THIS SEARCH THIS DOCUMENT THIS CR ISSUE GO TO
Next Hit Forward Next Document New CR Search
Prev Hit Back Prev Document HomePage
Hit List Best Sections Daily Digest Help
Contents Display
Mr. Chairman, many of the provisions that are the base of H.R. 333 were designed for
[Page: H522] GPO's PDF
Mr. Chairman, as elected officials for the American people we must protect America's families. Most individuals who file petitions in the bankruptcy courts are usually experiencing turbulent times. Financial hardship is a serious matter that deserves legislative reform that is the product of a deliberative process. This bill, is an extreme bill undertaken at the direction of special interest groups. We must protect working-class families. We must work to find a viable solution that deters abuse of the bankruptcy system while preserving the fresh start for discharged debtors. It is ironic that the consumer lending industry actively solicits unsuspecting consumers through the mail with terms of easy credit, buy-now, pay-later rhetoric. After addicting debtors to this ``financial crack'' lenders are advocating for reform. Of course debtors are responsible for financial obligations that they incur; however, lenders must assume responsibility for their actions in creating the precarious financial crisis we are discussing.
In the 105th Congress, I served as a member of the Subcommittee on Commercial and Administrative law and as a conferee on H.R. 3150, the precursor to the bill before us today. As a member of that subcommittee in the 105th Congress, I signed onto the dissenting views of the accompanied the report from the committee. The dissents' conclusion is appropriate in this context.
For nearly 100 years, Congress has carefully considered the bankruptcy laws and legislated on a deliberate and bipartisan basis. In the past, Congress has elected also to carefully preserve an insolvency system, that provides for a fresh start for honest, hard-working debtors, protects ongoing businesses and jobs, and balances the rights of and between debtors and creditors.
Because H.R. 333 departs from these historical principles, and tramples on the preservation of the American people, I oppose this legislation in the interest of all that is just and fair.
Mr. SENSENBRENNER. Mr. Chairman, I yield 4 minutes to the distinguished gentleman from Pennsylvania (Mr. GEKAS), the principal author of the bill.
(Mr. GEKAS asked and was given permission to revise and extend his remarks.)
Mr. GEKAS. Mr. Chairman, to the Members we state and restate the two principal themes that, from the very beginning of this crusade to bring about bankruptcy reform, have remained the truths of the entire debate.
Number one, in bankruptcy those who become so overburdened by debt, so crushed by the overweaning forces of finances that they no longer can meet and handle, to those people we guarantee a fresh start. That is what bankruptcy is all about, to allow and to foster a fresh start once this circumstance occurs. That we have never at all wavered in bringing about even to this moment.
The second truth is that in those circumstances where it is determined that a person filing for bankruptcy does indeed have the ability to repay some of the debt over a period of time, that individual should be compelled through a proper mechanism that we have in the bill to repay that portion of the debt. And so the purposes of bankruptcy envisioned by our forefathers have been met and yet we bring about some reform measures that guarantee or reguarantee the arena of personal responsibility on the part of the American citizen, the American worker and at the same time, to give relief where it is merited.
Mr. Chairman, what is never stated by the opponents of this bill and by the people who would criticize what we have attempted to do here is that most of the provisions of this bill have come about through testimony offered by our fellow citizens from every corner of American life, including women and children to which reference has been made many, many times; by the credit unions; by the taxing authorities; and they bring out two other truths that are part of the debate in this venture of ours here today.
One is this: Every time someone does file bankruptcy, it costs the consumer. All of the other consumers, the ones that the gentleman from Michigan says are opposed to this bill. Consumers are hurt by bankruptcy. Why? Because every time something like that occurs, the price of goods creeps up. Perhaps not envisioned immediately or seen, but they do creep up. So the consumer has to pay more at the supermarket because of bankruptcies.
Secondly, interest rates, because of the cost of credit, the cost of lending money goes up every time somebody files for bankruptcy, hits the consumer who is interested in borrowing money for a refrigerator or an automobile.
Third, I did not realize until we began investigating this whole area of concern, bankruptcy, even our taxes increase as a result of someone filing bankruptcy. I did not realize that the taxing authorities, until we were able to craft this particular piece of legislation, sometimes did not even know that a person owing back taxes or eventual taxes to be paid did not even know that those moneys were due them. We learned from the City of New York and the State of New York and other taxing authorities, municipal and county and state organizations, that for the first time they have in our bill a methodology for being notified that someone is going bankrupt and have an even chance of retrieving some of the back taxes. Why is that important? Because the consumers, the taxpayers are hurt every single time a bankruptcy is filed. The consumers, the taxpayers of our country, citizens of personal responsibility are supporting this legislation.
Mr. Chairman, I include for the RECORD a letter from the U.S. Chamber of Commerce.
U.S. CHAMBER OF COMMERCE,
Washington, DC., February 28, 2001.
To Members
of the U.S. House of Representatives:
The U.S. Chamber of Commerce, the world's largest business federation, with more than three million businesses and organizations of every size, sector and region, strongly urges you to vote for the Bankruptcy Reform Act of 2001.
This balanced, bipartisan bill is identical to the bill which last year passed the House by voice vote and was overwhelmingly approved by the Senate by a 70-28 vote. An earlier version passed the House by a strong 313-108 vote.
There are two pillars upon which bankruptcy reform rests: debtors must not have their access to bankruptcy protection restricted, while those who can afford to pay a significant portion of their debts must be required to do so.
This balanced, bipartisan legislation will accomplish these goals:
Access to bankruptcy will unquestionably remain available for all Americans, regardless of income.
More than 100,000 bankruptcy filers are abusing the system every year by discharging debts that they have the ability to repay.
Abusers of the bankruptcy system, those who earn more than the median income and can afford to repay a signficiant portion of their debts, will be required to pay back what they can afford.
The bill provides substantial new protections for women and children trying to collect their child support and alimony, for example, by moving child support to first priority. Child support collection authorities describe the bill as a ``veritable wish list'' of provisions to assist them in their child support collection efforts.
The safe harbor provisions will protect lower income Americans by ensuring that they will have access to Chapter 7 relief without qualification.
The bill imposes significant new responsibilities and disclosures on lenders, and particularly credit card lenders.
The bill is fair to debtors, while it also stops the very rich from exploiting the system to discharge their debts, leaving everyone else holding the bag.
The U.S. Chamber of Commerce will consider Scoring this vote in its annual ``How They Voted'' Guide.
Mr. NADLER. Mr. Chairman, I yield 2 minutes to the gentleman from Virginia (Mr. BOUCHER).
Mr. BOUCHER. Mr. Chairman, I thank the gentleman very much for yielding me this time.
Mr. Chairman, I ask the gentleman from Wisconsin (Mr. SENSENBRENNER) if he would be willing to yield 1 additional minute to me.
Mr. SENSENBRENNER. Mr. Chairman, I yield 1 additional minute to the gentleman from Virginia (Mr. BOUCHER).
Mr. BOUCHER. Mr. Chairman, I thank the gentleman from Wisconsin for yielding that additional 1 minute.
Mr. Chairman, I rise in support of the bankruptcy reform legislation and urge its approval in the House. With this measure, we bring to conclusion a process that was launched 4 years ago to bring a much-needed reform to the Nation's bankruptcy laws.
During the time of the generally strong economy, consumer bankruptcy filings should be rare. Contrary, however, to this expectation, there are now more than 1.2 million annual bankruptcy filings, representing a five-fold increase since the last major bankruptcy law revision that took place in 1978.
The current level of annual filings is more than 90 percent greater than the number of 1 decade ago. Bankruptcies of convenience are driving these increased filings.
Bankruptcy was never meant to be a financial planning tool, but it is increasingly becoming a first stop rather than a last resort, as many filers who can repay a substantial part of their debt use the complete liquidation provisions of chapter 7 of the Bankruptcy Code rather than the court supervised repayment plans that are contained in chapter 13.
Our legislation will direct more filers into chapter 13 plans. Those who can afford to make payments will be required to do so.
This is a consumer protection measure. The typical American family pays a hidden tax of $550 each year arising from the increased cost of credit and the increases in prices for goods and services occasioned by the discharge of $50 billion annually in consumer bankruptcy debt. By requiring that people who can repay a substantial part of their debt do so in chapter 13 plans, we will lessen substantially that hidden tax.
Another key point should be made about the provisions of the bill. The alimony or child support recipient is clearly better off under our bill than she is under current law. At the present time, she stands seventh in the rank of priority for the payment of claims in bankruptcy proceedings.
Under the legislation we are putting forward, the child support or alimony recipient will have priority number one. Her claim will be first in line for payment. Other provisions of the bill also make it easier for her to execute against the assets of the bankruptcy state.
For this reason, our bill has been endorsed by the child support enforcement agencies of a number of States because of the better ability to collect child support payments which this bill provides. I will say again that the child support recipient is clearly better off under this bill than she is under current law.
This is a balanced bipartisan measure which contains new consumer protections and requires greater debt repayment by those who can afford to make the payments. Responsible borrowers and all consumers will benefit from its passage.
I want to commend the gentleman from Pennsylvania (Mr. GEKAS), the sponsor of this measure, for the leadership he has provided over the last 4 years as we have sought to make this important reform. The measure he brings to the floor today deserves the endorsement of this House.
Mr. SENSENBRENNER. Mr. Chairman, I yield 2 minutes to the gentlewoman from New Jersey (Mrs. ROUKEMA).
(Mrs. ROUKEMA asked and was given permission to revise and extend her remarks.)
Mrs. ROUKEMA. Mr. Chairman, I rise in strong support of this legislation and associate my remarks with the gentleman from Pennsylvania (Mr. GEKAS) and the gentleman from Wisconsin (Mr. SENSENBRENNER).
This is a significant and substantial reform. It improves bankruptcy law and restores personal responsibility and integrity to our system. It does not diminish anything. It, at the same time, is a safety net for those who need it most.
I would like to refer to the child support component of this specifically because I was a pioneer in child support legislation, going back to the mid-1980s; and I served on the Commission for Interstate Child Support Enforcement. I want to make it clear that this is a giant step in terms of protecting child support. It has made those payments number one. Let there not be any misunderstanding about that.
The gentleman from Virginia (Mr. BOUCHER), the previous speaker, made reference to the State situation; and I would specifically like to reference that it does not, the automatic stay does not apply to State child-support collection agencies. I know from speaking with child-support advocates in New Jersey, in my State that has been a leader in this respect, that this change is a top priority for them to ensure the continued payment of child support.
Mr. Chairman, I want to again thank the leaders here and also acknowledge that there are components of this that the Committee on Financial Services has always agreed to.
Let me focus with more explicit details to the key elements of the bill as follows:
Mr. Chairman, I rise today in strong support of H.R. 333, the Bankruptcy Reform Act of 2001.
INTRODUCTION
Consumer bankruptcy reform is an important issue that needs to be addressed now. In 1998 Americans filed a record of 1.4 million consumer bankruptcy petitions representing an over 650 percent increase since 1978. Those who entered into bankruptcy erased an estimated $44 billion in consumer debt. This resulted in a hidden tax of almost $400 per household for families who have to pay monthly bills including mortgages, student loans, and insurance. It is important to note that this surge in bankruptcies in the last few years occurred at a time when the national economy has grown at a strong rate. In fact, between 1986 and 1996, real per capita annual disposable income grew by over 13 percent while personal bankruptcies more than doubled.
Bankruptcy is fast becoming the first stop financial planning tool rather than a last resort. The purpose of reform is to improve bankruptcy law and practice by restoring personal responsibility and integrity in the bankruptcy system but also ensuring that the safety net of the Bankruptcy code is intact for those who need it most. I am a strong supporter of the consumer bankruptcy reforms contained in the bill and I will continue to work hard for bankruptcy reform legislation.
FINANCIAL SERVICES
Included in this bill are important provisions from H.R. 1161, the Financial Contract Netting Improvement Act of 2000 passed by the House last year. The netting provisions have one primary purpose: to minimize the systemic risk evident in our nation's financial system. Specifically, to minimize risk that could occur when a counterpart to a derivative contract becomes insolvent. It amends our banking and bankruptcy insolvency laws to require netting of the financial and over-the-counter derivatives instruments that are often traded among large financial institutions. It is a common-sense approach that should be enacted this Congress.
These same provisions were part of last year's Working Group recommendations on the netting of derivatives and other financial contracts. The House passed similar netting provisions on three separate occasions in the last Congress--as a stand-alone bill, as part of last year's comprehensive Bankruptcy Reform bill and as part of H.R. 4541, the Commodity Futures Modernization Act of 2000 which reauthorized the Commodities Exchange Act.
CHILD SUPPORT
I would like to thank the Committee for the child support provisions in the Bankruptcy Reform Bill.
I have a long history of standing up for child support enforcement, having been a pioneer on child support reforms and having served on the U.S. Commission for Inter-State Child Support Enforcement. It's a national disgrace that our child support enforcement system continues to allow so many parents who can afford to pay for their children's support to shirk these obligations. The so-called ``enforcement gap'' the difference between how much child support could be collected and how much child support is collected--has been estimated at $34 billion.
[Page: H524] GPO's PDF
This legal abuse is a criminal violation as well as neglect of our children's most basic needs. In addition, the taxpayers are abused because billions of tax dollars are paid out because these families are falling onto the welfare roles at alarming rates.
H.R. 333 strengthens Child Support Enforcement by:
Child support payments are moved to Number one when determining which debts are paid first in a bankruptcy case. Currently, child support payments rank seventh behind such priorities as attorney's fees.
Confirmation and discharge of chapter 13 plans are made conditional upon the debtor's complete payment of child support. This will help further ensure that child support receives the priority it deserves.
| <<< | >>> |
THIS SEARCH THIS DOCUMENT THIS CR ISSUE GO TO
Next Hit Forward Next Document New CR Search
Prev Hit Back Prev Document HomePage
Hit List Best Sections Daily Digest Help
Contents Display