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February 3, 2000 Thursday, Final Chaser

SECTION: FRONT; Pg. A3

LENGTH: 366 words

HEADLINE: SENATE OKS BANKRUPTCY BILL, BUT HURDLES REMAIN

BYLINE: New York Times

DATELINE: WASHINGTON

BODY:
The Senate approved a sweeping overhaul of the nation's bankruptcy laws Wednesday, decisively passing a measure that would make it harder for people to seek legal protection from payment of their debts.

Major differences still exist in the details of the bankruptcy overhaul passed Wednesday and a rival House version approved last year. But lawmakers from both parties and Clinton administration officials expressed confidence Wednesday that Congress can produce a compromise bill that Clinton can sign into law this year. But in a move that could complicate final enactment of the legislation, it included in the measure a $1 increase over three years in the minimum wage, to $6.15 per hour.

The Senate vote Wednesday passing the Bankruptcy Reform Act came after Democrats summoned Vice President Al Gore from the campaign trail in New York City to break a possible tie vote on a contentious abortion rights amendment included in the bill.

Republicans who had vigorously opposed the amendment, which would bar people convicted of crimes against abortion clinics from using bankruptcy protection to avoid paying civil judgments, abandoned their opposition once Gore took his seat as president of the Senate. The measure, sponsored by Sen. Charles Schumer, D-N.Y., passed handily, 80-17.

Senators voted, 83-14, to approve the overarching legislation, which was proposed by the nation's largest banks and credit card companies but opposed by consumer and civil rights groups. One reason the outcome was so lopsided is the campaign contributions and lobbying muscle come mainly from the politically powerful financial community, concentrated in New York.

The banking industry has grown increasingly concerned that too many people with money are skipping out on mountains of debt.

"Despite their ability to pay, wealthier filers walk away from an estimated $3 billion per year in debt," said Edward L. Yingling, chief lobbyist for the American Bankers Association.

The measure imposes new income requirements on people seeking a fresh start under the bankruptcy laws. And it requires credit card companies to show interest rates and fees more prominently on monthly statements.

GRAPHIC: Chart; Bankruptcy law
Highlights of bankruptcy law overhaul legislation passed Wednesday by the
Senate:
* Applies a new standard for determining whether people filing for bankruptcy
should be forced to repay their debts under a court-approved reorganization
plan rather than having them abrogated. If a debtor is found to have
sufficient income to repay at least 25 percent of his or her debts over five
years, a reorganization plan generally would be required.
* Requires credit card companies to explain to customers in their monthly
statements how long it would take to pay off balances if they make only the
minimum required payments.
* Gives highest priority among debts to child support payments, putting them
ahead of credit card debt and other obligations.
* Imposes a $100,000 federal cap on homestead exemptions, in an effort to
prevent wealthy debtors from shielding their assets in luxury homes in
bankruptcy proceedings. Many states limit the exemption to $40,000 or less.

LOAD-DATE: March 1, 2000