September 21, 1999

The Honorable Trent Lott
Senate Majority Leader
United States Senate
S-230 U.S. Capitol Building
Washington, DC 20510-7010

Dear Majority Leader Lott:

As the voice for progressive community banks, America’s Community Bankers urges you to vote for cloture and final passage of S. 625, the "Bankruptcy Reform Act of 1999."

Despite strong economic growth, low unemployment, and rising personal income, the number of personal bankruptcies continues to escalate, reaching a record high of 1.42 million in 1998. Without corrective action, this dangerous trend shows no sign of slowing down, largely because bankruptcy has become a first stop, rather than a last resort, for too many people. As a result, the bankruptcy system costs the average American household an estimated $400 each year.

S. 625 will reverse this trend by reforming the bankruptcy system in a fair, common sense manner. It establishes a needs-based bankruptcy system, which will require debtors who have the ability to repay all, or a portion, of their debts to do so, while preserving bankruptcy protection for those who truly need it. It eliminates the practice of reducing the secured value, or "cramming down," residential real estate mortgages by permitting lenders to retain first liens in bankruptcy.

Furthermore, S. 625 provides increased protection for women and children by prioritizing child support and alimony payments over all other debts in bankruptcy proceedings. As a result, single mothers will find it easier to collect child support payments from "deadbeat dads" who attempt to forsake their obligations by filing for bankruptcy.

S. 625 provides critical reform of our broken-down bankruptcy system. We strongly urge you to support S. 625 when it is brought to a vote for cloture and final passage on the Senate floor.

Sincerely,

Robert R. Davis
Director of Government Relations