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Dan Thrift / Tahoe Daily Tribune / South Shore attorney Joe Laub has received an influx of phone calls from people seeking legal advice as Congress zeros in on a bankruptcy overhaul bill.
Driving a Greyhound bus for 35 years failed to keep one retired Nevada man in the black because $43,000 in credit card debt, among other obligations, drove his and his wife's finances into the ground.
Bill, whose last name isn't being used, joined the ranks of 1.6 million Americans who filed for bankruptcy last year. And doing so is expected to become tougher for people like Bill if a major overhaul to bankruptcy law is signed into federal law this year as anticipated. It's already passed the Senate and now sits in a House Finance Committee.
At 82, Bill gets a pension from the bus company and Social Security, but the compensation fell short when it came time to install a $7,000 truck motor and take vacations. Then, there was the $1,800 vacuum cleaner and air purifier contract a salesman talked them into that added to their health, utility and retirement-home expenses.
One credit card company jacked up their interest rate to 29 percent, something consumer advocates fear may become more prevalent since the Federal Reserve raised the rate by one-quarter percentage Tuesday.
"We couldn't make it," he said Wednesday. "Still, times are tight. I'll tell you, it's terrible to live like this."
Bill, whose last name isn't being used, joined the ranks of 1.6 million Americans who filed for bankruptcy last year. And doing so is expected to become tougher for people like Bill if a major overhaul to bankruptcy law is signed into federal law this year as anticipated. It's already passed the Senate and now sits in a House Finance Committee.
At 82, Bill gets a pension from the bus company and Social Security, but the compensation fell short when it came time to install a $7,000 truck motor and take vacations. Then, there was the $1,800 vacuum cleaner and air purifier contract a salesman talked them into that added to their health, utility and retirement-home expenses.
One credit card company jacked up their interest rate to 29 percent, something consumer advocates fear may become more prevalent since the Federal Reserve raised the rate by one-quarter percentage Tuesday.
"We couldn't make it," he said Wednesday. "Still, times are tight. I'll tell you, it's terrible to live like this."
In August, he turned to South Shore attorney Joe Laub and filed Chapter 13, which placed him under a three-year payment plan. Chapter 7 forgives the debt.
This wasn't his first bankruptcy. He filed Chapter 7 as a business in 1980.
"If I had to do it all over again, I would've done things differently," he said.
Key provisions in the federal bill circulating through Congress would make it more difficult for many to escape the debt by filing Chapter 7. Consumer advocates predict several people like Bill will end up saddled with the burden under Chapter 13. The Senate approved the Bankruptcy Abuse Prevention and Consumer Protection Act a few weeks ago. It's expected to make it to the House floor when they return to session in early April.
The looming bill that takes particular aim at Chapter 7 filers has prompted those considering bankruptcy to flood the phone lines of attorneys who specialize in the law.
"Now's the time to do it," attorney Joe Laub said Wednesday. "I've never seen consumers get so taken advantage of. The only escape these people had was Chapter 7, and that's essentially being taken away. I'd say 75 percent are not going to be able to qualify."
This wasn't his first bankruptcy. He filed Chapter 7 as a business in 1980.
"If I had to do it all over again, I would've done things differently," he said.
Key provisions in the federal bill circulating through Congress would make it more difficult for many to escape the debt by filing Chapter 7. Consumer advocates predict several people like Bill will end up saddled with the burden under Chapter 13. The Senate approved the Bankruptcy Abuse Prevention and Consumer Protection Act a few weeks ago. It's expected to make it to the House floor when they return to session in early April.
The looming bill that takes particular aim at Chapter 7 filers has prompted those considering bankruptcy to flood the phone lines of attorneys who specialize in the law.
"Now's the time to do it," attorney Joe Laub said Wednesday. "I've never seen consumers get so taken advantage of. The only escape these people had was Chapter 7, and that's essentially being taken away. I'd say 75 percent are not going to be able to qualify."
He estimated 98 percent of his bankruptcy clients file Chapter 7 - with many citing mounting credit card charges and medical bills as reasons.
The bill would set a new criteria to erase debts under Chapter 7. Those with income above the state median, which is $67,814 in California, who can pay at least $100 a month for five years could be forced into Chapter 13 repayment schedules. They'd also need to pay for credit counseling before filing and take a money management class.
Laub said filing bankruptcy is already hard on an individual because there's often shame involved. Businesses fare better because some say they provide a service. He pointed to one local ski clothing company that failed to pay suppliers for a year, and they continued to supply the retailer.
And Tahoe's seasonality presents a tough business climate. Duane Wallace, the South Lake Tahoe Chamber of Commerce executive director, said he was forced to go under in his Happy Steak franchise when corporate filed for bankruptcy.
"When big business does it, it's just considered business. But when small business or an individual does it, they seem to get a raw end of the deal," he said.
The bill would set a new criteria to erase debts under Chapter 7. Those with income above the state median, which is $67,814 in California, who can pay at least $100 a month for five years could be forced into Chapter 13 repayment schedules. They'd also need to pay for credit counseling before filing and take a money management class.
Laub said filing bankruptcy is already hard on an individual because there's often shame involved. Businesses fare better because some say they provide a service. He pointed to one local ski clothing company that failed to pay suppliers for a year, and they continued to supply the retailer.
And Tahoe's seasonality presents a tough business climate. Duane Wallace, the South Lake Tahoe Chamber of Commerce executive director, said he was forced to go under in his Happy Steak franchise when corporate filed for bankruptcy.
"When big business does it, it's just considered business. But when small business or an individual does it, they seem to get a raw end of the deal," he said.
Bill Uffelman, president of the Nevada Bankers Association, agreed, saying "bankruptcy cannot be a financial planning tool."
"The huge change we'll see is when it becomes law you're not going to walk away from debt," he said. He divided those who file into two categories - the responsible people who get buried in medical bills, and the irresponsible "who run up the credit cards then decide to take a trip." He predicted the bill will pass and be signed into law by President Bush.
Tom Meuser, who works at the El Dorado Savings Bank's regional office, predicts fewer people would file for bankruptcy if the law passes - and that would provide a welcome change when some abuse the system. Some choose bankruptcy versus foreclosure.
With 36 years in the business, Meuser believes the current bankruptcy climate has become too lenient and even acceptable to file.
"There's no stigma attached anymore," he said.
In El Dorado County, 483 people filed for Chapter 7, and 78 were issued Chapter 13 proceedings.
"The huge change we'll see is when it becomes law you're not going to walk away from debt," he said. He divided those who file into two categories - the responsible people who get buried in medical bills, and the irresponsible "who run up the credit cards then decide to take a trip." He predicted the bill will pass and be signed into law by President Bush.
Tom Meuser, who works at the El Dorado Savings Bank's regional office, predicts fewer people would file for bankruptcy if the law passes - and that would provide a welcome change when some abuse the system. Some choose bankruptcy versus foreclosure.
With 36 years in the business, Meuser believes the current bankruptcy climate has become too lenient and even acceptable to file.
"There's no stigma attached anymore," he said.
In El Dorado County, 483 people filed for Chapter 7, and 78 were issued Chapter 13 proceedings.
