The Congressman said that while bankruptcy reform is needed in order to curb abuse by some people who use credit irresponsibly, the new law targets the wrong group of Americans. “Every year, almost half of new bankruptcy filings are caused by huge medical bills, disability or long-term unemployment. People should not shirk their responsibilities, but it’s wrong to force families who have suffered severe hardships to become permanent debtors instead of giving them a fresh start.” Currently, individuals can file for protection from creditors under Chapter 7, where some assets are seized while debts are erased. The new law would require most individuals to seek bankruptcy protection under Chapter 13 -- where the debtor would set up a repayment plan over a set number of years. Even after bankruptcy, consumers could face years of ongoing payments, exorbitant fees and high interest rates.

Clay criticized the Republican leadership for rejecting amendments that would have excluded active duty military personnel and medical hardship cases. “Congress made no distinction between good debtors and bad debtors. This law makes it easier for creditors to continue to gouge the sick, the poor, and the elderly; even after they declare bankruptcy; while at the same time, we allow millionaires who declare bankruptcy to keep their mansions and trust funds,” said Clay.

Credit card companies and banks have been lobbying Congress for passage of this legislation for many years and have already contributed more than $620,000 to Majority Leader Tom Delay’s leadership PACs. The Republican leadership has sold out the interests of middle-class families. Instead of creating the ownership society that they pretend to support, this bill will create a permanently indebted underclass.