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Copyright 1999 Federal Document Clearing House, Inc.
Federal Document Clearing House
Congressional Testimony
March 25, 1999, Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 540 words
HEADLINE: TESTIMONY March 25, 1999 RICK BOUCHER REPRESENTATIVE
SENATE BANKING, HOUSING
& URBAN AFFAIRS
BANKRUPTCY REVISION
BODY:
Hearing on
Bankruptcy Reform and Financial Services Issues Prepared Testimony of the Honorable Rick Boucher
(D-VA) Member of Congress 9:30 a.m., Thursday, March 25, 1999 Mr. Chairman and
Senator Sarbanes, thank you for the opportunity to appear before you and
Members of the Senate Committee on Banking, Housing and Urban Affairs. I was
pleased to join with Representative Gekas and my friends and colleagues
Representative Bill McCollum and Rep. Jim Moran in introducing the
"Bankruptcy Reform Act of 1999." This legislation is intended to ensure that our
bankruptcy laws operate fairly, efficiently and free of abuse. Our legislation is
virtually identical to last year's conference report which was the product of
nearly two years of hearings, mark-ups, deliberation and compromise. I am
hopeful that the passage of
bankruptcy reform legislation will be one of the first bipartisan exercises in the 106th
Congress.
In an era where disposable incomes are growing, unemployment rates are low, and
the economy is strong, consumer
bankruptcies should be rare. Contrary to this expectation, in 1998 there were more than 1.4
million
bankruptcies, a 40% increase from 1996 when the number of filings reached 1 million for the
first time.
Bankruptcies of convenience are driving this increase.
Bankruptcy was never meant to be used as a financial planning tool, but it is becoming a
first stop rather than a last resort as many filers who can repay a substantial
portion of what they owe use the complete liquidation provision of Chapter 7
rather than the court supervised repayment plan of Chapter 13.
Our legislation will direct more filers into Chapter 13 plans. This is a
consumer protection measure. The typical American family pays a hidden tax of
$500 each year arising from increased costs of credit and the increases in
prices for goods and services occasioned by the discharge of $50 billion in
consumer debt in
bankruptcy proceedings each year. By requiring that people who can repay a substantial
part of this debt do so in Chapter 13 plans, we will lesson that hidden tax.
Another key point should be made about the provisions of our bill. The alimony
and child support recipient is clearly better off under our bill than under
current law. At the present time, she stands 7th in the rank of priority for
the payment of claims in a
bankruptcy proceeding. She is behind farmers
making claims against grain elevators. She is behind fishermen making claims
against warehouses. Under our bill the child support and alimony recipient
will have priority number one. Her claim will be first in line for payment.
Other provisions also make it easier for her to execute against the assets of
the bankrupt's estate than under current law. Last year, this measure when
considered as a conference report received 300 votes on the floor of the House
reflecting a broad bipartisan agreement that this
reform is necessary. I look forward to working with you Mr. Chairman and the members
of this Committee as well as my House colleagues Mr. Gekas, Mr. McCullom and
Mr. Moran to obtain early approval of our bipartisan
bankruptcy reform legislation. The enactment of this
reform should be one of the early successes of the 106th.
LOAD-DATE: March 29, 1999