Tuesday, April 27, 1999

Washington, DC -- Sen. Chuck Grassley today won Judiciary Committee approval for his plan to overhaul the nation's bankruptcy laws, with all committee Republicans and one-half of the committee's Democratic senators voting in favor of the bill.

The bill which Grassley has advanced with Sens. Robert Torricelli of New Jersey, Jeff Sessions of Alabama, and Joe Biden of Delaware would be the first comprehensive reform of the federal bankruptcy code since 1978. The legislation addresses irresponsible consumerism, lax bankruptcy laws and lawyer-run bankruptcy mills. It reflects two years of debate on Capitol Hill on how best to reform the federal code. Sens. Bill Roth of Delaware and Tim Johnson of South Dakota are co-sponsors of the bi-partisan bill.

"The goal of this reform is to close the loopholes that allow debtors who could repay at least some of the money they owe to walk away scot-free. We have worked to achieve a careful balance that ensures a safety net for people who need a fresh start after a hardship, while also making sure that those who work hard to make ends meet don't face continued increases in the price of consumer goods and services that result from the ever-growing number of bankruptcies filed by consumers," Grassley said.

In 1999, it is estimated that the number of bankruptcy filings in the United States will reach a record number of bankruptcies for the fourth consecutive year. Grassley said this trend is alarming, especially since the unemployment is also at record lows. He said there's plenty of blame to go around, including the fact that the stigma of declaring bankruptcy has lessened and that Congress set a bad example with 30 years of deficit spending. Last year, 1.4 million bankruptcies were filed.

During the committee session today, several amendments were adopted to the original measure that was introduced in March. A description of all amendments follows this news release on four pages.

Grassley is chairman of the Judiciary subcommittee with jurisdiction over bankruptcy policy. Torricelli is the subcommittee's top Democratic senator.

A separate bankruptcy reform proposal has been introduced in the House of Representatives by Rep. George Gekas of Pennsylvania. He is chairman of the House subcommittee that considers bankruptcy legislation.