It's hard to see the logic behind Congress's thinking on credit issues. It doesn't stop the slick come-ons and grinding usury of the credit-card industry. It provides little relief to the increasing number of Americans who lack health insurance, although health-related expense is a chief cause of financial collapse. Yet Congress enacts legislation that will leave many people to drown in a sea of debt with no lifeline.
The new bankruptcy law that went into effect Monday won't affect many Volusia County residents. Their incomes aren't high enough to qualify them for harsh new guidelines that will force many families to repay debt they can't afford.
But the people most at risk are those this county works hardest to attract (and who make up the majority of Flagler County's populace). This law puts the heaviest burden on hardworking middle-income families hit by unexpected health catastrophes that take them out of work, while bills pile up for hospitalization, drugs and doctor visits. A recent study by Harvard University found that half the people filing for bankruptcy in 2001 listed unpaid medical bills as their most significant debts. That doesn't count people who turned to credit cards after illness or injury forced them to stop working.
Most of the debtors Harvard studied had some form of health insurance when they first filed for bankruptcy -- but it wasn't enough. Current trends toward high deductibles and co-payments, coupled with limited coverage for life-threatening illnesses like cancer, drive many families into fiscal oblivion when a serious illness hits.
One obvious cure for these struggling families is a national health-care plan. Instead, Congress moved toward plans that shift even more burden to consumers -- making even more insured families vulnerable to financial ruin due to illness.
An obvious short-term fix is to exempt medical bills from consideration in the new bankruptcy laws. Louisiana and Texas officials are urging Congress to consider bankruptcy protections for those hit by natural catastrophes like Hurricane Katrina. Lawmakers should offer the same protection to blameless debtors caught in individual family disasters.
That protection would allow debtors with bills largely related to medical expenses to file Chapter 7, in which debtors hand over most of their possessions (with the exception of their home) and in return, have their debts erased. It allows a clean start. But under the law now, all debtors with income above a set range must go through Chapter 13, which forces them to devote all of their income -- minus set expenses -- to debt repayment. In Volusia and Flagler counties, that range goes from $35,883 for a one-person household to $59,789 for a four-person household.
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