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Supreme court ruling bodes ill for American consumer

After rejecting lawsuit, court denies even class-action arbitration
It may seem counterintuitive if you're in pressing need of bankruptcy protection, but if you have the luxury of "planning" for bankruptcy with some lead time, it's probably worthwhile to stay abreast of news about the economy, unemployment, legislative actions and judicial rulings--especially rulings in your home state or from the U.S. Supreme Court.

Benefits of understanding 'the big picture'

For example, let's say your most compelling need is a job, perhaps following a layoff during the Great Recession. If you're lucky enough to live in an area in which jobs are being added, maybe you can redouble your efforts to land new employment and thereby set your financial ship aright.

Informing your business decision

Conversely, let's say your biggest problem is being underwater on your home loan, yet you're in an area in where home prices are still falling. Do you file Chapter 13 in order to save the house?

Good question for your bankruptcy attorney.

The point is, economic and government news and indicators may well play into your business decision to protect your assets and stop creditor harassment.

Senate cram-down vote failed

Slightly more than two years ago, the Senate had a chance to advance true reform of the bankruptcy code that undergone a so-called reform in 2005, with the passage of BAPCPA. However, the measure died on a 51-45 vote. The signal to consumers? Don't expect "cram-down" help from Congress, even though the House had supported a similar bill and likely would have been able to reach a compromise had the Senate version passed.

Consumers lose in recent Supreme Court decision

A recent ruling from the U.S. Supreme Court seems to indicate that big corporations continue to gain momentum over U.S. consumers.

An April 27 piece in the Chicago Tribune says, "The Supreme Court gave corporations a major win Wednesday, ruling in a 5-4 decision that companies can block their disgruntled customers from joining together in a class-action lawsuit. The ruling arose from a California lawsuit involving cellphones, but it will have a nationwide impact.

'In the past, consumers who bought a product or a service had been free to join a class-action lawsuit if they were dissatisfied or felt they had been cheated. By combining these small claims, they could bring a major lawsuit against a corporation.

Decision forces consumers into single arbitration

'But in Wednesday's decision, the high court said that under the Federal Arbitration Act companies can force these disgruntled customers to arbitrate their complaints individually, not as part of a group. Consumer-rights advocates said this rule would spell the end for small claims involving products or services."

A May 12 editorial in The New York Times sums up the ruling and provides some background:
These are major setbacks for individuals who may not have the resources to challenge big companies in court or through arbitration.

When Vincent and Liza Concepcion signed a two-year contract for AT&T cellphone service, they received what they were told were two free phones. AT&T then charged them $30.22 in sales tax for the phones. They sued the company for fraud in federal court and their case and another were consolidated as a class action.

AT&T argued that the contract required the Concepcions to submit their claim to individual arbitration. A federal trial court, upheld by the United States Court of Appeals for the Ninth Circuit, struck down the AT&T arbitration clause as unconscionable under California law and allowed the plaintiffs to move forward against the company in a class action in federal court.

'Not your father's Supreme Court'

A May 12 release by class-action litigator Gary Graifman at U.S. Politics Today continues in that vein: "Yes, this is not your father's Supreme Court. Especially if your father happened to live during the heady years of the Warren Court when civil rights, free speech and sanctity of the individual were prominently featured. Those were the days -- lest we all forget -- when the Court of last resort, the Supreme Court, was the bastion and refuge of the underdog, powerless and downtrodden. As for the others, large corporations and the rich, they had their lobbyists in Congress.

"Growing up in the 1950s and early 1960s, I recall reading the book, Gideon's Trumpet, in elementary school. James Gideon's plight was a clarion call to the concept that one of the Supreme Court's most important purposes was to serve as that refuge for the rights of the individual -- those being discriminated against, those treated unfairly or those subjected to overreaching practices. It was a role taken to heart by the Court. After all, the Supreme Court was and is the one Court which could and would legislate by judicial fiat (notwithstanding attempts by certain Justices -- current or former -- to suggest otherwise, that is indeed what the Court does best)."

Consider free evaluation

The message from the court seems to be that individual consumers are not as important as the corporations who depend on consumers for their business survival. However, the bankruptcy court stands as a ready ally for haggard consumers need a chance to reorganize and start over.

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