Some 2005 Cost Increases Bankruptcy “Reform” Will Ignore
The Wall Street Journal reported earlier this week (link requires paid subscription) that steep increases are coming on many toll roads (bolds added):
The toll increases are steep and affect millions of commuters on some of the busiest traffic arteries in the U.S. It now costs $3 — up from $2 last summer — to cross the San Francisco-Oakland Bay Bridge and six other state-owned bridges in the Bay Area. Pennsylvania socked drivers with an average price rise of 43% on the Pennsylvania Turnpike, the fastest route between Philadelphia and Pittsburgh. The New York State Thruway Authority plans an average increase of 25% for cars and 35% for trucks starting in mid-May on the 641-mile highway system, the country’s longest toll road. Tolls there will rise as high as $18.50, from the current $14.70.
The Means Test in Bankruptcy “Reform” is based on the Internal Revenue Service’s Collection Financial Standards as of Jan. 1, 2005, in this case the portion of those standards relating to Tranportation. The Means Test will therefore ignore these toll increases in any filings that take place after the law takes effect (October 16) until January 2006. It will also ignore the 20%-plus increase in gas prices. It will ignore any and all inflation in any cost element that has taken place since Jan. 1.
Every dollar of ignored cost will potentially be, and will usually be, an extra dollar that a person or family subject to Chapter’s 13 partial-payment regimen will have to pay out of money that in most cases won’t be available. In some cases, it will cause what should have been a Chapter 7 if accurate costs had been used to become a Chapter 13.
The bill’s writers certainly knew of this lag factor when they wrote the misnamed “Bankruptcy Prevention and Consumer Protection Act of 2005,” and they could have compensated for it by padding the IRS dollar amounts by about 5%-10% across the board. 10% especially would have overcome the time-lag problem, and it would have taken care of a lot of the objections from those in high-cost areas who spend more than their respective regional averages on food, clothing, and the like.
But, as I’ve said before: Bankruptcy “Reform” isn’t about fairness. It’s about punishment.
