The middle class opposes. In 2005, a record 2 million American households were forced to declare personal bankruptcy. Studies suggest that the majority were middle-class families with children, who were pushed to insolvency by job losses, massive unexpected medical bills, or the devastating break-up of their families. In recent years the leading cause of bankruptcy has not been irresponsible consumer spending, but the loss of a job. Medical crisis is the second leading cause of bankruptcy. This bill would limit Americans’ ability to receive federal bankruptcy protection when they lose their jobs, incur uninsured uncovered medical bills or when a wage-earning spouse leaves. The legislation, which has been introduced every session since 1998 but never passed before, enacts the wish list of the credit card industry, boosting the profits of credit issuers by making it easier for them to collect from even the most financially distressed families. It empowers the credit card industry to saddle middle-class families with unreasonable interest rates and payment agreements by expanding their ability to re-evaluate and terminate debtor agreements without the consent of a court. The bill also creates a windfall for unregulated credit counseling agencies, many of which are under civil and criminal investigation.

Amendments that would have allowed the elderly to hold onto their homes and would have shielded veterans and active duty military from the most punitive parts of the bill did not pass the Senate. An amendment that would have protected employees’ earnings and retirement savings when their employer files for bankruptcy was also rejected.