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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