Bankrupt yet?

If you're buried in debt, stop reading and run to the nearest courthouse.

DENVER - Hundreds of consumers across the nation crowded into courthouses Friday to file bankruptcy petitions to beat the start of a new federal law that sets stricter standards for seeking protection from creditors.

Across the nation, about 100,000 petitions were filed in the first three days this week, according to Burlingame, Calif.-based Lundquist Consulting, which compiles bankruptcy statistics. The firm said 102,863 were filed last week, a record expected to fall.

The new law, the most sweeping reform of the U.S. Bankruptcy Code in decades, takes effect Monday, setting new limits on personal bankruptcy filing and requiring people to get professional credit counseling before they may file petitions.

It will prohibit most filers with above-average income from filing Chapter 7 petitions that allow debts to wiped out.

And by "above-average income," they mean?

Instead, people deemed by a "means test" to have at least $100 a month left over after paying certain debts and expenses will have to submit a five-year repayment plan under the more restrictive Chapter 13.

At the U.S. Bankruptcy Court here, clerk Brad Bolton said the number of filings set a record every day this week, with nearly 2,000 filed on Thursday alone.

"We've never seen anything like this," he said, standing in a corridor near the courthouse door. "Every day has just gotten worse than the day before."

Finally, Congress has restored sanity to our nation and protected large credit card companies and other creditors from slightly smaller profit margins. So what if families are burdened with crushing debt for years? They knew when they bought that home or car that they might get sick or laid off suddenly. They knew when they bought their children clothes with a credit card that their jobs could be outsourced to Bangladesh at any moment. They understood the risks.

The credit-counseling requirement is a particularly nice touch because, as Susie points out, it forces people with their heads on the chopping block to be advised by the people holding the blade.

How come this "culture of responsibility" that wingnuts love to talk about doesn't apply to companies that make risky loans or issue risky credit? Oh, I forgot. Becuase the credit-card industry actually wrote this law.

Click here to read an article by about this by Jonathan Alter of Newsweek. I warn you, the site is cluttered with poorly placed ads and links, which make the article text twist and turn down the page until it looks like a Texas Congressional district. And the beginning of the third paragraph is obscured, crushed between an advertisement and a box of links. But if you copy that part of the text and paste it elsewhere, say in Word, you'll see that it says the following:

The law was literally written by the credit-card industry, the same folks whose siren-song targeting of high-risk borrowers caused much of the bankruptcy problem in the first place.

I tried to find another site with the text intact, but the only one I could find required visitors to register for a "free 30-day trial," and I didn't want to do that to you.

For those of you who can't bear to leave this site even for a moment, here's an excerpt from Alter's article that you shouldn't miss:

We're not talking here about that irresponsible guy you see in the mall who is buying a flat-screen TV he cannot afford. Making it harder for him to weasel out of his financial obligations is fine. But according to a Harvard study of bankruptcy, the most thorough ever undertaken, this deadbeat is the exception. Nearly 95 percent of those who declare personal bankruptcy are swamped by job loss, family breakup, medical problems or some combination. For about half, it's the health-care costs that do them in. (Alcohol- and drug-rehab expenses account for only 2 percent of defaulted expenses.) About 10 percent have the pleasure of getting cancer and going bankrupt at the same time.

There's an election coming up, so be sure to thank your Congressional representatives next November, in the only way they understand.