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The House in Committee of the Whole House on the State of the Union had under consideration the bill (H.R. 833) to amend title II of the United States Code, and for further purposes:

• Mr. KENNEDY. Mr. Chairman, H.R. 833 provides fair and reasonable bankruptcy reform to a system that is badly in need of repair. Chapter 7 of the Bankruptcy Code was established to help honest, debt burdened individuals gain a fresh start. In 1982, when economic times were tough, less than 400,000 individuals used this portion of the Code, which forgives all existing debts.

• Oddly, in today's economy in which real per capita annual disposable income is growing, unemployment rates are low, and the market is strong, Chapter 7 fillings are at a record high with over 1.4 million people asking to be discharged from about $50 billion in debt. Currently it is estimated that over 70% of bankruptcy filers use Chapter 7. Last year, 1.4 million personal bankruptcies were filed, an increase of 94.7 percent over 1990. By contrast business filings have remained steady over the last two decades. As my House colleague Congressman RICK BOUCHER aptly said, ``bankruptcy was never meant to be used as a financial planning tool, but it is becoming a first stop rather than a last resort'' to those who have the ability to pay a portion of their debts, but choose to ignore their responsibilities.

• Clearly, the Congress has a responsibility to address this issue. Our nation simply cannot afford widespread abuse in our bankruptcy system. Consumers pay an estimated $500 dollars per year in additional ``hidden taxes'' by companies trying to make up for the cost of bankruptcy losses. For this reason, I have joined the fight in promoting federal legislation that actively seeks to reform the Code and target those who abuse the system at the expense of others.

• The Bankruptcy Reform Act, which passed yesterday with overwhelming bipartisan support will force those who should file under Chapter 13, and pay a portion of their debt, to meet their responsibilities. It insists that a debtor demonstrate that full bankruptcy relief under Chapter 7 is warranted. Those who do not meet this needs-based test will be subject to a formula based on the debtor's income and obligations. The bill also ensures that debtors know all their financial options before they file bankruptcy. Often, debtors are the prey of entities that push debtors into bankruptcy without an explanation. This initiative will crack down on these practices. The bill also includes a House passed amendment that will require greater disclosure to debtors by credit card companies and other creditors about the types of fees and payments schedules that consumers may incur. By balancing the needs of creditors and debtors, this bill achieves meaningful bankruptcy reform.

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