The housing industry has been celebrating changes in the federal bankruptcy act, and perhaps, the elation is justified.

The changes were designed to stop abuses of the system. One establishes a clear procedure for the speedy resolution, in federal bankruptcy court, of cases in which a tenant has defaulted on the lease agreement for failure to pay and then files for bankruptcy. It also provides debtors with due-process protection against unfair evictions.

The other change stipulates that homeowners who file for bankruptcy within 40 months of buying a home, would be able to protect no more than $125,000 of home equity from creditors. After 40 months, existing state homestead limits would apply.

From what the network news programs have been saying, the changes might end up punishing people who get into back-breaking debt through no fault of their own, such as paying for medical expenses not covered by insurance.

My father died $5,000 in debt and with very poor credit -- both the result of prolonged periods of unemployment during economic downturns in the mid-1960s and early 1970s; and the bad financial luck that seemed to follow him in his adult life.

I remember one of those times vividly because of the dislocation it caused our family.

My father was earning about $10,000 a year as an industrial engineer. Evenings and Sundays after church, he refinished furniture while my mother cleaned houses for people who were having parties. Even I had a paper route large enough so that I'd never have to ask for an allowance.

My parents had grown so confident that they decided to buy their first house.

I don't remember what the house cost in August 1963, but I do remember the mortgage was $110 a month.

We had been living in a rental house, for which my father paid $60 a month. The main reason they bought this house was because the owners, for whom my father worked part-time on Saturdays, offered a price break.

It was a purely financial rather than a lifestyle decision, and that made it the wrong house for our family. It was custom-built for a family of three, and we were five. It was tough to maintain, difficult to heat, and the only access my sisters had to their room from the living room was through mine. I had no privacy.

As you've guessed by now, my father lost his job at the end of the summer of 1964. My mother went to work at a minimum wage factory job. My father eventually went back to his original occupation as a toolmaker on an overnight shift, and even got his real estate license in an effort to make ends meet.

When they got their act together, however, they were six months in arrears on the mortgage. The patient banker finally told them to sell or he would foreclose.

My father's first sale as a real estate agent was his own house. He took the small profit from the sale, that remained, after making good on the back mortgage payments, paid off utility bills and came up with a security deposit for a rental house and moving costs.

My father chose not to file for bankruptcy protection. He was too proud to do that, just as he was too proud to use food stamps which we were entitled to, during those bad times. Growing up during the Depression, he was used to hard times, and assumed that he could find a way out.

I realize that a lot of people work the system to their own advantage. There are renters who use the laws designed to protect them from unjust eviction, to get several months free. They do it to one landlord, milk what they can get, and then move on to the next apartment house.

I also know that there are many people who spend thousands of dollars more than they know they can ever possibly repay because the bankruptcy law always guaranteed them an easy out of their indebtedness -- so easy that they could do it again and again and again.

But, as the TV news programs illustrated, there are many people who, like my father, often are humming along, doing well, being reasonable, providing for their families, trying to better themselves, trying to take care of sick relatives, and all of a sudden, without warning, the bottom drops out of their lives.

Instead of celebrating the victory against the people who abuse the system, it would be better if we made sure that those who don't abuse the system, have the protection when they need it.

Published: April 21, 2005

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