language of the bill.

Bills can be written that specifically state they are retro.

I doubt the final wording isn't even close to done yet, so we'll have to wait and see.

I actually doubt this one will be retro.

[Tactical Progressive]

5. So if it's not retro

you should still be able to, for years hence, discharge pre-existing debt under the old bankruptcy regimen.

[napi21]

7. Not years. Old laws would apply to when you file for bankruptcy

protection, not to when the dept was incurred.

[SW FL Dem]

8. Incorrect. the last time I read the bill

it had an effective date 6 months after it was signed into the law. The relevant date is the date the petition for bankruptcy is filed, NOT the date the debt was incurred.

[SW FL Dem]

6. I don't think the ex post facto rule applies here

The new law will be effective 6 months after it is signed into law. That give debtors time to file if they need to before the new rules go into effect. My advice to anyone with large debts is to watch this carefully, and if you need to file, do it as soon as possible. Once you file, you can move on. If you wait, you may lose your chance for a fresh start.

[Jacobin]

11. You are correct. .....unfortunately

[SW FL Dem]

13. I know - I used to practice law and have done some BK work

I know how many people are going to be hurt by this new law.