Bankruptcy Reform Hits Women Hard

Bankruptcy reform hits women hard

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Changes could hurt single mothers, already the most vulnerable
financially, experts say. And they'd lose their priority for support and
alimony when fathers file.

By Christian Science Monitor

Jennifer Moran was only 23 when she faced a financial nightmare. After
quitting a $45,000 sales job because it took her into dangerous
neighborhoods, she became a CVS store manager, earning only $23,000.
With her salary cut in half, her debts mounted. Her car was repossessed,
and bill collectors knocked on her door at 3 a.m. Frightened, she took a
lawyer's advice and filed for bankruptcy.

"I was a young, naive girl and had no understanding of finance or legal
matters or what my options were," says Moran, of Point Pleasant Beach, N.J.

Whether she should have filed for bankruptcy is debatable. But under
reform legislation now working its way through Congress, debtors like
her may no longer have the option of filing in the first place. By
making it tougher and, possibly, more expensive to declare insolvency,
the bill aims to encourage personal responsibility and restore more
power to creditors in an era when personal bankruptcies have become more
popular.

If the reform becomes law, however, women will be the most affected,
experts say.

"Make no mistake, the new bankruptcy bill will fall hardest on women,"
says Elizabeth Warren, a professor at Harvard Law School and coauthor of
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At rising risk
Even without the reform, more than 1 million women will find themselves
in bankruptcy court this year, outnumbering men by about 150,000, if
past trends hold, says Jill Miller, chief executive officer of Women
Work! in Washington, D.C.

Women with children, Warren explains, are more vulnerable than ever
before. "They're spending more on the basics, so they have less
flexibility in their budgets if something goes wrong. Single women early
in their career tend to have lower income and higher expenses. That puts
them at risk. Older women often have much less built up in retirement
funds and are counting on home and cash assets that won't be protected
in bankruptcy."

Single mothers, who often work in low-wage jobs, are 50% more likely to
file for bankruptcy than married parents, and three times more likely
than childless couples, says Miller.

One divorced mother in suburban Chicago has refinanced her house eight
times in 12 years and still owes $25,000 in credit-card debt, says
Catherine Williams, vice president of Money Management International, a
credit-counseling service in Houston.

About half of that debt, Williams says, is an accumulation of day-to-day
expenses: "Johnny sits on his glasses, Susie loses her coat, and the
price of gas goes up." Other expenses involve vacations and what
Williams calls "compensation spending" to make up for the divorce.

"If she didn't have the equity in the house, she probably would have
been bankrupt," Williams says.

When the woman asked if she should file for bankruptcy, Williams
reassured her that she has the ability to repay the debt. The woman
earns $32,000 and her former husband pays modest child support.

Williams, a financial counselor for nearly 25 years, does not think the
new bankruptcy law will affect women too disproportionately because a
means test takes income into account. "Those who will feel the biggest
impact will be filers who have the income to repay the debt but just
don't want to," she says.

Spendthrifts? Not really
Contrary to stereotypes, the majority of those who declare bankruptcy
are not spendthrifts who abuse credit cards. Howard Ehrenberg, an
attorney in Los Angeles who serves as a Chapter 7 bankruptcy trustee,
sees more than 100 debtors a month who have filed for bankruptcy.

"They have not run up their bills with no intention of paying them," he
says. "Most people file bankruptcy because one of three calamities has
hit them -- a serious illness to themselves or a person who makes the
money in the household, the loss of a job, or a divorce."

A generation ago, Warren says, when families had more savings and fewer
debts, a divorcée was in better financial shape. Today she is likely to
have almost no savings, a load of debt and an income that has already
been figured into the family budget. "Even with better enforcement of
child support and better-paying jobs, divorced women are at greater risk
for financial collapse than they were a generation ago."

That may explain why women appear to file for bankruptcy more frequently
than men. The evidence, however, is based on a single study done in a
single state in the late 1990s. Poring through filings in Nebraska,
attorney Oliver Pollak found that the share of women filers rose
dramatically between 1977 and 1987. By 1997, they had overtaken men
(although joint petitions remained more numerous).

Under current laws, noncustodial parents who file for bankruptcy cannot
discharge their child support and alimony. Under the proposed new law,
Miller says, they still can't discharge those debts, but there's a
difference. Claims to back child support and alimony would be on equal
footing with the claims of credit-card companies. In some cases,
"mothers will be coming in after other creditors have received their
payment," Miller says. "It's absolutely terrible."

More pricey to file?
Ehrenberg sees another change in the new bankruptcy bill that could
affect women. Attorneys will now be liable for inaccuracies in a
debtor's bankruptcy papers.

"They're going to have to investigate their own clients," he says. "It's
widely believed in the bankruptcy community that many attorneys who
provide moderate-cost legal services will pull out because they can't
afford to do the case for that amount of liability for the same price.
It would not be surprising that women would be adversely affected by not
being able to find affordable legal representation."

Moran knows firsthand the importance of good legal representation. In
her case, bankruptcy was unnecessary, the result of bad legal advice.

"Could you imagine going bankrupt for just $6,000 in debts?" she asks.
Still, she has put the experience behind her. Now a sales executive and
author, she says, "I have an 'A' credit rating and a beautiful home."

Eva Rosenberg, publisher of TaxMama.com in Northridge, Calif., struggled
with mounting debt for 15 years after an automobile accident left her
unable to work. She refused to consider bankruptcy as an option. "I knew
I had the earning capacity to deal with [my debts]," she says. "Not
everyone has that." As a tax consultant who sometimes recommends
bankruptcy to her clients, she says, "Sometimes bankruptcy is the best
alternative for everybody concerned."

Others offer reassurance that there is life after bankruptcy. A woman
who asks to remain anonymous found herself in deep financial trouble as
the result of a failed business. She and a male business partner founded
a company in New York. After she left the firm, her former business
partner defaulted on the line of credit. Creditors placed an $80,000
lien on her personal bank account. A lawyer advised her to file for
bankruptcy.

"My credit rating tanked," she says. "The process was terrifying and
humiliating at first, but I realized it was a necessary process to get
out of a financial mess created by my own business ignorance -- signing
things I didn't read -- and by another person."

Today, two years later, she has one credit card with a $600 limit that
she pays off each month. She married recently, and her husband helps her
finance certain purchases. She is working to build up her credit rating.

Moran is disappointed that the new bankruptcy bill does not address a
fundamental problem that contributes to bankruptcies -- the barrage of
credit card offers that encourage people to overspend. "For somebody who
doesn't have will power or an understanding of what they're doing with
those mailings, it's very dangerous," she says.

Although bankruptcy stays on a person's record for 10 years, legal
experts encourage debtors to begin rehabilitating their credit
reputation by getting a secured credit card. "Deposit $500 with a bank,"
says John Maxwell, an attorney in St. Charles, Mo. "Begin making charges
and making repayments in a timely fashion."

How to stay solvent
To avoid problems, Rosenberg urges women to pay attention to household
finances. "Do not leave them in the hands of your husband," she says.
"Look over all the tax returns before you sign them. If you're not
comfortable signing them, file a separate return. Even though it will
cost a little more, you won't be responsible for his omissions or his lies."

She also joins other financial experts in warning about the perils of
plastic. "Don't run up your credit cards for frivolous things. Think
twice before you buy something."

Warren encourages open communication, noting that money is the No. 1
topic that couples find difficult to discuss. "Our files are full of
people who were keeping money secrets from each other -- people who
wouldn't talk about what they spent, what they earned, financial
commitments they had made," she says. "That harms not only the
relationship but also the family's economic security."

Whatever a woman's financial situation, Warren emphasizes the need for
greater confidence, noting that women often feel helpless about money.
"Too many women have been taught for too long that it's hard, it's
complicated, that only guys understand it and can really manage it.
That's wrong."

The bankruptcy bill, she adds, "is just one more signal that women need
to take care of themselves first. The safety net is shrinking, and women
can't count on anyone other than themselves."

By Marilyn Gardner

The Bill will actually provide protection for children that depend on
child support. When a parent files for bankruptcy, the child support
payments will be protected.

What about men? Especially the ones that have to pay C.S.? I guess
that's not politically correct nowadays.

b.

wrote in message
...

What about men? Especially the ones that have to pay C.S.? I guess
that's not politically correct nowadays.

It doesn't matter what the topic, the main stream media will always do one
of their "women and children hit hardest" type analyses. It's all part of
the victim mentality.

You know the drill:

Gasoline Prices Up: Women and Children Hit the Hardest

Tax Reduction Approved: Women and Children Hit the Hardest

State Health Plan Changed: Women and Children Hit the Hardest

Bankruptcy Laws Change: Women and Children Hit the Hardest

Bob Whiteside wrote:

wrote in message
...

What about men? Especially the ones that have to pay C.S.? I guess
that's not politically correct nowadays.


It doesn't matter what the topic, the main stream media will always do one
of their "women and children hit hardest" type analyses. It's all part of
the victim mentality.

You know the drill:

Gasoline Prices Up: Women and Children Hit the Hardest

Tax Reduction Approved: Women and Children Hit the Hardest

State Health Plan Changed: Women and Children Hit the Hardest

Bankruptcy Laws Change: Women and Children Hit the Hardest

Don't forget "State Child Support Guidelines Revised to Increase Awards
Again: Women and Children Hit the Hardest"

- Ron ^*^

"Bob Whiteside" wrote in message
news

wrote in message
...

What about men? Especially the ones that have to pay C.S.? I guess
that's not politically correct nowadays.

It doesn't matter what the topic, the main stream media will always do one
of their "women and children hit hardest" type analyses. It's all part of
the victim mentality.

You know the drill:

Gasoline Prices Up: Women and Children Hit the Hardest

Tax Reduction Approved: Women and Children Hit the Hardest

State Health Plan Changed: Women and Children Hit the Hardest

Bankruptcy Laws Change: Women and Children Hit the Hardest


Look what the article on this subject off of Yahoo says. See the spin
below -- like fathers avoiding child support will file BK to help the
situation - BK can't discharge child support payments, spousal support, and
back taxes unless 3+ years old and paid on time. There should be an
adjustement if a NCP is paying child support but no they just base the
number off of the state's average income as a criteria if you get Chapter 13
or 7.

"But backers in Congress and the financial services industry argue that
bankruptcy frequently is the last refuge of gamblers, impulsive shoppers,
divorced or separated fathers avoiding child support, and
multimillionaires - often celebrities - who buy mansions in states with
liberal homestead exemptions to shelter assets from creditors."

http://news.yahoo.com/news?tmpl=stor..._co/bankruptcy

"Bob Whiteside" wrote in message
news

wrote in message
...

What about men? Especially the ones that have to pay C.S.? I guess
that's not politically correct nowadays.

It doesn't matter what the topic, the main stream media will always do one
of their "women and children hit hardest" type analyses. It's all part of
the victim mentality.

You know the drill:

Gasoline Prices Up: Women and Children Hit the Hardest

Tax Reduction Approved: Women and Children Hit the Hardest

State Health Plan Changed: Women and Children Hit the Hardest

Bankruptcy Laws Change: Women and Children Hit the Hardest

This is the result of a feminized society.

WHOA, I can file bankruptcy to avoid child support. ****ing kooks
should at least know what the **** they are talking about.

wrote in message
oups.com...
The Bill will actually provide protection for children that depend on
child support. When a parent files for bankruptcy, the child support
payments will be protected.

C$ can't be forgiven in bankruptcy court. Nor can any arrears.
This bill does nothing to protect anything to do with C$.

wrote in message
oups.com...
The Bill will actually provide protection for children that depend on
child support. When a parent files for bankruptcy, the child support
payments will be protected.

The above is a rather misleading message. One clue is the use of the
word "parent," instead of "father." In how many cases, do you think, is
"child support" being paid by a mother? Very, very few -- in fact, for some
time, I've been looking for a mother who pays CS, so that I can become her
agent, and have her appear in such places as Ripley's Believe It or Not
exhibits. "And in the next cage, beside the bearded lady, we have a mother
who is paying child support." (By the way, if anyone knows of a bearded
lady, who is also a mother, and who pays CS, please let me know. A finder's
fee will be paid.)

In addition, I have doubts about whether the new bankruptcy law makes
any material difference to the fathers who are paying CS to the mothers of
their children. I'm virtually certain that for some time the position has
been that CS is excluded from bankruptcy proceedings, and that mothers can
continue to collect it regardless of the dire financial straits in which
fathers find themselves. The main purpose of the new bankruptcy law was to
protect a specific category of usurious lenders -- the credit card
companies.

What happens with bankruptcy laws is a measure of the political clout of
banks and other lenders, just as what DOESN'T happen in domestic relations
law is a measure of the political weakness of fathers.