Those whose lives were irrevocably ripped apart by Hurricane Katrina face numerous pressing issues, including but not limited to finding water, food and shelter, locating one's family members, and coping with the shock and grief stemming from the immense scale of death and displacement. There's also the matter of determining whether the loss of property is total or partial, and making the decision on whether to uproot from the Gulf Coast or plan for rebuilding.As families max out their credit cards to pay for essentials without the benefit of home equity or a job, the question of personal finances will soon become unavoidable. Even with the banking industry offering forbearance on loans and mortgages for those affected, the benefit of such measures is dwarfed by the devastation to the Gulf Coast economy and the ability to earn a living. Thus, for many, the road to recovery will necessarily go through bankruptcy court.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 takes effect on October 17, 2005. Among its provisions is the requirement that a consumer seeking Chapter 7 relief from debt will have to undergo financial counseling six months before being able to file for bankruptcy.
It is an obviously bad idea to force the victims of Hurricane Katrina to attend financial counseling and then wait six months to obtain relief. It would be utterly devoid of sympathy and humanity to hold people to the letter of the law under these circumstances, and I fully expect that Congress or the courts will make the appropriate allowances.
The scope of the suffering wrought by Hurricane Katrina is certainly larger in scope and deeper in its effect than most human tragedies. Nevertheless, every single day people fall victim to situations entirely outside of their control, whether it's job loss, illness or family crisis -- all common triggers for financial distress and bankruptcy. Although these personal tragedies play out one household at a time rather than on CNN, it is cruel under any circumstances to put someone in a demeaning, six-month holding pattern before offering the prospect of a lifeline.