Fully Constructed

It has taken some time, but I have finally completed the migration to the "web". Let me take a moment to review. At my home page http://home.att.net/~gaspalaw/, the first thing you will note are direct links to my website at America On Line, my full resume, this current newsletter, and an archive of all past newsletters (except for a couple I could not find on diskette or drive). My internet server (AT &T) made available at no additional charge 5 megabytes of storage, which has greatly expanded usefulness. Since HTML (which is what you are reading now) does not consume a great deal of space relative to other forms of electronic script, I have been able to link all past newsletters. Translation has been tedious but worthwhile since now I have a central location for resarching prior articles.

I have also listed some useful hyperlinks. On the left side of the second, larger table, you will find predominantly legal related links. On the right side, I have tried to be a bit more creative with links that have been referred to me; some interesting, some off beat, and some just plain useful. Look for these to change from time to time.

Spring?

Change of Mailing Address

Tech Trends

No More Paper(s)

UPI, May 8, 1998: Eighty percent of the computer users surveyed in a United Press International poll believe that during the next five years the Internet will eclipse print newspapers as a significant source of daily news and information. The same audience felt a greater sense of trust in the accuracy of the information they obtained online than from other sources but they don't trust online advertising much. And while they were very leery about using credit cards for online purchases, they also have strong feelings against the concept of taxing such commerce, according to the survey conducted for UPI by Luntz Research.

No More Mail

UPI, May 1, 1998: The Internet is taking hold throughout society so extensively that the U.S. Postal Service is concerned that e-mail and e-commerce technologies will break its monopoly hold on first class mail, according to retiring Postmaster General Marvin T. Runyon. "Research tells us that within the next 10 years, the infrastructure, security, and public acceptance issues that now limit electronic diversion (of communications currently sent as first class mail) will be solved," said Runyon in his April 14 talk about the future of the Postal Service at the National Press Club. He explained the Postal Service feels it must maintain its monopoly on first class mail in order to support its national delivery network. Runyon noted that bills, payments and statements account for a third of the Postal Service's revenues and half of its volume.

Comment: No Comment. other than I look forward to the day when I have licked my last stamp price increase. I thought competition was about "lowering prices", not increasing them.

No More Cash or Checks

According to the National Automated Clearing House Association, in the U.S. in 1995, $533 trillion was transferred by wire, as compared to $73 trillion in check transactions, and $2.2 trillion in cash transactions.

Bankruptcy Reform Gone Crazy

Not Just a Commentary
 

Previously in this newsletter, I reported on the efforts and findings of the Bankruptcy Review Commission. Since that time, almost unknown to the public, and almost by stealth, other unrelated "reform" measures have been pressed forward in Congress. It appears now that those measures-in some final form--have a good chance for vote and successful passage in the very near future. Save and excepting few, most of the planned reforms are misguided and ridiculous. On May 27, 1998, forty law professors delivered a letter to Congress commenting on the current barrage of planned reforms. They noted collectively that the reforms of the past (six) weeks to amend the federal Bankruptcy Code represent a "reform process that appears to be veering our of control". The Professors concluded that they continue to be alarmed by the helter-skelter process being used to change the Bankruptcy Code. Initially, the effort to reform was motivated by one Congressman's desire to insure that the special chapter on farmer bankruptcy would be renewed. It has now mushroomed into an out of control debate over the morality and excesses of a "generation". I predict that the legislators now lining up in almost lockstep fashion will eventually live to regret their current efforts. First, and foremost, the "reform" process appears to be "tainted" by special interest involvement. During the last few months, lobbyists for the credit card and financial industries have been incredibly successful in pushing their idea of bankruptcy "reform" through Congress. Surprisingly, many have nothing to do with the Bankruptcy Review Commission recommendations. Bills have been recommended by the judiciary committees of both Houses of Congress and a vote is possible as soon as this month. It is my concern that some version of these "reforms" will pass and, if that happens, bankruptcy will be much more difficult, more expensive and probably a fairly embarrassing process.  In 1997, more than 1.3 million American families turned to the consumer bankruptcy system for help in managing overwhelming financial problems including foreclosure, repossession, utility termination, wage garnishment and debt collection harassment. The vast majority of these debtors were low-income working class American families earning less than $50,000 per year. American families file bankruptcy out of necessity. The typical bankruptcy debtor is facing income reductions due to transition to a lower paying job, illness, death of a breadwinner, loss of overtime, divorce, or retirement. As credit card debt has doubled in five years, more families carry more debt, without a corresponding increase in real income.  Uninsured medical expenses, doubling of the average student loan debt burden, and a tripling of home equity credit compound the problem. Carefully crafted bankruptcy legislation must avoid penalizing the many American families who legitimately need help. Most debtors in the bankruptcy system are struggling with massive credit card debts which carry interest rates ranging from 16 to 20%. It is irresponsible for the banks that have earned record profits by encouraging families to borrow at high rates to place full blame on consumers for the rise in bankruptcies.  The current Senate legislation S. 1301 is unbalanced Senate legislation which was voted out of the Judiciary Committee in haste on May 21, 1998. It contains numerous pitfalls for American consumers without a corresponding effort to reign in irresponsible practices of lenders. The bill would:

Create new eligibility barriers, filing requirements and procedural hurdles which would be expensive for debtors to meet. These new impediments would preclude effective debt relief for those at the bottom of the economic spectrum. If S. 1301 is passed, many working class families will be too poor to afford bankruptcy.  Increase the cost of the bankruptcy system to taxpayers by generating hundreds of thousands of new litigated disputes in bankruptcy each year. These would require new Judges trustees and courtroom personnel Institutionalize conflicts of interest between lawyers and their clients by creating potential financial liability for lawyers who represent debtors in legitimate cases which fail.  Encourage fraudulent debt counseling operations by giving government imprimatur to any counseling organization without oversight and review. Even credit counseling organizations have criticized this provision.  Allow creditors to take children's toys, VCR's and heirlooms of minimal value by changing the longstanding definition of household goods. These items have no value to creditors because they cannot be cost-effectively resold. However, they have high replacement cost or sentimental value to debtors.  Encourage continued reckless lending practices and abusive lawsuits by allowing creditors to claim fraud against borrowers without having to prove it.  Undermine debtors' attempts to save their homes from foreclosure and their cars from repossession by adding thousands of dollars in new costs to each chapter 13 payment plan case for car lenders and retailers. If debtors cannot use chapter 13 to address their home and car loans, more cases will fail and no creditors will be paid.  Eliminate the right of many debtors to use the bankruptcy system to pay rent arrears and prevent eviction. The bill will increase homelessness with corresponding social costs.  Punish debtors who make mistakes in filing their voluminous bankruptcy papers by eliminating existing mechanisms to correct errors and by denying debtors a fair opportunity to refile.  Undermine collection of child support and alimony by redirecting income to a debtor's less urgent debts. S. 1301 is radical anti-consumer legislation. Consumer groups are united in opposition.  Bankruptcy Judges and law professors have encouraged Congress to slow down, because the existing proposals are not well thought out. Passage of the bill in its current form would be disastrous to American families who are mired in the quicksand of overwhelming debt.  Source: National Consumer Law Center, the Consumer Federation of America, or the National Association of Consumer Bankruptcy Attorneys.

Bankruptcy Filings Hit Record

"Despite a booming economy, the number of personal bankruptcy filings keeps escalating, hitting record numbers last year for the third consecutive year and again in the first quarter of this year.  From 1996 to 1997, filings jumped 20 percent to 1.35 million, or one in every 70 households.

The numbers are causing concern in Congress, where the House and Senate are expected to vote in the next few weeks on legislation cracking down on those seeking to wipe out their debt. Some lawmakers -- backed by banks, credit card companies and retailers -- say the process is too easy and that too many people with the ability to repay creditors are seeking this relief.

"Those who want to say [that] the way to solve rising consumer bankruptcy is by changing the law are the same people who would have said during a malaria epidemic that the way to cut down on hospital admissions is to lock the door," said Elizabeth Warren, a Harvard University law school professor who studies bankruptcies.

"Bankruptcy is only the symptom, not the problem," she said. "The problem is the amount of consumer debt we've got and the way families are failing because of it."

The debate has intensified in recent years because personal bankruptcy filings are rising rapidly in the midst of a booming economy, which has been creating more jobs, increasing wages and putting more spending money in the pockets of consumers. Bankruptcy filings by businesses, in contrast, have remained relatively constant.

Among the proposals being debated in Congress is a "means test" that is intended to move some filers from a Chapter 7 bankruptcy filing to a Chapter 13 filing, which requires a repayment plan."

Inland Area bankruptcies climb 16 percent

Excerpted from the Press-Enterprise, Riverside, California, March 5, 1998 by Jeanette Steele

Filings in 2 county region hit 25,978

"Inland Empire bankruptcies continued on an upward track in 1997, jumping 16 percent over the previous year..

The greater Los Angeles region, which includes the Inland Empire, led the nation in bankruptcies in 1997 with 118,335 filings, up 15 percent from the year before.  The national bankruptcy rolls climbed 19 percent in 1997."

Facts:

Does the banking and credit industry really need a taxpayer funded or subsidized "debt collection" bureaucracy?

My further updates will follow.
 
Sincerely,
Gerald Spala
May 30, 1998
amd. June 8, 1998