Statement
Regarding
S.
625, the Bankruptcy Reform Act of 1999
American Financial Services Association
(AFSA)
February
2, 2000
AFSA
applauds the Senate’s passage today of S. 625 sponsored by Senators Grassley
(R-IA), Torricelli (D-NJ), Biden (D-DE) and Sessions (R-AL).
Contrary
to assertions made by some of the bill’s critics, S. 625 still allows any
American to seek bankruptcy protection. Under a “needs-based” formula, filers
will be directed into one Chapter or another of the U.S. Bankruptcy Code based
upon their ability to repay. Those
whose income and circumstances indicate a true need for a complete “fresh start”
(an estimated 90% of current bankruptcy filers) will be able to obtain it under
Chapter 7. Higher-income individuals who clearly have the ability to repay a
meaningful portion of their debts will be required to do so under Chapter
13.
This
approach to bankruptcy reform is a fair, logical one that has strong support
from the American people. Public
opinion polls repeatedly show that the majority of Americans believe current
federal law makes it too easy for people to file for bankruptcy and avoid the
responsibility of paying their bills.
As
an active supporter of both the Jump$tart Coalition for Personal Financial
Literacy and adult consumer education initiatives, AFSA is particularly pleased
with the bill’s educational provisions – which encourage improved personal
finance education in the nation’s schools, as well as require credit counseling
prior to a bankruptcy filing and a course on financial management
afterwards. These “macro”
approaches will help some individuals develop new skills to better manage their
household finances, and others to avoid bankruptcy and its consequences
altogether,
In
addition, the bill includes strong measures that clarify and strengthen the
priority of child support and alimony obligations among those who declare
bankruptcy.
AFSA
wishes to thank the leadership of the Senate and the managers of the bill for
their efforts to bring S.625 to the Senate floor. Given these pro-women and children
measures, the American people’s support for bankruptcy reform, and the country’s
nearly 1.4 million personal bankruptcy filings, the time to act is NOW. We urge Congress to move quickly, so
that meaningful bankruptcy reform will be enacted at long last.
Founded
in 1916 and based in Washington, D.C., AFSA is the national trade association
for finance companies, “captive” auto finance/leasing companies and other market
funded financial services firms that lend to consumers and small
businesses. AFSA is a member of the
National Consumer Bankruptcy Coalition.
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