Name: The Americans Joe Biden Left Behind on the Bankruptcy Bill
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The Americans Joe Biden Left Behind on the Bankruptcy Bill

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Andrew Harnik/AP Photo Democratic presidential candidate former Vice President Joe Biden high-fives a member of the audience during a campaign rally at Modern Woodmen Park, January 5, 2020, in Davenport, Iowa. Elizabeth Warren’s (Full disclosure: I consulted with the Warren campaign on the policy) aims squarely at unwinding one of former Vice President Joe Biden’s chief legislative accomplishments, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The bankruptcy bill was perhaps the most anti–middle class piece of legislation in the past century. It was also Warren’s introduction into the bare-knuckle world of legislative politics. She fought the bill tirelessly and succeeded in blocking it for nearly a decade. Her new plan makes clear that she hasn’t given up the fight.Biden’s support for BAPCPA is well known, but his numerous roll call votes on amendments to the bill have never been previously examined. Warren’s plan draws sharp attention to these votes by adopting many of the very positions Biden opposed. An examination of Biden’s roll call votes paints a very different picture of Biden’s involvement with the bill than the vice president likes to present. The record makes clear that as a senator, Biden used his clout to push for the law’s passage and to defeat amendments to shield servicemembers, women, and children from its harsh treatment. When votes were taken, “Middle-Class Joe” was no friend to the middle class.Bankruptcy is the last resort for millions of families that find themselves overburdened with debt, often through no fault of their own, as a result of uninsured medical expenses, life savings stolen by a drug-addicted child, or a global financial crisis. By enabling honest but unfortunate debtors to wipe out debts, bankruptcy serves as a financial safety net for families desperately trying to stay in the middle class.Bankruptcy law offers debtors a choice between a Chapter 7 and a Chapter 13 process. In Chapter 7, debtors surrender their current assets above a minimum level to creditors, but retain all of their future income. In Chapter 13, debtors retain their assets, but are required to devote all of their disposable income for several years to a demanding payment plan. Chapter 7 gives debtors an immediate “fresh start,” by wiping out most debts. Chapter 13 debtors have to repay more, and many ultimately fail to complete payment plans.Tuesday, BAPCPA made it harder for consumers to file for Chapter 7 by imposing a “means test” for Chapter 7 eligibility, and by substantially increasing the cost of filing for bankruptcy. This caused debtors’ average total out-of-pocket costs for filing for Chapter 7 to . The subsequent result was . BAPCPA made bankruptcy too expensive for the most broke households, making financial stress, , and more likely, particularly after the 2008 financial crisis.Not only did the law discourage bankruptcy filings, but it made it harder to wipe out credit card debt and student loans in bankruptcy. The result was for consumer lending businesses, many of which are based in Biden’s state of Delaware. Not surprisingly, then, by lowering the risk of bad lending decisions, the Biden bankruptcy bill , which has contributed to the massive rise in student loan debt.The bankruptcy bill was perhaps the most anti–middle class piece of legislation in the past century.BAPCPA’s passage was one of Biden’s long-sought goals as a senator. Not only did Biden vote for the legislation four times between 1998 and 2005, but he was so singularly committed to its success that , and later was the sole Democrat on the Senate Judiciary Committee to vote for the bill.Biden also consistently voted against efforts to soften BAPCPA’s blow on vulnerable populations. He voted against for consumers whose financial troubles stem from medical expenses. He voted against . He from the law’s eligibility restrictions. He voted against . And Biden even voted against . Biden also , potentially imperiling their employment and ability to achieve financial rehabilitation.Several of these amendments are resurrected in the Warren bankruptcy plan, including the union dues and children of debtors amendments.It’s not as if Joe Biden was opposed to all amendments to the legislation: He voted to enshrine a “” that allows wealthy, well-counseled debtors to shield their assets from creditors by placing them in asset-protection trusts. Nor did he act to cut off the loophole that shields assets placed by wealthy families in “dynasty trusts,” such as are offered by Delaware.that he worked to ensure that the legislation protected the interests of women and children by making the repayment of alimony and child support obligations the top priority in bankruptcy. This is false. Prior to BAPCPA, domestic support obligations were formally eighth in line for repayment. Functionally, however, they were second in line, right after the administrative costs of the bankruptcy, because the obligations ranked second through seventh priority, such as emergency bailout loans from the Federal Reserve or money owed to grain elevators, do not exist in consumer bankruptcy cases. The Biden bankruptcy bill to provide that domestic-support obligations are to be paid first—unless there are administrative expenses. In other words, BAPCPA’s protections for women and children were&nbsp;all window dressing. Women and children still stand behind administrative expenses in bankruptcy. The claim that BAPCPA helped women and children is simply dishonest.If anything, BAPCPA actually hurt women and children, . Because BAPCPA made it impossible to wipe out certain credit card and student loan debt in bankruptcy, it meant that banks for deadbeat ex-husbands’ remaining assets after the bankruptcy.It’s hard to reconcile the Biden bankruptcy bill with Biden’s claims of being “Middle-Class Joe.” When it counted, Joe Biden looked out for millionaires and the banks, not the middle class.&nbsp; &nbsp;Copyright 2022 | The American Prospect, Inc. | All Rights ReservedBuilt with

Andrew Harnik/AP Photo Democratic presidential candidate former Vice President Joe Biden high-fives a member of the audience during a campaign rally at Modern Woodmen Park, January 5, 2020, in Davenport, Iowa. Elizabeth Warren’s (Full disclosure: I consulted with the Warren campaign on the policy) aims squarely at unwinding one of former Vice President Joe Biden’s chief legislative accomplishments, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The bankruptcy bill was perhaps the most anti–middle class piece of legislation in the past century. It was also...

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Adam J. Levitin

Adam Levitin

Ideas, Politics & Power: The American Prospect is an independent political magazine. We cover Washington and beyond like no one else does.

The Americans Joe Biden Left Behind on the Bankruptcy Bill

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