Monday, February 06, 2006
AAS: Bankruptcy judge blisters Congress over unfair law
Legal world abuzz about tirade calling act inane, confusing
AMERICAN-STATESMAN STAFF, Monday, February 06, 2006
FREDERICKSBURG -- Alfonso Sosa, a house painter here who made about $20,000 last year, filed for bankruptcy the morning of Dec. 6, hoping to avoid the foreclosure on his family's mobile home scheduled for later that day. Judge Frank Monroe of Austin rejected the case 16 days later -- with a bang.
In his ruling, Monroe said the new federal bankruptcy law is full of traps for consumers, calling some of its provisions "inane," "absurd" and incomprehensible to "any rational human being."
He stopped just short of accusing Congress of being bought and paid for, dryly noting, "Apparently, it is not the individual consumers of this country that make the donations to the members of Congress that allow them to be elected and re-elected and re-elected and re-elected."
Ordinarily, a case such as the Sosas', which primarily concerns a mobile home and land valued at $32,840, would quietly disappear into court archives.
But Monroe's order has caught fire in the world of bankruptcy and consumer law. It's being debated on law blogs and circulated across the country.
Steve Jakubowski, left, a bankruptcy specialist in Chicago and creator of the Bankruptcy Litigation Blog, said Monroe's unusually strong language represents "the pot boiling over" in frustration at the Bankruptcy Abuse Prevention and Consumer Protection Act, which took effect Oct. 17. "It's the kind of thing people know but that you don't write down."
The law makes it harder for individuals to qualify for Chapter 7 bankruptcy, which lets them erase much of their debt, and forces them to file for Chapter 13, which means they face longer court-ordered repayment plans. It also requires debtors to seek credit counseling before they file.
Alfonso Sosa said he didn't know about the requirement, so he and his wife, Melba, didn't seek counseling. He said he was just trying to keep his house.
Monroe's order said the law left him no choice but to disallow the Sosas' petition. He called the counseling requirement "one of the more absurd provisions of the new (bankruptcy) act."
In an interview last week, Monroe said that if Congress really wanted to help debtors, it would have required rigorous credit counseling before they can emerge from bankruptcy.
Instead, the act requires a few hours of counseling before filing. "That serves no purpose," he said.
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