Divorce is already a rough enough process economically for a family, and when we’re in mid recession with wages frozen and constant layoffs, navigating the financial minefield definitely isn’t any easier. Now, despite overhaul on many banking regulations, it seems that personal bankruptcy rules will be just as onerous as ever, and often that can make single mothers suffer.
Via Women’s E-News:
In July Congress gave final approval to the most ambitious overhaul of financial regulations in generations, including the establishment of an independent consumer bureau within the Federal Reserve System to protect borrowers against abuses in credit card, mortgage and other types of lending.
Advocates for women’s financial security, however, say the new law does nothing to reform a 2005 bankruptcy law that has hurt single mothers and benefited credit card companies by making it easier for their ex-husbands to avoid paying child support and alimony.
“Until 2005, bankruptcy wiped out credit card debts while leaving child support and alimony obligations intact,” said Carey Ebert, president of the Washington-based National Association of Consumer Bankruptcy Attorneys, an organization of 4,500 lawyers. “This helped women because their ex-husbands had more funds available to fulfill their support obligations after bankruptcy.”
Now the credit card debts can’t be discharged, so women find themselves competing with Visa and MasterCard for a share of their ex-husbands’ paychecks, Ebert said. Women don’t have the sophisticated collection departments credit card companies do, so many divorced women and children go begging.
Not only will the mother need to compete with collections in order to try and obtain the court ordered monthly payments, but in some cases she may end up responsible for the debt as well. Should any of the outstanding, unresolvable debt be in both spouses name — for example joint credit cards or lines of credit, the company can come after the former spouse even if the debt was classified as the ex’s during the divorce proceedings.
With a recession in which more and more men are finding themselves without a paycheck, and more women are finding themselves with a smaller one, the end results could be devastating to the family, especially parent who cares for the children.
The issue has become so predominate that often lawyers also do bankruptcy counseling with couples to help them decide whether it is more beneficial to declare bankruptcy together while still married, or have one or both partners declare it after the marriage is dissolved instead.
Even worse, divorced women are hit coming and going with this continuing bankruptcy law, as Women’s E-News points out, because they are both more likely to have less assets and run out of income faster, due to lower wages and children to support, and an inability to ever full discharge their own credit card debt if they declare bankruptcy themselves.
Although economic news has focused in great detail about the hardships of this “mancession,” what’s truly been lost in the coverage is how much women have been suffering, too. Especially those who are trying to raise a family alone.
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