Bankruptcy Blog: May 5, 2005

On Monday, I posted a note about the increase in the bankruptcy filing fee from $155 to $200. The increase was supposed to pay for 28 new bankruptcy judges (at a 5-year cost of $25 million) but the government now estimates that the increase will raise an additional $125 million over the next five years. In other words, we have a new tax just for people who are broke.

But the bankruptcy bill started in the Senate, and only the House can impose new taxes. So the House added section 6042 to (of all things) the Emergency Supplemental Appropriations Act For Defense, The Global War on Terror, and Tsunami Relief, so that Congress could initiate this new tax. The day after I posted my note, the House and Senate Conference on that bill met and raised the Chapter 7 filing fee again by another $20 — to $220. We hear that it will pass this week or next.

Why extract $225 million over five years in general tax revenue from people who are already broke? Are they kicking debtors just because they can? Or is this just another play at the margins — a way to keep the poorest, most desperate families from declaring bankruptcy? Is this one more move to keep bankruptcy available only for the well-to-do?

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We know most people go numb over numbers. But this is wrong, and hiding it behind decimal places won’t make it right. Where are the no-new-taxes folks? Where are the help-struggling-families advocates? Let’s gear up again and let our senators and representatives know that this “fix” is whipping families that have already been beaten unconscious.

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