by Calculated Risk on 4/01/2010 11:54:00 PM
Thursday, April 01, 2010
NY Times on Wage Garnishment
From John Collins Rudolf at the NY Times: Moves to Garnish Pay Rise as More Debtors Fall Behind (ht Ann)
One of the worst economic downturns of modern history has produced a big increase in the number of delinquent borrowers, and creditors are suing them by the millions.I'm surprised there isn't a move to rework the Orwellian-named "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005". We definitely need a consumer financial protection agency. Look at this example from the Times story:
...
Bankruptcy can clear away most debts. Yet sweeping changes to federal law in 2005 — pushed by the banking lobby — complicated that process and more than doubled the average cost of filing, to more than $2,000. Many low-income debtors must save for months before they can afford to go broke.
Ruth M. Owens, a disabled Cleveland woman, was sued by Discover Bank in 2004 for an unpaid credit card. Ms. Owens offered a defense, sending a handwritten note to the court.
“After paying my monthly utilities, there is no money left except a little food money and sometimes it isn’t enough,” she wrote.
Robert Triozzi, a judge at the time, heard the case. He found that over a period of several years, Ms. Owens had paid nearly $3,500 on an original balance of $1,900. But Discover was suing her for $5,564, mostly for late fees, compound interest, penalties and other charges. He called Discover’s actions “unconscionable” and threw the case out.