LEXIS-NEXIS® Academic Universe-Document

LEXIS-NEXIS® Academic

November 28, 1999, Sunday, FINAL EDITION

SECTION: COMMENTARY, Pg. 2

LENGTH: 646 words

HEADLINE: Congress should act early next year to reform nation's bankruptcy laws;

BODY:

For five decades and through multiple congresses, federal lawmakers have debated bankruptcy laws, trying always to decide which debtors deserve to escape their financial obligations.

A second chance and fresh start are the policies at the core of these laws. We need for people to pay their debts, but we don't want to see debtors ruined forever. That no one would see debtors so strapped by their obligations that they could not recover is the reason our forefathers gave bankruptcy constitutional prominence. The last truly meaningful reform of the bankruptcy code in this country occurred 21 years ago, but in the past two congressional sessions major reform efforts have come from both sides of the aisle. Nevertheless, though lawmakers have passed bills, no new legislation has been adopted.

SENATORS ONCE AGAIN bogged down despite our hope last summer that Congress would pass needed reforms after the House voted overwhelmingly for change, and despite strong bipartisan support in the Senate this year.

Interestingly, they approved 31 of some 300 amendments added to the initial legislation. But after two weeks of debate, 14 amendments, including two politically driven and contentious Democratic proposals involving guns and abortion, were still on the table as the 1999 session drew to a close.

Trent Lott, the majority leader, has decided to close debate Jan. 25, and the measure may not be brought up again until then. Some Democrats and consumer organizations have decried his decision to stop the discussions, but Lott was right to call a halt to the debate.

An amendment that would effectively prevent bankruptcies by gun manufacturers who are now the the targets of civil lawsuits, as well as another that would make sure abortion clinic protesters who are sued and lose cannot discharge debts associated with their beliefs, are politically inspired and irrelevant to any meaningful discussion about bankruptcy protection.

Besides, neither of these amendments could pass even a voice vote in the Senate.

As we have been saying for a long time, bankruptcy reform is desperately needed. More than 1.4 million Americans filed for bankruptcy last year, costing consumers and businesses $ 45 billion. Every time a debt is wiped away, someone else loses money.

Some, and we suspect the majority, of these debtors have no way out. They will never be able to pay their debts. But others have learned to manipulate the system. They have no sense of moral obligation and would simply walk away.

There are enough of those deadbeats out there to justify the contemplated reforms, and both the House and Senate proposals insist that people who can repay a portion of their debts should.

The point of bankruptcy reform, as Iowa Sen. Charles Grassley said, is to limit Chapter 7, which discharges debts, to those who legitimately cannot pay. Those people who can pay a portion of their debts would do so under a Chapter 13 repayment plan. Every person who has the means must pay unless a judge or trustee decides the debtor will not be able to meet that obligation.

Such a plan seems to us eminently fair. It encourages personal responsibility while making it more difficult to erase debt.

No longer would wealthy individuals like Burt Reynolds be able to sidestep their debts and keep their multimillion-dollar homes because the legislation places a cap on the amount of protected property.

NO LONGER WOULD deadbeat parents be able to avoid their child support and alimony obligations by filing for bankruptcy.

If the goal of the bankruptcy system is to match bankruptcy relief to debtor need, then Chapter 13 repayment plans accomplish this objective. We urge the Senate to pass its bill early next year and reconcile it with the House version. Real reform is needed now.

NOTES: EDITORIALS

LOAD-DATE: December 3, 1999