Copyright 2000 The Washington Post
The Washington
Post
October 13, 2000, Friday, Final Edition
SECTION: FINANCIAL; Pg. E03
LENGTH: 694 words
HEADLINE:
House Passes Tougher Debt Rules; Clinton Opposes Bankruptcy Bill
BYLINE: Kathleen Day , Washington Post Staff Writer
BODY:
A bill that would make it harder for
consumers to wipe out debt through bankruptcy was passed by the House yesterday,
drawing an immediate veto threat from President Clinton.
The 420-page
bill, which was passed by voice vote, has been sought by the credit-card
industry but decried by consumer groups as overly harsh to people who have
fallen on hard times because of divorce, emergency medical expenses or job loss.
Senate leaders plan to try to bring it to a vote by the end of next
week. Opponents and supporters say it's likely to pass. The legislation would
then go to the president, who opposes it on several grounds. The White House
said yesterday that Clinton's objections include a provision that would allow
violent demonstrators at abortion clinics to continue to use
bankruptcy law to evade fines and damages, and one that would
allow once-wealthy bankruptcy filers to retain their expensive homes.
Despite what could be speedy approval from Congress, the bill's future
is uncertain. Lawmakers hope to adjourn by the end of next week. That means that
even if they have enough votes to override a presidential veto--which appears
possible--they might not be in session long enough to do so.
The House
and Senate each passed versions of the bill earlier this year. But passage has
been stalled by opponents, who used parliamentary procedures to prevent
lawmakers from meeting in conference committee to reconcile the two versions for
a final vote.
Supporters of the bill fought back yesterday, using
equally complicated parliamentary maneuvering to move a final version with a
swiftness that surprised many.
"Very few people knew what was going on
because it happened so quickly and no one except the Republican leadership knew
what was in the bill," said Travis Plunkett, lobbyist for the Consumer
Federation of America, a nonprofit advocacy group. "They have cut the public out
of the process. They have moved to the brink of passing a bill that appears to
be unbalanced in favor of creditors and harmful to consumers."
Sen.
Charles E. Grassley (R-Iowa), a key backer of the legislation, praised the House
action. "I look forward to Senate passage of this important bill," he said. "It
strikes the balance needed to strengthen the safety net for people who need a
fresh start after a hardship while closing the loopholes exploited by big
spenders to walk away from debts they could repay."
The bill would
create a complex formula for determining how much debt financially troubled
consumers would be required to repay under a court-supervised plan and how much
of their income they could retain each month. It would be harder for many
consumers to wipe out debts completely.
Retailers, banks and credit-card
companies--which have made $ 6 million in political donations in the first six
months of the year--say a new law is needed to plug loopholes that permit
consumers who could pay off some of their debt to get off the hook completely
when they run into trouble.
They point to the rise in bankruptcy
filings--which peaked at 1.4 million in 1998--as evidence of abuse of the system
by consumers.
But consumer groups, several Democrats and the White House
say the credit industry bears a large responsibility for getting Americans over
their heads in debt because of its aggressive marketing techniques. Thus, they
argue, the legislation needs to contain stronger consumer protections.
And some consumer groups question the need for reform at all, precisely
because filings have leveled off.
The bill passed by the House yesterday
does contain one consumer measure that the credit-card industry had fought
earlier this year. It would require credit-card companies to include on billing
statements a chart to show consumers the compounding effect of interest, or to
include a toll-free number where they could obtain that information.
The
charts would show, for example, that a $ 1,000 credit-card balance paid off at a
rate of 2 percent a month and carrying an interest rate of 17 percent would take
88 months, or more than seven years, to pay off.
Staff writer Helen
Dewar contributed to this report.
LOAD-DATE: October
13, 2000 
