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Working Poor & Life Chances
Recent hurricanes have obliterated the houses, jobs and property values of Gulf Coast residents, but evacuees’ mortgages and debts are still intact.
The Federal Emergency Management Agency has provided $4.4 billion in federal aid to more than 1.4 million households in the wake of Hurricane Katrina, but when the aid stops coming, hurricane survivors may find themselves in financial crises.
Dr. Howard Karger, professor of social work at the University of Houston, predicts a credit crisis of major proportions for Gulf Coast residents. The solution can only come from debt and federal bankruptcy reform, he said.
Officials estimate that as many as 373,000 Gulf Coast evacuees from Katrina immediately sought refuge in Texas. More than 27,000 survivors were brought to the Reliant Center and the Houston Astrodome.
Hurricane survivors who originally relocated to the Houston area will not affect the city’s economy drastically, Karger said.
“Houston is such a large economy,” he said. “A lot of the hurricane survivors have either already left the area or are integrating into the Houston workforce, but if even 400,000 people stayed here, it would just be a drop in the bucket to our economy.”
Karger said he predicts a larger impact on the financial futures of individual hurricane survivors rather than the Houston economy.
“The major impact won’t be felt in the economy,” Karger said. “It will be on people’s lives when the federal aid runs out and they don’t have places to live and can’t pay their bills.”
Criticism of FEMA’s response and aid to hurricane survivors has developed as survivors remain displaced for an extended period. Initial outrage at the delayed response and poor planning of FEMA has been replaced by questions of the organization’s ability to continue to aid survivors after media attention dwindles.
President George W. Bush promised hurricane survivors in September that the federal government would be with them “for the long haul,” but planned government assistance will not likely be enough to sustain those affected by Katrina, Karger said.
Bush has outlined plans to distribute $2,000 in federal aid to every affected household, but that amount will not be sufficient to provide long-term care for survivors. Federal government assistance has focused on short-term planning and has not included provisions for the next several years.
FEMA provided short-term shelter for evacuees by providing expense-free hotel rooms through the Hotel Program. This program will end in January, when states must present plans to help evacuees find longer-term housing.
Evacuees are not likely to find ample housing opportunities with federal aid of only $2,000. Housing is only one of many concerns that evacuees must face, including how to provide for themselves and their families on a limited income. If more aid is not provided, hurricane survivors will be forced into financial ruin, Karger said.
Bankruptcy rates usually rise two to three years after a disaster like Katrina, Karger said. Members of the middle class who are unable to pay mortgages on homes that may have been destroyed will likely account for an increase in bankruptcy rates in the next few years.
“The federal government needs to step up to the plate and help people overcome this disaster financially,” he said. “The long-term plan needs to be debt-forgiveness, not only through the federal government but also credit card companies, loan offices and banks.”
Proposed legislation that has yet to pass Congress or be enacted seems to assume that bankruptcy is inevitable for hurricane survivors.
Many mortgage companies are offering homeowners all sorts of breaks for the time being including deferred payments, waived late fees and unreported delinquent accounts, but legislation to protect evacuees has not yet been established.
A new bankruptcy bill that went into effect this month would force thousands of people who would now qualify for Chapter 7 debt forgiveness into the more confining Chapter 13, where their future wages will be garnished for years. Legislators are working to allow storm survivors to file under the old bankruptcy law through Oct. 17, 2006.
Legislators are also proposing to strike provisions that make it easier for landlords to evict tenants during bankruptcy proceedings, which would ensure that storm victims who can’t pay rent as a result of the disaster aren’t evicted.
Both the American Bar Association and the American Bankruptcy Institute have offered their lawyers to help hurricane victims on a pro bono basis.
© Copyright World Internet News 2006-07
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