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For Immediate Release: Contact: Amy Simmons
March 16, 1999 202-225-7141
LaFalce Calls For Credit Card Reforms in Bankruptcy Legislation
Citing record numbers of credit card solicitations and increasing consumer debt. U.S. Rep. John J. LaFalce today called on the House Judiciary Committee to include credit card reforms in the bankruptcy reform legislation.

"As the Subcommittee considers proposals to restructure our bankruptcy system, it should also examine the practices of some members of the credit card industry that contribute to the escalation of consumer debt," said LaFalce, who is Ranking Member of the Committee on Banking and Financial Services.

"The Subcommittee needs to ask the credit card companies that seek to restrict eligibility for Chapter 7 bankruptcy a number of important and pertinent questions. Why has the industry increased its solicitations among known debtors, students and others that it knows have only a limited ability to repay debt? Why does it continue to send out misleading "teaser rate" promotions that attempt to lure consumers with promises of low interest rates while hiding the permanent interest rate and potential penalties that can readily raise interest rates to 25 percent or more?" said LaFalce.

LaFalce recently introduced his own credit card legislation, H.R. 900, The Consumer Credit Card Protection Amendments of 1999. The bill requires a more complete disclosure of all credit card terms and costs, including "teaser rates." It also bans credit card issuers from canceling an account or imposing new fees on card holders who routinely pay off monthly card balances in full. H.R. 900 also prohibits credit card companies from issuing credit card accounts to people under 21 years old, except with parental approval or evidence of means of payment.

LaFalce told the Senate panel, "H.R. 900 offers common sense actions that can help ease the growing debt burden on American families and reduce the cost of consumer credit. Several of the proposals in H.R. 900 were included in the Senate version of last year's bankruptcy reform legislation. These include new disclosures relating to required minimum monthly payments and a prohibition on penalties on cardholders who pay off their monthly balances on time. These and other credit card reforms should be included as a minimum consumer protection component in this year's bankruptcy legislation. "

The New York Democrat also asked the House Subcommittee as it considers bankruptcy reform legislation to be open to the Banking Committee offering an amendment with credit card reform language, given the critical link between credit cards and rising bankruptcies.

"While experts often cite the loss of a job, divorce, illness, gambling or other factors as principal causes of bankruptcy, interviews with persons who file for bankruptcy often reveal that it is large consumer debt- typically credit card debt- that makes it impossible for consumers to overcome these hardships and avoid bankruptcy," said LaFalce.

Information about H.R. 900 can be found on the Ranking Member's web site at: www.House.Gov/Banking.
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