[Page: H9826]---
Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 624 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 624
Resolved, That upon adoption of this resolution it shall be in order to consider the conference report to accompany the bill (H.R. 2415) to enhance security of United States missions and personnel overseas, to authorize appropriations for the Department of State for fiscal year 2000, and for other purposes. All points of order against the conference report and against its consideration are waived. The conference report shall be considered as read.
The SPEAKER pro tempore (Mr. PEASE). The gentleman from Texas (Mr. SESSIONS) is recognized for 1 hour.
Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas (Mr. FROST), pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.
Mr. Speaker, the resolution before us provides for the consideration of H.R. 2415, legislation that will reform our Nation's bankruptcy laws. This rule waives all points of order against the conference report and against its consideration. The rule provides that the conference report may be considered as read.
The underlying legislation is important legislation that fundamentally reforms the existing bankruptcy system into a needs-based system. I am very proud of the tireless efforts of the Members of both the House and the Senate who have worked to reach this bipartisan agreement to ensure that our bankruptcy laws operate fairly, efficiently and free of abuse.
There is a strong support for bankruptcy reform. The House version of this bill passed with more than 300 votes earlier this year. The Senate passed their version with 88 votes. There is a great need for this legislation. A record 1.42 million personal bankruptcy filings were recorded in 1998. This is a stunning increase of 500 percent since 1980. Despite an unprecedented time of economic prosperity, low unemployment and rising disposable income, personal bankruptcies are rising, costing over $40 billion in the past year.
Without serious reform of our bankruptcy law, these trends promise to grow each year costing business and consumers even more in the form of losses and higher costs of credit.
Mr. Speaker, the bankruptcy reform that we will consider is based upon two important tenets: number one, the bankruptcy system should provide the amount of debt relief that an individual needs, no more and no less; and, point two, bankruptcies should be the last resort and financial crisis, not the first resort using it as a financial planning tool.
A record 1.4 million personal bankruptcies were filed in 1998. That is one out of every 75 households in America.
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[Time: 11:45]
That is why it is so important that we pass real bankruptcy reform.
Opponents of this bill have tried to divert the discussion away from the merits of the bill, and to claim that it would make it more difficult for divorced women to obtain child support and alimony payments. However, nothing could be further from the truth. This bankruptcy reform bill protects the financial security of women and children by giving them a higher priority than under the current law.
The legislation closes loopholes that allowed some debtors to use the current system to delay or evade child support and alimony payments. The bill recognizes that no obligation is more important than that of a parent to his or her children.
Currently, child support payments are the seventh priority, behind such things as attorney's fees. Make no mistake, this bankruptcy bill puts women and children first, well ahead and at the top of that list. We should provide greater protection to families who are owed child support, and this bill will do just that.
One important part of this legislation is known as the homestead provision. Protection of one's home is something that is very important to myself and my constituents in Texas. The homestead provision in this legislation maintains the long-held standard that allows the States to decide if homesteads should be protected, yet stops these purchases or purchase of a home before filing bankruptcy as a means to evade creditors.
The bill also addresses other problems, including needs-based bankruptcy. The heart of this legislation is a needs-based formula that separates filers in Chapter 7 or Chapter 13 based upon their ability to pay.
While many families may face job losses, divorce, or medical bills and therefore legitimately need the protection provided by the bankruptcy code, research has shown that some Chapter 7 filers actually have the capacity to repay some of what they owe.
The formula directs into Chapter 13 those filers who earn more than the national median income, which is roughly $51,000 for a family of four, if they can pay all secured debt and at least 20 percent of the unsecured non-priority debt.
This bill recognizes the need for customer education and protection. It includes education provisions that will ensure that debtors are made aware of their options before they file for bankruptcy, including alternatives to bankruptcy such as credit counseling, and the bill cracks down on bankruptcy mills, which are law firms and other entities that push debtors into bankruptcy without fully explaining the consequences.
The bill also imposes new restrictions and responsibilities upon creditors with the goal of preventing borrowers from getting in over their heads. For example, the bill requires creditors to disclose more about the effect of paying only the minimum payment, and establishes new creditor penalties designed to encourage good-faith pre-bankruptcy settlement with debtors.
I believe Congress has a special responsibility to address this issue and to ensure that our bankruptcy laws operate fairly, efficiently, and free of abuse.
Mr. Speaker, this conference report meets those two tenets I mentioned earlier. It allows those who truly need a fresh start, and compels those who can pay back part of their debt to do so.
I urge my colleagues to support this rule and the underlying legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I support passage of bankruptcy reform, and so, in order for it to pass before the adjournment of the 106th Congress, I will vote for this rule and for the conference report.
But the reason the Republican leadership has been forced to resort to this kind of parliamentary game is because the Republican majority in this Congress has left unfinished the agenda that matters most to the people of this country.
It is October 12, Mr. Speaker, and there is not an end in sight to this Congress, and there is little hope left that the real American agenda will be finished. Thus, in order to pass legislation which has overwhelming bipartisan support, the Republican leadership has resorted to using tricks and games, rather than regular order.
Were this situation not so sad, Mr. Speaker, it would be laughable. Mr. Speaker, for 2 years Democrats in this body have asked the Republican leadership for the opportunity to address the issues that matter most to Americans: real Medicare prescription drug coverage, real help for America's schools, a real and meaningful Patients' Bill of Rights, an increase in the minimum wage, campaign finance reform, saving social security and Medicare, paying down the national debt.
These are real issues that matter to real people. But in those 2 years, what have my Republican colleagues done? They have brought forward legislation that does everything but what the American people want. When the Republican leadership's position has been soundly defeated on a bipartisan basis, they have simply shelved the wishes of the bipartisan majority in this House.
For example, in August of 1999, the House passed a real Patients' Bill of Rights, a bipartisan Patients' Bill of Rights, passed it by a vote of 275 to 151. It took the Speaker until November 3 of 1999 to appoint conferees. When he did, he failed to appoint a single Republican conferee who supported the bill that passed the House, not a single one.
Today that conference has still not reported back to either the House or Senate. The Patients' Bill of Rights sits on a shelf.
In September of last year, the House passed a bipartisan campaign finance reform bill by a bipartisan vote of 252 to 177. That bill has also disappeared into the legislative dustbin of the 106th Congress.
The Democrats in this body, as well as in the Senate, have repeatedly asked for further consideration of that legislation. But our requests have gone unanswered.
Mr. Speaker, yet another meaningful bill sits on the shelf in the Republican leadership's closet. We asked that the House consider legislation that would give seniors a real Medicare prescription drug benefit, but we were prevented from getting a vote on the Democratic version of the bill.
We have asked that the Congress consider legislation which would provide more well-trained teachers for schools across the country in order to reduce class size. We have been ignored. We have asked for a clean vote on increasing the minimum wage, and our Republican colleagues loaded up the bill with tax cuts that would benefit the wealthiest while begrudgingly offering a $1 an hour over 2 years wage increase for Americans who are at the very low end of the income scale.
We have asked repeatedly for this Congress to consider issues that really matter to real Americans, the people who pay mortgages, who pay rent, who make car payments, who send their children to school, that they want to be safe.
But we have been ignored, Mr. Speaker, so we find ourselves in this situation today. While the House has rules which regulate how and when legislation and amendments can come to the floor, the other body does not. As a consequence, the refusal of the congressional Republican leadership to consider real legislation that would mean something to real Americans, the refusal of the congressional Republican leadership to sit down and work on a bipartisan basis with the Democrats in the House and Senate and with the President of the United States, has resulted in the need to play these kinds of legislative games we are engaged in today.
Mr. Speaker, I have long supported reform of our bankruptcy laws. I support this conference report. It will allow Americans who need a fresh financial start to get one, but it will also prevent those who have indebted themselves and who are able to pay those
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This bill affords new protections for consumers by requiring that credit statements include more detailed disclosures. It protects the homes of individuals who live in States with homestead exemptions, but not those who move there simply to claim the exemption in a bankruptcy.
It gives permanent Chapter 12 relief to farmers.
Mr. Speaker, many Members are concerned about the process. Quite frankly, I share their views. It is not proper that the House should be considering this important legislative reform within a shell of a bill that has already been passed and signed into law.
But given the hour, given the inability of the Republican leadership to manage the business of this House and the Congress any better than it has in the past 6 years, I will reluctantly vote for this rule so we may at least pass some meaningful legislation before the end of this Congress.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I, too, would like to have this House not only consider important pieces of legislation, as we are doing today, but also, as the gentleman from Texas has outlined, that there are a good number of things that we have yet to do that have not been done, just as we have not seen the ability to take social security to a lockbox that is being held up in the Congress of the United States because of the Democrat party.
There are frustrating things that are occurring every day. The fact of the matter is, and I would remind my colleague, we are working together. We are going to continue until we have resolved the differences that we have. This is part of the bipartisan approach, but the fact of the matter is that rather than us sitting here and bickering, we need to get our job done on this important piece of legislation that has been passed numerous times.
Mr. Speaker, I will once again remind my colleagues, this bankruptcy reform passed with more than 300 votes from this body. I am proud of the work that we are doing. We have not gone home, we are working together feverishly, not only among our House colleagues but also with the other body and our colleagues there, as well as the White House, on things that are of great importance not only to America but to families and to Members of Congress.
Mr. Speaker, I yield 5 minutes to the gentleman from Virginia (Mr. GOODLATTE).
Mr. GOODLATTE. Mr. Speaker, I thank the gentleman for yielding time to me, and for his help in bringing this very important piece of legislation to the floor. I rise in strong support of the legislation and the rule on this conference report.
Mr. Speaker, I want to particularly commend the gentleman from Pennsylvania (Mr. GEKAS), the chairman of the Subcommittee on Commercial and Administrative Law of the Committee on the Judiciary where this legislation originated, because he has been working on this legislation for years now trying to break the gridlock that has kept this very, very important reform of our bankruptcy laws from being signed into law.
I think we are now getting very close to accomplishing that if we can get this conference report passed today, as I am confident we will, with the same kind of overwhelming support, bipartisan support, that we have already had.
Our bankruptcy laws are in grave need of reform. We are at very, very high levels of bankruptcy filings in this country, and part of this problem is that all of the incentives exist for people to file bankruptcy and none of the responsibilities for people to consider the consequences of their actions and to pay something when they indeed have the ability to pay a part of those debts.
The reason for that is that today a debtor has a complete opportunity to choose whether they have a Chapter 7 bankruptcy, where they can file all of their debts and discharge them and walk away, or a Chapter 13 bankruptcy, where they are required to make payments.
This legislation reforms that in a very, very important way by allowing people who are responsible consumers to not have to bear this debt themselves. That is what happens today. Every time a bankruptcy is filed, all of those consumers who are responsible, who pay their payments on a monthly basis, who keep good credit ratings, are picking up, in the increased costs of goods and services, in the increased costs of consumer and other types of loans, the difference in the cost of all of those people who file bankruptcies who could make some payments.
This bill is reasonable in its approach. People who make less than $50,000 a year will not be required to participate in what are called mandatory Chapter 13s, but people with significant income but who do not have a lot of other assets and therefore are not worried about filing a Chapter 7 because they are not worried about those assets being taken by a bankruptcy creditor or the trustee to sell and distribute to the creditors right now have the ability to do that and walk away. They should not be able to do that if they are able to pay a portion of those obligations. This will be a significant reform in the law to do just that.
Mr. Speaker, I just want to make the point that this legislation helps protect people who are receiving child support payments by increasing the priority level of protection for those folks.
This is important legislation. I thank the gentleman from Pennsylvania for his leadership and his perseverance on this issue. I thank the gentleman from Texas for bringing forward this excellent rule, and I hope that people will support both the rule and final passage of this conference report.
[Time: 12:00]
Mr. FROST. Mr. Speaker, I yield 4 minutes to the gentleman from North Carolina (Mr. WATT).
Mr. WATT of North Carolina. Mr. Speaker, I thank the gentleman for yielding me the time.
Mr. Speaker, I rise in opposition to the rule, and I am going to try to shield as best I can my absolute disappointment, indeed outrage, at the process by which this bill has come to the floor and at the rule under which it is coming to the floor. And if the Members would just kind of put themselves in my position, perhaps they will understand the outrage that I feel about the process.
I am a member of the subcommittee of the Committee on the Judiciary that considered the House bill for bankruptcy. I sat through almost all of the hearings, discussions, the markups in the subcommittee. The bill then went to the full committee, and I sat there and dealt with the bill.
Then the bill came to the floor, and it passed the House. Then all of a sudden, yesterday afternoon conferees were appointed who never met and out of the shadows of the back room, a bill emerges and gets substituted in the place of a State Department authorization, so that a bill where we thought we were going to debate American embassy security and State Department matters ends up being a bankruptcy bill, and then the Committee on Rules then turns around and waives all points of order against the bill.
What are we as members of the committee supposed to think under those circumstances? Notwithstanding the substance of the bill, we cannot even get to the substance of the bill when the House is being operated in such a sinister and backhanded way, when the authorizing committee and the committee that is supposed to consider the substance of the bill gets cut out of the process.
The conferees never get an opportunity to meet to discuss what is going to be brought to the floor. How should we as members of the committee feel other than disappointment and outrage? And I think we ought to send a resounding message to the leadership here that this process is unacceptable.
We ought to vote this rule down, and then we can talk about the substance of the bill, which I have some reservations about, too. But right now, we are talking about the process by which this bill got to the floor, and we should all be outraged.
We should not be here considering a bill that brings itself here as an embassy security matter, as a State Department authorization bill and ends up being a bankruptcy bill which has nothing to do with the title of the bill that we are considering. We should be
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Mr. Speaker, I ask my colleagues to oppose the rule and let us at least send this bill through the regular process and get some regular order in this House.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would like to forthrightly address the issues that have been talked about, the outrage from my colleagues on the left. The process that we are going through was done in the light of day. It was a bipartisan agreement. It was initiated on behalf of the Senate.
I have the signature of one of the most distinguished Members of the United States Senate who happens to be a Democrat, who fully supported, not only this process, but agreed that this should be a way that we should get this done.
Bankruptcy reform is important for us to do, and I am proud that Members from the other body forthrightly approached the issue.
Ms. JACKSON-LEE of Texas. Mr. Speaker, will the gentleman yield?
Mr. SESSIONS. I yield to the gentlewoman from Texas.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman for his explanation. I think the one difference or the one response to the gentleman's point is that yesterday, I believe, the House voted enthusiastically for there to be an open conference with full opportunity for presentation or viewing by the public and media present. I do not believe in the last 18 hours, I do not even think it has been 24 hours, that we have had that to occur, that a conference opportunity has happened. Now the bill is on the floor, for a vote.
Mr. SESSIONS. Mr. Speaker, reclaiming my time, I have great respect for what the gentlewoman from Texas (Ms. JACKSON-LEE) talks about. It would be untruthful to suggest this was not a bipartisan agreement. It is a bipartisan agreement on a very important piece of legislation, and I believe that the truth should not be held hostage on this issue.
Mr. Speaker, I yield 5 minutes to the gentleman from Pennsylvania (Mr. GEKAS), the chairman of the Subcommittee on Commercial and Administrative Law.
Mr. GEKAS. Mr. Speaker, I thank the gentleman for yielding the time.
Mr. Speaker, I was intrigued by the opening statement of the gentleman from Texas (Mr. FROST), who with my gratitude, asserts that he is going to support the rule and the bill to bring to fruition our efforts on bankruptcy reform.
But then he went on to, in a sense, modify his own position by saying that, implying that it is not important to the American people like the matters which the minority have obstructed, like patients' bill of rights, like they have obstructed versions of Medicare reform, like they have obstructed other things. Those things are more important to him, implying that this is not important to the American people.
Let me tell my colleagues this, everyone should recognize that the consumers of our country, the private citizens, the families of our country are affected by bankruptcy. When someone files bankruptcy, the price paid for goods at the supermarket, for the cereals and the oranges and the beefsteak, all of those are subject to price rises because someone has failed to pay a debt, and that has to be made up by the general consuming public.
Mr. Speaker, not only that, but when someone goes bankrupt and a consumer, an average citizen, wants to buy an automobile and contracts to pay over a period of time, the interest rate that he pays, or she, for that automobile is impacted by a bankruptcy, which potentially makes that interest rate rise in cost.
So the consumers are hurt in just two ways that I mentioned: one, prices at the supermarket; and, two, interest rates for goods that the family requires, like an automobile or a refrigerator.
Are not those bankruptcies harmful to the consumer, to the people of our country? That is why we were able to get 313 votes in the House, because the people who represent the consumers back home voted in favor of bankruptcy reform, to make it possible for some of this debt to be recovered, where it can be recovered.
Furthermore, what about the consumer who is also a taxpayer, the taxpayer-consumer, and they are inextricably intertwined in most cases in our country, suffers when someone files bankruptcy, because the taxing authorities, like the State or a school board or a township or some municipality in their inability to recover monies from someone who is declared bankrupt, that means that that uncollected tax from an individual has to be spread among everybody else?
All of a sudden, we have the consumer-taxpayer having to pay additional taxes. We have the consumer paying extra for the cereal, extra for interest rates to purchase an automobile, and extra monies to make up for losses by a taxing authority from someone who has gone bankrupt and has put into that pot, under today's law, the taxes that he owes to a particular entity.
What happens if there is a shortfall of the school district's taxes by $10,000, shall we say, that someone has failed to pay and gone bankrupt to try to avoid? Where do they make up that $10,000? That is correct, from the pockets of the consumer taxpayer.
So I say to the gentleman from Texas (Mr. FROST) that he is correct in voting for the rule. He is correct in voting for the conference report, and he will have to understand and perhaps acknowledge that the people of our Nation will also be benefited from the bankruptcy reform at our hands here this afternoon.
Mr. Speaker, I ask every Member to keep in mind the two themes of bankruptcy reform, each one of which is supremely important: the first is that every single soul who files bankruptcy who needs a fresh start so overwhelmed by debt, so burdened by the obligations that there is no way out but bankruptcy, that person is guaranteed a fresh start under this bankruptcy reform bill. That is extremely important.
Then the other balancing feature is that those individuals who file bankruptcy who have an ability to repay some of the debt over a period of time will be compelled to do so with the mechanism that we place in the bankruptcy reform bill.
With those two balancing features, there is no reason why we cannot match the 313 votes by which this legislation passed the last time it was presented to the Members of the House.
Mr. FROST. Mr. Speaker, I yield 4 minutes to the gentlewoman from Texas (Ms. JACKSON-LEE).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, might I take the opportunity to correct the gentleman from Pennsylvania (Mr. GEKAS), my good friend and colleague, the chairman of the Subcommittee of Commercial and Administrative Law, and offer to say to him that this is a travesty. It is hypocrisy. Let us call it what it is.
We hope that those of us who disagree will have the opportunity to represent our constituents, represent Americans in this debate. Yesterday we were on the floor of the House, and we asked simply to have a conference committee that would be open and that would have a meeting and that would have the opportunity for the public to be present, so we can see whether this is really reform or a sham.
We did this at 6:22; the House voted almost unanimously. At 8:20 p.m., this conference report was sealed, signed, and delivered. I might say it might not have been signed. I have lived with this issue for almost 4 years, and I am gratified to say that because of the economy, bankruptcies have gone down. There is not the crisis that we thought there was some years ago.
In addition, the bankruptcy judges and trustees oppose this legislation. It is not reform. Interestingly enough, as we look at what this legislation says, even the bankruptcy commission did not agree for means testing. What does that mean? That means before you can file bankruptcy, good hard-working citizens, senior citizens who have catastrophic illnesses, divorced individuals who have fallen upon hard times, you must submit data to be determined whether you can even go into court. It is called a means test, and those hard-working Americans who may have missed the standardized formula, by the way, designed by the IRS, will be
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Mr. Speaker, $40 million was utilized to lobby for this law; but yet in States like Texas, where our home is our life and our land, they did not even allow language that states who had their own provisions on homestead could opt out States rights. That is not even in the legislation. So if your parents have lived in a home that has increased in value, but they have fallen upon hard times because of bad health, they cannot even utilize the homestead exemption if, in fact, it is more than $100,000 under this bankruptcy bill.
In this economy we know that has occurred if families have lived in homes for over 40 years. Our divorcees that need child support, in Chapter 13, the child support payments are put in along with credit cards. Can you imagine that? Who is going to be able to be the winner, the child needing child support, the parent who cannot get a lawyer, or the credit card company that says you better pay my credit card debt before you pay child support or alimony?
In Chapter 7, for example, there are no assets, and mostly you pay administrative costs. How will someone pay alimony or child support unless it is isolated?
Let me share with my colleagues what the gentleman from Illinois (Mr. HYDE), chairman of the Committee on the Judiciary, said, ``to say that substituting a reasonably necessary standard, providing some flexibility in determining what a debtor can live on, because what this bill does, it tells you while you are in bankruptcy, you have to be governed by the Internal Revenue Service expenses.'' Can you imagine that?
[Time: 12:15]
The chairman says, why are we using the IRS standards? This is the only place in town, this bankruptcy bill, where the IRS is popular.
When he got to the floor of the House and he was arguing about this bill, in the CONGRESSIONAL RECORD on May 5, 1999, the gentleman from Illinois (Chairman HYDE) said, ``Lastly, let me pay my respects to the creditor lobby. They are awesome.''
I only ask that we respect the American people. We know that the American people believe in responsibility. That is what this Nation was founded on. We work every day. We pay our bills. We pay our mortgages.
But I tell my colleagues if one had a catastrophic illness, a tragic accident, which some of my constituents have had, devastating car accident, one cannot work and one falls upon hard times, does one need the IRS telling one what one can live on? Does one need one's house being taken away from one. Does one need the credit card people telling one they are more important than one?
I am voting against this rule, against the bill, and I ask my colleagues to stand up for the American people.
Mr. SESSIONS. Mr. Speaker, may I ask how much time is remaining on both sides, please.
The SPEAKER pro tempore (Mr. SIMPSON). The gentleman from Texas (Mr. SESSIONS) has 10 minutes remaining. The gentleman from Texas (Mr. FROST) has 17 1/2 minutes remaining.
Mr. SESSIONS. Mr. Speaker, I appreciate the dialogue from the gentlewoman from Texas (Ms. JACKSON-LEE). I would like to, once again, ask the gentleman from Pennsylvania (Mr. GEKAS) to respond.
Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania (Mr. GEKAS).
Mr. GEKAS. Mr. Speaker, I thank the gentleman for yielding to me.
Mr. Speaker, it is peculiar to hear the argument against our provisions on homestead exemption and the modification we made to it. If we do nothing, if we pass no bankruptcy reform at all, the opponents of the current bankruptcy reform say we like the present system, well, the present system is the one against which the President has railed as being one where the rich can go to these homestead exemption States and escape their obligations. He is opposed to that kind of an exemption for the rich.
So now we offer a compromise which preserves the homestead exemption status of the States that employ it and then put into place a reform measure that discourages the rich from shopping to go to a homestead just for the purpose of avoiding bankruptcy.
But now we hear the gentlewoman from Texas (Ms. JACKSON-LEE) criticizing the homestead exemption. Does she want us to stay where we are, to benefit the rich, as the President of the United States has said? That is a salient question.
On the homestead exemption, I think I am going to engage in a colloquy later with people who are interested in the specifics of that, and I will be glad to engage in that. But the other point that the gentlewoman from Texas attempted to make about the stand up for the American people, that is what we did; 313 of us stood up for the American consumer, the people who suffer at the hands of people who go bankrupt and have to pay higher costs at the supermarket and interest rates and the taxes and all of that.
The priorities that we set for women and children are very important and high priorities. The gentlewoman from Texas would say that she is not satisfied with those priorities. She wants what is the current law to prevail here. If that is the case, then she should recognize and we should be truthful about the fact that the current law gives no priorities to that.
Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Michigan (Mr. CONYERS).
Mr. CONYERS. Mr. Speaker, I thank the gentleman from Texas for yielding time to me, and I yield to the gentlewoman from Texas (Ms. JACKSON-LEE).
Ms. JACKSON-LEE. Mr. Speaker, I will not take all of the gentleman's time. I thank the ranking member very much, and I thank him for working on this issue.
Let me just say to the gentleman from Pennsylvania (Mr. GEKAS) I appreciate his work on this bill. But he is inaccurate.
What happens in the discharge of alimony and child support? They are lumped in with credit card debt. It is a big lump of prioritization. What those of us who oppose this bill are asking for is to put credit card debt below that of alimony and child support, which represents real life or death issues in the lives of children and families.
All this bill does is give the single parent, man or woman, with limited resources an opportunity to fight to get child support and alimony. We know who is going to be the victor in that fight against the big credit card companies.
The other thing is, just on the homestead issue, let me be very clear, the language in the conference report does not have the opt-out language that protects State rights to allow them to opt out if they have other homestead exemptions. That is hurting senior citizens who have lived in their home for 50 years and the value of their homes are assessed at more than $100,000 because the value has increased. That is what I am crying out against. This is not reform. This bill is punitive to many Americans.
Mr. CONYERS. Mr. Speaker, as more and more Members begin to examine this, I think the awesome power of the credit lobby is becoming very, very clear. We are making a bill that makes bankruptcy worse. So for the chairman of the subcommittee to be telling us that, because we oppose this bill, we want to go back to the existing circumstance is inaccurate at least for my part. What we want is a better set of provisions than the ones that exist now, and this bill does not contain them.
Mr. SESSIONS. Mr. Speaker, the gentleman from Texas (Mr. Frost), my colleague on the Committee on Rules, indicates he does not have further speakers. I have indicated back that I do have two additional speakers. I am well aware there is an imbalance on time on both sides. I will proceed with that understanding. I will proceed with two additional speakers, then I will offer the gentleman from Texas (Mr. Frost) the opportunity to close, and then I will do the same.
Mr. Speaker, I yield 4 minutes to the gentleman from Del Mar, California (Mr. Cunningham).
Mr. CUNNINGHAM. Mr. Speaker, I was not even going to speak on this issue until I heard the Democrat leadership's partisan attacks which has flowed through these Chambers over the last year.
When one takes a look at the Democrat leadership and their interest to recapture the majority and gridlock this
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I went in 18 different congressional districts over the last few weeks. The minimum amount that the union goons had spent against our vulnerable candidates was a million dollars each. But yet my colleagues on the other side, because their campaign coffers are filled by the union bosses, will they do that? Absolutely not.
So when my colleagues talk about campaign finance reform and their extreme rhetoric, no, we will not support those kinds of things.
The Patients' Bill of Rights was mentioned that the Democrats push. It would be so easy for this House to come together. Instead, in an election year, they choose to try to make it a partisan issue. The Patients' Bill of Rights not only has unlimited lawsuits, but unlimited amounts with the intention of killing HMOs. If one kills an HMO, what is left, only a Hillary Clinton government type of health care plan. If one demonizes insurance companies, what is left for prescription drugs? A government-controlled health care system. They say, well, it is under Medicare, but yet the cost would be driven up instead of having insurance.
I had pneumonia last year. My wife is a teacher. I used her insurance. I went down and needed augmentin, and I went to the prescription place, and I got augmentin for a much reduced price. That is an insurance company, but which my colleagues tend to demonize and talk about their patients' bill of rights.
The second aspect of that, they then, the liberal trial lawyers who also fill their campaign coffers, then go down and sue the small businesses with unlimited lawsuits, the people that hire in good faith those HMOs or those organizations to provide health care for their workers. Absolutely not, we are not going to go along with the liberal Democrat leadership agenda.
One takes a look in NFIB and the Chamber of Commerce who produce the jobs in this country they fight it.
Talk about education. Talk about school construction. Why do my colleagues think they want school construction to come out of the Federal Government instead of local, because all Federal monies go down and have to go at the prevailing Davis-Bacon union wage. Again, quote the union boss wage which costs 35 percent more money to build our schools.
Does one think that my colleagues, if we had a bill that said, hey, we will support your construction bill, waive Davis Bacon and the Union wage, and let us put 35 percent more in building schools, but does one think they would do that, no, because it upsets the unions and the money going to their campaign coffers.
It makes me sick on this house floor. Like I said, I had not planned on even speaking on this. In 1993, did you have a minimum wage increase? You had the White House, House and the Senate. Absolutely not.
What did you do? You tried to government control health care, you increased the tax on Social Security, you stole every dime, your leadership took every dime out of the Social Security Trust Fund. AL GORE was the deciding vote on that.
Mr. SESSIONS. Mr. Speaker, I appreciate the gentleman from California taking time to discuss this with us.
Mr. Speaker, I yield 3 minutes to the gentleman from Addison, Michigan (Mr. SMITH).
(Mr. SMITH of Michigan asked and was given permission to revise and extend his remarks.)
Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman very much for yielding me this time.
Mr. Speaker, I think this legislation is very important and it is so important that we move ahead and send it to the President. I became interested and concerned with bankruptcy laws when I became chairman of the Michigan Senate Agricultural Committee back in the early 1980s.
Farmers came to me with their frustrations and I note those were tough times for farmers. Farmers came to me with their frustration that they were not allowed to reorganize. They were forced to sell their equipment and then told, well, if you can find a way to pay your way out of this, fine. With out their equipment it didn't work.
I met with my congressman, wrote many others and it was in 1986 that we first came up with chapter 12 to allow special considerations for farmers. In 1992 and 1993, when my son Brad Smith became a law clerk with Judge Edith Jones in Houston, Texas with the Fifth Circuit Federal Court of Appeals. I become more aware of problems with the federal law, talking to my son Brad and Judge Jones. If bankruptcy is to easy lenders raise interest rates for everybody else. Because thru bankruptcy it was too easy for many to get out of paying what they owed somebody else other borrowers are charged more to cover the unpaid bills.
So there must be a balance. One wants to be fair, but on the other hand, one does not want to punish everybody to make it too easy so a few people can declare bankruptcy and not pay what they owe.
I have two bills that I introduced that are now incorporated in this bankruptcy law. One is the child support payments that are owed to local units of government. They have been dischargeable. Now, under my amendment and this legislation they are not.
The other, of course, is making section 12 of the bankruptcy law permanent. In tailoring chapter 12 to meet the economic realities of family farming, this bill has eliminated many of the barriers that family farmers have faced when seeking to reorganize successfully under either chapter 11 or chapter 13 of the Bankruptcy Code.
For example, chapter 12 is more streamlined. It is less complicated. It is directed towards family farmers, not the giants, not the corporation, but family farmers. It provides that they can reorganize in such a way that they do not have to sell their tractors, their plows and their corn planter. It gives them a chance to get back on their feet. Chapter 12 provisions no longer exist in current law. Farmers are not allowed to use these provisions, because they have expired.
This bill, this legislation makes chapter 12 permanent. I hope we move ahead and support this rule and the bill.
Mr. SESSIONS. Mr. Speaker, I have indicated this would be the remaining speakers that we have in line with the agreement that the gentleman from Texas (Mr. Frost) and I had, and I would like to let him know we have now finished our speakers.
Mr. Speaker, I reserve the balance of my time.
Mr. FROST. Mr. Speaker, I yield 1 minute to the gentleman from Michigan (Mr. Conyers), the ranking member on the committee, and then we are prepared to close.
Mr. CONYERS. Mr. Speaker, I would like to ask the gentleman from Michigan (Mr. SMITH), would he join me in pushing legislation to pass a freestanding bill to make chapter 12 permanent should this bill not succeed in the Senate as most expect? Right now, chapter 12 is being held hostage to this bill.
Mr. Speaker, I yield to the gentleman from Michigan (Mr. SMITH).
Mr. SMITH of Michigan. Mr. Speaker, I ask the gentleman from Michigan (Mr. CONYERS) to repeat the question.
Mr. CONYERS. Mr. Speaker, would the gentleman from Michigan join me in supporting legislation in a freestanding bill to make chapter 12 permanent should this bill not succeed in the Senate as most expect that it will?
Mr. SMITH of Michigan. Yes, Mr. Speaker. But I certainly hope the other provisions that are so important, such as the discharge of those debts owed in child support, et cetera, somehow need to be corrected. But, yes, I have introduced such a bill. It is very important to farmers. I would hope we would pass the provisions in this bill.
[Time: 12:30]
Mr. FROST. Mr. Speaker, I yield myself such time as I may consume to simply state once again, as I indicated in my opening statement, that I intend to vote for this rule and I intend to vote for the bill. We would have preferred that it come up under a regular
[Page: H9832]
Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume to tell my colleague, the gentleman from Texas (Mr. FROST), that I appreciate his support. I too would ask Members to vote for this rule.
Mr. Speaker, I have no further requests for time, I yield back the balance of my time, and I move the previous question on the resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.
Mr. GEKAS. Mr. Speaker, pursuant to House Resolution 624, I call up the conference report on the bill (H.R. 2415) to enhance security of United States missions and personnel overseas, to authorize appropriations for the Department of State for fiscal year 2000, and for other purposes.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. SIMPSON). Pursuant to House Resolution 624, the conference report is considered as having been read.
(For conference report and statement, see proceedings of the House of October 11, 2000 at page H 9723.)
The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. GEKAS) and the gentleman from Michigan (Mr. CONYERS) each will control 30 minutes.
The Chair recognizes the gentleman from Pennsylvania (Mr. GEKAS).
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
It is important, for the purpose of the CONGRESSIONAL RECORD and for the purpose of reenlightening the Members of the House as to the purpose of the mammoth effort that we expended over the last 3 years and more to bring about needed, necessary and cogent bankruptcy reform, to outline the two main theses that apply and on which we banked our experience and our intent to bring about bankruptcy reform. They are worthy of repetition and rerepetition. And every ounce of prevention that we can add to this debate about all those who oppose the concepts that we are employing we repeat and will repeat time and time again.
Everyone and anyone who becomes so flooded with and burdened with and overextended by reason of obligations for a variety of reasons, whether it be divorce or drinking or gambling or overextension of credit in its many different forms, whatever the reason might be that someone became hopelessly indebted and found no reason to do anything except to file bankruptcy, that person, who is so overburdened will find at the hands of the bankruptcy system a fresh start. We guarantee that. That is one of the purposes of bankruptcy from its first usage back in colonial days. The fresh start will be available to every American who needs it.
But by the same token, we cannot permit people to use the bankruptcy system as a mechanism for financial planning for themselves. If we take an objective look at someone's resources, their status in society, their earning power, their status in the financial system of which our economy is a part, if we, upon examination, determine, through the bankruptcy system that we put in place, that there is an ability on the part of this individual to repay some of the debt, albeit not all of it, and not immediately, but over a period of years, then we should compel that individual, through a sympathetic system of transferring that obligation or set of obligations from Chapter 7 to Chapter 13, we should allow that individual to work his way out of that debt. We do not demand that he pay every penny back, but that he return some of the money to the general wheel that keeps our economy going.
It is unfair for such an individual, who could repay, to be absolved of any obligation and then lay his burden at the footstep of every other consumer and taxpayer in the country. Because our country is so wealthy, it is difficult to portray how one bankruptcy that loses in a stream of commerce just $10,000 truly matters. One might say, well, what is that? But that $10,000 of debt unpaid has to be made up somehow in the general economy. And who makes it up? The consumer, the seeker of credit, the purchaser of large items, like automobiles, homes, et cetera.
So this is not an issue that is out there in the ether someplace, that has no connection with everyday living in our communities and the struggles of every family. This touches the heart of the pocketbook of every family. To dismiss it as being a giveaway to somebody or other, or that benefits only one segment of society, one must take a look at individual cases of bankruptcy.
I defy anyone to comment or to assert that our bankruptcy reform crashes down on the poor or the low-income people, when the very threshold upon which the bankruptcy system begins under our reform measure exceeds the median income. Therefore, people under the median income, in whatever quarter in our country, if it is below that standard, there is almost an automatic fresh start accorded that individual when he or she files bankruptcy.
That is a magnanimous view of the low-income stratum of our society. And we say that when that individual from that stratum does find himself or herself overburdened, we are going to help. That fresh start will be available. So I reject contentions that this is a bill biased towards any segment of our society. Rather it is biased, if it is biased at all, towards rectitude, towards balancing the equation in the economy in which we find ourselves.
Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
(Mr. CONYERS asked and was given permission to revise and extend his remarks.)
Mr. CONYERS. Mr. Speaker, this measure imposes indiscriminate means tests to determine the eligibility for bankruptcy relief and the amount a bankruptcy filer is required to pay a creditor. This test does not account for such items as child care payments, most health care costs, and the costs of caring for individuals unable to care for themselves. Further, families will be required to go through a series of means tests to justify their medical bills and other expenses. These standards are so extreme that they have been rejected by the Internal Revenue Service.
So when the chairman of the subcommittee, the gentleman from Pennsylvania (Mr. Gekas), says that the two themes of this bill is to give people a fresh start and then to have, number two, some accountability for those who can and should pay, this bill flunks the test right from the beginning on both counts. It does not allow for a fresh start, and the accountability is so extreme that we are using standards that even the Internal Revenue Service rejected.
The proposal is highly damaging to a single mother's access to the bankruptcy system. It would treat an individual's credit card debt on the same level of obligation as there is to paying child support or alimony. So, therefore, I would argue that it does not make accountability an important consideration because, as again we see the awesome power of the creditor lobby, they have now elevated credit card obligations to the same level as those for child support or alimony. Now, how that meets theme two is beyond my understanding.
So, therefore, a mother who relies on payments to feed or clothe her children would be competing from the same pool of money as a major credit card company. Thanks a lot, I say to the gentleman from Pennsylvania. That really makes accountability a strong theme in this so-called reform measure.
Next, the business provisions of the proposal will impose harsh time deadlines, massive new legal and paperwork burdens on businesses, real estate concerns and, by design, will lead to premature liquidation and job loss. So much for theme one of the so-called reform and fresh start of the gentleman from Pennsylvania. Thanks a lot. By leading to premature bankruptcy or liquidation and job loss, we are giving folks a fresh start. Well, my colleagues, there is the awesome power of the creditor lobby working again.
Instead of giving businesses a fresh start and a chance to reorganize, this would cripple an organization and defeat the true purpose of a bankruptcy process, even the one that we have now. At the same time, the conference report addresses the alleged rampant bankruptcy abuse by debtors. It gives
[Page: H9833]
By the way, are bankruptcy filings going up or down? Is there any Member in this body that does not know that they are going down? We have tables to show that the decrease in bankruptcy filings, personal bankruptcy, in the period ending June 30 of this year, ran 8.29 percent below the year earlier levels, and per capita personal bankruptcy rates ran 9.15 percent below the year earlier levels.
So as the bankruptcy courts themselves tell us, the bankruptcy filings are down, not up, according to their figures. So what are we doing here? Well, I think we are genuflecting to the awesome power, as the chairman of the Committee on the Judiciary says, the awesome power of the creditor lobby. So what we have, due to deregulation of credit cards and the resulting deluge of credit card solicitations, is that customer debt has skyrocketed to more than $1.3 trillion.
But what attention do we give to the lending lobby, the lending industry, which has encouraged this? Is there anyone that does not get one or two a week or a month of credit cards that say this card is operative, it is for you; if you need it, use it? They send them to students in colleges in their dorms. They are being flooded with them. So our response to this irresponsible activity of the creditor industry is to say that we are going to make it tough by making it harder to get started again, and then hold at the same level the family's need for their support of children. We are going to elevate the credit card obligation to the same as the ones of people who have families in need.
[Time: 12:45]
And so the conference report fails in yet another respect. It fails to require credit card companies to fully disclose the total amount of time it takes an individual to complete payment on a credit card balance if only the minimum is paid.
The conference report also omits an important Senate provision that would prevent protesters found guilty of violence and of harassment at abortion clinics from declaring bankruptcy to avoid paying court judgments.
And so, without such a provision, I say to the subcommittee chairman, we are allowing the abortion bombers to intimidate, maim and kill women without suffering any adverse financial consequence. And so, Mr. Speaker, I obviously oppose the conference reports before us.
Mr. Speaker, I reserve the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield 4 minutes to the gentleman from Tennessee (Mr. BRYANT) a former member of our Committee on the Judiciary who, notwithstanding the fact that he abandoned us, I am still willing to yield to him to talk about bankruptcy reform.
Mr. BRYANT. Mr. Speaker, I thank the gentleman for yielding me the time.
Mr. Speaker, I do want to thank the gentleman and commend him and other Members and especially the staff who have worked so closely with us over the last 4 years to make this bankruptcy reform a reality. I know a lot of hard work and compromise went into this legislation, and I am confident that the consumers and the creditors will be better off because of it.
In recent years, bankruptcy has truly become a first stop rather than a last resort. In 1998, approximately 1.4 million people filed for bankruptcy, which is the equivalent of more than one in 100 households across this country. This increase in the bankruptcy filings costs the American families, those of us who do not file bankruptcy, on average $400 a year because of these higher prices for their credit and consumer needs that have to be made up because of these filings.
The reform agreement before us today will protect responsible consumers while cracking down on abusive bankruptcy practices.
Now, the object of this bill is to reduce repeat filings and to prevent the gaming of the bankruptcy system, that is running up credit card bills right before they file bankruptcy or filing and dismissing a bankruptcy case and refiling as a stalling tactic. Also, this bill hopes to improve the administration of bankruptcy cases in providing debtors with information about alternatives to bankruptcy such as credit counseling services.
This bill also maintains a needs-based test, a means test so to speak, and it provides safeguards for women and for children and it assists farmers who may be forced into Chapter 7 bankruptcies by extending that particular Chapter 7.
Now, I do want to mention something about this means testing. I sat through a lot of debate this morning on this particular rule and on the general debate and I hear from the other side the opponents, the people who oppose this reform, saying that it is means testing, it is harmful to people who are poor. But then I hear other people from that same side oppose it because it fails to protect the homestead exemption on houses, $250,000 is not enough.
It strikes me kind of strange that we are talking about bankruptcy here and a concern about people who live in houses that have equity of more than $250,000. I think that is an inaccurate figure, too, I might add. Because it is not right that people who file bankruptcy ought to be able to keep houses regardless of how much they have in it or have a value of $250,000.
We have reduced that, in a compromise spirit, down to a $100,000 where it is obvious that they bought the house with the intention of trying to protect their equity and mess over all those creditors out there.
But let me go on to say, too, that I am also pleased to point out that this bill, H.R. 2415, offers my State of Tennessee specific relief by providing additional bankruptcy judges, one in the Western District of Tennessee that is a permanent judge, and a temporary judge in the eastern part of the State.
For example, in the Western District, talking about the tremendous number of bankruptcies cases, we have four judges and it is the highest filing district in the Nation. And we believe these four judges have worked too hard for too long. In fact, when we case-weight the numbers in the Western District based on filings through June of 1999, each judge has had 2,380 cases. And I would point out that 1,500 cases per judge is the level that they should be working at according to their own Judicial Conference.
So by providing this additional judgeship, we can at least reduce their caseloads down to 1,904 cases, still well above the recommended level.
Mr. Speaker, this bill does provide common sense reform and I urge its adoption.
Mr. CONYERS. Mr. Speaker, I am pleased to yield 3 minutes to the gentleman from Virginia (Mr. Moran).
Mr. MORAN of Virginia. Mr. Speaker, I thank the ranking member very much for yielding me the time. I think he knows how fond I am of him personally and how much I respect his intellect and his heart. But I rise today in support of H.R. 2415 and the much needed bankruptcy reform measures contained in this legislation.
The American people find it unacceptable and inherently unfair that those who do pay their bills have to foot the bill for those who in many instances have the ability to pay but choose not to. It has been conservatively estimated that personal bankruptcies cost every American family $400 per household per year and it takes 15 responsible borrowers to cover the cost of one bankruptcy of convenience.
The system will continue to be unjust if debtors persist in using it as a tool of first resort rather than a tool of last resort when all other financial options have been exhausted.
Clearly, this Nation's bankruptcy system is broken when it enables individuals to avoid paying their debts despite their ability to do so. What this Congress must do is to undertake genuine needs-based bankruptcy reform to require those who have the ability to repay a portion of their debts to enter a Chapter 13 repayment plan while also preserving the historic fresh start in Chapter 7 for those people who have truly fallen on hard economic times.
The goal of our bankruptcy system should be to protect those who need protecting, to provide those who experience genuine and serious financial hardship the opportunity to wipe the slate clean. What we must do is return our system back to its original fair and compassionate mission through a simple legislative fix.
[Page: H9834]
Bankruptcy reform is not a Republican or a Democratic issue. It is a consumer issue. According to a recent National Consumer League survey, 76 percent of Americans believe that individuals should not be allowed to erase all of their debts in bankruptcy if they are able to repay a portion of what they owe. This survey merely reflects the American public's belief that individuals should be responsible for their own action.
This bill would help to remedy the glaring problems of today's bankruptcy system by creating a needs-based system, subject to judicial oversight, which would similarly continue to protect the rights of those citizens who need a fresh start, while at the same time requiring those who do not to meet their personal responsibilities.
H.R. 2415 represents a true compromise product between the House and Senate-passed bankruptcy reform bills. Both Chambers passed bankruptcy reform by strong bipartisan margins. The House passed their version last June by a vote of 314-108 with the support of 96 Democrats. The Senate passed theirs by 83-14.
This bill contains a number of pro-consumer items, including a host of new disclosure requirements for credit card companies. Specifically, it requires credit card statements to disclose late payment fees. It also mandates that statements must include a toll free number for consumers to receive estimates on how long it would take to repay their existing balancing by making only the minimum monthly payments.
The legislation also requires improved disclosures on introductory rates and prohibits creditors from closing an account solely if the customer does not incur finance charges.
We need to pass this legislation, and I urge my colleagues to support it.
GENERAL LEAVE
Mr. GEKAS. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on H.R. 2415.
The SPEAKER pro tempore (Mr. Simpson). Is there objection to the request of the gentleman from Pennsylvania?
There was no objection.
Mr. GEKAS. Mr. Speaker, it gives me pleasure to yield 5 minutes to the gentleman from Virginia (Mr. Boucher).
(Mr. BOUCHER asked and was given permission to revise and extend his remarks.)
Mr. BOUCHER. Mr. Speaker, I thank the gentleman from Pennsylvania for yielding me the time, and I want to congratulate him on his fine work in bringing this measure to the floor today.
Mr. Speaker, I am pleased to rise in support of the conference agreement and to urge its approval by the House. With this measure, we bring to conclusion a process that we launched 3 years ago to bring a much needed reform to the Nation's bankruptcy laws.
In an era in which disposable incomes are growing, unemployment rates are low, and the economy is strong, consumer bankruptcy filings should be rare. Contrary, however, to this expectation, there are now more than 1.4 million annual bankruptcy filings, a 40 percent increase from 1996 and a 95 percent increase over the number of filings 1 decade ago.
Bankruptcies of convenience are driving this increase. Bankruptcy was never meant to be used as a financial planning tool, but it is increasingly becoming a first stop rather than a last resort, as many filers who could repay a substantial part of what they owe are using the complete liquidation provisions of Chapter 7 of the Bankruptcy Code rather than the court supervised repayment plans that are provided for in Chapter 13.
The legislation that we bring to the floor today would direct more filers to use Chapter 13 plans. Those who can afford to make a substantial repayment of what they owe would be required to do so.
This is a consumer protection measure. As the gentleman from Virginia (Mr. Moran) just indicated, the typical American family is paying a hidden tax of at least $400 every year arising from the increased cost of credit and the increases in the prices for goods and services occasioned by the discharge of more than $50 billion annually in consumer bankruptcy filings. By requiring that people who can repay a substantial part of their debt do so in Chapter 13 plans, we will lessen substantially that hidden tax.
Another key point should be made about the provisions of this conference report. The alimony or the child support recipient is clearly better off under this conference agreement than she is under current law. At the present time, she stands number seven in the rank of priority for payment of claims in bankruptcy proceedings. This conference report places her number one. Her priority is elevated from number seven in current law to number one in this conference agreement. Her claim will be first in line for payment, and other provisions of the conference agreement make it easier for her to execute against the assets of the estate of the bankrupt person than under current law.
In May of last year, this reform passed the House by the overwhelming vote of 315-108. A similar reform was approved in the other body by the vote of 83-14. The consensus in support of this reform is broad and it is bipartisan.
I would note that the conference agreement we consider today actually moves in the direction of the bankruptcy filer. It contains a means-testing threshold for the use of Chapter 7 that is more generous to bankruptcy filers than the provision in the House bill. It provides that the filer can still use Chapter 7 if he cannot repay at least 25 percent of his unsecured debt over a 5-year period, and that is after accounting for his normal and necessary living expenses. The House provision was a somewhat less generous 20 percent.
The conference agreement also provides that the filer can still use Chapter 7 unless he can repay at least $6,000 of what he owes over a 5-year period, and that also is after necessary living expenses. And that $6,000 figure over 5 years is compared to the less generous $50 per month over that same period in the House bill.
The conference agreement also contains the credit card consumer disclosure guarantees that were in the Senate bill and assure that consumers have a better understanding of the consequences of only paying the minimum amount on their credit card statement.
[Time: 13:00]
I want to commend the gentleman from Pennsylvania (Mr. Gekas) for his leadership on this and the gentleman from Florida (Mr. McCollum), who I was pleased to join as the original cosponsor of the first bankruptcy reform that we introduced. I want to commend the gentleman from Virginia (Mr. Moran) for his excellent work in support of this effort and say that this is a balanced bipartisan measure which will provide a substantial reform and deserves the support of this House.
I am pleased to urge approval of the conference report.
Mr. CONYERS. Mr. Speaker, I yield myself 2 minutes, because my dear friend the gentleman from Virginia (Mr. Boucher) whom I tried to get on the conference as a conferee has made a case that on the surface sounds pretty good. But those who are concerned about the payment of alimony and child support have expressed strong opposition to this bill.
Now, why? The proposed legislation does not live up to its billing. It fails to protect women and children adequately. And I think we ought to have a thorough discussion on that part of the report. The child support provisions of the bill fail to ensure that the increased rights the bill would give to commercial creditors do not come at the expense of families owed support. And so what we are saying is that this is a bill that does not improve the status of women and children in bankruptcy proceedings. Absolutely not. That is also why the National Organization for Women is strongly opposed to the measure. The National Partnership for Women and Families is unalterably against this bill. The National Women's Law Center is opposed to the bill. The National Conference of Bankruptcy Institute is opposed to the bill. And one of the main reasons they are opposed to the bill is that contrary to the assertion that it allows a fresh start and a better fresh start than the existing legislation is that it does not. It would raise up the credit card creditor to the same status as those who are seeking alimony and child support
[Page: H9835]
Mr. Speaker, I reserve the balance of my time.
Mr. GEKAS. Mr. Speaker, it pleases me to yield 2 minutes to the gentleman from South Carolina (Mr. GRAHAM).
Mr. GRAHAM. I thank the gentleman for yielding me this time.
Mr. Speaker, I, too, would like to echo my congratulations to the gentleman from Pennsylvania (Mr. Gekas) and all those who have worked so hard to bring this bill to the floor. We are in the last hours of the Congress and I believe we are on the verge of doing something good for the American consumer and business community. This bill is the reaction to a problem. Under the old bankruptcy code, there were people throughout the land running up hundreds of thousands of dollars of debts, making incomes of $100,000, being able to file bankruptcy and walk away from their obligations, leaving a lot of the American business community holding the bag.
This bill has a balance to it. It is going to change the culture of our country. It is going to allow people to start over in a very fair fashion but it is going to ask people, if you can pay, to pay your debts the best that you can. Chapter 7 if you get under that provision, you discharge all of your debts and you basically walk away. This bill is saying, Wait a minute. If your income is such after you take your food, your clothing, private school expenses, necessary living expenses in a liberal fashion and compute it, that if you can afford to pay $100 a month over a 5-year period to your creditors, pay it. Because that is good for the American business community. It is good for the economy. I think it is good for America, to try to get people who owe something to someone else back on their feet without leaving anybody hanging.
I disagree with my friend the gentleman from Michigan (Mr. Conyers). Child support payments are elevated in this bill. That is the balance that we need. From being seventh you are now first. And you cannot get discharged from Chapter 13 if you file under that chapter if you do not keep your child support payments current. We tell the credit card community, you are just not going to be able to inundate people with free credit. You have to inform them better. There is a debtor's bill of rights that tells people options to bankruptcy and ways to make your payments and try to get people together so you do not have to file bankruptcy.
This is long overdue. This is not only good for our business community, good for consumers, it is going to change our culture. I am proud to have been a part of it. I urge its passage.
Mr. CONYERS. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Texas (Mr. Bentsen).
(Mr. BENTSEN asked and was given permission to revise and extend his remarks.)
Mr. BENTSEN. Mr. Speaker, I would like to enter into a colloquy with the gentleman from Pennsylvania if I might to understand the homestead provisions in this. The House had adopted my amendment earlier in the proceedings that would have allowed the States to opt out. Now, as I understand it there is a 2-year residency requirement under section 322 of the conference report. So a homeowner who purchased their home and files a petition for bankruptcy within 2 years would be subject to a Federal cap but after that 2 years, would not be subject to a Federal cap?
Mr. GEKAS. If the gentleman will yield, that is exactly correct. The purpose is to say to someone who would move into Texas, if you move into Texas, purchase a property and within 2 years file bankruptcy, you would still preserve a $100,000 exemption but you would not have a total exemption.
Mr. BENTSEN. But after that 2 years you would be under State law?
Mr. GEKAS. After that he is a true Texan and does not have to worry about anything except the State law.
Mr. BENTSEN. The other question is after you have exceeded the 2-year period and you increase the value of your home through addition or property values rise, are you under a new 2-year period?
Mr. GEKAS. No. After 2 years, the person under our provisions and under the intent and under the law generally, after 2 years that individual is a true Texan for all purposes of residency and lives under the homestead exemption laws of your State.
Mr. BENTSEN. And to the extent that one after the 2 years changes residence within the State, the equity they roll over, as I understand it, would be an exempt item under the State homestead law. Would it be additional equity rolled into the new purchase that would be under the $100,000 cap for 2 years or not?
Mr. GEKAS. It would not.
Mr. BENTSEN. I thank the gentleman.
Mr. GEKAS. Mr. Speaker, I yield 2 1/2 minutes to the gentleman from Ohio (Mr. Chabot).
(Mr. CHABOT asked and was given permission to revise and extend his remarks.)
Mr. CHABOT. Mr. Speaker, I rise in support of this very pro-consumer bankruptcy reform conference report. This vital legislation protects individuals and businesses from having to pick up the tab for irresponsible debtors, debtors who are capable of paying off a significant portion of their debts.
This bankruptcy reform bill establishes a clear causal link between a debtor's ability to pay and the availability of Chapter 7 bankruptcy super-discharge. It requires those who can afford to pay their debts to honor their commitments.
Let me emphasize at the outset that individuals who make below the median income will not be forced into Chapter 13 under this bill, although they may still voluntarily choose to file there. What this bill does do is require individuals who make above the median income and are determined to have significant repayment capabilities to file in Chapter 13.
Mr. Speaker, there are people who truly have a legitimate need to declare bankruptcy. No one is denying this. At times hardworking people come up against special circumstances that are beyond their control. Family illness, disability, or the loss of a spouse may necessitate the need to seek relief. This legislation effectively protects these individuals. Too frequently, however, people who have the financial ability or earnings potential to repay their debts are simply seeking an easy way out of repaying debts. While this may prove convenient for the debtor, it is not fair to their friends and neighbors who are ultimately stuck with the bill.
Estimates show that the average American pays as much as $550 per year as a bad debt tax in the form of higher prices and increased consumer credit interest rates to cover the economic costs associated with the excessive bankruptcy filings of others. Nationally, consumer bankruptcies reached a record 1.4 million in 1997 and those numbers have remained high. What makes these statistics particularly alarming is the fact that this trend began in 1994 during a time of solid economic growth, low inflation and low unemployment, during an unprecedented peacetime boom in our economy.
The primary culprit of this dramatic increase in bankruptcy filings is a system that allows consumers to evade personal responsibility for their debts. Under this legislation, individuals who can pay their debts will be moved to Chapter 13 where they will be given a generous 5 years to establish a fair repayment plan and get their financial houses in order.
I would like to take this opportunity to thank the gentleman from Pennsylvania (Mr. Gekas) and the gentleman from Florida (Mr. McCollum) for their leadership in this area, and I urge its passage.
Mr. CONYERS. Mr. Speaker, I am happy to yield 3 minutes to the gentlewoman from New York (Mrs. Maloney).
Mrs. MALONEY of New York. I thank the gentleman for yielding time and for his leadership.
Mr. Speaker, it is with great regret that I come to the floor in opposition to this bill. I supported this bill when the House first voted on it. Unfortunately, the majority has taken a bill in which I thought we had made good progress and chosen to railroad it through the House without really holding a conference and by tying it to a totally unrelated embassy bill.
[Page: H9836]
Furthermore, I appreciate the comments and would like to be associated with the gentleman from Michigan's comments about the many leading women's organizations that oppose the bill. Also, the majority has deleted a critical provision that Senator SCHUMER added to the bill. This provision prevents those who commit acts of violence at reproductive health clinics from escaping paying penalties for these actions. Clinic bombers should not be allowed to excuse penalties assessed on them by the courts through bankruptcy. This bill would allow them to excuse these debts and to walk away from these penalties.
Mr. Speaker, bankruptcy reform is important to the American people, but so is protecting women's safety and reproductive freedom. This is a growing problem that the majority is ignoring. Between 1993 and 2000, three doctors, two clinic employees, one clinic escort and one security guard have been murdered in acts of violence at clinics. There have been 16 attempted murders since 1991. More than 2,400 acts of violence have been reported at clinics since 1997. These included bombings, arsons, death threats, kidnappings, and other acts of harassment. The Senate approved this amendment by a vote of 80-17. Why has the majority now excluded it? Why should clinic bombers be allowed to excuse their penalties by declaring bankruptcy?
I urge all Members who care about women's safety to vote against this bill for this reason and also because of the abusive procedure under which it has been brought to the floor.
Mr. Speaker, I include for the Record a letter from John Podesta, chief of staff to the President, in which he writes that the President will veto the bill because, and I quote, it gets the balance wrong.
THE WHITE HOUSE,
Washington, DC, October 12, 2000.
Hon. J. DENNIS
HASTERT,
Speaker of the House of Representatives,
Washington, DC.
DEAR MR. SPEAKER. I understand that the House will take up today the conference report on H.R. 2412, which apparently incorporates the text of S. 3186, a recently filed version of bankruptcy legislation. If this bankruptcy legislation is sent to the President, he will veto it.
Over the last few months, this Administration has engaged in a good faith effort to reach agreement on a number of outstanding issues in the bankruptcy legislation. The President firmly believes that Americans would benefit from reform legislation that would stem abuse of the bankruptcy system by, and encourage responsibility of, debtors and creditors alike. With this goal in mind, we have pursued negotiations with bill proponents on a few key issues, notwithstanding the President's deep concern that the bill fails to address some creditor abuses and disadvantages all debtors to an extent unnecessary to stem abuses by a few.
An agreement was reached in those negotiations on an essential issue--limiting homestead exemptions--with compromises made on both sides. Unfortunately, H.R. 2412 fails to incorporate that agreement, instead reverting to a provision that the Administration has repeatedly said was fundamentally flawed. The central premise of this legislation is that we must ask debtors, who truly have the capacity to repay a portion of their debts, to do so. This would benefit not only their creditors but also all other debtors through lower credit costs. Unlimited homestead exemptions allow debtors who own lavish homes to shield their mansions from their creditors, while moderate-income debtors, especially those who rent, must live frugally under a rigid repayment plan for five to seven years. This loophole for the wealthy is fundamentally unfair and must be closed. The inclusion of a provision limiting to some degree a wealthy debtor's capacity to shift assets before bankruptcy into a home in a state with an unlimited homestead exemption does not ameliorate the glaring omission of a real homestead cap.
Moreover, the President has made clear that bankruptcy legislation must require accountability and responsibility from those who unlawfully bar access to legal health services. Yet the conference report fails to address this concern. Far too often, we have seen doctors, health professionals and their patients victimized by those who espouse and practice violence. Congress and the States have established remedies for those who suffer as a result of these tactics. However, we are increasingly seeing the use of the bankruptcy system as a strategic tool by those who seek to promote clinic violence while shielding themselves from personal liability and responsibility. It is critical that we shut down this abusive use of our bankruptcy system and prevent endless litigation that threatens the court-ordered remedies due to victims of clinic violence. The U.S. Senate was right in voting 80-17 to adopt an amendment that would effectively close down any potential for this abuse of the Bankruptcy Code. We fail to understand why the bill's proponents refuse to include this provision and shut down the use of bankruptcy to avoid responsibility for clinic violence.
I repeat President Clinton's desire to see balanced bankruptcy reform legislation enacted this year. The President wants to sign legislation that addresses these known abuses, without tilting the playing field against those debtors who turn to bankruptcy genuinely in need of a fresh start. He will veto H.R. 2412 because it gets the balance wrong.
Sincerely,
JOHN PODESTA,
Chief of Staff to the
President.
Mr. GEKAS. Mr. Speaker, I yield 3 minutes to the gentleman from Texas Mr. BENTSEN for the purpose of wrapping up a colloquy.
Mr. BENTSEN. I thank the gentleman for yielding me this time.
Mr. Speaker, to follow up where we were, a question that I think is extremely important is the question of homeowners today in Texas and other States which have a broader homestead exemption.
[Time: 13:15]
Are these provisions prospective in nature in that if one has resided in their home for 2 or more years today, or of the date of enactment, if this bill is to become enacted into law, would they thus be exempted from the Federal cap provided for in this bill? Would they be under State law at that time and any subsequent purchase they make using the equity from the home they own today be exempted from that cap?
Mr. GEKAS. In the hypotheticals that the gentleman pronounced, it would come under State law. The only time that there is a look-back is the initial 2 years of residency in a homestead-exemption State.
So 2 years, and thereafter the State laws would apply.
Mr. BENTSEN. Including today. So one who has resided today in their home for at least 2 years is under State law and would not be under this cap?
Mr. GEKAS. That is exactly correct.
Mr. BENTSEN. The other is on section 308, the 7-year look-back provision which is designed, as I understand it, to prevent the diversion of nonexempt assets into exempt property, is the burden of proof on the debtor or the creditor?
Mr. GEKAS. It is on the creditor, and that really conforms to the general state of the law in such cases. There has to be affirmative evidence of fraud having been committed so that the creditor must come forth.
Mr. BENTSEN. The question is raised on the roll-over period and the prospective nature talks about interest acquired. The bill reads the homestead as interest acquired by the debtor, and this is getting somewhat technical or minute, I guess, during that 2-year period, would interest be assumed to include such things as routine principal payments or rise in property value?
Mr. GEKAS. Does the gentleman mean during the 2 years for a look-back in the 2 years?
Mr. BENTSEN. Right, during the 2-year look-back.
Mr. GEKAS. I would have to say yes, that in the look-back it would generally be determined what the value was of the claimed exemption and the $100,000 would apply.
Mr. BENTSEN. To close, for general purposes after 2 years of residency and so long as one is a resident of a State, regardless of where they live or how many places they live, the first 2 years exempts them from the Federal cap for the equity that they gain?
Mr. GEKAS. That is correct. The State laws apply.
Mr. BENTSEN. Any appreciation that applies in equity?
Mr. GEKAS. Yes, on anything that occurs after 2 years.
Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the gentlewoman from New York (Mrs. LOWEY).
Mrs. LOWEY. Mr. Speaker, I thank the gentleman from Michigan (Mr. CONYERS) for yielding me this time, and I thank him for his leadership on this issue.
Mr. Speaker, I rise in opposition reluctantly to this conference report because I am shocked, frankly, and outraged about the way in which this bill was brought to the floor of the House. After months of negotiations on this bill, we have been given a day's notice to consider a measure that does not represent a true compromise and is still in the process of being worked out. I support efforts to ensure that those
[Page: H9837]
The Senate version of the bankruptcy bill included a provision requiring accountability from those who terrorize reproductive health clinics, their employees and the women who need their services. This provision, which received 80 votes, eight zero votes, in the Senate, would prevent those who are convicted of a crime from hiding behind the bankruptcy system in order to shield themselves from paying the consequences of their actions.
Now, despite the fact that the President has said, again, that the clinic violence language must be included in final bankruptcy legislation for it to win his support, the provision was dropped. The proponents of the bill claim it will stop people from abusing the bankruptcy system; but by excluding the Schumer amendment individuals and organizations found to violate FACE, the Freedom of Access to Clinic Entrances law, will have carte blanche to abuse the system. This is wrong. It does not make sense.
Mr. Speaker, let us agree on a simple principle: violence and harassment have no place in our democratic system and using the bankruptcy code to evade the law, any law, is wrong and should not be tolerated.
FACE passed with a broad bipartisan consensus. It has dramatically reduced violent incidents at health clinics, but we need the tools to fully enforce it, and any bankruptcy bill that does not hold these criminals accountable for their actions is a disgrace. So I urge my colleagues to oppose this conference report.
Mr. GEKAS. Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I will have a motion to recommit the entire conference report to the committee of conference to insist that according to the motion to instruct conferees that we have at least one meeting of the conference committee as required by House rule XXVIII, clause 6. I intend to do that.
What we have found in the course of the study of this bankruptcy anti-reform measure are three myths. One is that it is a pro-consumer bill. It clearly is not.
Two, that it will permit a fresh start for people that are brought into bankruptcy. It actually precludes a start as efficacious as the one that already exists in the existing bankruptcy law. It is a move backwards from fresh start.
The myth of a fair accountability has been destroyed completely in the course of this discussion.
In other words, this is a one-sided measure that is guaranteed to empower the creditors' lobby in a fine new way. Of course, the reality of where this bill is going is known to many of the Members on the Committee on the Judiciary, perhaps not a lot of other Members in the body. That is to say that it is going to again be subject to some delaying tactics in the Senate and that the President has promised to veto on this measure.
So I think that that would be an appropriate conclusion to this measure and give us a chance in the next Congress to begin again.
The bill fails to address the unlimited homestead cap, which is currently enjoyed by Texas and Florida, even though there is a 2-year wait before it kicks in. It imposes a nominal cap on homestead exemptions, but it is so filled with loopholes as to be next to meaningless.
Anyone who lives in a State for more than 2 years will be able to thumb their noses at their creditors and remain in their multimillion dollar mansions, and this goes contrary to a provision that we had that would have cured this.
So this measure before us in the form of a conference report, shot through with all kinds of process defects, is mean-spirited, will have a negative impact on the most vulnerable elements of our society and so is appropriately opposed by the United Automobile Workers, the AFL-CIO, AFCSME, a raft of consumer organizations, women and family organizations. I think it is very clear that we should now vote against this measure, and I hope that many of the Members who supported the bill in an earlier vote will reconsider and vote no when this conference report comes for a vote.
Mr. Speaker, I reserve the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield such time as he may consume to the gentleman from Texas (Mr. SESSIONS), which that is a reward that I am granting him on the basis that he has been tremendously helpful to this chairman on many separate issues in this bankruptcy reform bill, primarily what we have discussed thoroughly, the homestead exemption. We owe a great deal to the gentleman from Texas (Mr. SESSIONS).
Mr. SESSIONS. Mr. Speaker, I appreciate the chairman, the gentleman from Pennsylvania (Mr. GEKAS), for his thoughtfulness in allowing me an opportunity to stand up to respond to my colleague, the gentleman from Michigan (Mr. CONYERS).
Mr. Speaker, I have been a student of this process. Perhaps I could be accused of changing what was the Democrat option on this bankruptcy. I appeared before the Committee on the Judiciary. The prior amount was $100,000. It is very clear that the Democrat Party wanted to take people's homes from them for as little as $100,000 of a home. The Democrat Party, as exemplified by the chairman, wants to make it easier for the middle class of this country to lose their homes if they are engaged in a bankruptcy. I stood up before the Committee on the Judiciary, and I said millionaires and billionaires are talked about taking advantage of this circumstance and it is blamed on people that have a home worth $100,000. I understand the gentleman from Michigan (Mr. CONYERS) disagrees with me. I understand the Democrat Party disagrees with me. The fact of the matter is, is that that figure has been moved to $250,000. The gentleman from Massachusetts (Mr. DELAHUNT) agreed with me that day as a result of testimony back in the Committee on the Judiciary. That is why we are at $250,000. $100,000 is a wrong amount, and I believe that we should be forthright in understanding that a figure of $100,000 would mean that the middle class of this country, if faced with a bankruptcy, could then be thrown out of their own home. That is the reason why we have made the changes. That is the reason why it is what is in the best interest of people not only in Texas but all across this country.
It preserves the States' rights, but the most important thing is that we aim at the problem. The problem is not the middle class of this country attempting to get out of paying their bills. It is about a problem of someone hiding their money in an asset or a resource like a home and trying to hide from their creditors. The problem, I believe, has been amply addressed.
I disagree with the gentleman's assessment and would ask that we support this because it is the right thing for America.
[Time: 13:30]
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I think the three myths that have been the basis of this bill's long life have now been exposed. There is no fresh start. The accountability is very severe. This is a very definitely an anti-consumer bill.
People of all incomes are subject to new coercive creditor motions, including being able to challenge the discharge of even small cash advances. In this bill, it defines current monthly income as the previous 6 months' income, even if they have lost their job.
I say, thanks a lot. I just sort of thank the generous, thoughtful, sympathetic people that wrote that into the bill. I will repeat it for the subcommittee chairman's benefit. It defines current monthly income as the previous 6 months' income, even if they lost that job and will not have the income in the future, thereby skewing the whole means test.
If the expenses exceed what the IRS says they should, they have to go to court and litigate it. Thanks a lot. That was a very thoughtful and sympathetic and moving provision, because they are telling an honest bankrupt to
[Page: H9838]
It is just the idea, it is just an indication of the great concern and touching sympathy that the other side has for the people of limited means that go into bankruptcy court.
``Disclosure of how deep you are getting into debt, and how long it would take you to pay the balance at the minimum payment.'' There is just an 800 number. And then, 80 percent of all the banks would be exempted from even that requirement.
Mr. Speaker, this is a mean-spirited bill. This is a measure that does not meet the tests of anybody.
Finally, I would like to just reiterate the comment made by my good friend, the member of the Committee on the Judiciary, the gentleman from Virginia (Mr. BOUCHER), about moving child support from the seventh to the first priority. That is meaningless. It does it, but the order of priorities apply only in Chapter 7 among unsecured creditors during the bankruptcy proceeding.
Ninety-six percent of all the consumer debtors do not have any assets to distribute to prior unsecured creditors, so that has no meaning. It is a fig leaf. It is phony. It does not improve child support, for those who need the child support at all, because it moves the credit card debtors to the same priority as those who need child support.
Sorry to have to tell everyone about this at the end of this discussion, but I am afraid that those are the sad and sorry consequences of a bill that has the earmarks of the creditor lobby, that awesome creditor lobby that has had such an undue influence on the measure before us.
Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I do this for one small purpose, to reiterate for the record, for the Members of the House, that every contention made by the gentleman from Michigan (Mr. CONYERS), every action taken by those who oppose bankruptcy reform, every debate that they offered over the course, every one of them has been thoroughly discussed, thoroughly debated, and each one of them considered in the overwhelming vote granted bankruptcy reform by the Members of the House.
Mr. BEREUTER. Mr. Speaker, this Member rises today to express his support for the Conference Report of H.R. 2415, which is amended with the Bankruptcy Reform Act. It is important to note that this Member is an original cosponsor of H.R. 833, the Bankruptcy Reform Act, which passed the House on May 5, 1999, by a vote of 313-108.
First, this Member would thank the distinguished gentleman from Pennsylvania (Mr. GEKAS), Chairman of the Judiciary Subcommittee on Commercial and Administrative Law, for introducing the House bankruptcy legislation (H.R. 833). This Member would also like to express his appreciation to the distinguished gentleman from Illinois (Mr. HYDE), the Chairman of the Judiciary Committee, for his efforts in getting this measure to the House Floor for consideration.
This Member supports the Bankruptcy Reform Act for numerous reasons; however, the most important reasons include the following:
First, and of preeminent importance to the nation's agriculture sector, this Member supports the provision in H.R. 2415 which permanently extends Chapter 12 of the Bankruptcy Code for family farmers. Chapter 12 bankruptcy allows family farmers to reorganize their debts as compared to liquidating their assets. Chapter 12 bankruptcy has been a viable option for family farmers nationwide. It has allowed family farmers to reorganize their assets in a manner which balances the interests of creditors and the future success of the involved farmer.
If Chapter 12 bankruptcy provisions are not permanently extended for family farmers, this will have a drastic impact on an agricultural sector already reeling from low commodity prices. Not only will many family farmers have to end their operations, but also land values will likely plunge downward. Such a decrease in land values will affect both the ability of family farmers to earn a living and the manner in which banks, making agricultural loans, conduct their lending activities. This Member has received many contacts from his constituents regarding the extension of Chapter 12 bankruptcy because of the situation now being faced by our nation's farm families--although the U.S. economy is generally healthy, it is clear the agricultural sector is hurting.
Second, this Member supports the provision in H.R. 2415 which provides for a means testing (needs-based) formula when determining whether an individual should file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy allows a debtor to be discharged of his or her personal liability for many unsecured debts. In addition, there is no requirement that
a Chapter 7 filer repay many of his or her debts. However, Chapter 13 bankruptcy filers, on the other hand, commit to repay some portion of his or her debts under a repayment plan.
Some Chapter 7 filers actually have the capacity to repay some of what they owe, but they choose Chapter 7 bankruptcy and are able to walk away from these debts. For example, the stories in which an individual filed for Chapter 7 bankruptcy and then goes out takes a nice vacation and/or buys a new car are too common. Moreover, the status quo is costing the average American individual and family in increased costs for consumer goods and credit because of the amount of debt which is never repaid to creditors.
As a response to these concerns, the needs-based test of H.R. 2415 will help ensure that high income filers, who could repay some of what they owe, are required to file Chapter 13 bankruptcy as compared to Chapter 7. This needs-based system takes a debtor's income, expenses, obligations and any special circumstances into account when determining whether he or she has the capacity to repay a portion of their debts.
Third, this Member supports the additional monthly expenses that are not considered as a factor under the needs-based test of H.R. 2415 which determines whether a person can file Chapter 7 or 13 bankruptcy. These expenses include the following: reasonable expenses incurred to maintain the safety of the debtor and debtor's family from domestic violence, an additional food and clothing allowance if demonstrated to be reasonable and necessary; and reasonable and necessary expenses for the care and support of an elderly, chronically ill, or disabled member of the debtor's household or immediate family.
In closing, for these aforementioned reasons and others, this Member would encourage his colleagues to support the Conference report of H.R. 2415.
Ms. DELAURO. Mr. Speaker, I regret I was absent from the floor of the House on October 12. Had I been present, I would have voted for the motion to instruct conferees to have an open conference on bankruptcy reform.
I look forward to this conference. An issue as crucial as this deserves a full and fair debate. Bankruptcy reform should expect responsible efforts from both debtors and creditors that extend credit far beyond what individuals are capable of paying back.
Mr. CONYERS. Mr. Speaker, the following is a letter which clarifies what will happen to child support obligations if this bill passes. It answers the myth that this bill will not harm children.
NATIONAL WOMEN'S LAW CENTER,
Washington, DC, June 7, 2000.
Hon. ROBERT
MENENDEZ,
Cannon House Office Building,
Washington,
DC.
DEAR REPRESENTATIVE MENENDEZ: The undersigned organizations are long-time advocates for women and children, including economically vulnerable single parents and their families. We are writing in response to your May 24 letter to your colleagues which criticizes the recent TIME magazine article on bankruptcy and asserts that the pending bankruptcy bill would help children obtain child support. We must respectfully, but emphatically, disagree. The bill would give many creditors, including credit card companies, finance companies, auto lenders and others, greater claims to a debtor's limited resources than they have under current law. This would intensify the competition for scarce resources between children owed child support and sophisticated commercial creditors both during and after bankruptcy.
Your letter characterizes as a ``myth'' the statement in the TIME Magazine article that: ``The proposed legislation would treat a bankrupt man's credit card debt the same as his obligation to pay child support.'' However, the effect of several provisions of the bill, taken together, would indeed have this result. As the National Association of Attorneys General, commenting on a similar, earlier version of the bankruptcy bill warned, it:
Would encourage credit card companies to treat all debts as secured even though the resale value of the personal property charged on such cards would rarely approach the amount of the debt and even though the interest rates charged for such debt are set in recognition of the fact that such debts are essentially unsecured; and
As a consequence, could allow credit card debt to be elevated to the same or a higher level than domestic support claims and make it far more difficult to ensure that debtors will be able to satisfy their obligations to their spouses and children. (Emphasis added) (Resolution of the National Association of Attorneys General, March, 1999)
Your letter states the following ``fact'':
Bankruptcy reform moves child support to the number one priority position in bankruptcy proceedings. Currently it is priority number seven, behind things like attorney
[Page: H9839]
Unfortunately, the child support provisions that you mention in your letter would not solve the serious problems the rest of the bill would create for children in need of support.
Moving child support from seventh to first priority sounds good, but is virtually meaningless. This order of priorities only applies in Chapter 7, among unsecured creditors, during the bankruptcy proceeding. Even today, fewer than five percent of consumer debtors in Chapter 7 have any assets to distribute to priority unsecured creditors after secured debtors receive the value of their collateral. Under the bill, there would be even less for priority unsecured creditors in Chapter 7 cases. Only the poorest debtors will have access to Chapter 7 under the means test, and the claims of secured creditors, who are paid before even ``priority'' unsecured creditors, will be increased. Thus, in effect, children owed support will have ``first priority'' to nothing. And, once the Chapter 7 proceeding is over, these priorities have no effect. Under current law, child support and alimony obligations are among the few debts that cannot be discharged in bankruptcy. However, under the bill, many more debts, including credit card debts, will survive bankruptcy and compete for the debtor's resources.
In Chapter 13, current law already requires child support owed to families to be paid in full. (The major change in this section of the bill would be an increase in the rights of States to be paid in Chapter 13 for child support that was assigned to them as reimbursement for public assistance.) However, other provisions of the bill would make it less likely that children would actually receive all the child support they are due in Chapter 13. For example, the bill would require debtors in Chapter 13 to pay many other creditors in full--including credit card companies claiming security interests in property of little or no value. The bill may say that debtors must pay all these debts in full; but if there is not enough money to go around, it simply will make it less likely that children will get the support they need during the Chapter 13 proceeding, much less afterward.
Under current law, the ``automatic stay'' does not allow bankruptcy filers to avoid paying child support while their cases are pending; relief from automatic stay for child support enforcement is routinely granted, and some jurisdictions do not even require the filing of a motion. The elimination of the automatic stay would simplify the process of collecting child support during bankruptcy in some cases. However, the potential benefit of this provision is outweighed by the hundreds of pages of other provisions that increase the rights of commercial creditors, during and after bankruptcy, at the expense of children.
Our organizations are committed to making sure that children get the support they need and deserve. We have opposed this Bankruptcy Reform Act because it will reduce the ability of parents to pay their most important debt--their debt to their children.
Sincerely,
ACES (Association for Children for
Enforcement of Support)
American Association of University Women
Business & Professional Women/USA (BPW/USA)
International Women's
Insolvency & Restructuring Confederation (IWIRC)
National Association of
Commissions for Women
National Center for Youth Law
National
Organization for Women
National Partnership for Women & Families
National Women's Law Center
NOW Legal Defense and Education Fund
The
Woman Activist Fund, Inc.
Women Employed
Women's Institute for Freedom
of the Press
Mr. HOBSON. Mr. Speaker, I support the long-awaited bankruptcy reform legislation included in H.R. 2415. As a small businessman, I know the importance of improving the bankruptcy system for Americans.
While the bankruptcy process should continue to be a life preserver for those who have debt that is insurmountable, this bill makes the needed for reforms to prevent abuse of the system. Not reforming the system amounts to a hidden tax on American consumers, who currently subsidize individuals who walk away from mountains of debt, yet can afford to pay back a portion of their debts.
The number of bankruptcies has trended upwards, despite the economy's overall good health. In 1997, the figure climbed to 1.35 million, more than triple the number recorded in the early 1980s. The rise in bankruptcy filings is often attributed to a rise in household debt burdens. Since 1980, household debt has risen from about 61 percent to 85 percent of total disposable personal income.
This bill provides for the increased use of Chapter 13 bankruptcy, which allows for the repayment of some debts. This is an appropriate step to ensure that our bankruptcy laws ensure that individuals who can repay a portion of their debts, pay their fair share. I commend my colleagues for their hard work and years of effort to reduce the ``abuse'' of the bankruptcy system while continuing to protect low-income consumers.
Ms. PRYCE of Ohio. Mr. Speaker, I am in strong support of this conference report. We have before us a fair and even-handed conference report that will allow us to consider this important legislation to reform the nation's bankruptcy system.
Procedure in the House is not always all that we might want it to be, but when we are presented with legislation that is so needed and so desired by the American people, we must take hold of it and champion it to see that it becomes law.
This bankruptcy reform legislation will remedy weaknesses in existing law that allow higher income taxpayers to escape their responsibilities even when they are able to repay a portion of what they owe. This bill will take steps to eliminate the ``bankruptcy of convenience.''
At the same time, this legislation will protect those who truly need a second chance and maintain their ability to obtain a fresh start. Further, this legislation contains important protections for children and spouses who are owed child support or alimony.
By equipping state child support collection agencies with the necessary tools and codifying the importance of child support and alimony obligations, this legislation will increase our commitment to children and families, and will hold parents, husbands, and wives to their responsibilities.
Over 70 percent of Americans have indicated their desire for bankruptcy reform. We can do no less than what the American people have overwhelmingly asked of us.
I urge your support of this important legislation, and yield back the balance of my time.
Mr. CASTLE. Mr. Speaker, I rise today in strong support of the bankruptcy reform conference report.
This legislation has been a long time coming. Since 1980, bankruptcies have risen 400 percent, imposing a heavy burden on American families. Some estimate that bankruptcies cost each household $400 a year in the form of higher interest rates on their credit cards, car loans, school loans, and mortgages.
The means testing approach championed by my colleague, GEORGE GEKAS, will make bankruptcy abuse much harder in the future. Wealthy individuals who can hire savvy lawyers will no longer be able to game the bankruptcy system at the expense of the American consumer.
What this bill says is that if you file bankruptcy, you will not be able to walk away from your debt if after all your reasonable monthly expenses are taken into account, you still have $166 in your pocket. If you are one of these people, then you will have to enter into an agreement to repay at least part of your debt in a 5 year plan, unless you can prove special circumstances to the judge. That is taking responsibility for your debt instead of imposing the cost on other consumers.
I also want to thank Chairman GEKAS for his support in helping my home State of Delaware receive an additional bankruptcy judgeship. As I testified before a joint House-Senate Judiciary Committee hearing earlier this year, Delaware's bankruptcy judges have the highest average bankruptcy caseloads in the Nation according to the U.S. judicial conference. The need for relief has reached critical levels and Chairman GEKAS has been quick to recognize this.
Recognition also must go to Speaker HASTERT and Majority Leader ARMEY, who fulfilled their commitment to finding an appropriate vehicle that would allow the will of the House and the will of the Senate to proceed on this legislation. They did the honorable thing by taking our unrelated riders from both sides of the aisle and presenting this body with a clean bill for us to vote on. I thank them for their leadership.
Finally, I want to thank Chairman GEKAS for his support in removing a provision in the bill that would have eliminated a business' place of incorporation as an acceptable venue for filing a bankruptcy. Delaware's bankruptcy judges and the Delaware bar are among the finest in the Nation in resolving bankruptcies quickly, fairly and efficiently. We need to keep the courtroom doors open in Delaware.
Therefore, I urge my colleagues to support this clean, balanced bankruptcy reform conference report.
Mr. GEKAS. Mr. Speaker, I yield back the balance of my time, and I move the previous question on the conference report.
The previous question was ordered.
MOTION TO RECOMMIT OFFERED BY MR. CONYERS
Mr. CONYERS. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the conference report?
Mr. CONYERS. Yes, sir, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to recommit.
[Page: H9840]
The Clerk read as follows:
Mr. CONYERS moves to recommit the conference report on the bill (H.R. 2415) to the committee of conference with instructions to the managers on the part of the House to insist on conducting at least one meeting of conferees as required by House Rule XXII, cl. 12, and in accordance with the motion to instruct conferees approved by the House of Representatives yesterday by a vote of 398 to 1, before making any report on the bill.
Mr. GEKAS (during the reading). Mr. Speaker, I ask unanimous consent that the motion be considered as read and printed in the RECORD.
The SPEAKER pro tempore. Is there objection to the request of the gentleman from Pennsylvania?
There was no objection.
The SPEAKER pro tempore. Without objection, the previous question is ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The motion to recommit was rejected.
The SPEAKER pro tempore. The question is on the conference report.
The conference report was agreed to.
A motion to reconsider was laid on the table.
END