On October 17, about the time the lights are scheduled to go back on in New Orleans, the new bankruptcy law is supposed to go into effect. Whatever else anyone can say about this bill, everyone agrees on one fact: the law makes it harder for anyone to go bankrupt. Sure, the credit industry says the means test will snag only people with above-median incomes, but literally hundreds of provisions in the bill apply to every family, not just those with higher incomes. Filing fees will increase, paperwork will increase, credit counseling will become mandatory, consumer education will be required, the amounts to be paid to confirm a plan in Chapter 13 will go up — and on and on.
What happens next to small businesses may be even worse. The new Chapter 11 provisions target little businesses — those that owe less than $2 million — for special treatment. Unlike their bigger cousins, small businesses will face a shut down if they cannot confirm a plan of reorganization within 300 days. Starting in October, small businesses — and only small businesses — will be required to file a stack of new forms and submit for more extensive examination by Washington. Just when the Gulf Coast region will needs its entrepreneurs most, fewer of them will get the chance to recover from the financial devastation of Katrina and start their business running again. As part of the relief for the Gulf Coast, Representatives Nadler, Conyers and Jackson-Lee have proposed a bill to delay implementation. Such a bill is also said to be under consideration in the Senate. So here’s the question: Why not? Legislation is on the table to spend billions of tax dollars to rehabilitate the region. Why not one small break for the families and small businesses who will be doing their best to scramble back to their feet? It won’t cost the taxpayers a nickel. It will keep lawyers’ fees low. It will give those who have been hit the hardest, but who want to pick themselves back up a real chance to do so. How can anyone vote no?