[Congressional Record Volume 151, Number 44 (Thursday, April 14, 2005)]
[House]
[Pages H1974-H1987]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONSIDERATION OF S. 256, BANKRUPTCY ABUSE PREVENTION AND
CONSUMER PROTECTION ACT OF 2005
Mr. GINGREY. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 211 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 211
Resolved, That upon the adoption of this resolution it
shall be in order to consider in the House the bill (S. 256)
to amend title 11 of the United States Code, and for other
purposes. All points of order against the bill and against
its consideration are waived. The bill shall be considered as
read. The previous question shall be considered as ordered on
the bill to final passage without intervening motion except:
(1) one hour of debate on the bill equally divided and
controlled by the chairman and ranking minority member of the
Committee on the Judiciary; and (2) one motion to recommit.
The SPEAKER pro tempore (Mr. Duncan). The gentleman from Georgia (Mr.
Gingrey) is recognized for 1 hour.
Mr. GINGREY. Mr. Speaker, for the purpose of debate only, I yield the
customary 30 minutes to the gentleman from Florida (Mr. Hastings),
pending which I yield myself such time as I may consume. During
consideration of this resolution, all time yielded is for the purpose
of debate only.
Mr. Speaker, this is a closed rule providing for consideration of S.
256, the Bankruptcy Abuse Prevention and Consumer Protection Act of
2005.
{time} 1030
The rule provides for 1 hour debate in the House, equally divided and
controlled by the chairman and ranking minority member of the Committee
on the Judiciary. It waives all points of order against the bill and
its consideration, and it provides for one motion to recommit with or
without instructions.
General Leave
Mr. GINGREY. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks on H. Res. 211.
The SPEAKER pro tempore (Mr. Duncan). Is there objection to the
request of the gentleman from Georgia?
There was no objection.
Mr. GINGREY. Mr. Speaker, bankruptcy reform is overdue for passage.
Despite its critics, S. 256, the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005, does not exclude anyone from filing
for bankruptcy. Instead, it implements a simple means test to shield
debtors who make below their State's median income and to determine if
a higher income debtor has the ability to partially pay back his or her
creditors.
To phrase it simply, bankruptcy reform is financial accountability.
It protects our system against fraud and abuse. And it asks those who
have the means to repay as much of their debts as they can.
For at least four previous Congresses, members have been trying to
reform our ``when in doubt, bail out society'' in favor of personal
responsibility. Bankruptcy should not be a financial planning tool, and
it should be available for legitimate emergency situations only. Our
bankruptcy system should fit the needs of the individual, no more, no
less. With this rule, and
[[Page H1975]]
passage of the underlying legislation, S. 256 we will finally see some
movement in the right direction.
Bankruptcy reform is important to help speed up court hearings,
because it only takes a few fraudulent or misdirected cases to stall a
court for hundreds of other legitimate bankruptcy filings. Federal
bankruptcy filings per judgeship have increased by 71 percent from
2,998 in 1992 to 5,130 in 2003; and it represents the largest case load
in our Federal court system. This creates a backlog that slows down the
process for those really in need of bankruptcy protection.
Bankruptcy reform provisions found in S. 256 include, but are not
limited to: abuse prevention so debtors who have committed crimes of
violence or engaged in drug trafficking are no longer able to use
bankruptcy to hide their finances;
Needs-based credentials, where if a debtor has the ability to
partially repay debts, he or she must either be channeled into a form
of bankruptcy relief that requires repayment or risk having the
bankruptcy case dismissed as an abusive filing;
Spousal and child support protections to help single parents and
their children by closing a loophole used by some spouses currently
avoiding their child support responsibilities. This would put child
support and alimony payments as a first priority, ahead of credit card
debt and attorney's fees. Child support and alimony payments are
currently seventh in the priority list of payments;
Closing the mansion loophole require a debtor to live in a State for
at least 2 years before he or she can claim that State's homestead
exemption. The current requirement is 91 days, allowing some debtors to
shield themselves from creditors by putting all of their equity into
their homes;
Debtor protections requiring potential debtors to receive credit
counseling before they can be eligible for bankruptcy relief, allowing
them to make an informed choice about bankruptcy considering all
alternatives and consequences;
Further, small business protections to defend against needless
bankruptcy lawsuits. Under current law, a business can be sued by a
bankruptcy trustee and forced to pay back monies previously paid by a
firm that later files for bankruptcy protection;
Additionally, family farm relief by doubling debt eligibility for
chapter 12 filing, allowing periodic inflation adjustment of this debt,
and lowering the required percentage of a farmer's income that must be
derived from farming operations.
There are business privacy protections to prohibit the disclosure of
names of a debtor's minor children with privileged information kept in
a nonpublic record. Current law allows nearly every item of information
supplied by a debtor in connection with his or her bankruptcy case to
be made available to the public.
S. 256 passed the Senate with a clear 74 to 25 majority. The House
judiciary markup on March 16 included rollcall votes on 11 amendments.
The reforms included in this legislation will be very beneficial to our
society without ignoring the need of those suffering financial
uncertainty. This legislation deserves a clean up-or-down vote. Mr.
Speaker, I ask my colleagues to support this rule and pass S. 256
bankruptcy reform.
Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I thank the gentleman from
Georgia (Mr. Gingrey) for yielding me the time.
Before yielding myself such time as I may consume, I yield to the
distinguished gentleman from California (Mr. Stark) for a unanimous
consent request.
(Mr. STARK asked and was given permission to revise and extend his
remarks.)
Mr. STARK. Mr. Speaker, I rise in strenuous opposition to this unfair
bill.
Mr. Speaker, I rise in strong opposition to S. 256. This bankruptcy
bill is touted as reform, but it is actually a wolf in sheep's clothing
intended to allow credit card companies and other lenders to gouge
consumers when they are most vulnerable.
Republicans are giving this gift to big credit card companies at a
time when many Americans are faced with uncertain job stability,
retirement security, and health coverage. In fact, 90% of all
bankruptcies are filed due to the common financial emergency of a lost
job or lack of medical coverage. This bill makes it harder for working
families to seek shelter from these devastating and unavoidable
expenses.
The Wall Street Journal recently featured the case of a constituent
in my district. Crystal Herndon, a single mom in Haywood, California,
earns $15 an hour. Ms. Herndon got sick with pneumonia, causing her to
miss six weeks of work and rack up over $5,000 in medical bills. These
unforeseen expenses caused her to fall behind on other financial
obligations, and before she knew it she was simply unable to make ends
meet. Bankruptcy protection was the only way out for Ms. Herndon and
her family. It's hard to see the abuse in real instances of need such
as these, especially when many Americans live paycheck to paycheck.
Sadly Crystal Herndon is not the only worker to be forced into
bankruptcy due to unavoidable medical expenses. According to a recent
Harvard University research study 2 million Americans, including filers
and their dependents, face the double jeopardy of illness and
bankruptcy each year. Most of these medically bankrupt are middle-class
homeowners with responsible jobs and health insurance coverage. Once
illness strikes, high co-payments, deductibles, exclusions from
coverage, and other loopholes quickly overwhelm these families'
budgets. Loss of income and health insurance often deepen this
financial crisis when a breadwinner becomes too sick to work.
To add insult to injury, consumers like Crystal Herndon will
potentially face an avalanche of litigation that they can't afford as a
result of this bill. The bill requires the debtor in some cases to have
to challenge big corporate lenders in court to prove they are eligible
to seek relief under Chapter 7 of the bankruptcy code. In addition,
this bill also allows creditors to threaten debtors with costly
ligitation that will force many families to needlessly give up their
legal rights.
In their continuing compassion, the Republicans have crafted this so-
called reform so that a parent seeking child support from a bankrupt
spouse will have to fight it out with creditors in order to receive
payment. Meanwhile, this bill makes it easier for those seeking
bankruptcy protection to lose their homes or be evicted by the
landlords. Yet, those with million dollar mansions will be able to keep
their homes even while seeking the same protection under the law.
Nothing like a fair shake for America's working families.
Finally, Mr. Speaker, with all of the perks they've awarded to the
big credit card companies, Republicans have done nothing to ensure that
they are held accountable for their role in this consumer crisis. There
is nothing is this bill that stops the abusive, predatory lending that
lands too many Americans in bankruptcy in the first place.
Bankruptcy has always been about giving a fresh start to those who
have fallen on hard times. The link between illness, job loss, and
health insurance is a harsh reality in our country today. It is morally
reprehensible to suggest that we exploit medical tragedies befalling
honest, hardworking Americans in order to grant the wishes of the
credit card companies.
I urge my colleagues to vote down this merciless legislation. Now is
not the time to turn the tables on America's working families. Vote no
on S. 256.
Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I
may consume.
Mr. Speaker, I rise today to oppose this closed rule and S. 256. Once
again, the majority has squelched debate on a controversial piece of
legislation for no legitimate reason.
More than 35 Democratic amendments were offered in the Rules
Committee yesterday. Yet none have been made in order. Why? There is no
reason for limiting the debate in this manner.
The House came into session on Tuesday and Members will leave town
later this afternoon after just 2 days of work. Even more, there was
only one other bill of substance before the House this week. The time
to debate this bill and its offered amendments is available. The
willingness to conduct meaningful business, however, is the missing
ingredient. A 1-hour debate on legislation containing such sweeping
reforms is not the way to conduct the people's business.
The argument will be made that this has been 9 years in the making.
But a lot of this measure has been overcome by time, and that will be
discussed by others later.
I am particularly disappointed that an amendment I offered is not
being allowed to come before this body for consideration. My amendment
seeks to prevent the very bankruptcies that are
[[Page H1976]]
causing this Congress so much consternation and is germane to the
discussion. It requires credit card companies to preserve a customer's
interest rate prior to incurring medical expenses if the customer is
unable to pay off the full medical expenses on time. It also prohibits
hospitals from reporting delinquent patients for 5 years, provided that
the patient is paying 20 percent of his or her monthly mandated medical
expenses.
All the information we have available suggests that medical bills are
the second leading cause of personal bankruptcy in the United States.
It is, in my opinion, hypocritical to prevent debate on an amendment
that could ameliorate some of the issues facing this bankruptcy reform
legislation. Is not the whole point of this bill to make bankruptcy
less frequent? If Members of Congress have ideas about how to
accomplish that, should they not be heard?
Many other Members sought to introduce amendments, but have also been
denied their opportunity to be heard. These amendments could have
improved this legislation.
For example, the gentleman from Virginia (Mr. Scott) offered an
amendment to exempt from the means test provision of debtors who have
business losses incurred by a spouse who has died or deserted the
debtor.
The gentleman from California (Mr. Filner) offered an amendment that
would exempt victims of identity theft. And the ranking member of the
Rules Committee, the gentlewoman from New York (Ms. Slaughter), offered
an amendment that imposes restrictions on issuing credit cards to
college students. But none of those amendments, or the 31 others, will
be debated today because the rule on this bill is closed.
At this point, Mr. Speaker, I will insert a list of all 35 amendments
which the Republican majority has blocked from being considered in the
Congressional Record.
Amendments Submitted to the Rules Committee for S. 256 and Denied
Consideration by the Rule (H. Res. 211)
1) Emanuel/Delahunt/Dingell--prevents debtors from
shielding their funds from bankruptcy liquidation through so-
called ``asset protection trusts;''
2) Filner--exempts disabled veterans from the bill's means
test;
3) Filner--exempts from the bill's means test consumers who
are victimized by identity theft;
4) Inslee--exempts from the bill's means test consumers
whose debts are the result of serious medical problems;
5) Delahunt--requires debtor corporations to file for
bankruptcy where their principal place of business is
located;
6) Sanders--establishes a ``usury rate'' for credit card
companies, above which credit card companies cannot charge
consumers;
7) Sanders--caps fees credit card companies can impose on
consumers at $15;
8) Sanders--prohibits credit card companies from changing
interest rates based on changes in consumers' credit
information;
9) Sanders--prohibits credit card companies from raising
interest rates based on consumer credit reports;
10) Ruppersberger--requires credit card solicitations to be
accompanied by a brochure explaining the consequences of the
irresponsible use of credit;
11) Schiff--exempts from the bill's means test consumers
who are victimized by identity theft, if at least 51% of the
creditor claims against them are due to identity theft;
12) Lofgren--exempts from the bill's means test 1) families
facing bankruptcy due to a serious medical hardship that
drains at least 50% of their yearly income, and 2) families
who lose at least one month of needed pay or alimony due to
illness;
13) Lofgren--exempt from the bill's means test a single
parent who failed to receive child or spousal support
totaling more than 50% of her or his household income;
14) Scott (VA)--exempts from the bill's means test
provisions: 1) debtors who have business losses incurred by a
spouse who has died or deserted the debtor 2) debtors who
have had serious illness in their family and 3) debtors who
have been laid off;
15) Scott (VA)--exempts from the bill's means test
provisions debtors who have business losses incurred by a
spouse who has died or deserted the debtor;
16) Scott (VA)--exempts from the bill's means test
provisions debtors who have had serious illness in their
family;
17) Scott (VA)--exempts from the bill's means test
provisions debtors who have been laid off from their jobs
through no fault of their own;
18) Nadler--sunsets the bill after 2 years;
19) Watt--prohibits annual credit card rates higher than
75%;
20) Watt--includes the costs of college in the calculation
of debtor's monthly expense;
21) Ruppersberger--exempts from the bill's means test
debtors who have declared bankruptcy due to high medical
expenses;
22) Hastings (FL)--prevents credit card companies from
increasing rates on consumers who use their credit cards to
pay for extraordinary medical expenses; also prevents
hospitals from generating negative credit information on
consumers who are paying their bills in good faith;
23) Meehan--Exempts from the means test disabled veterans
whose indebtedness occurred primarily as a result of an
injury or disability resulting from active duty or homeland
defense activities; closes a loophole in S. 256, which
exempts only disabled veterans whose indebtedness occurs
primarily while on active duty while failing to exempt
disabled veterans whose indebtedness occurs after they have
left active duty;
24) Jackson Lee--makes debts arising out of state sex
offenses non-dischargeable in bankruptcy proceedings;
25) Jackson Lee--clarifies Congress' intent that nuclear
liabilities be covered by the Price-Anderson Act, and not by
bankruptcy laws;
26) Jackson Lee--makes debts arising out of penalties
imposed on businesses for false tobacco claims non-
dischargeable;
27) Jackson Lee--strikes the bill's means test provision;
28) Woolsey--requires credit counseling agencies to provide
free services to recent veterans of the military who served
in combat zones;
29) Slaughter--requires credit card companies to determine,
before they approve a credit card, whether a student
applicant has the financial means to pay off a credit card
balance; it restricts the credit limit to minimum balances if
the student has no independent income; and it requires
parental approval for credit limit increases in the event
that a parent cosigns the account;
30) Slaughter--applies the highest median income of any
county or Metropolitan Statistical Area in the state to all
residents of the state petitioning for bankruptcy protection;
31) Millender-McDonald--provides the bankruptcy courts a
higher percentage of the fees collected when a debtor files
for bankruptcy;
32) Maloney--ensures that debtors emerging from bankruptcy
make child credit payments first, before payments on credit
card debt. The current version of the bill does not ensure
that child support payments will have priority over the other
types of unsecured debts, such as credit card debt;
33) Meehan and Berman--provides a modest homestead
exemption for people who have suffered a major illness or
injury;
34) Jackson Lee--provides additional protections to debtors
who are the victims of identity theft;
35) Jackson Lee--increases the means test limit on
parochial school tuition expenses from $1,500 to $3,000, so
that families Chapter 13 bankruptcy can keep their children
in schools that conform to their deeply held religious
beliefs.
Mr. Speaker, the House has adopted a new modus operandi. We saw it
earlier this year with the class action bill, and we are seeing it
again today.
It seems that if the Republican leadership deems legislation
important, and that is their prerogative, it is willing to push through
the other body's version without the opportunity for debate here in the
people's House on any amendments. This new method does a great
disservice to the people of this Nation. Even more, it stops Members,
Democrats and Republican, from serving as thoughtful, effective
legislators.
The House of Representatives is the people's House. The Founding
Fathers envisioned a forum for lively debate on the issues of the day,
not the controlled steering of selected legislation with no opportunity
for meaningful change.
What also concerns me is the unworkable means test contained in this
legislation. I am greatly disturbed, as I know all the residents of
south Florida will be, that this means test includes disaster
assistance as a source of revenue.
People forced into dire financial circumstances through natural
disasters should find bankruptcy a source of relief. Considering
disaster assistance as a source of revenue adds insult to injury and
contradicts the government's efforts to help people get back on their
feet.
This legislation, masquerading as protection against bankruptcy
abuse, is really a protection for credit card companies and their
predatory lending practices. This legislation does not protect the
American people. This legislation protects the credit industry at the
expense of the American people.
Increasingly, credit card companies market their product to riskier
consumers, and now they want the Congress to protect them from the
losses that are the foreseeable result of this ill-sighted business
strategy. Why are we not debating legislation that would address those
practices, instead of eviscerating a crucial safety net that Americans
rely on when all else fails?
[[Page H1977]]
Mr. Speaker, should it pass, this bill will severely curtail the
ability of Americans to obtain relief from bankruptcy without solving
any of its underlying causes. Medical bills, unemployment, and
predatory lending practices are at the root of this problem. In the
long run, the net effect of this legislation will drive more Americans
deeper into financial crisis and weaken our social structure and the
Nation's economy.
I will not, and cannot, support such an attack on American consumers.
I urge my colleagues to vote ``no'' on this closed rule and ``no'' on
S. 256.
Mr. Speaker, I reserve the balance of my time.
Mr. GINGREY. Mr. Speaker, I yield myself such time as I may consume.
I want to point out, Mr. Speaker, to the gentleman from Florida that
medical expenses are specifically covered in the bill, and all other
extenuating circumstances are covered in section 102 of the bill
allowing judicial latitude.
At this point, I would like to yield 4 minutes to the gentleman from
Wisconsin (Mr. Sensenbrenner), the distinguished chairman of the
Judiciary Committee.
{time} 1045
Mr. SENSENBRENNER. Mr. Speaker, I thank the gentleman from Georgia
for yielding me time.
I rise in support of the rule for consideration of S. 256, the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This
bill consists of a comprehensive package of reform measures that will
improve bankruptcy law and practice by restoring personal
responsibility and integrity to the bankruptcy system. It will also
ensure that the system is fair for both debtors and creditors.
As we now consider this rule, and the legislation later today, I
believe it is particularly important to keep in mind bankruptcy
reform's extensive deliberative history before the Committee on Rules,
the Committee on the Judiciary, and both bodies of Congress, which I
would like to briefly summarize.
First, the bill represents the culmination of nearly 8 years of
intense and detailed congressional consideration. The House, for
example, has passed prior iterations of this legislation on eight
separate occasions. Likewise, the other body has repeatedly registered
its strong support for bankruptcy reform. Just last month, the bill
passed there 74 to 25, marking the fifth time that body has
overwhelmingly adopted bankruptcy reform legislation since 1998.
Second, S. 256 has benefited immensely from an extensive hearing and
amendment process, as well as meaningful bipartisan and bicameral
negotiations. Over the past four Congresses, the Committee on the
Judiciary has held 18 hearings on the need for bankruptcy reform, 11 of
which focused on S. 256's predecessors. The Senate Judiciary Committee
likewise has held 11 hearings on bankruptcy reform, including a hearing
held earlier this year.
In the 105th Congress, 4 days were devoted to the Committee on the
Judiciary's markup of bankruptcy reform legislation.
In the 106th Congress alone, the Committee on the Judiciary
entertained 59 amendments over the course of a 5-day markup on
bankruptcy reform legislation, which included 29 recorded votes. On the
floor, 11 more amendments were considered.
In the 107th Congress, the Committee on the Judiciary considered 18
amendments during the course of its markup of bankruptcy reform
legislation, and the House, thereafter, considered five amendments.
In the last Congress, the Committee on the Judiciary entertained nine
amendments to the bill, and five amendments were considered on the
House floor. Also in the last Congress, the Committee on Rules made two
amendments in order in connection with a similar bill, addressing
bankruptcy reform, which was considered on the floor.
Last month, the Committee on the Judiciary entertained 23 more
amendments, each of which has been soundly defeated.
Mr. Speaker, I have over here the paper record of the House
consideration of bankruptcy reform legislation over the last four
Congresses. Here's the committee report on this bill, over 500 pages
long. We have a copy of the House version of the bill, which is over
500 pages long. We have the committee report from 2003. We have a
conference report from the 107th Congress. We have a committee report
from the 107th Congress. We have a committee report from the 106th
Congress. We have a committee report earlier in the 106th Congress, one
from the 105th Congress, and then we have a committee report from the
105th Congress on the House side. All of these are debates in the
Congressional Record when this bill has come up, and we have had
conference reports filed, amendments filed, original bills filed.
There has been plenty of process on this legislation. The time to
pass it is now, and that is why this rule is coming up in the way it is
structured the way it is.
Mr. Speaker, I thank the gentleman for yielding again for the time.
Mr. Speaker, I rise in support of this rule for consideration of S.
256, the ``Bankruptcy Abuse Prevention and Consumer Protection Act of
2005.'' S. 256 consists of a comprehensive package of reform measures
that will improve bankruptcy law and practice by restoring personal
responsibility and integrity to the bankruptcy system. It will also
ensure that the system is fair for both debtors and creditors.
As we now consider this rule, and the legislation later today, I
believe it is particularly important to keep in mind bankruptcy
reform's extensive deliberative history before the Rules Committee, the
Judiciary Committee, and both bodies of Congress, which I would like to
briefly summarize for you.
First, S. 256 represents the culmination of nearly 8 years of intense
and detailed congressional consideration. The House, for example, has
passed prior iterations of this legislation on eight separate
occasions. Likewise, the other body has repeatedly registered its
strong support for bankruptcy reform. Just last month, they passed S.
256 by a vote of 74 to 25, making the fifth time that body has
overwhelmingly adopted bankruptcy reform legislation since 1998.
Second, S. 256 has benefitted immensely from an exhaustive hearing
and amendment process as well as meaningful bipartisan, bicameral
negotiations. Over the past four Congresses, the Judiciary Committee
held 18 hearings on the need for bankruptcy reform, 11 of which focused
on S. 256's predecessors. The Senate Judiciary Committee, likewise, has
held 11 hearings on bankruptcy reform, including a hearing held earlier
this year.
In the 105th Congress, 4 days were devoted to the Judiciary
Committee's mark up of bankruptcy reform legislation. In the 106th
Congress alone, the Judiciary Committee entertained 59 amendments over
the course of a 5-day markup of bankruptcy reform legislation, which
included 29 recorded votes. On the floor, 11 more amendments were
considered.
In the 107th Congress, the Judiciary Committee considered 18
amendments during the course of its markup of bankruptcy reform
legislation, and the House, thereafter, considered five amendments. In
the last Congress, the Judiciary Committee entertained nine amendments
to the bankruptcy legislation and 5 amendments were considered on the
House floor. Also in the last Congress, the Rules Committee made two
amendments in order in connection with a similar bill, addressing
bankruptcy reform, which was considered on the floor. Last month, the
Judiciary Committee entertained 23 more amendments, each of which was
soundly defeated.
Third, it must be remembered that S. 256 is a result of extensive
bipartisan and bicameral negotiation and compromise. For example,
conferees during the 106th Congress spent nearly 7 months engaged in an
informal conference to reconcile differences between the House and
Senate passed versions of bankruptcy reform legislation. In the 107th
Congress, conferees formally met on three occasions and ultimately
agreed--after an 11-month period of negotiations--to a bipartisan
conference report. The legislation before us today represents a
delicate balance and various compromises that have been struck over the
past 7 years.
Fourth, and perhaps most importantly, the need for bankruptcy reform
is long-overdue and should not be further delayed. Every day that
passes by without these reforms, more abuse and fraud goes undetected.
Mr. Speaker, there simply is no reason to further amend this
legislation given its uniquely extensive deliberative record. Those who
come to the floor today and complain about lack of
[[Page H1978]]
process or the need to further refine this legislation--simply oppose
bankruptcy reform. Accordingly, I believe this rule is appropriate, and
urge Members to support it.
Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I
may consume.
My respect for the chairman of the Committee on the Judiciary is
immense, and he has thrust all of these hearings and all that were in
committee where 40 Members of the Committee on the Judiciary had an
opportunity to participate.
What we are talking about is today, 35 Members of the House of
Representatives, 35 amendments are not being permitted today. So I
guess the 40-plus people are the ones who are representing the near
395, 40-plus none for the American people. That would be what I would
put on the table from the minority side.
Mr. Speaker, I am delighted to yield 3 minutes to the gentlewoman
from California (Ms. Matsui), our newcomer, who is making her first
statement as a Committee on Rules member.
(Ms. MATSUI asked and was given permission to revise and extend her
remarks.)
Ms. MATSUI. Mr. Speaker, I thank the gentleman from Florida for
yielding me this time.
I rise in opposition to this rule. We have before us a misguided
attempt to reform our bankruptcy system. We have heard cries that this
system is being abused and is corrupted; and while there is need for
reform, the proposal before us today contains a number of unintended
consequences, consequences that would deprive consumers of the
protection they deserve, hurt children, hurt families and neglect our
veterans.
During the Committee on the Judiciary markup, numerous amendments
were offered to correct these provisions, yet amendment after amendment
was voted down, not on the merits of the amendments but because there
was a backroom deal to move this legislation through the House without
any changes. The committee held a sham markup.
Again, in the Committee on Rules, a number of amendments were offered
to allow a debate on these issues, but not a single one was made in
order today. In certain cases, my Republican colleagues acknowledged
the merits of the amendments, but maintained it was simply not the time
to address the issue. I have to disagree.
I am particularly disappointed that the very reasonable amendment
offered by the gentleman from California (Mr. Schiff) was not made in
order. The amendment is narrowly tailored to exempt from the means test
consumers with 51 percent of their debt caused by someone who stole
their identity.
This amendment makes sense. I am sure that most everyone at some time
in their life has experienced the frustration of losing their wallet.
First, you have to call all the credit card companies to cancel
service. Then you may have to close and later reopen your checking
account. Then you may have to take a trip down to DMV to get a new
driver's license. It is an ordeal.
But these days, losing your wallet can even lead to greater problems.
To then realize someone racked up thousands of dollars of debt after
stealing your identity is just awful. No one should ever have to pay
for a crime someone else committed.
Those on the other side of the aisle say they sympathize with the
issue and would like to address this matter at some point in the
future; but I ask, why do we not do this now? What are we waiting for?
What better place to talk about the rights of bankrupted identity theft
victims than in the bankruptcy reform bill?
Just yesterday, an article ran in the New York Times about another
security breach potentially leaking Social Security numbers, driver's
licenses, and addresses of over 300,000 people.
We all see the headlines. Identity theft poses an enormous financial
risk to the average American. No one deserves a bill for someone else's
crime, but the Republican majority seems to think so. Their legislation
would punish the victims of identity theft, and the refusal to adopt
this very simple fix raises real questions about who they are fighting
for. I believe this amendment is very timely and appreciate the
attention the gentleman from California (Mr. Schiff) has brought to
this issue.
I know this legislation has been around since 1998, but that does not
excuse us from being unresponsive to real issues affecting Americans
today.
Mr. GINGREY. Mr. Speaker, I yield to myself such time as I may
consume.
I want to thank the gentleman from Wisconsin, distinguished chairman
of the Committee on the Judiciary, for bringing forth those statistics
and that stack of documents that he just went over; and I want to add
one more statistic to that, and this is that since the 105th Congress,
the House and the Senate have passed bankruptcy reform legislation a
dozen times, with a vote tally of 2,455 for and 871 against.
To my distinguished colleague from Florida, in regard to the
amendment process in the Committee on Rules, my colleague knows that
the other side was offered an amendment in the nature of a substitute.
That substitute amendment could have included all 35 Democrats, who my
colleagues allege were shut out. Every one of those 35 amendments could
have been included in an amendment in the nature of a substitute; but
apparently they just could not get their act together, did not have an
amendment and passed on that opportunity.
In regard to the gentlewoman from California and the concerns about
identity theft, opponents of the means test of the bankruptcy
legislation have attempted to claim that a debtor should be except from
the means test if the debt is related to identity theft. This is a red
herring, Mr. Speaker, because consumers who are victims of identity
theft do not owe the debts that result from identity theft; and,
therefore, it is not an issue addressed by the bankruptcy court.
We all understand the sentiment of trying to help identity theft
victims. Amendments related to identity theft, though, are not
necessary. They would inadvertently do serious harm to consumers and
create a significant potential for fraud and abuse. A consumer who is
victimized when an identity thief establishes credit in the consumer's
name is not liable for any of the debts incurred by the identity thief.
The maximum amount I think is $50, and that is even waived by the
credit card companies if it is proved to be fraudulent. Bankruptcy
relief is, therefore, not necessary in regard to identity theft.
Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I
may consume before yielding to the distinguished ranking member to
respond to my colleague from Georgia by indicating, the last time I
looked at the rules, it allowed that individual Members have a right to
make amendments, and we are not required to offer a substitute.
Mr. Speaker, I yield 3 minutes to the gentlewoman from New York (Ms.
Slaughter), my good friend.
(Ms. SLAUGHTER asked and was given permission to revise and extend
her remarks, and include extraneous material.)
Ms. SLAUGHTER. Mr. Speaker, I thank the gentleman for the time.
The rule we are debating, that we have made today is a closed rule
which means that the Members of Congress who brought 35 amendments to
the Committee on Rules will not have a chance to bring them up.
This closed rule means that the elected representatives of the people
will never have the opportunity to consider the amendments and decide
for themselves whether or not they would make the bankruptcy bill a
better piece of legislation.
I personally think that amendments protecting our men and women
returning from military service in Iraq and Afghanistan would be a good
idea, and I feel very strongly that the amendment protecting the
victims of identity theft from bankruptcy is an important measure that
should be debated on the House floor. After all, Americans are and
should be very concerned about identity theft. AARP said it is one of
the top five issues concerning seniors today.
Just to give my colleagues an idea of how concerned our fellow
Americans should be about this, Lexis-Nexis and GM MasterCard are both
recovering from wide-scale security breaches which may have placed
millions of
[[Page H1979]]
Americans at risk for having their identity stolen. In fact, just 2
days ago, Lexis-Nexis identified more than 300,000 Americans that their
personal information may have been stolen. In some cases, it will take
those people 6 years to get back their identity. It is a very real
problem for our country.
But if my colleagues in the majority do not agree that protecting
Americans from identity theft is an important issue, why will they not
let the body debate it? If they want to, they can always vote against
it. That is the way things are supposed to happen here in a democracy.
Instead, they have instituted another closed rule and will not allow us
to debate the issues.
This is the fifth Congress that we have debated bankruptcy reform,
and we have heard that this morning. To be fair, we have not debated
this bill under open rules in the past, but we have certainly debated
them under rules that allowed amendments.
This chart shows the number of amendments that the Committee on Rules
made in order on this bill in every Congress since the 105th, and I
insert in the Record at this point a list of the rules.
Number of Amendments Made in Order on Bankruptcy Bills--105th-109th
Congress
105th Congress (H. Res. 452)--12 amendments made in order.
106th Congress (H. Res. 158)--11 amendments made in order.
107th Congress (H. Res. 71)--6 amendments made in order.
108th Congress (H. Res. 147)--5 amendments made in order.
109th Congress (H. Res. 211)--Closed Rule, 0 amendments
made in order.
This chart shows a disturbing pattern, Mr. Speaker, a pattern that
has become common practice here in the House.
{time} 1100
In every Congress, Republican leaders have allowed fewer and fewer
amendments to be debated. We started at 12 amendments in the 105th
Congress; and in the 109th Congress, we have a completely closed rule.
Zero amendments are in order. There is less and less democracy in this
House, and every Congress fewer voices are being heard on the floor.
The Democrats on the Committee on Rules last month issued a report
studying the disturbing trend toward less democracy and deliberation in
this House. During this last Congress and this closed rule today
convinces me we are only getting worse.
So, Mr. Speaker, I say again we have disallowed the amendments that
would have let us make this a better bill, a bill that would protect
more vulnerable people in this country, including our soldiers who have
returned from Iraq, most of those in the National Guard and Reserves,
many of whom are losing their houses because they were called back time
and again and were to able to maintain their houses. It is a disgrace
we were not allowed to bring that amendment to the floor.
Mr. GINGREY. Mr. Speaker, I yield 2 minutes to the gentleman from
Wisconsin (Mr. Sensenbrenner).
Mr. SENSENBRENNER. Mr. Speaker, I would like to lay to rest the fact
that we have not had a full and complete debate on this.
This year, on March 16, the Committee on the Judiciary had a full
markup on this bill. Anybody who wished to offer amendments was allowed
to do so. Our committee publishes the complete transcript of markups as
a part of the committee report. This transcript goes on for 160 pages
in the committee report, which shows that everybody had an opportunity
to speak their peace. There were 23 amendments that were offered, and
all of them were voted down by overwhelming margins.
Now, amending this bill is what the people who wish no bankruptcy
reform have in mind because they know the other body has had difficulty
in finding time to debate this bill and vote cloture. The gentlewoman
from New York (Ms. Slaughter), whom I greatly respect, has voted
against this bill every time it has come up when she has cast a vote in
a rollcall. Much of the complaints we are going to be hearing are
coming from Members who wish to sink this bill through amendments. They
have never supported it in the past. They are against it even if it
were amended, and that is why the rule is the way it is.
Mr. HASTINGS of Florida. Mr. Speaker, I yield 2 minutes to the
gentleman from Virginia (Mr. Scott).
Mr. SCOTT of Virginia. Mr. Speaker, while some who file bankruptcy
have been financially irresponsible, the overwhelming majority of those
who file do so as a result of divorce, major illness, or job loss. Half
of those who go into bankruptcy do so because of illness, and most of
them had health insurance but still could not pay their bills.
If the purpose of the legislation is to try to deal with those who
abuse credit, we ought to be able to distinguish them from the hard-
working Americans who unfortunately become ill, those who have an
unforeseen loss of a job, or whose spouses desert them after a business
failure.
Mr. Speaker, in addition to those who get sick or lose their job,
this bill will also hurt small business entrepreneurs. They go into
business and consider a risk-benefit ratio that includes the
possibility of making a lot of money, but also includes the possibility
of losing everything and ending up in bankruptcy. With the passage of
this legislation, those entrepreneurs and their families will risk not
only losing everything but also being denied a fresh start if the
business goes under. They will be stripped down to essentials like food
and rent for 5 years, and that is average rent for the area, not what
they may have been living in.
Finally, we ought to consider the impact on society of increasing the
number of people who conclude that they have nothing to lose. It is
ironic that the last time we debated bankruptcy reform on the floor of
the House, a farmer had driven his tractor into the pond near the
Washington Monument, tying up traffic for a long time. He was quoted as
saying, ``I am broke. I am busted. I have the rest of my life to stay
here.''
People who feel they have nothing to lose can become dangerous to
society. Denying bankruptcy protection to people who need a fresh start
will only increase the number of people in our community who feel they
have nothing to lose.
This legislation does not differentiate between those who abuse the
system and those who deserve a fresh start. This rule does not allow
amendments to fix the bill; and, therefore, the rule should be
defeated.
Mr. GINGREY. Mr. Speaker, I yield myself such time as I may consume.
In the 105th Congress, H.R. 3150, bankruptcy reform, passed 306-118.
In the 106th Congress, H.R. 8333 passed the House, 313-108.
In the 107th Congress, H.R. 333 passed the House 306-108.
In the 108th Congress, H.R. 975 passed the House 315-113.
The gentleman from Virginia (Mr. Scott) was not one of those voting
in the affirmative on any of those occasions, but I want to point out
to the gentleman in regard to his concern over medical and health-
related expenses for a debtor, spouse, and dependents, on line 23, page
8, continuing through line 10 page 9, this covers the treatment of
medical expenses for the debtor, spouse of the debtor, and dependents
of the debtor. It expressly includes not just actual medical expenses
but expenses for health insurances, disability insurance, and health
savings accounts.
Mr. Speaker, put another way, contrary to misrepresentations by
opponents, the needs-based test not only takes into account the full
range of medical expenses by the debtors, but it also covers the spouse
and dependents. This is just one of three provisions for a member of
the household or immediate family. The provision includes for the
monthly expense of the debtor, expenses incurred for the care and
support of an elderly, chronically ill or disabled member of the
debtor's immediate family. This includes parents, grandparents,
siblings, children and grandchildren of the debtor, among others.
So medical in any situation, Mr. Speaker, medical or otherwise, no
debtor is denied access to bankruptcy relief. All S. 256 says is that,
in a limited range of cases, a debtor with meaningful capacity to repay
may have to file in chapter 13 as opposed to chapter 7. In no case is a
debtor denied access to the bankruptcy system.
Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I yield 2 minutes to the
gentleman from Massachusetts (Mr. Delahunt).
Mr. DELAHUNT. Mr. Speaker, the chairman of the Committee on the
Judiciary is correct when he says 8 years. I dare say we could spend
another 8 years, but given the quality of this bill, given the reality
that it imposes no responsibility whatsoever on the credit
[[Page H1980]]
card industry, naturally we will be opposed. Responsibility. We hear
personal responsibility. What about corporate responsibility?
Responsibility is a two-way street.
To get a fair and balanced bill, we need amendments. We need
amendments like the one that the gentleman from North Carolina and
myself filed which would have limited the interest on credit cards to
75 percent.
Sure, that might have shifted, if you will, some of us to support the
bill. But, no, the credit card industry bought and paid for this
legislation. Somewhere north of $40 million was part of that effort.
Let us not kid ourselves. This bill was written for and by the credit
card industry. It has nothing to do with the consumer. But that is why
we needed amendments, to make it fair and to make it balanced. Let us
not just use those words.
Mr. GINGREY. Mr. Speaker, I yield such time as he may consume to the
gentleman from California (Mr. Dreier).
(Mr. DREIER asked and was given permission to revise and extend his
remarks.)
Mr. DREIER. Mr. Speaker, this is a great day. Not only are we going
to be able to see the Nationals play the first home game in 34 years,
but we are going to finally pass bankruptcy reform legislation that can
get to the President's desk and be signed.
Also, tomorrow many of us are going to be paying our taxes. We have
constituents who are complaining justifiably about the high cost of
gasoline.
On average, passage of this legislation will save a family of four
$400 a year, and $400 a year is a very important amount of money for an
awful lot of people in this country, and that is the price that they
are paying because of the abuse that we have seen of our bankruptcy law
that has been going on for years and years and years.
I happen to believe that it is essential that we provide that $400 in
relief to the American people just as quickly as we can. We know, as
the gentleman from Wisconsin (Mr. Sensenbrenner) has said, and I
congratulate the gentleman for all of the effort that he has put into
this, that we for years and years and years have been going through the
amendment process. We have had a wide range of concerns brought to the
forefront, and we have been able to address them. I believe that we are
doing the right thing by moving ahead with this measure.
Mr. Speaker, any Member who votes no on this rule is voting against
bankruptcy reform. They are voting against bankruptcy reform. Why?
Because it is true 35 amendments were submitted to us in the Committee
on Rules. We made it very clear that one of the things that we offered
when we came to majority status was the chance to give the minority an
opportunity to offer a substitute. The gentleman from Wisconsin
(Chairman Sensenbrenner) came before the Committee on Rules and made it
very clear to us. He requested a closed or a modified closed rule.
Let me say, a modified closed rule means that the minority is offered
a chance at providing a substitute, cobbling together a package that in
fact is an alternative to the measure that we have brought forward.
The minority had an opportunity to do that. What did they choose to
do? Members of the minority did not come forward with a substitute.
They chose to offer what I describe as cut-and-bite amendments, going
through these issues and amending and amending and amending.
Mr. Speaker, we would have made in order a substitute had they given
it to us.
Mr. SENSENBRENNER. Mr. Speaker, will the gentleman yield?
Mr. DREIER. I yield to the gentleman from Wisconsin.
Mr. SENSENBRENNER. Mr. Speaker, I recall yesterday when the death tax
repeal was on the floor. It was a similar rule, and the minority was
offered a chance to offer a substitute. They offered a substitute which
was voted on and debated in the House of Representatives. But that rule
passed by voice vote. So the rule under which we considered the death
tax repeal yesterday is the same type of rule that we are considering
today, except that the minority on this bill decided not to offer a
constructive alternative substitute.
Mr. DREIER. Mr. Speaker, reclaiming my time, the chairman of the
Committee on the Judiciary is absolutely right. We reported out a
modified closed rule that provided the gentleman from North Dakota (Mr.
Pomeroy) an opportunity to not only offer his substitute, but he could
have offered a motion to recommit. So two bites at the apple. The exact
same opportunity existed on this bill which has gone through Congress
after Congress with an excess of 300 votes in the past.
We said a substitute would have been made in order if it had been
submitted to us in the Committee on Rules.
Mr. DELAHUNT. Mr. Speaker, will the gentleman yield?
Mr. DREIER. I yield to the gentleman from Massachusetts.
Mr. DELAHUNT. Mr. Speaker, the gentleman made a statement, if I
understand correctly, that passage of this proposal before us today
would translate into a savings of $400 for each family in America.
Mr. DREIER. Mr. Speaker, that is absolutely right. If you look at the
cost that exists today because of abuse of bankruptcy law, the abusive
filings of bankruptcy, there is, on average, for a family of four of
$400 per year.
{time} 1115
Mr. DELAHUNT. If the gentleman will yield further, the $400 would
actually go back to the American family? Is that what the chairman is
suggesting?
Mr. DREIER. If I could reclaim my time, what I am suggesting is that
because of abuse of bankruptcy filings that take place today, that is a
cost that is imposed on American consumers to the average family of
four of in excess of $400.
That is the reason it is absolutely essential, Mr. Speaker, that we
pass this legislation.
Mr. DELAHUNT. Will the gentleman yield further?
Mr. DREIER. I have yielded three times. If I could finish my
statement, I would like to. We have other people who would like to
participate. I know that my dear friend from Florida (Mr. Hastings)
will be more than happy to yield further time to the gentleman from
Massachusetts.
Mr. Speaker, we have been waiting for years and years and years to
get to the point where we could get a measure to the desk of the
President of the United States so that he can sign it, so that we can
deal with this issue and finally bring about responsible reform of our
bankruptcy law.
We happen to believe very passionately that people should be
accountable for their actions. We do not want anyone to be deprived of
access to file for bankruptcy, but we know full well that this has been
abused for such a long period of time. That is why we are here today
and that is why I am convinced, Mr. Speaker, that even though we will
see opposition to this rule, at the end of the day, we will see very
strong bipartisan support to reform our bankruptcy law.
Mr. HASTINGS of Florida. Mr. Speaker, I am pleased to yield 2 minutes
to my good friend, the gentlewoman from Texas (Ms. Jackson-Lee).
Ms. JACKSON-LEE of Texas. Mr. Speaker, with that generous yielding, I
would like to yield to the distinguished gentleman from Virginia (Mr.
Scott).
Mr. SCOTT of Virginia. I would like to respond very quickly. If
medical expenses wipe you out and you cannot pay them, under this bill
you cannot get into chapter 7 if you can pay $166 a month on your
bills, however much they are. There could be hundreds of thousands of
dollars that you could never pay.
Ms. JACKSON-LEE of Texas. I thank the distinguished gentleman.
Mr. Speaker, I rise today to answer my good friend, the chairman of
the Committee on Rules, to simply say the reason why a substitute was
not offered is because the bankruptcy code as it now stands addresses
the needs of the American people. It is interesting that the
Republicans want to tell us what kind of amendment to offer when we had
35 amendments that would have protected the American people.
Mr. Speaker, I am outraged because the bankruptcy bill stabs the
American people in the back. The reason why I say that is because we
have a bankruptcy code that allows for the discretion of the judiciary
in the bankruptcy courts to be able to determine whether your case is
frivolous.
[[Page H1981]]
But now we have put in place what we call a means test which
indicates that hardworking American families, middle-class families who
have faced catastrophic illnesses, divorce, loss of job in this
horrible economy, these individuals will be barred from entering the
bankruptcy court because they do not meet the IRS guidelines. Who wants
to meet the IRS guidelines? We already know what the Internal Revenue
Service will do to you. All we wanted to do is to give more leeway.
If you listen to Professor Elizabeth Warren of Harvard University,
she will tell you that the time for the bankruptcy bill has long
passed. It is an 8-year-old bill that was written more than 8 years
ago. Now we find that more consumer bankruptcies have declined. There
are less consumer bankruptcies. But if you look at what the President
is going to do with Social Security and take so much money out of our
economy and break the American people, you are going to see an upsurge.
But what you are going to see is the American people, because of this
bankruptcy bill, losing their house, pulling their children out of
school, not being able to make ends meet. It is an outrage. This rule
should be defeated because the American people are being stabbed in the
back. It is a disgrace.
I ask for a ``no'' vote on the rule.
Mr. GINGREY. Mr. Speaker, I yield myself such time as I may consume.
In response to the gentlewoman from Texas, Mr. Speaker, a substitute
amendment was offered in every other Congress that bankruptcy reform
was considered. Every other Congress in which bankruptcy reform was
considered, the minority submitted a substitute amendment. Why not now?
I have asked that question several times, and I still have no answer.
In regard to health care expenses, and I am reading from a March 29,
2005, CRS report for Congress titled ``Treatment of Health Care
Expenses under the Bankruptcy Abuse Prevention and Consumer Protection
Act'':
``Conclusion. Health care expenses will generally be considered in
one of two contexts in a bankruptcy filing. Significant expenses
incurred prior to the bankruptcy filing may be calculated as unsecured
claims; if the debtor cannot afford to pay 25 percent of unsecured
claims or $100 a month, the debtor may be eligible to file under
chapter 7.
``Ongoing health care expenses and health insurance premiums may be
deducted from the debtor's monthly income. Factoring in these expenses
may also reduce the debtor's disposable income under the means test.''
Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I yield 2 minutes to my good
friend, the gentlewoman from California (Ms. Waters).
Ms. WATERS. Mr. Speaker, I rise in strong opposition to this unfair,
undemocratic closed rule and to the underlying bankruptcy bill. This
lopsided bill will make it harder for families and seniors with debt
problems arising from high medical expenses, job loss, divorce, or
other financial hardships to address their problems while doing nothing
to rein in the credit card companies whose practices have led to much
of the rise in bankruptcies.
S. 256 presumes that bankruptcy filers are simply bankruptcy abusers
looking to game the system and avoid paying their bills, ignoring the
clear evidence that the overwhelming majority of people in bankruptcy
are in financial distress because of job loss, medical expense,
divorce, or a combination of these causes.
Mr. Speaker, an important and controversial bill like the bankruptcy
bill deserves a real debate. Members deserve the opportunity to
consider a wide range of amendments. For the Republican leadership and
the Republican members of the Committee on Rules to propose that we
consider a bill that is tilted toward the credit card companies and as
complex as this bill is without giving Members any opportunity to amend
it on the floor with only 30 minutes per side for general debate is a
travesty and a gross abuse of power.
When this bill was in the Committee on the Judiciary, we had a
pseudo-markup that lasted all day and was a complete embarrassment and
a waste of time for all of the members, for the Republicans would not
even consider one amendment, no matter how meritorious or beneficial to
the American people, even if the amendment addressed issues not
previously considered because of the Republican leadership's insistence
on reporting out a clean bill in order to avoid a conference committee.
As a result, important, thoughtful amendments on such subjects as
protection on domestic violence victims from eviction, disabled
veterans, alimony and child support, exemptions for medical emergencies
and job loss, underage credit card lending, and a homestead exemption
for seniors, predatory lending and payday loans all were rejected by
the Committee on the Judiciary.
Shame on you Republicans.
Mr. GINGREY. Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I am pleased to yield 1 minute
to my friend, the gentlewoman from California (Ms. Lee).
Ms. LEE. I thank the gentleman for yielding me this time and for his
leadership.
Mr. Speaker, I rise in opposition to this rule and to this morally
bankrupt bill that puts corporate greed over fairness for ordinary
folks. This bill takes the phrase ``kick them when they are down'' to a
whole new level. What about the fact that half of the people who file
for bankruptcy protection are forced to do so because of high medical
costs, loss of a job, or scam loan sharks? This bill would say to these
people, the answer is, of course, too bad.
Make no mistake, Mr. Speaker, this bill is a big-time corporate
payoff that was drafted with one overriding goal in mind, that is,
profits, profits, profits.
I am all for curbing abuses in bankruptcy and would suggest that we
start by closing bankruptcy loopholes for millionaires and taking steps
to address predatory lending and payday loans rather than a one-sided,
harsh industry payoff. This bill should include real solutions to
address the really hard problems fueling the financial difficulties so
many in this Nation are facing. We should focus on the true abusers and
not the working families that have played by the rules.
Mr. Speaker, we need to have a bankruptcy bill that addresses the
real abusers. This is a morally bankrupt bill.
Mr. GINGREY. Mr. Speaker, I yield myself 1 minute.
The gentlewoman from California brought up the issue about bankruptcy
reform harming veterans. In speaking to that, Senate 256 needs-based
test includes several safeguards and exceptions for special
circumstances, including those of veterans: a specific reference to a
debtor who is subject to a call or ordered to active duty in the Armed
Forces to the extent that such occurrences substantiate special
circumstances.
S. 256 means test has a special exception just for debtors who are
disabled veterans if the indebtedness occurred primarily during a
period when the debtor was on active duty or performing a homeland
security activity. The bill excuses a debtor if he or she is on active
military duty in a military combat zone from the mandatory credit
counseling and financial management training requirements.
I could go on and on, Mr. Speaker; but we are addressing, as we
always have on this side of the aisle, the special needs of our great
veterans of this country.
Mr. HASTINGS of Florida. Mr. Speaker, I am pleased to yield 2 minutes
to my good friend, the gentlewoman from New York (Mrs. Maloney).
(Mrs. MALONEY asked and was given permission to revise and extend her
remarks.)
Mrs. MALONEY. Mr. Speaker, I rise in opposition to this rule. There
is much that should be law in this bill; but as written, it should not
pass. If this bill becomes law, children will have to compete for the
first time with credit card companies in State court for the limited
assets of debtors emerging from the bankruptcy process.
I believe that there are many good parts of this bill; but as a
mother I came to Congress to protect the rights of children, not to
make their interests second to those of credit card companies. Congress
has always insisted that debtors should take care of their children
before their credit cards, and we
[[Page H1982]]
should not undermine this important family value.
I am a strong supporter of the netting provisions of the bill. These
provisions provide for the orderly unwinding of complex financial
transactions when one participant becomes insolvent. Alan Greenspan has
said these provisions reduce uncertainty for market participants and
reduce risk by making it less likely that the default of one financial
institution would have a domino effect on others. I support this; and
as a New Yorker, I am really concerned that these provisions go into
effect to protect the financial sector in the event of another
terrorist attack. And I agree we need to build savings.
But these positive aspects of the bill are outweighed by an
unacceptable feature that the majority has refused to address, the fact
that the bill pits child support claimants against credit card
companies in State court for the assets that the debtor has when she or
he goes into bankruptcy. In other words, kids will lose.
I offered an amendment to address this, but the Committee on Rules
did not make it in order. They did not make other important amendments
that would protect victims of medical catastrophes, of identity theft
and many others. This is very, very important. The sponsors say that
they take care of this, but none of their steps address the new threat
created by the bill to protect children from having to fight credit
card companies in State court. We have never done this before. We
should not leave this as a legacy of this Congress. We can get this
right. We should have put children first. We must vote against this
rule and the bill.
Mr. GINGREY. Mr. Speaker, I yield myself 1 minute.
In response to the gentlewoman, I have got a letter from the National
Child Support Enforcement Association, February 8, 2005, that I will
insert for printing in the Record.
Let me just read one paragraph, the first and most important:
``The National Child Support Enforcement Association is a membership
organization representing the child support community--a workforce of
over 63,000 child support professionals. For the past 5 years, it has
strongly supported the enactment of bankruptcy reform because the
treatment of child support and alimony under present bankruptcy law so
desperately needs reform. We applaud your continuing efforts since the
mid-1990s to reform the bankruptcy system and welcome your introduction
of S. 256. The bankruptcy bill, S. 256, like the reform bills of the
last three Congresses and the signed conference report of 2002,
includes provisions crucial to the collection of child support during
bankruptcy.''
National Child Support
Enforcement Association,
Washington, DC, Feb. 8, 2005.
Re: Child Support Provisions in S. 256
Hon. Chuck Grassley,
Hart Senate Office Building,
Washington, DC.
Dear Senator Grassley: The National Child Support
Enforcement Association is the membership organization
representing the child support community--a workforce of over
63,000 child support professionals. For the past 5 years it
has strongly supported the enactment of bankruptcy reform
because the treatment of child support and alimony under
present bankruptcy law so desperately needs reform. We
applaud your continuing efforts since the mid 1990s to reform
the bankruptcy system and welcome your introduction of S.
256. The Bankruptcy Bill, S. 256, like the reform bills of
the last three Congresses and the signed conference report of
2002, includes provisions crucial to the collection of child
support during bankruptcy.
With each day that passes under current law, countless
numbers of children of bankruptcy debtors are subject to
immediate interruption of their on-going support payments. In
addition, during the lengthy 3 to 5 years duration of
consumer bankruptcies as they happen every day under present
law, debtors often succeed in significantly delaying or even
avoiding repayment of child support and alimony arrearages
altogether. Hardest hit by these effects of current
bankruptcy law are former recipients of welfare who are owed
support arrears but are stuck waiting until the bankruptcy is
completed before such debts can be collected. Families who
are dependent on obtaining their share of marital property
for survival may now find under present bankruptcy law that
such debts are discharged. And, worst of all, under present
law significant collection tools used to require the payment
of current child support needed by the custodial parent to
feed and clothe children may be rendered ineffective after a
bankruptcy petition is filed. Today, a bankruptcy filing may
delay or halt the collection of support debts through the
federally mandated earnings withholding and tax refund
intercept programs, the license and passport revocation
procedures, and the credit reporting mandates.
S. 256 would provide these children with first priority in
the collection of support debts, allow the enforcement of
medical support obligations, prevent any interruption in the
otherwise efficient process of withholding earnings for
payment of child support, and insure that during the course
of a consumer bankruptcy all support owed to the family would
be paid, and paid timely. It will allow state court actions
involving custody and visitation, dissolution of marriage,
and domestic violence to proceed without interference from
bankruptcy court litigation.
We, therefore, urge the members of the Conference Committee
and the leadership of Congress to enact this important piece
of legislation with its long overdue bankruptcy reforms.
Sincerely,
Margot Bean,
President. National Child Support Enforcement Association
{time} 1130
Mr. GINGREY. Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I yield 5 seconds to the
gentlewoman from New York (Mrs. Maloney) for the purpose of making a
unanimous consent request.
Mrs. MALONEY. Mr. Speaker, I request permission to place in the
Record, in response to this statement, statements by Bar Associations
across this country, women's organizations, women's legal defense,
asserting what I have said that children are put second to credit card
companies.
The material referred to is as follows:
National Women's Law Center,
Washington, DC, March 14, 2005.
Re: Oppose H.R. 685, The Bankruptcy Act of 2005
Hon. John Conyers, Jr.,
House of Representatives,
Washington, DC.
Dear Congressman Conyers: The National Women's Law Center
is writing to urge you to oppose H.R. 685, a bankruptcy bill
that is harsh on economically vulnerable women and their
families, but that fails to address serious abuses of the
bankruptcy system by perpetrators of violence against
patients and health care professionals at women's health care
clinics.
This bill would inflict additional hardship on over one
million economically vulnerable women and families who are
affected by the bankruptcy system each year: those forced
into bankruptcy because of job loss, medical emergency, or
family breakup--factors which account for nine out of ten
filings--and women who are owed child or spousal support by
men who file for bankruptcy. Contrary to the claims of some
proponents of the bill, low- and moderate-income filers--who
are disproportionately women--are not protected from most of
its harsh provisions, and mothers owed child or spousal
support are not protected from increased competition from
credit card companies and other commercial creditors during
and after bankruptcy that will make it harder for them to
collect support.
The bill would make it more difficult for women facing
financial crises to regain their economic stability through
the bankruptcy process. H.R. 685 would make it harder for
women to access the bankruptcy system, because the means test
requires additional paperwork of even the poorest filers;
harder for women to save their homes, cars, and essential
household items through the bankruptcy process; and harder
for women to meet their children's needs after bankruptcy
because many more debts would survive.
The bill also would put women owed child or spousal support
who are bankruptcy creditors at a disadvantage. By increasing
the rights of many other creditors, including credit card
companies, finance companies, auto lenders and others, the
bill would set up an intensified competition for scarce
resources between mothers and children owed support and these
commercial creditors during and after bankruptcy. The
domestic support provisions in the bill may have been
intended to protect the interests of mothers and children;
unfortunately, they fail to do so.
Moving child support to first priority among unsecured
creditors in Chapter 7 sounds good, but is virtually
meaningless; even today, with no means test limiting access
to Chapter 7, fewer than four percent of Chapter 7 debtors
have anything to distribute to unsecured creditors. In
Chapter 13, the bill would require that larger payments be
made to many commercial creditors; as a result, payments of
past-due child support would have to be made in smaller
amounts and over a longer period of time, increasing the risk
that child support debts will not be paid in full. And, when
the bankruptcy process is over, women and children owed
support would face increased competition from commercial
creditors. Under current law, child and spousal support are
among the few debts that survive bankruptcy; under this bill,
[[Page H1983]]
many additional debts would survive. But once the bankruptcy
process is over, the priorities that apply during bankruptcy
have no meaning or effect. Women and children owed support
would be in direct competition with the sophisticated
collection departments of commercial creditors whose
surviving claims would be increased.
At the same time, the bill fails to address real abuses of
the bankruptcy system. Perpetrators of violence against
patients and health care professionals at women's health
clinics have engaged in concerted efforts to use the
bankruptcy system to evade responsibility for their illegal
actions. This bill does nothing to curb this abuse.
The bill is profoundly unfair and unbalanced. Unless there
are major changes to H.R. 685, we urge you to oppose it.
Very truly yours,
Nancy Duff Campbell,
Co-President.
Marcia Greenberger,
Co-President.
Joan Entmacher,
Vice President and Director, Family Economic Security.
____
Legal Momentum,
Washington, DC, February 28, 2005.
Dear Senator: Legal Momentum is writing to you today to
urge you to oppose S. 256, the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005. Legal Momentum is a
leading national not-for-profit civil rights organization
with a long history of advocating for women's rights and
promoting gender equality. Among our major goals is securing
economic justice for all. In this regard we have worked to
end poverty; improve welfare reform; create affordable,
quality childcare and guarantee workplace protections for
survivors of domestic violence. The bankruptcy system is
another crucial safety net for women, and Legal Momentum is
concerned that the changes to the bankruptcy system proposed
in S. 256 would be harmful to the economic security of women
and families. In addition, the legislation fails to hold
perpetrators of violence against workers and patients of
women's health care clinics accountable for their actions.
The large majority of women who file for bankruptcy do so
because of unemployment, medical bills, divorce, or because
they are owed child support by men who file for bankruptcy.
And because women are more likely to be caring for dependent
children or parents and have lower incomes and fewer assets
than men, they are more likely to seek bankruptcy as a result
of a divorce or a medical problem. In 2001, women represented
39% of households filing for bankruptcy, while men filing
independently represented only 29%. Married couples
represented 32%. Single mothers are the group most at risk
for bankruptcy--in the last 20 years, bankruptcy filings for
female-headed households have increased at more than double
the rate of bankruptcies in other households. This
legislation will make it more difficult for women already
struggling to achieve economic independence to access the
bankruptcy system. The proposed means test will make filing
for bankruptcy more complex, it will be more difficult to
keep homes and cars from being repossessed, and even if a
bankruptcy is successfully filed, more debts will main.
Even the child support provisions in the legislation will
not help women and children. If the parent who owes child
support is the debtor, the bill will divert more money to
other creditors and allow more non-child support debts to
survive bankruptcy. As a result, the custodial parent,
usually the mother, will have to compete with other
creditors, including credit card companies, for the debtor's
limited income.
Legal Momentum is concerned that, unlike in the conference
report of last year's bankruptcy legislation, S. 256 does not
include a provision to prevent perpetrators of clinic
violence from declaring bankruptcy to avoid responsibility
for their actions against patients and health care providers.
Please include language that would insure that these
perpetrators of violence cannot use the bankruptcy system to
protect themselves. The pocketbooks of violent offenders are
protected, while hardworking women struggling to make ends
meet and feed their families are denied access to a system
that could help and provide them with hope for the future.
Legal Momentum believes that if S. 256 is enacted, the
economic effects on more than 1.2 million women each year
will be devastating, and we strongly urge you to oppose the
legislation. If you have any questions, please contact Legal
Momentum's Policy Office at 202/326-0044.
Sincerely
Lisalyn R. Jacobs,
Vice President for Government Relations.
____
Leadership Conference
on Civil Rights,
Washington, DC, March 14, 2005.
Oppose Unfair Bankruptcy ``Reform''
Dear Representative: On behalf of the Leadership Conference
on Civil Rights (LCCR), the nation's oldest, largest, and
most diverse civil rights coalition, we write to express our
strong opposition to the ``Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005'' (H.R. 685). We urge you to
oppose H.R. 685 because it poses significant concerns for the
economic self-sufficiency of all working people in the United
States and will cause substantial financial inequities in the
process.
The issue of bankruptcy reform is of profound concern to
LCCR because, as a general matter, disadvantaged groups in
our society disproportionately find themselves in bankruptcy
courts as a result of economic discrimination in its many
forms. For example:
Divorced women are 300 percent more likely than single or
married women to find themselves in bankruptcy court
following the cumulative effects of lower wages, reduced
access to health insurance, the devastating consequences of
divorce, and the disproportionate financial strain of rearing
children alone;
Since 1991, the number of older Americans filing for
bankruptcy has grown by more than 120 percent. This age group
tends to file after being pushed out of jobs and encountering
discrimination in hiring, which could result in loss of
health insurance, or victimization by credit scams or home
improvement frauds that put their homes and security at risk,
and;
African American and Hispanic American homeowners are 500
percent more likely than white homeowners to find themselves
in bankruptcy court largely due to discrimination in home
mortgage lending and housing purchases, and to inequalities
in hiring opportunities, wages, and health insurance
coverage.
H.R. 685 proposes a number of changes in current bankruptcy
law, and supporters claim that enactment is thereby necessary
to stop abuse of bankruptcy laws. Yet a majority of those who
file are working families who are not abusing the system;
instead, they have experienced financial catastrophe. H.R.
685 would make starting over virtually impossible.
In addition, hundreds of thousands of women and children
who are owed child support or alimony would be harmed under
H.R. 685, as it forces them to compete with credit card
issuers and therefore would make it less likely that support
payments will be made to those in need. H.R. 685 will also
make it much more difficult for businesses to reorganize,
thereby forcing them into bankruptcy and eliminating much
needed jobs.
H.R. 685 also fails to address one of the key reasons that
bankruptcy filings have increased in recent years--a reason
that is the willful doing of many of the financial
institutions that are lobbying in support of the bill--the
aggressive marketing of credit cards to our most financially
vulnerable citizens, such as women, students, seniors, and
the working poor. According to a recent article in the
Washington Post, credit card companies continue to offer
credit in record amounts, in an aggressive campaign to saddle
more Americans with debts. (Kathleen Day, Tighter Bankruptcy
Law Favored, Washington Post, February 11, 2005 at A-05). Yet
these same companies have steadfastly resisted even the most
modest reforms to help consumers avoid placing themselves in
financial jeopardy in the first place, such as requiring
clearer disclosure about late payment fees, interest rates,
and minimum payments.
LCCR has opposed bankruptcy reform proposals similar to
H.R. 685 every year since 1998. Sadly, bankruptcy reform
proponents are now pushing legislation that is every bit as
flawed as previous legislation and, given today's slow
economy, would lead to even more inequitable results. We
strongly urge you to reject H.R. 685 because it would
radically alter the bankruptcy system in a way that imposes
hardships particularly on the most vulnerable among us.
Thank you for your consideration. If you have any
questions, please feel free to contact Rob Randhava, LCCR
Counsel, at (202) 466-6058.
Sincerely,
Wade Henderson,
Executive Director.
Nancy Zirkin,
Deputy Director.
____
Written Statement of Marshall Wolf, May 13, 1998, on Behalf of the
Governing Council of the Family Law Section of the American Bar
Association
* * * earlier version of this legislation concluded that
``child support and credit card obligations could be `pitted
against' one another. . . . Both the domestic creditor and
the commercial credit card creditor could pursue the debtor
and attempt to collect from post-petition assets, but not in
the bankruptcy court.''
Outside of the bankruptcy court is precisely the arena
where sophisticated credit card companies have the greatest
advantages. While federal bankruptcy court enforces a strict
set of priority and payment rules generally seeking to
provide equal treatment of creditors with similar legal
rights, state law collection is far more akin to ``survival
of the fittest.'' Whichever creditor engages in the most
aggressive tactic--be it through repeated collection demands
and letters, cutting off access to future credit, garnishment
of wages or foreclose on assets--is most likely to be repaid.
As Marshall Wolf has written on behalf of the Governing
Counsel of the Family Law Section of the American Bar
Association, ``if credit card debt is added to the current
list of items that are now not dischargeable after a
bankruptcy of a support payer, the alimony and child support
recipient will be forced to compete with the well organized,
well financed, and obscenely profitable credit card companies
to receive payments from the limited income of the poor guy
who just went through a bankruptcy. It is not a fair fight
and it is one that women and children who rely on support
will lose.''
[[Page H1984]]
It is for these reasons that groups concerned with the
payment of alimony and child support have expressed their
strong opposition to the bill and its predecessors. Professor
Karen Gross of New York Law School stated succinctly that
``the proposed legislation does not live up to its billing;
it fails to protect women and children adequately.'' Joan
Entmacher, on behalf of the National Women's Law Center,
testified that ``the child support provisions of the bill
fail to ensure that the increased rights the bill would give
to commercial creditors do not come at the expense of
families owed support.''
Assertions by the legislation's supporters that any
disadvantages to women and children under S. 256 are offset
by supposedly pro-child support provisions are not
persuasive. It is useful to recall the context in which these
provisions were added. In the 105th Congress, the bill's
proponents adamantly denied that the bill created any
problems with regard to alimony and child support. Although
the proponents have now changed course, the child support and
alimony provisions included do not respond to the provisions
in the bill causing the problem--namely the provisions
limiting the ability of struggling, single mothers to file
for bankruptcy; enhancing the bankruptcy and post-bankruptcy
status of credit card debt; and making it more difficult for
debtors * * *
____
March 11, 2005.
Re The Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005 (H.R. 685/S. 256).
Hon. F. James Sensenbrenner,
Chairman, Committee on the Judiciary, House of
Representatives, Rayburn House Office Building,
Washington, DC.
Hon. John Conyers, Jr.,
Ranking Democratic Member, Committee on the Judiciary, House
of Representatives, Rayburn House Office Building,
Washington, DC.
We are professors of bankruptcy and commercial law. We are
writing with regard to The Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 (H.R. 685/S. 256)(the
``bill''). We have been following the bankruptcy reform
process for the last eight years with keen interest. The 110
undersigned professors come from every region of the country
and from all major political parties. We are not members of a
partisan, organized group. Our exclusive interest is to seek
the enactment of a fair, just and efficient bankruptcy law.
Many of us have written before to express our concerns about
earlier versions of this legislation, and we write again as
yet another version of the bill comes before you. The bill is
deeply flawed, and will harm small businesses, the elderly,
and families with children. We hope the House of
Representatives will not act on it.
It is a stark fact that the bankruptcy filing rate has
slightly more than doubled during the last decade, and that
last year approximately 1.6 million households filed for
bankruptcy. The bill's sponsors view this increase as a
product of abuse of bankruptcy by people who would otherwise
be in a position to pay their debts. Bankruptcy, the bill's
sponsor says, has become a system ``where deadbeats can get
out of paying their debt scott-free while honest Americans
who play by the rules have to foot the bill.''
We disagree. The bankruptcy filing rate is a symptom. It is
not the disease. Some people do abuse the bankruptcy system,
but the overwhelming majority of people in bankruptcy are in
financial distress as a result of job loss, medical expense,
divorce, or a combination of those causes. In our view, the
fundamental change over the last ten years has been the way
that credit is marketed to consumers. Credit card lenders
have become more aggressive in marketing their products, and
a large, very profitable, market has emerged in subprime
lending. Increased risk is part of the business model.
Therefore, it should not come as a surprise that as credit is
extended to riskier and riskier borrowers, a greater number
default when faced with a financial reversal. Nonetheless,
consumer lending remains highly profitable, even under
current law.
The ability to file for bankruptcy and to receive a fresh
start provides crucial aid to families overwhelmed by
financial problems. Through the use of a cumbersome, and
procrustean means-test, along with dozens of other measures
aimed at ``abuse prevention,'' this bill seeks to shoot a
mosquito with a shotgun. By focusing on the opportunistic use
of the bankruptcy system by relatively few ``deadbeats''
rather than fashioning a tailored remedy, this bill would
cripple an already overburdened system.
1. The Means-test: The principal mechanism aimed at the
bankruptcy filing rate is the so called ``meanstest,'' which
denies access to Chapter 7 (liquidation) bankruptcy to those
debtors who are deemed ``able'' to repay their debts. The
bill's sponsor describes the test as a ``flexible . . . test
to assess an individual's ability to repay his debts,'' and
as a remedy to ``irresponsible consumerism and lax bankruptcy
law.'' While the stated concept is fine--people who can repay
their debts should do so--the particular mechanism proposed
is unnecessary, over-inclusive, painfully inflexible, and
costly in both financial terms and judicial resources.
First, the new law is unnecessary. Existing section 707(b)
already allows a bankruptcy judge, upon her own motion or the
motion of the United States Trustee, to deny a debtor a
discharge in Chapter 7 to prevent a ``substantial abuse.''
Courts have not hesitated to deny discharges where Chapter 7
was being used to preserve a well-to-do lifestyle, and the
United States Trustee's office has already taken it upon
itself to object to discharge when, in its view, the debtor
has the ability to repay a substantial portion of his or her
debts.
Second, the new means-test is over-inclusive. Because it is
based on income and expense standards devised by the Internal
Revenue Service to deal with tax cheats, the principal effect
of the ``means-test'' would be to replace a judicially
supervised, flexible process for ferreting out abusive
filings with a cumbersome, inflexible standard that can be
used by creditors to impose costs on overburdened families,
and deprive them of access to a bankruptcy discharge. Any
time middle-income debtors have $100/month more income than
the IRS would allow a delinquent taxpayer to keep, they must
submit themselves to a 60 month repayment plan. Such a plan
would yield a mere $6000 for creditors over five years, less
costs of government-sponsored administration.
Third, to give just one example of its inflexibility, the
means-test limits private or parochial school tuition
expenses to $1500 per year. According to a study by the
National Center for Educational Statistics, even in 1993,
$1500 would not have covered the average tuition for any
category of parochial school (except Seventh Day Adventists
and Wisconsin Synod Lutherans). Today it would not come close
for any denomination. In order to yield a few dollars for
credit card issuers, this bill would force many struggling
families to take their children from private or parochial
school (often in violation of deeply held religious beliefs)
for three to five years in order to confirm a Chapter 13
plan.
Fourth, the power of creditors to raise the ``abuse'' issue
will significantly increase the number of means-test
hearings. Again, the expense of the hearings will be passed
along to the already strapped debtor. This will add to the
cost of filing for bankruptcy, whether the filing is abusive
or not. It will also swamp bankruptcy courts with lengthy and
unnecessary hearings, driving up costs for the taxpayers.
Finally, the bill takes direct aim at attorneys who handle
consumer bankruptcy cases by making them liable for errors in
the debtor's schedules.
Our problem is not with means-testing per se. Our problem
is with the collateral costs that this particular means-test
would impose. This is not a typical means test, which acts as
a gatekeeper to the system. It would instead burden the
system with needless hearings, deprive debtors of access to
counsel, and arbitrarily deprive families of needed relief.
The human cost of this delay, expense, and exclusion from
bankruptcy relief is considerable. As a recent study of
medical bankruptcies shows, during the two years before
bankruptcy, 45% of the debtors studied had to skip a needed
doctor visit. Over 25% had utilities shut off, and nearly 20%
went without food. If the costs of bankruptcy are higher, the
privations will increase. The vast majority of individuals
and families that file for bankruptcy are honest but
unfortunate. The main effect of the means-test, along with
the other provisions discussed below, will be to deny them
access to a bankruptcy discharge.
2. Other Provisions That Will Deny Access to Bankruptcy
Court: The means-test is not the only provision in the bill
which is designed to limit access to the bankruptcy
discharge. There are many others. For example:
Sections 306 and 309 of the bill (working together) would
eliminate the ability of Chapter 13 debtors to ``strip down''
liens on personal property, in particular their car, to the
value of the collateral. As it is, many Chapter 13 debtors
are unable to complete the schedule of payments provided for
under their plan. These provisions significantly raise the
cash payments that must be made to secured creditors under a
Chapter 13 plan. This will have a whipsaw effect on many
debtors, who, forced into Chapter 13 by the means-test, will
not have the income necessary to confirm a plan under that
Chapter. This group of debtors would be deprived of any
discharge whatsoever, either in Chapter 7 or Chapter 13. In
all cases this will reduce payments to unsecured creditors (a
group which, ironically, includes many of the sponsors of
this legislation).
Section 106 of the bill would require any individual debtor
to receive credit counseling from a credit counseling agency
within 180 days prior to filing for bankruptcy. While credit
counseling sounds benign, recent Senate hearings with regard
to the industry have led Senator Norm Coleman to describe the
credit counseling industry as a network of not for profit
companies linked to for-profit conglomerates. The industry is
plagued with ``consumer complaints about excessive fees,
pressure tactics, nonexistent counseling and education,
promised results that never come about, ruined credit
ratings, poor service, in many cases being left in worse debt
than before they initiated their debt management plan.''
Mandatory credit counseling would place vulnerable debtors at
the mercy of an industry where, according to a recent Senate
investigation, many of the ``counselors'' are seeking to
profit from the misfortune of their customers.
Sections 310 and 314 would significantly reduce the ability
of debtors to discharge credit card debt and would reduce the
scope of the fresh start, for even those debtors who are able
to gain access to bankruptcy.
The cumulative effect of these provisions, and many others
contained in the bill (along
[[Page H1985]]
with the means-test) will be to deprive the victims of
disease, job loss, and divorce of much needed relief.
3. The Elusive Bankruptcy Tax?: The bill's proponents argue
that it is good for consumers because it will reduce the so-
called ``bankruptcy tax.'' In their view, the cost of credit
card defaults is passed along to the rest of those who use
credit cards, in the form of higher interest rates. As the
bill's sponsor dramatically puts it: ``honest Americans who
play by the rules have to foot the bill.'' This argument
seems logical. However, it is not supported by facts. The
average interest rate charged on consumer credit cards has
declined considerably over the last dozen years. More
importantly, between 1992 and 1995, the spread between the
credit card interest rate and the risk free six-month t-bill
rate declined significantly, and remained basically constant
through 2001. At the same time, the profitability of credit
card issuing banks remains at near record levels.
Thus, it would appear that hard evidence of the so-called
``bankruptcy tax'' is difficult to discern. That the
unsupported assertion of that phenomenon should drive
Congress to restrict access to the bankruptcy system, which
effectuates Congress's policies about the balance of rights
of both creditors and debtors, is simply wrong.
4. Who Will Bear the Burden of the Means-test? The
bankruptcy filing rate is not uniform throughout the country.
In Alaska, one in 171.2 households files for bankruptcy. In
Utah the filing rate is one in 36.5. The states with the ten
highest bankruptcy filing rates are (in descending order):
Utah, Tennessee, Georgia, Nevada, Indiana, Alabama, Arkansas,
Ohio, Mississippi, and Idaho. The deepest hardship will be
felt in the heartland, where the filing rates are highest.
The pain will not only be felt by the debtors themselves, but
also by the local merchants, whose customers will not have
the benefit of the fresh start.
The fastest growing group of bankruptcy filers is older
Americans. While individuals over 55 make up only about 15%
of the people filing for bankruptcy, they are the fastest
growing age group in bankruptcy. More than 50% of those 65
and older are driven to bankruptcy by medical debts they
cannot pay. Eighty-five percent of those over 60 cite either
medical or job problems as the reason for bankruptcy. Here
again, abuse is not the issue. The bankruptcy filing rate
reveals holes in the Medicare and Social Security systems, as
seniors and aging members of the baby-boom generation declare
bankruptcy to deal with prescription drug bills, co-pays,
medical supplies, long-term care, and job loss.
Finally, it is crucial to recognize that the filers
themselves are not the only ones to suffer from financial
distress. They often have dependents. As it turns out,
families with children single mothers and fathers, as well as
intact families--are more likely to file for bankruptcy than
families without them. In 2001, approximately 1 in 123 adults
filed for bankruptcy. That same year, 1 in 51 children was a
dependent in a family that had filed for bankruptcy. The
presence of children in a household increases the likelihood
that the head of household will file for bankruptcy by 302%.
Limiting access to Chapter 7 will deprive these children (as
well as their parents) of a fresh start.
Conclusion: The bill contains a number of salutary
provisions, such as the proposed provisions that protect
consumers from predatory lending. Our concern is with the
provisions addressing ``bankruptcy abuse.'' These provisions
are so wrongheaded and flawed that they make the bill as a
whole unsupportable. We urge you to either remove these
provisions or vote against the bill.
Sincerely,
Richard I. Aaron, S.J. Quinney College of Law, University
of Utah.
Peter Alexander, Dean and Professor of Law, Southern
Illinois University--Carbondale School of Law.
Thomas B. Allington, Professor of Law, Indiana University
School of Law--Indianapolis.
Ralph C. Anzivino, Professor of Law, Marquette University
School of Law,
Allan Axelrod, Brennan Professor of Law (emeritus),
Rutgers-Newark Law School.
Douglas G. Baird, Professor of Law, University of Chicago
Law School.
Patrick B. Bauer, Professor of Law, University of Iowa.
Robert J. Bein, Adjunct Professor of Law, The Dickinson
School of Law of the Pennsylvania State University.
Carl S. Bjerre, Associate Professor of Law, University of
Oregon School of Law.
Susan Block-Lieb, Professor of Law, Fordham Law School.
Amelia H. Boss, Professor of Law, Temple University School
of Law.
Kristin Kalsem Brandser, Associate Professor of Law,
University of Cincinnati College of Law.
Jean Braucher, Roger Henderson Professor of Law, University
of Arizona.
Ralph Brubaker, Professor of Law and Mildred Van Voorhis
Jones, Faculty Scholar, University of Illinois College of
Law.
Mark E. Budnitz, Professor of Law, Georgia State University
College of Law.
Daniel Bussel, Professor of Law, UCLA School of Law.
Bryan Camp, Professor of Law, Texas Tech University School
of Law.
Dennis Cichon, Professor of Law, Thomas Cooley Law School.
Donald F. Clifford, Jr., Aubrey Brooks Professor Emeritus,
University of North Carolina School of Law.
Neil B. Cohen, Professor of Law, Brooklyn Law School.
Andrea Coles-Bjerre, Assistant Professor, University of
Oregon School of Law.
Corinne Cooper, Professor Emerita of Law, University of
Missouri, Kansas City.
Marianne B. Culhane, Professor of Law, Creighton Univ.
School of Law.
Susan L. DeJarnatt, Associate Professor of Law, Beasley
School of Law of Temple University.
Paulette J. Delk, Associate Professor, Cecil C. Humphreys
School of Law, The University of Memphis.
A. Mechele Dickerson, 2004-2005 Cabell Research Professor
of Law, William and Mary Law School.
W. David East, Professor of Law, South Texas College of
Law.
Thomas L. Eovaldi, Professor of Law Emeritus, Northwestern
University School of Law.
Mary Jo Eyster, Associate Professor of Clinical Law,
Brooklyn Law School.
Adam Feibelman, Associate Professor, University of North
Carolina.
Paul Ferber, Professor of Law, Vermont Law School.
Jeffrey Ferriell, Professor of Law, Capital University
School of Law.
Larry Garvin, Associate Professor of Law, Michael E. Moritz
College of Law, Ohio State University.
Michael Gerber, Professor of Law, Brooklyn Law School.
S. Elizabeth Gibson, Burton Craige Professor of Law,
University of North Carolina at Chapel Hill.
Marjorie L. Girth, Professor of Law, Georgia State
University College of Law.
Michael M. Greenfield, Walter D. Coles, Professor of Law,
Washington University in St. Louis School of Law.
Karen Gross, Professor of Law, New York Law School.
Steven L. Harris, Professor of Law, Chicago-Kent College of
Law.
John Hennigan, Professor of Law, St. John's University
School of Law.
Henry E. Hildebrand III, Adjunct Professor, Nashville
School of Law.
Margaret Howard, Professor of Law, Washington and Lee
University School of Law.
Sarah Jane Hughes, Professor of Law, Indiana University-
Bloomington School of Law.
Melissa B. Jacoby, Associate Professor of Law, University
of North Carolina at Chapel Hill.
Edward J. Janger, Visiting Professor of Law, University of
Pennsylvania Law School and Professor of Law, Brooklyn Law
School.
Creola Johnson, Associate Professor of Law, Ohio State
Univeristy, Moritz College of Law.
Daniel Keating, Tyrell Williams, Professor of Law,
Washington University in Saint Louis School of Law.
Kenneth C. Kettering, Associate Professor, New York Law
School.
Jason Kilborn, Assistant Professor, Louisiana State
University Law Center.
Don Korobkin, Professor of Law, Rutgers-Camden School of
Law.
Robert M. Lawless, Gordon & Silver, Ltd., Professor of Law,
University of Nevada, Las Vegas, William S. Boyd School of
Law.
Paul Lewis, Professor of Law, The John Marshall Law School.
Jonathan C. Lipson, Visiting Professor of Law, Temple
University and Professor of Law, University of Baltimore.
Lynn M. LoPucki, Security Pacific Bank Professor of Law,
UCLA Law School.
Ann Lousin, Professor of Law, John Marshall Law School.
Stephen J. Lubben, Associate Professor of Law, Seton Hall
University School of Law.
Lois R. Lupica, Professor of Law, University of Maine
School of Law.
Ronald J. Mann, Ben H. & Kitty King Powell Chair in
Business and Commercial Law, University of Texas School of
Law.
Nathalie Martin, Dickason Professor of Law, UNM Mexico
School of Law.
James McGrath, Associate Professor of Law, Appalachian
School of Law.
Stephen McJohn, Professor of Law, Suffolk University Law
School.
Juliet M. Moringiello, Professor of Law, Widener University
School of Law.
Jeffrey W. Morris, Samuel A. McCray Chair in Law,
University of Dayton School of Law.
James P. Nehf, Professor and Cleon H. Foust Fellow, Indiana
University School of Law-Indianapolis, and Visiting
Professor, University of Georgia School of Law.
Spencer Neth, Professor of Law, Case Western Reserve
University.
Gary Neustadter, Professor of Law, Santa Clara University
School of Law.
Scott F. Norberg, Associate Dean for Academic Affairs and
Professor of Law, Florida International University College of
Law.
Richard Nowka, Professor of Law, Louis D. Brandeis School
of Law, University of Louisville.
Rafael I. Pardo, Associate Professor of Law, Tulane Law
School.
Dean Pawlowic, Professor of Law, Texas Tech University
School of Law.
Christopher Peterson, Assistant Professor of Law,
University of Florida Fredric G. Levin College of Law.
Lydie Pierre-Louis, Assistant Professor of Law, Director,
Securities Arbitration Clinic, St. John's University School
of Law.
John A. E. Pottow, Assistant Professor of Law, University
of Michigan Law School.
Lydie Nadia Pierre-Louis, Assistant Professor of Law, St.
John's University School of Law.
[[Page H1986]]
Thomas E. Plank, Joel A. Katz Distinguished Professor of
Law, University of Tennessee College of Law.
Katherine Porter, Visiting Associate Professor of Law,
University of Nevada, Las Vegas William S. Boyd School of
Law.
Theresa J. Pulley Radwan, Associate Dean of Academics,
Stetson University College of Law.
Nancy B. Rapoport, Professor of Law, University of Houston
Law Center.
Robert K. Rasmussen, Milton Underwood Chair in Law, FedEx
Research Professor of Law, Director, Joe C. Davis Law and
Economics Program, Vanderbilt University School of Law.
David Reiss, Assistant Professor, Brooklyn Law School.
Alan N. Resnick, Interim Dean and Benjamin Weintraub,
Professor of Law, Hofstra University School of Law.
R. J. Robertson, Jr., Professor of Law, Southern Illinois
University School of Law.
Arnold S. Rosenberg, Assistant Professor of Law, Thomas
Jefferson School of Law.
Keith A. Rowley, Associate Professor of Law, William S.
Boyd School of Law, University of Nevada Las Vegas.
David Wm. Ruskin, Adjunct Professor of Law, Wayne State
University Law School.
Michael L. Rustad, Thomas F. Lambert Jr., Professor of Law
& Co-Director of Intellectual Property Law Program, Suffolk
University Law School.
Milton R. Schroeder, Professor of Law, Arizona State
University College of Law.
Steven L. Schwarcz, Stanley A. Star, Professor of Law &
Business, Duke University School of Law, Founding Director,
Global Capital Markets Center.
Stephen L. Sepinuck, Professor of Law, Gonzaga University
School of Law.
Charles Shafer, Professor of Law, University of Baltimore.
Paul Shupack, Professor of Law, Benjamin Cardozo School of
Law, Yeshiva University.
Norman I. Silber, Professor of Law, Hofstra University
School of Law.
David Skeel, S. Samuel Arsht, Professor of Corporate Law,
University of Pennsylvania Law School.
Judy Beckner Sloan, Professor of Law, Southwestern
University School of Law.
James C. Smith, Professor of Law, University of Georgia.
Charles Tabb, Associate Dean for Academic Affairs and Alice
Curtis Campbell Professor of Law, University of Illinois
College of Law.
Walter Taggart, Prof. of Law, Villanova University School
of Law.
Bernard Trujillo, Assistant Professor, U. Wisconsin Law
School.
Joan Vogel, Professor of Law, Vermont Law School.
Thomas M. Ward, Professor, University of Maine School of
Law.
G. Ray Warner, Professor of Law & Director, LL.M. in
Bankruptcy, St. John's University School of Law.
Elizabeth Warren, Leo Gottlieb, Professor of Law, Harvard
Law School.
Elaine A. Welle, Professor of Law, University of Wyoming
College of Law.
Jay Lawrence Westbrook, Benno C. Schmidt, Chair of Business
Law, University of Texas School of Law.
Douglas Whaley, Professor Emeritus, Moritz College of Law,
Ohio State University.
Michaela M. White, Professor of Law, Creighton University
School of Law.
Mary Jo Wiggins, Professor of Law, University of San Diego
School of Law.
Lauren E. Willis, Associate Professor of Law, Loyola Law
School--Los Angeles.
William J. Woodward, Jr., Professor of Law, Temple
University School of Law.
John J. Worley, Professor of Law, South Texas College of
Law.
Mary Wynne, Associate Clinical Professor and Director
Indian Legal Clinic, Arizona State University.
The SPEAKER pro tempore (Mr. Sweeney). Is there objection to the
request of the gentlewoman from New York?
Mrs. MALONEY. And this is wrong. Where are the family values in this
Congress?
The SPEAKER pro tempore. The gentlewoman is not under recognition.
Mrs. MALONEY. Is it just rhetoric or do you really care about
children?
Mr. SAM JOHNSON of Texas. I object, Mr. Speaker.
The SPEAKER pro tempore. Objection is heard.
Mr. GINGREY. Mr. Speaker, I reserve the balance of my time.
Parliamentary Inquiries
Mr. HASTINGS of Florida. Parliamentary inquiry, Mr. Speaker. What was
the objection about?
The SPEAKER pro tempore. The objection was regarding the placement of
extraneous material in the Record.
Mr. HASTINGS of Florida. Mr. Speaker, further parliamentary inquiry,
what is the ruling of the Chair?
The SPEAKER pro tempore. The Chair heard objection.
Mr. HASTINGS of Florida. Further parliamentary inquiry, so the
gentlewoman from New York's request to put in the Record the material?
The SPEAKER pro tempore. The material will not be placed in the
Record. Objection was heard.
Mr. HASTINGS of Florida. Mr. Speaker, there is objection to a
Member's placing in the Record, a Member who had made a statement
supporting the things that she asked to be submitted, that is being
denied?
The SPEAKER pro tempore. That is correct.
Mr. NADLER. Parliamentary inquiry, Mr. Speaker. What is the basis for
the objection to a request for insertion into the Record of material?
The SPEAKER pro tempore. It takes unanimous consent to place
extraneous material in the Record. An objection was heard to such a
request; therefore, unanimous consent was not obtained.
Mr. NADLER. Mr. Speaker, is it not customary as a normal matter of
comity in this House to allow all material requested to be placed in
the Record?
The SPEAKER pro tempore. Unanimous consent was sought. It was not
obtained because the gentleman from Texas was on his feet and objected;
therefore, the material does not get inserted in the Record.
Mr. SENSENBRENNER. Parliamentary inquiry, Mr. Speaker. Is the
material asked to be inserted covered under the General Leave that was
requested at the beginning of the debate by the gentleman from Georgia
(Mr. Gingrey)?
The SPEAKER pro tempore. The general leave was for extension of
remarks and not for insertion of extraneous material.
Mr. NADLER. Mr. Speaker, I appeal the ruling of the Chair.
The SPEAKER pro tempore. There has been no ruling. The Chair merely
heard objection.
Ms. WATERS. Mr. Speaker, parliamentary inquiry.
The SPEAKER pro tempore. The gentlewoman from California is
recognized.
Ms. WATERS. Mr. Speaker, does the rule not state that the objection
must be asked for prior to the speaking of the Member? This Member
spoke, and the objection was asked for after the party spoke. My
understanding is it should have been done ahead of time.
What is the correct rule?
The SPEAKER pro tempore. The gentlewoman from New York made a
unanimous consent request, which was heard in total. At the conclusion
of that request, the Chair queried for objection, and the gentleman
from Texas rose and objected. Therefore, unanimous consent was not
obtained.
Ms. WATERS. I am sorry, Mr. Speaker. I think what I observed was she
asked unanimous consent. There was no objection. She proceeded to
speak. She spoke, and the objection was not timely. It was asked for
after she had completed speaking. That is what I saw.
The SPEAKER pro tempore. The gentlewoman from New York was yielded
for the purpose of a unanimous consent request. At the conclusion of
that consent request, objection was made by the gentleman from Texas.
Ms. WATERS. Mr. Speaker, I submit that that was not a timely
objection. It was not timely.
The SPEAKER pro tempore. It was a contemporaneous objection; when the
Chair queried for objection, the gentleman was on his feet. Therefore,
it was timely.
Ms. WATERS. Mr. Speaker, I do not think so. And I would oppose that,
and I would support my colleague, who again would ask that we have a
vote on the ruling by the Chair.
The SPEAKER pro tempore. Does the gentlewoman from California appeal
the ruling of the Chair that the objection was timely?
Ms. WATERS. Yes, Mr. Speaker. Based on my statement, he is now again
appealing the ruling of the Chair based on that it was untimely.
I ask the gentleman from New York (Mr. Nadler) if that is right.
Mr. NADLER. Yes, it is.
The SPEAKER pro tempore. The question is, shall the decision of the
Chair stand as the judgment of the House?
Motion to Table Offered by Mr. Sensenbrenner
Mr. SENSENBRENNER. Mr. Speaker, I move to table the appeal.
The SPEAKER pro tempore. Would the gentleman kindly withhold that
motion.
Mr. SENSENBRENNER. Mr. Speaker, I withdraw for now the motion to
table.
Mr. NADLER. Mr. Speaker, in light of new information, I withdraw the
appeal.
[[Page H1987]]
The SPEAKER pro tempore. Does the gentlewoman from California
withdraw her appeal?
Ms. WATERS. Yes, Mr. Speaker, I withdraw; and I thank the gentleman
on the opposite side of the aisle.
Mr. HASTINGS of Florida. Mr. Speaker, with the Speaker's permission,
I ask unanimous consent that the extraneous material offered by the
gentlewoman from New York (Mrs. Maloney) be made a part of the Record
following her remarks.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Florida?
There was no objection.
Mr. HASTINGS of Florida. Mr. Speaker, I yield 1 minute to the
gentleman from Illinois (Mr. Emanuel).
Mr. EMANUEL. Mr. Speaker, I rise to oppose this legislation.
After 4 years of record deficits and $2 trillion in new debt, one
would think that the Republican majority would have a better
understanding of what bankruptcy is. They are lucky this law does not
apply to their actions in the last 4 years.
Instead, we have a bill that promotes one bankruptcy code for the
wealthy and another for the middle class.
Case in point: The bill preserves the ``Millionaires Loophole,'' used
by the wealthy to hide up to $1 million from creditors and courts into
offshore accounts known as asset protection. Everyone should be subject
to the same law and the same standards, not one set of rules for the
wealthy and one for middle-class families. If one can afford a high-
priced lawyer to set up an asset protection trust, they are a lot
better off in bankruptcy than a middle-class family struggling to pay
off large hospital bills. More than half of all bankruptcies result
from catastrophic medical bills.
Mr. Speaker, rather than deal with the health care crisis or making
college affordable, this legislation protects wealthy deadbeats from
the same standard imposed upon every middle-class American. We should
have one rule, one standard in the law of bankruptcy law that applies
to every American regardless of income and regardless of wealth or
position.
Mr. GINGREY. Mr. Speaker, I yield myself 1 minute.
In response to the gentleman from Illinois, the reform bill
significantly limits two practices that some wealthy filers use to hide
assets from bankrupt creditors. Under the current system, in States
with unlimited homestead exemptions, debtors can shield the full value
of their residencies from creditors. To discourage debtors from
relocating to the State to hide assets prior to a bankruptcy filing,
the legislation requires a 3-year residency before a debtor can take
advantage of the State's full homestead exemption. Currently, that is
91 days.
In addition, the bill adds a specific provision that prevents filers
from shielding funds in an asset protection trust when fraud is
involved. In fact, these practices will continue unabated unless this
legislation is passed.
Mr. Speaker, I reserve the balance of my time.
Mr. HASTINGS of Florida. Mr. Speaker, I yield for the purposes of
making a privileged motion to the gentlewoman from California (Ms.
Woolsey).
____________________