LEXIS-NEXIS® Congressional Universe-Document

LEXIS-NEXIS® Congressional

March 16, 1999, Tuesday

SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 757 words

HEADLINE: TESTIMONY March 16, 1999 GEORGE GEKAS REPRESENTATIVE HOUSE JUDICIARY COMMERCIAL AND ADMINISTRATIVE LAW BANKRUPTCY REVISION

BODY:
Congressman George Gekas 2410 Rayburn HOB Washington, DC 20515 Dear Congressman Gekas: NATIONAL RETAIL FEDERATION February 23, 1999 On behalf of the National Retail Federation, the world's largest retail trade association, I am writing to let you know of our strong support of your legislation, the Bankruptcy Reform Act of 1999. This bipartisan legislation, which received 300 votes in the 105th Congress, represents a fair and balanced approach to curtailing abuse in the bankruptcy system. At a time when the U.S. economy is stable and unemployment is low, individuals are filing for bankruptcy in record numbers. Last year, bankruptcy filings set a new record of more than 1.4 million -- representing a nearly 60 percent increase over the past two years and a 400 percent increase since 1980. This tremendous growth in filings resulted in the discharge of more than $40 billion, costing every U.S. household an estimated $500 in higher prices for goods and services each year. As a result of a flaw in the present Bankruptcy Code, individuals are permitted to fully discharge their debts through Chapter 7 even if they have the ability to repay them. Many are doing so. In fact, some studies have revealed that as many as 25% of those individuals who file under Chapter 7 could afford to pay back a significant portion of their debt. However, current law does not require them to pay. The Bankruptcy Reform addresses this fundamental flaw by directing filers to the chapter that best matches their needs. Specifically, your legislation provides complete relief for those consumers who encounter serious financial difficulties. However, the legislation would also ensure that those who blatantly misuse the system to wipe out debts that they can afford to pay would not be allowed to do so. Furthermore, the legislation significantly strengthens current law regarding payment of child support and alimony obligations, and contains provisions to encourage debtors to participate in consumer education and to fully explore alternatives to bankruptcy. By way of background, the National Retail Federation membership includes the leading department. specialty, mass merchandise and independent stores. NRF members represent an industry that encompasses over 1.4 million U. S. retail establishments, employs more than 20 million people, I in 5 American workers, and registered annual sales of nearly $2.5 trillion. NRF commends you for your leadership in reforming our federal bankruptcy laws, and we look forward to working with you in the 106th Congress to enact the Bankruptcy Reform Act of 1999. Sincerely, Steve Pfister Senior Vice President National League of Cities The National League of Cities supports the passage of Rep. George Gekas' Bankruptcy Reform Act of 1999. The bill would lessen the burden that unpaid property taxes have on cities and towns. The tax provisions in the Bankruptcy Reform Act of 1999 would mean that owed funds recovered from property taxes by those filing for bankruptcy would be carried over into local education programs. Many local jurisdictions use revenues derived from property taxes or "ad valorem" taxes for education budget purposes and suffer when taxes are delinquent or never paid due to the current federal bankruptcy code. This bill would aid local governments in recovering losses by giving fair access to assets of bankruptcy estates and will prevent debtors from using the Bankruptcy Code to skirt the law. It is estimated that about 15% of the education budget in the City of Houston, Texas is lost due to personal and corporate bankruptcy filings. In Dallas, six cases of bankruptcy have accounted for $449,593 in lost revenue, according to Jayne Morrell, Tax Assessor / Collector for the City of Dallas, Texas. Virtually every state has experienced a revenue shortfall as a result of the way the federal bankruptcy law is currently written. Florida cities have also has attributed losses to the law, because judges have ordered cities to pay large refunds of property taxes paid years earlier. The tax revisions included in Rep. Gekas' bill are clarifications to the Bankruptcy Code that would assist state and local governments and do NOT make any changes to the Internal Revenue Code. These changes protect taxpayers by giving states and municipalities a more appropriate priority for debt settlement. If local governments do not get relief from loopholes in the bankruptcy code, then local taxes may increase to support the losses attributable to bankruptcy filers.

LOAD-DATE: March 17, 1999