By Ralph Nader

MARGARET DICKENS OF University City, Mo., was having a tough time with mounting bills. She was a perfect target for a finance company that offered to refinance her 7.5 percent home mortgage with a $65,000 loan at 12.5 percent interest, plus up-front fees of $11,600 including points and a single-premium credit life insurance policy.

Dickens isn't alone as a victim of predatory lending that often pushes borrowers into foreclosures and bankruptcies. Take the case of a 68-year-old former cleaning woman in Atlanta who was coaxed into refinancing her home six times. In the end she had to default when the loan costs took more than 60 percent of her pension. A couple in Chicago was lured into an expensive loan consolidation to pay for the husband's triple-bypass heart surgery – a loan that carried up-front fees and charges representing 7 percent of the loan amount, all secured by a new $98,500 mortgage on their home at 12 percent interest.

Millions of other consumers are being led into unmanageable debt by credit card companies that are using the mail and telecommunication solicitors to bombard consumers with unsolicited credit card offers promising easy instant credit.

Recent class action lawsuits and regulatory-agency complaints against credit card companies have revealed a growing list of unscrupulous practices designed to rip off consumers, including charging late fees even when payments are received on time, advertising deceptive "teaser" interest rates that quickly skyrocket into unaffordable double-digit interest rates, adding on worthless, high-cost life insurance, making false promises to eliminate annual fees, charging for processing applications, and making frequent increases in credit limits without regard to the ability of the credit card holder to repay.

So, what is Congress doing to protect consumers against these growing credit scams? The answer: nothing. In fact, Congress is on the verge of becoming a willing accomplice by making it easier for the credit merchants to collect from borrowers caught in impossible debt situations.

The legislation is going under the banner of "Bankruptcy Reform" – a classic euphemism in a Congress addicted to misnomers. In reality the legislation guts the federal Bankruptcy Code and, in effect, turns the bankruptcy courts into collection agencies for the biggest financial corporations, credit card companies, car dealers, entertainment companies, and gambling casinos.

The legislation would eliminate the concept that bankruptcy is designed to provide a second chance – a fresh start for citizens trapped in unmanageable debt, very often the result of illness, loss of jobs, and unscrupulous and predatory lending practices.

Key to the demands of the banks and credit card companies is a provision that imposes a tough, inflexible means test, one that will bar all but the most destitute from filing under Chapter 7 of the Bankruptcy Code, which now allows bankruptcy judges to grant consumers relief from impossible debt burdens.

"They've decided its time to lock the door on the bankruptcy courthouse," says Elizabeth Warren, a Harvard law professor and bankruptcy specialist. "The point of this bill is to squeeze people out of bankruptcy altogether, turning debtors into annuities – they'll make payments to the credit card companies forever."

What this means is that thousands of wage earners, trapped in these congressionally sanctioned "debtors prisons without parole," will not be able to rebuild their lives as productive citizens with the ability to provide properly for their families. The long-term impact on many low-, moderate- and middle-income families is likely to be devastating, not only in terms of human misery but also in consequences for the economy and future welfare costs.

Sadly, members of Congress aren't paying attention to independent experts like Warren. Instead, they are listening to their generous benefactors – banks and other financial corporations that have poured millions of dollars into lobbying and campaign donations in the effort to eliminate protections for consumers facing bankruptcy.

The National Consumer Bankruptcy Coalition which includes Visa, MasterCard, the American Bankers Association, and the American Financial Services Association, contributed more than $5 million dollars to federal parties and candidates during the 1999-2000 election cycle, according to the Center for Responsive Politics.

MBNA America Bank, a giant credit card operator, contributed $3.1 million to political campaigns last year and was the overall top contributor to George Bush's presidential campaign.

The Center for Responsive Politics says that banks, credit unions, and finance companies contributed $30 million during the last election. Gambling interests, including some of Las Vegas's biggest casinos, which are also pushing for the bankruptcy legislation, contributed $9.4 million. The Recording Industry Association of America, which has asked Congress to crack down on recording artists who file for bankruptcy and get out of record deals, contributed $451,488 in the last election cycle.

Congress apparently has swallowed a lot of the business propaganda about abuse of the current bankruptcy system. U.S. Chamber of Commerce president Tom Donohue, for example, lauded the Senate passage of the lenders' bankruptcy bill with these words: "The Senate took a critical step today to prevent wealthy debtors from passing the tab for mountains of debt on to businesses and consumers."

But the facts support neither the chamber's statement nor congressional passage of the legislation. A national study conducted by bankruptcy judges in 1999 found that the median income of debtors seeking bankruptcy protection was $21,500 – "wealthy" by no one's standards.

The bankruptcy legislation is still in a House-Senate conference, but its proponents are pushing for a quick end to the conference and a vote on final passage in the next few weeks. The vote on final passage will speak loudly about where individual members stand on consumer justice versus the demands for special favors by the biggest financial corporations and a collection of their allies including car dealers and gambling casinos.