BANKRUPTCIES AND KATRINA….Bankruptcy filings have been rising steadily in the United States for the past two decades, but Peter Gosselin reports today on research that confirms what ought to be obvious: they grow a lot faster in states that have been hit by a natural disaster.Three years after a major hurricane hits, bankruptcy filings in landfall states increase nearly 20 percentage points more than in unaffected states.
The new bankruptcy law passed in March is aimed at making bankruptcy more difficult, and it’s specifically aimed at making it harder for filers who make more than the median income in their state ? which in Louisiana is about $51,000 for a family of four. And while the law has a “special circumstances” clause, not everyone is impressed:
Critics of the new law say many filers will not be able to qualify for leniency because of paperwork rules, among other reasons. The law says the debtor “shall be required to itemize each additional expense or adjustment to income and to provide…documentation…and a detailed explanation” under oath.
“There’s no way many people are going to be able to provide all this paperwork; it’s underwater,” said Keith Lundin, a federal bankruptcy judge for the eastern district of Tennessee and a longtime opponent of the overhaul.
Bottom line: maybe the new bill is flexible enough to take Katrina into account, maybe it’s not. But why take chances? If Republicans in Congress have time to slash Medicaid and pass another round of tax cuts for the rich, surely they have time to craft some language ensuring that no one is prevented from filing bankruptcy because they lost everything in Hurricane Katrina?
