Legal News

Obama and McCain Trade Barbs Over Bankruptcy Laws

By Dan Slater

Senator Barack Obama wants to make it easier for some owners homeowners — such as those wiped out by medical payments, military disaster victims, members on extended leave and elderly homeowners — to keep their houses during periods of insolvency. Obama, according to this WSJ story, says he would waive onerous bureaucratic steps required to file for personal bankruptcy and establish a financial floor to allow such people to retain their home equity.

In he speech he gave today in Powder Springs, Georgia, Senator Obama also took a shot at John McCain’s voting history on bankruptcy laws

“While I was opposing the credit card industry’s bankruptcy bill that made it harder for working families to climb out of debt, [Sen. McCain] was supporting it – and he even opposed helping families who were only in bankruptcy because of medical bills they couldn’t pay,” Obama told a crowd at the town hall, referring to a 2005 revamp of bankruptcy laws that McCain voted to support. Obama, who opposed the revamp, called it a sop to special interests. “He sided with the big banks again when it came to protecting the most valuable possession that older Americans have – their home.”

But during Obama’s speech, McCain spokesman Tucker Bounds put out an e-mail saying, “Barack Obama has shown he’ll tax job-creating small businesses and Americans making as little as $32,000 a year.” (The WSJ’s Christopher Cooper notes that Bounds is stretching things a bit. In fact, Obama has not said he’ll raise taxes on small breadwinners. Instead, the reference is to Obama’s opposition to make the Bush tax cuts permanent, which, if repealed in full, could effectively raise taxes on moderate wage-earners.)

Obama’s bankruptcy proposal would, among other things, establish a minimum national “homestead” level for homeowners, pegged to the region’s median home value, which would prevent creditors from attaching assets for non-payment.

LB Trivia: According to this historical Web site, in 1838, ten years after gold had been discovered in Georgia, the City of Powder Springs was incorporated as Springville in the lands of two Cherokee chiefs, Chief Nose and Chief Ana Kanasta. It was at about this same time that the Cherokees were forced off their land and marched to Oklahoma on the “Trail of Tears.”

Full post as published by Law Blog - WSJ.com on July 08, 2008 (boomark / email).