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New bankruptcy laws will hurt hurricane survivors

Published Sep 19, 2005 10:59 PM

New bankruptcy laws go into effect on Oct. 13 and for those who will be hurt the most—the poor and middle class saddled with debt—it will now become virtually impossible to file for Chapter 7 and have that debt wiped away.

Most of the estimated 150,000 people who were left in New Orleans to face the brunt of the Category 4 hurricane alone, and were abandoned for five days after the hurricane ravaged the area, will have nothing to return to.

Most of these people lived in old, rundown tenements and homes and didn’t have flood insurance, private transportation, and many had no bank accounts. Now, they will have no jobs to return to and no way to make a living. The changes in the bankruptcy law will be a further inundation for them and thousands more along the coast.

Of the hundreds of thousands of people who were able to evacuate themselves, a great number had nowhere to go and were forced to live off credit cards to stay in hotels, rent automobiles and buy food.

The disaster was not that the hurricane brooded in the Gulf and hit shore with 150 mile-per-hour winds, but the criminal negligence of the local, state and federal authorities and their disregard for the basic rights and needs of people in the path of the storm.

The misery will only deepen with the new bankruptcy bill. Under the amended law, it will be extremely difficult, if not impossible, for families to petition for bankruptcy. The bill seeks to establish a means test for Chapter 7 filing; the median household income would be the bar, and if the household income is above the state’s annual median, then the household would be ineligible for filing under Chapter 7 and would be relegated to Chapter 13 repayment over a five-year program.

This is no option, as the ruling class and its government’s disdain for the poor and people of color has been uncovered by the devastating winds of Hurricane Katrina.

Relief for airlines, not the people

The obviousness of the government's scorn for workers and the poor can be seen in the protection offered corporations in filing Chapter 11, which will not be affected by the new bill.

Northwest Airlines and Delta Airlines Inc. both recently declared bankruptcy on Sept. 14. The airlines, the fourth- and third- largest airlines in the United States, cited the skyrocketing oil prices and increased competition as reasons for entering into Chapter 11 bankruptcy protection.

The airlines are following United Airlines and US Airways into bankruptcy and will be ultimately seeking to slash workers’ benefits, wages and pensions in the process.

Already, 4,400 Northwest mechanics and cleaners were forced out on strike when the airline demanded huge concessions of the workers, including a huge reduction in jobs, 75 percent fewer than four years ago, and concessions from the workers in benefits and wages.

Both companies will be looking to unload billions of dollars of workers pensions and benefits, as well as to eliminate a substantial base of workers, to demand more of a smaller workforce at lower wages, with scant benefits, all to increase profits.

This comes on the heels of the devastation of the Gulf Coast and the lives of thousands of poor, mainly people of color who lived along the coast. Nearly one-third of the oil consumed in the United States comes from the Gulf.

Oil prices have been soaring, with the imperialist war in Iraq sinking deeper into a mucky quagmire. The prices went up further after the hurricane, as a result of huge oil spills and damage to the oil companies' operations in the Gulf.

The oil industry, heavily responsible for the erosion of the coastal marsh and barrier islands, used the hurricane as an excuse to ratchet up prices at the pump. Of course, the real cause is the brutal war in Iraq, which is not going well for the imperialists.