LEXIS-NEXIS® Academic Universe-Document

LEXIS-NEXIS® Academic

May 16, 1999 Sunday, Final Chaser

SECTION: BUSINESS; Pg. D2

LENGTH: 436 words

HEADLINE: MEANS TEST IN BANKRUPTCY SOUGHT BY COALITION;
SENATE IS URGED TO OK REFORM BILL

BYLINE: By Jennifer Corbett Dooren, Hearst Newspapers

DATELINE: WASHINGTON

BODY:
School administrator Elfreda Massie and her husband, Leonard, couldn't make ends meet despite their $180,000 combined annual salaries.

The Massies filed for bankruptcy twice in the past 18 years but they still lived a lifestyle that allowed them to take vacation trips to Cancun, Mexico. The Massie's most recent bankruptcy - filed last June - showed that the couple had amassed more than $140,000 in debt on 23 credit cards as well as a loan of almost $10,000 from a credit union.

As a result of their bankruptcy plea, the Massies will be able to walk away from much of that debt, even though Elfreda, a deputy school superintendent in Baltimore, earns $108,000 and her husband earns about $72,000 annually.

"That's the kind of case we are trying to eliminate," said George Wallace, a member of the Consumer Bankruptcy Reform Coalition, a group of banks, credit unions, retailers and mortgage companies that are pushing for bankruptcy reform.

The coalition is urging the Senate to approve legislation in the next few weeks that would require most people earning more than $50,000 annually to pay a portion of their debts. The House approved similar legislation this month.

The drive to tighten the federal bankruptcy law comes as more and more consumers seek to shed their debts by filing for bankruptcy. A record 1.4 million Americans sought bankruptcy last year, according to the Administrative Office of the U.S. Courts.

"I think the need for bankruptcy reform is fairly obvious," said Sen. Charles Grassley, R-Iowa., citing those bankruptcy figures. Grassley is the author of the Senate bankruptcy bill.

The means test in the legislation would be adjusted on a regional basis. The Senate bill, unlike the House bill, gives bankruptcy judges some leeway to stray from using the means test.

Wallace acknowledges that many people who file for bankruptcy protection aren't abusing the system and got into trouble with the loss of a job or hit with thousands of dollars of unexpected medical bills. Indeed, Elfreda Massie told a local newspaper that she got into financial trouble when she had to pay a portion of nursing home care for a relative.

Wallace and supporters of the reform legislation say that, even with the changes they want, the bankruptcy law would still give people a "fresh start" when they run into unforeseen trouble.

While the credit industry has pushed for bankruptcy reform, consumer groups argue that creditors helped contribute to the increase in bankruptcies by encouraging people to take on more debt by, for example, sending out millions of credit card solicitations.

LOAD-DATE: May 18, 1999