LoBiondo Backs Credit Card Companies at the Cost of Consumers

Frank LoBiondo voted “yes” on the so-called “Bankruptcy Abuse Prevention and Consumer Protection Act,” which was signed into law in April. Let us first talk about the misleading title of that bill. Who, exactly, was abusing bankruptcy? And how does this statute protect consumers? Are the airlines, which are permitted to discharge their employee pension plans, abusing bankruptcy? Apparently not, since they are unaffected by this law. Who are the consumers needing protection? Congress and President Bush appear to have confused them with credit card companies. This bill makes it harder for individuals to wipe out debt through bankruptcy. That's right. Individuals. Not corporations. People do need to take personal responsibility for their debt and in the past, where they filed for bankruptcy and wanted to save their homes and other equity, they were already required to file under “Wage Earners” Chapter 13, which mandates partial or full repayment of their debt. Some types of liability were already not dischargeable. But credit card companies must share the blame. The Republican majority in both houses voted down amendments intended to curb excessive fees and other abusive practices. LoBiondo sided with his party, which refused to carve out exceptions for people who fell into arrears through divorce, unemployment, catastrophic medical illness, or military service, or who had paid off the original debt but who still owed heavy balances resulting from punitive charges. Credit card companies target students encumbered by tens of thousands (or more) in student loans upon graduation. They target people with poor credit histories. They target bad risks. And as folks fall farther into debt, Visa and MasterCard raise their credit limits and send unsolicited checks for cash advances. Why do they do this, if there is such concern about consumers abusing credit? Firstly, poor or nonexistent credit histories justify charging high double-digit interest rates. Secondly, companies can assess punitive charges—penalty fees and sharply higher interest rates after a payment is late—which compound the problems of financially strapped individuals. Penalty interest rates are about 30%, some as high as 40%. Let’s be real. Credit card companies do not want us to pay off our debt every month. They make no money that way. They have even suggested that they may impose fees on consumers who do not carry balances. According to the Washington Post, bankruptcy experts say that by the time an individual files for bankruptcy or is sued by creditors, he or she often has repaid an amount equal to the original credit card debt plus double-digit interest, but still owes hundreds or thousands of dollars because of these penalties.* LoBiondo makes proud with his duty on the Armed Services Committee, but where is his compassion for our men and women who are losing their homes and businesses while they are serving in Afghanistan and Iraq? Families of Reservists and National Guard are losing the income of at least one, sometimes both of the soldiers who are sent overseas on active duty for at least a year. Small business owners are not there to run their shops and must hire someone to fill in. Spouses and children of these “part-timers” are not afforded medical coverage while their loved ones risk their lives for our country. Credit cards often seem the only option. LoBiondo has done nothing to assist the legions of Americans who are uninsured, but refused to support an exemption in this law for people who fell into debt after someone in their family suffered catastrophic illness and they were forced to pay medical bills with credit cards. He refused to recognize that many people became uninsured or fell on hard times through divorce or job loss. We ask again, where is Rep. Frank LoBiondo’s compassion, and why does he stand with big business and against the interests of the real consumers?

____________________

* Kathleen Day and Caroline E. Mayer, Washington Post, March 6, 2005, page A01.

Submitted by JANET L. FAYTER

Egg Harbor Township