Compassion For the Few

News & Politics

Americans have come to expect little from government, which is generally what we get. So when Katrina's victims receive help from the federal government, we're happy for them on one level, but envious on another. Like children living with an emotionally distant parent, even the slightest attention makes us jealous as we fight for the crumbs. It's not surprising, then, that in a city like Houston, with a large number of Katrina evacuees and an even larger number of indigenous poor, envy and bitterness are already beginning to rear their ugly heads.

The Justice Department has recently affirmed that natural disasters, such as Katrina, qualify as "special circumstances," thereby justifying the elimination of debt under the forgiveness or "fresh start" umbrella of Chapter 7 bankruptcy. In other words, Katrina's victims are exempt from the harshest part of the new bankruptcy law, one that forces debtors into Chapter 13 (debt reorganization and court-ordered debt repayment over three years). Katrina victims are also exempt from other requirements of the new bankruptcy law, including producing cumbersome documents, forced attendance at credit counseling sessions and compulsory meetings with creditors.

While the Justice Department's flexibility is good news for Katrina's victims, it's unclear how long they'll be exempt, although it better be for a long time since bankruptcy filings don't peak until three years after a disaster.

The Justice Department's ruling is based on the simple premise that victims of natural catastrophes are impoverished by an act of nature rather than by their own moral failings. In effect, this creates a category of worthy versus unworthy debtors. Since the logic is strikingly similar to the 17th-century distinction between the worthy and unworthy poor, perhaps the DoJ might want to think about resurrecting debtor's prisons.

The Justice Department's ruling brings up troubling contradictions. For instance, while Katrina's victims are considered worthy of compassion, other groups are not. Apparently, those who fall ill and quit their jobs or are forced to cut back on work hours due to illness, are considered unworthy. These individuals fall under the new bankruptcy law that took effect October 17.

In their books, As We Forgive Our Debtors and The Fragile Middle Class, authors Teresa Sullivan, Elizabeth Warren and Jay Lawrence Westbrook found that contrary to popular stereotypes, bankruptcy filers are not irresponsible spendthrifts. Instead, the reasons they fall off the financial cliff include layoffs, downward job mobility, part-time work, huge medical bills, income loss from illness or accidents, overuse of credit cards, and the financial pressure on single-family households resulting from divorce or abandonment (a divorced woman is 300 percent more likely to file for bankruptcy than her married sister).

Many causes for bankruptcy are rooted in events -- like hurricanes -- that are beyond the individual's control.

One lesson learned from the Justice Department's ruling is that if you have intractable debt but your circumstances don't warrant special consideration, move to the Gulf Coast. Anywhere from Pensacola to Houston will do. Then pray for a hurricane since that's probably the only way you'll merit compassion. Of course, the extent of that compassion will depend largely on the president's approval rating.

Understand the importance of honest news ?

So do we.

The past year has been the most arduous of our lives. The Covid-19 pandemic continues to be catastrophic not only to our health - mental and physical - but also to the stability of millions of people. For all of us independent news organizations, it’s no exception.

We’ve covered everything thrown at us this past year and will continue to do so with your support. We’ve always understood the importance of calling out corruption, regardless of political affiliation.

We need your support in this difficult time. Every reader contribution, no matter the amount, makes a difference in allowing our newsroom to bring you the stories that matter, at a time when being informed is more important than ever. Invest with us.

Make a one-time contribution to Alternet All Access, or click here to become a subscriber. Thank you.

Click to donate by check.

DonateDonate by credit card
Donate by Paypal
{{ }}
@2022 - AlterNet Media Inc. All Rights Reserved. - "Poynter" fonts provided by