The aftermath of Hurricane Katrina has sparked renewed debate over
stricter provisions in the new bankruptcy law that takes effect on
October 17th. Higher filing fees, more stringent document requirements,
and mandatory credit counseling are all cited as especially burdensome
for victims of natural disasters. Democrats are concerned that the
controversial financial means test will deny Katrina victims the
ability to declare a fresh start, and have proposed an exemption in a
bill referred to the Senate Committee on the Judiciary on September
8th. [1]
Republican backers of the new law instead urge that the stricter
standards won't apply to those most in need and that judges will retain
the discretion to take Katrina into account when processing bankruptcy
claims. The reluctance to accept any exemption could be a costly move
politically, given the much-publicized lag in aid at the outset of
Katrina. Now with recovery efforts in full swing, … Read the rest