New Bankruptcy bill hurts Katrina victims

Tracy Van Slyke

From Think Progress: Last spring, the conservative Congress passed harsh new bankruptcy laws which made it harder and more expensive for Americans to recover from financial difficulties, at the same time protecting the powerful credit card industry. Now the effects of the severe legislation are coming home to roost. The LA Times reports that, thanks to the new law, recovery will be even tougher for Hurricane Katrina survivors. House compassionate conservatives specifically rejected language to exempt victims of natural disasters from the new, harsher laws. According to experts, many people who lost everything won’t “be able to qualify for leniency because of paperwork rules, among other reasons.” For example, the new law requires debtors “shall be required to itemize each additional expense or adjustment to income and to provide … documentation … and a detailed explanation’ under oath.” That’s tough in this case, when most receipts, records and files are simply gone. “There’s no way many people are going to be able to provide all this paperwork,” said Keith Lundin, a federal bankruptcy judge. “It’s underwater.”

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Tracy Van Slyke, a former publisher of In These Times, is the project director for The Media Consortium.
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