The 2005 Bankruptcy Amendments

A Law Passed for the Rich People, by the Rich People

The news reports pretty flatly tell us today (8/26/10) that Bankruptcy filings are up, the highest since 2005 when the Bankruptcy Code was amended to make it harder for all the little people to file. The reference to 2005 is made without any explanation, but with things out here going from worse to downright awful, it has to be examined.

Was the Bankruptcy Code so broken before 2005 that it needed an overhaul? Absolutely not.

From 1989 to 2005 I worked on loads of business and consumer bankruptcy cases. The system worked well. People needed financial relief, and that need grew more and more as time went on. The United States Trustee’s Office, the bankruptcy cops, did a good job at spotting abuse and acting on it.

Abuses, such as hiding assets and understating income, were rare. The reason for this was that most people filing for protection did not have any assets. One cannot commit fraud if one has no money with which to behave in a fraudulent fashion. These people did not game the system. They were all just broke, and needed a new start. They were not committing abuse, but rather were seeking protection from it.

So why did the law change in 2005? Who changed it? More specifically, what elected officials got paid by the credit card industry and at the same time by us, to make the changes?

People filed in 2005 to get in under the wire, to get bankruptcy relief before the changes made it much harder to walk away from a financial disaster. The changes were designed to make people enter repayment plans under Chapter 13, rather than for liquidation under Chapter 7.

The premises for the changes were several, all pushed by the credit card industry.

First, the lending industry successfully sold Congress on the notion that the law should presume that people out there were committing bankruptcy fraud.

Second, the lending industry shelled out 100 million dollars lobbying for the changes.

Bankruptcy reform had been kicked around for a decade before 2005, but no one was really biting. Unless you were a big business looking to reorganize in a Chapter 11, nobody in the world cared. The poor regular working family, so behind that they needed a Chapter 7 case, was and still is perhaps the most little noticed event imaginable, except to the credit card industry.

Up until 2005, these unneeded reforms had also been sidetracked by sheer idiocy. For example, one of the biggest holdups to passage of any reforms had been an annual fight over whether damages awarded in connection with violence at an abortion clinic would be dischargeable under the reformed Code. Every year I would read this and wonder what kind of idiots worry about such things? Whether you favor or oppose abortion, this type of award happens infrequently. Someone with the gumption to shoot up an abortion clinic is extraordinarily rare. Nevertheless this issue, which had nothing to do with the reasons people file for bankruptcy protection, stalled the reforms year after year.

So who passed it?

The millionaires in Congress finally concluded, with the credit card industry’s urging, that poor people should be forced into repayment plans. They did so only two years before our economy entered a depression in which more people than ever would need relief of some sort.

One of the main sponsors of the reforms was some Congressman named Jim Sensenbrenner from Wisconsin. From what I read about him, he looks like a pretty rich guy who, just maybe, might be a little out of touch with the plight of the ordinary poor American citizen. In fact, someone like old Jim will probably never meet people whose lives are so wrecked that they need to file. Americans who are so pressed that they need to file for bankruptcy protection do not hang out at country clubs like Jim’s and millionaires’ clubs like Congress. That is because they don’t have the money or time to golf and don’t have a million dollars.

Aristocrats in Congress helping aristocrats in the lending industry by squeezing the last few bucks out of impoverished bankruptcy filers. It’s a beautiful thing when people help each out like this, isn’t?

Maybe Congress can help us out America just a little bit now, and repeal one of the most unnecessary, poorly thought out, badly timed legislative moves of all time.

*Attorney Gene Kelley has written numerous articles on bankruptcy and working out of debt for working people which have appeared in various print and electronic media. He is also the author of a book, JUNKY ROAD-A RECOVERY GUIDE FROM CREDIT CARD ADDICTION, (2010). For ordering information, see this website.

Of all the bad lenders who brought their crummy loan products to the subprime marketplace, Countrywide was the worst. I witnessed with my own eyes time and again as the Countrywide lending machine gave regular people very expensive loans in amounts and on terms which it knew could never be repaid. When they defaulted, Countrywide simply crushed them.

Countrywide made a lot of loans in Northeast Pennsylvania, fitting as we were subprime long before it came into vogue.

Countrywide did not lend just to poor people in Pennsylvania. You might remember it made a very famous loan to Senator Chris Dodd who, amazingly, never knew anything about it. He was apparently so poor he could not even afford to remember stuff.

Countrywide also made a whole bunch of loans to the people at Fannie Mae but these looked pretty good in terms of rates and terms. This article even names the Fannie Mae guys who got them.

One has to wonder, why would they do this?

First I felt kind of bad for these Fannie Mae borrowers. Maybe the Fannie Mae executives were poor too, or working middle class, like the people I represented who had Country wide loans. Maybe they took the loans because they were not too educated about finance. If that’s the case, I really feel sorry for them, because Countrywide might eventually have been pretty hard on them, just like it was on my clients.

But wait… the article says that these were Fannie Mae executives, some of them making as much as 21 million dollars a year. That’s not really very poor, even where all my middle class clients shop. That kind of pay should let them squeak by until the end of the month.

And wait again….these borrowers were not financial illiterates like many of my clients. Google ‘Jamie Gorelick’, one of those names I hear almost every time something bad happens. She really gets around where there is money to be found. A Harvard girl, this bad penny did a good job running Fannie Mae right into the ground and helping to costing us taxpayers 84 Billion dollars.
That’s “B” as in billions.

It’s “B” as in bribes.

If the machinations of our self appointed too deeply engrained aristocracy continue without being addressed, our country is headed to ruin. We are permitting this to happen.

When I was a kid the sounds of train whistles drifted over our valley at all hours of the day and night. The sound of train cars being coupled could be heard for miles as well. It was, in a strange way, comforting and indicative of home.

Hopping trains was a regional past time for many of us boys. The more daring kids claimed to have ridden as far as New Jersey, but it was hard to tell. I only saw them hop on and leave. I never rode one very far. It always felt too dangerous.

Waiting at rail crossings was a normal traffic impediment. No one seemed to think it odd for two diesels locomotives to hold cars and trucks while pulling 300 cars of freight through town.
Despite our parents repeated warning, we kids put stuff on the tracks to see what would happen, a quarter and a dime, a steel bar, a steel bolt, each would be crushed to a heated flatness no amount of milling could accomplish. We spent entire afternoons on this interesting and dangerous practice.

Climbing in abandoned collieries, and shooting at rats with BB guns in and around these structures, was considered entirely normal. I can personally attest that a sliver in your knee from hard dry wood one hundred years old, blackened with a century of coal dust is like no other. Train tracks ran right through and under these massive old structures, and we would climb from the old cars into the wooden supports. No one supervised these old sites.

Then there was the kid who got cut in half.

He and his friends were fooling around on the tracks on a summer evening. Something happened and he fell under the wheels trying to jump a train. His friends panicked and ran away. When they calmed down and came back, the kid’s body was severed at his hips. His upper body had dragged itself about 20 feet before he died.

This was the story at least, but I had it verified by guys who said they were there.
All of this occurred in what seemed to us perfect normalcy.

At some point maybe 30 years ago all train whistles died out. Whatever remained of the rail industry quietly went to sleep.

Now it’s coming back.

Once again the whistles sound all night and all day, and long trains cause traffic to back up as they pass. A new generation of kids gets to experience the danger and thrill of having massive equipment rolling by their old coal miner homes, loaded with freight and graffiti from around the country and the world.

It is not the trains I fear. They are awesome and powerful and no one could fail to be intrigued by what their size and appearance.

They are however a harbinger of new disturbances to our environment. Work underground to extract natural gas cannot but have effects on the surface. It may contaminate our water supply. Most likely it will. It will certainly have an impact on the lives of our children, especially if they learn to hop trains like we did.

Eugene C. Kelley, Esquire
Kelley & Polishan, LLC
259 South Keyser Avenue
Old Forge, PA 18518
Tel: 570-562-4520
Fax: 570-562-4531

Lebron James, the erstwhile star of the Cleveland Cavaliers NBA team announced he will be joining The Miami Heat this season. Mr. James, a seven year veteran of the NBA, has never won a championship. This is not all that unusual. It took Michael Jordan about six years to win his first with The Bulls, and some players, like Charles Barkely, never won one at all even with statistically successful career stats.

There was a lot of speculation about this move. Many teams competed for Lebron James, a player who can be compared to Michael Jordan without recourse to hyperbole. Many felt that he would go to The New York Knicks, for instance. This whole process has been a crash course in state tax laws for many basketball fans, with some complaining that New York’s high state and city tax would be detrimental to The Knicks chances. To counter this, it was supposed that Lebron would be compensated by a greater number of lucrative endorsements due to being associated with such a major media market.

While there may be substance to the above points, in my view what prompted Lebron James decision was pretty simple-he was tired of losing and wanted to win. If he’d gone to The Knicks, the media there would have torn him apart and The Knicks organization would not have offered much support. As for media endorsements, I doubt James will ever be taken to America’s heart the way that smiley Magic Johnson was. I could be wrong, but Lebron James isn’t as marketable with regards to that population of basketball fans who don’t really like basketball. Nobody bought Starbury Sneakers anyway.

Lebron wants to win. The last winner The Knicks had was Pat Riley, who was sorely treated there but has won a couple more championship rings in Miami to total seven he’s collected. Riley is probably not the best NBA coach in history, but barring acts of God, Lebron James is going to win two championships in the next three to four years. However, unless he is superhuman, his career may be cut short. His style of play is a lot more physical than Jordan’s was, he gets absolutely mauled by opposing teams, and James is not marketable enough to warrant special protection from the refs.

So, even though they are burning his jersey in effigy in Cleveland, Lebron James made the right decision. The Knicks, with their track record of treachery from both players, coaches, and management, would have been the worst possible choice. There are a lot of great basketball fans in New York, but this is a franchise that blacks games out on TV in a twenty mile radius if they don’t sell out. In short, these guys are stupid. It’s as if they are saying,”Not enough people are attending the games, so I will stop marketing the games at all to my most obvious fan base”.

Some would say Lebron is being selfish. If so, good for him. Cleveland was lucky to have him, didn’t appreciate him, and would have cut him the day he outlived his usefulness. The Knicks are just looking for a scapegoat to blame for the fact that they are losers. Riley knows how to win.

So shrug yourself on out of Cleveland, King James, and let someone else pay for registered sex offenders to get free Viagra in Manhattan. Here’s hoping Lebron James finally gets some championships.

Our region is once again invaded by giant energy companies. The attention of the world, long departed, has returned to Northeast Pennsylvania. Have the lessons of 150 years of history taught us nothing? It is like the ghosts of the rail and anthracite cartels have been resurrected, and they have not changed. 

In the meantime, the public outcry is almost nonexistent.  

Our roads are jammed with tri axles and tractors hauling water trucks and sand for use in the operations of the Marcellus Shale Drilling. The scale of these projects is immense. 

Does anyone notice?  

Through our beautiful valley flows one of the largest rivers in North America. Within 50 miles there are several smaller rivers. Each of these is fed by thousands of tributaries which wind down mountainsides and fall through forests into culverts where the only sound is the ancient song of running water. Anyone who has hiked our mountains knows what it is to taste clean cold water from a deep basin on a hot summer day. These quiet places are among the most rare and beautiful in the world. To reach them, one need only follow any stream into the hills.  

Should we not be outraged, even panicked, that the fracking and drilling and hauling and piping and dispersal of chemicals pose an immediate threat to the quiet unseen places deep in our mountains? It is too late for our valley, which has long been a black desert within which communities persist like outposts in a wasteland. The water here was long ago tainted. Should we not take action to protect what remains? 

Some guy from Dimock made a movie called “Gasland“. Everyone in Pennsylvania should watch it He travels and interviews people in Pennsylvania, Texas, Colorado and a bunch of other places as he drives across the country. One shouldn’t have to see too many ruined creeks and tap water which ignites to get the idea that fracking will ruin the water in any of the areas it touches.

The saddest part of all of this is that any job can be done safely if enough time and resources are put into it. This gas has been in the ground for eons. It should be a small matter to wait and do the job right, if it must be done at all.  

Imagine if that guy from Dimock had a camcorder in about 1880, and traveled through the anthracite region of Northeast Pa. How would he have commented on the piles of culm which were then just getting started? What would he have said about the streams and rivers which were then on their way to eternal defilement?

Could it all have been prevented?  

Probably not. The forces at work to get the coal from the ground were simply too powerful. No one was allowed to voice a contrary opinion. The coal and rail companies hired the Pinkertons and had the Coal and Iron Police simply shoot miners protesting over safety and wages..

At present, government leaders who are bound to oversee public safety and the environment are looking the other way, most likely paid to do so. The single most disturbing part of the movie Gasland is how public officials stutter, doublespeak and lie about the potential for harm to the environment.  

These people have never sought the quiet places and, as a result, do not know how to value them. Only those among us who have will miss them when they are gone.

Eugene C. Kelley, Esquire
Kelley & Polishan, LLC
259 South Keyser Avenue
Old Forge, PA 18518
Tel:  570-562-4520 begin_of_the_skype_highlighting              570-562-4520      end_of_the_skype_highlighting
Fax: 570-562-4531
Email: ekelley@kelleypolishanlaw.com
www.kelleypolishanlaw.com  

http://kpws-law.com