ARE THOSE bankers I see hiding behind the women's skirts?
The consumer finance industry is conducting an expensive publicity campaign to promote bankruptcy law changes. It's no surprise to see them exaggerate the amount of money lost to dishonest consumers abusing the system. And it's not surprising that they would try to mislead us about the consequences of rules they champion.
But it is particularly galling when the promoters of this legislation pretend it will help unfortunate women who are owed alimony and child support by deadbeat dads.
The sponsors rightly sense that it's hard for us to work up much compassion for a trillion dollar industry that every year stuffs our mailboxes with over 3 billion enticements to borrow more. So now they want us to believe they are really fighting for the needy.
This was Delaware Gov. Thomas R. Carper's message in a column "Congress must help ensure child support payments," (Opinion
Commentary, Aug. 7). Governor Carper said that the proposed Bankruptcy Reform Act stresses the importance of parents' obligation to financially support their children.
Isn't it odd that this legislation is opposed by every woman's group in the country that has looked at it?
Either 30 women's organizations don't know what's good for them or Governor Carper needs to review this bill more closely.
The current bankruptcy law already provides considerable protection for women (and men) who are owed alimony and sup- port.
For example, alimony and child support is not dischargeable. That means that no matter how many times a man files for bankruptcy he cannot get out of the legal obligation to pay those debts.
Another protection is that a woman with alimony and support claims may continue to try to collect from her ex-husband even after he has obtained bankruptcy protection. Almost all other creditors must cease pursuing the debtor once the petition is filed. And alimony and support have priority in bankruptcy. Those debts must be paid in full before any money goes to other creditors.
Supporters of the bill often point to provisions they claim will help women. But those provisions are worthless.
For example, the proposed law grants women with alimony and support top priority. Currently they have seventh priority. This sounds great. Who wouldn't want to be number one? But the provision is a sham.
Most of the creditors which now have higher priority are rarely involved in consumer bankruptcies. But the move to first priority would put women ahead of the trustees, those who administer the bankruptcy proceedings.
This provision is harmful to women because it will discourage the collection of money.
Not only does the legislation offer no real benefits to women, it boosts the status of lenders to make them more powerful competitors for whatever money is available.
Large amounts of credit card debt could not be discharged and lenders would have more leverage to get reaffirmation agreements that require the debtor to pay after the bankruptcy is over. As the credit industry collects more, support claimants will collect even less.
Finally, women in financial distress as a result of divorce (who make up about one-third of all bankruptcy debtors) would be hamstrung by the many pro-creditor changes. The statute's "means test" is aimed directly at working families, making it harder for them to file for bankruptcy and making bankruptcy more costly and time consuming.
Charles Shafer is a professor of law at the University of Baltimore Law School.