Copyright 2002 Newsday, Inc.
Newsday (New York, NY)
May 28, 2002 Tuesday ALL EDITIONS
SECTION: NEWS, Pg. A06
LENGTH: 1197 words
HEADLINE:
Snag in Bankruptcy Overhaul;
Abortion
rights, child aid at issue
BYLINE: By Elaine S; Povich;
WASHINGTON BUREAU
BODY:
Washington - Just as it
seemed headed for final action, a bill to overhaul the nation's bankruptcy laws
to make it harder to escape debt is now hanging by a thread in Congress in a
clash over two unlikely issues - deadbeat dads and abortion rights.
If
not resolved soon - the situation looks grim though not yet hopeless according
to both sides - the measure and the five years of work and fierce lobbying
already put into the effort could fail to produce the first change in bankruptcy
laws in two decades. Negotiators hope to meet after the Memorial Day recess,
which ends next week.
The bill, long pressed by businesses - especially
large credit card companies - would make it harder for debtors to file for
bankruptcy under the section of the code that allows them to avoid paying debts
after they sell off their assets. Instead, it would require some debtors to pay
$10,000 in debt or a quarter of their bills over five years.
Several women's groups say the measure would place a tough burden on lower and
middle class divorced mothers. It could force divorced mothers seeking child
support payments from bankrupt fathers to compete for a small pool of money with
large credit card companies.
The bill's advocates say it sets up no
unfair competition and point to safeguards to protect divorced mothers from
fathers who seek to hide behind bankruptcy to renege on child support, so-called
deadbeat dads.
Competing House and Senate versions of the bill have
largely been resolved by a joint conference committee, except for at least one
key provision, sponsored by Sen. Charles Schumer (D-N.Y.). It would prevent
abortion clinic demonstrators from declaring
bankruptcy to get out of paying fines imposed for violations of
a separate law that requires protesters not to hamper access into
abortion clinics. Schumer's provision is in the Senate version
of the bankruptcy bill but not the House version. Rep. Henry
Hyde (R-Ill.), Congress' most prominent opponent of abortion, opposes the
provision.
Schumer is equally adamant that he won't drop it.
"Those who blockade are prevented from using the refuge of bankruptcy,"
Schumer said. "The clinic access provision is a vital part of this bill and it's
important to me and if it's not in there, I'm not going to support the bill."
Jennifer Palmer, a spokeswoman for Hyde, said Hyde is "always optimistic
that a compromise can be reached." But Hyde himself last week noted that there
are "blockades and there are blockades" of clinics, suggesting that further
refinement of the language is necessary for any deal to be struck.
Sen.
Joseph Biden (D-Del.), whose state is home to the nation's largest credit card
companies, is working to broker a compromise between the two. He said last week
that he sees some light because the two are getting closer on a possible
compromise. But he conceded there's a long way to go before any deal can be
reached.
Schumer's insistence on the abortion clinic provision could
doom a bill backed by an industry that has strongly supported the New York
senator. Schumer is Congress' top recipient of campaign contributions from
finance and credit companies, according to the Center for Responsive Politics,
which tracks political contributions. He picked up $62,250 in
those contributions in 2001-02, the group said.
Sheila Krumholtz, who
analyzed the contributions and the bankruptcy bill for the
center, noted that abortion rights advocates generally provide
very little support to congressional candidates. "Abortion rights donors' money
is not going to hold a candle to finance," she said.
The finance
industry poured more than $9 million in "soft money," unlimited
and unregulated donations to political parties, over the 1999-2000 election
cycle, with more than two-thirds going to Republicans. Abortion rights groups
gave about $460,000 in campaign contributions in the last
election cycle, mostly to Republicans.
Krumholtz pointed out that the
five-year debate over bankruptcy changes has "kept the money rolling in from an
industry that has money to give."
Schumer and Sen. Hillary Rodham
Clinton (D-N.Y.) both voted for the bankruptcy bill last year when it passed the
Senate, but Clinton said she hasn't decided whether she will support the final
conference agreement. "I want to see what comes out of it, if something comes
out," she said.
One item that Clinton worked hard for in the Senate
increased the amount of credit card debt that could be forgiven when someone
declares bankruptcy from $250 to $700. That,
she said at the time, was to help poor women, who sometimes rack up credit card
debt on food and medicine in the last few months before they are forced to
declare bankruptcy.
The tentative conference agreement puts that figure
at $500. Clinton said she worked very hard with Sen. Orrin
Hatch (R-Utah) on the $700 provision but "I don't think the
conference is respecting that enough."
The bill's other controversial
issue also involves women and whether child support payments become a priority
debt when someone declares bankruptcy. The bill would consider child support as
a first priority for payment, even under bankruptcy, and would bar such support
payments from being forgiven by the bankruptcy filing. Schumer said that should
help divorced parents. But opponents of the bill argue that once a bankruptcy
court proceeding is complete, it becomes more difficult to get child support
from a reluctant parent without going back to court.
"The bill is
terrible," said Rep. Jerrold Nadler (D-Manhattan). "It screws up child support
collections."
"Let's say you owe $2,000 in child
support and you owe $5,000 to a credit card company. Who do you
think is going to be more effective in collecting," he said, "the single mother
or the company?"
He also said the bill is tailored too much toward
credit companies. "This is simply 60 or 70 ways for the banks and credit card
companies to get more money from low- and middle-income people, who, because of
a medical emergency or a divorce or being laid off, are in a terrible
situation," he said.
Credit card companies have spent millions lobbying
on the bill. Most recently, they have taken out ads in Capitol Hill publications
urging Congress to pass the bill to crack down on relatively wealthy people who
use bankruptcy as a dodge to get out of debts. The number of personal
bankruptcies in the nation rose to a record 1.4 million in 1998, prompting
Congress to take another look at the bill that had languished for years.
President George W. Bush also is on record as a supporter of the bill.
Bush's largest single donor in his presidential campaign was MBNA bank, the
nation's leading credit card issuer.
Margo Friedman, co-president of the
National Women's Law Center, said her group opposes the bill partially because
credit card companies are so aggressive in sending cards to almost everyone,
regardless of their ability to pay.
"The kind of squeeze this puts on
women, and particularly low-income women, makes it particularly hard for us to
support," she said.
LOAD-DATE: May 28, 2002
