S.Amdt. 92Senate109th Congress (2005-2007)
To amend the credit counseling provision.
Sponsored by 
Sen. Russell D. Feingold (D-WI)
Sen. Russell D. Feingold (D-WI)Submitted March 7, 2005
Text
Modified
This amendment's own text couldn't be picked out of its Congressional Record passage, so the passage is shown in full.
BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005--
Continued
amendment no. 90
The PRESIDING OFFICER. There will now be 2 minutes of debate, equally
divided, on the Feingold amendment No. 90.
Mr. FRIST. Mr. President, for the information of my colleagues, in
consultation with the Democratic leader, we would like to have all of
the remaining votes be 10-minute votes. We are going to be enforcing it
strictly, so we have a reason to keep moving along. We ask that
everybody, once we start voting shortly, stay in the Chamber and
continue to vote. We will have 10-minute votes for the remainder of the
evening.
The PRESIDING OFFICER. The Senator from Wisconsin is recognized.
Mr. FEINGOLD. Mr. President, if we have a brief quorum call, I
believe we may be able to eliminate the need for some of the votes.
Mr. FRIST. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. FEINGOLD. Mr. President, I ask unanimous consent the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator is recognized.
Mr. FEINGOLD. Mr. President, I appreciate the fact that we have had
some opportunity to make a few modest modifications at the end of this
process. Obviously, I hoped for more, but I do thank the Senator from
Utah, Mr. Hatch, the Senator from Alabama, Mr. Sessions, the Senator
from Iowa, Mr. Grassley, and the Senator from Pennsylvania, Senator
Specter, who are working on a number of changes and accepting a couple
of amendments so we can move this process through. The result will be
that the next five votes on my amendments will not be necessary, if
this agreement is made. So I hope that causes the unanimous consent
agreement to go through.
[[Page S2463]]
Amendments Nos. 90, 93, 95, and 96 Withdrawn
Amendment No. 92, As Modified
Amendment No. 87, As Modified
I ask unanimous consent that my amendments No. 90, No. 93, No. 95,
and No. 96 be withdrawn; that my amendment No. 92, as modified and as
at the desk, be adopted; and that a modification of my amendment No. 87
which was agreed to last night be accepted as well.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
The amendment (No. 92) as modified, was agreed to, as follows:
Credit Counseling Amendment:
(1) On page 34, after line 25, insert--
``(4) The requirements of paragraph (1) shall not apply
with respect to a debtor whom the court determines, after
notice and hearing, is unable to complete those requirements
because of incapacity, disability, or active military duty in
a military combat zone. For the purposes of this paragraph,
incapacity means that the debtor is impaired by reason of
mental illness or mental deficiency so that he is incapable
of realizing and making rational decisions with respect to
his financial responsibilities; and ``disability'' means that
the debtor is so physically impaired as to be unable, after
reasonable effort, to participate in an in person, telephone,
or Internet briefing required under paragraph (1)'';
(2) On page 42, line 15, strike ``and''; and
(3) On page 43, between lines 3 and 4, insert the
following:
``(E) if a fee is charged for the instructional course,
charge a reasonable fee, and provide services without regard
to ability to pay the fee.''
(4) On page 35, line 12, insert ``who is a person
described in section 109(h)(4) or'' after the word
``debtor.''
(5) On page 36, line 9, insert ``who is a person described
in section 109(h)(4) or'' after the word ``debtor.''
The amendment (No. 87) as modified, was agreed to, as follows:
On page 445, strike lines 10 through 13, and insert the
following:
SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.
Section 104(b) of title 11, United States Code, as amended
by this Act, is further amended--
(1) by inserting ``101(19A),'' after ``101(18),'' each
place it appears;
(2) by inserting ``522(f)(3) and (f)(4),'' after
``522(d),'' each place it appears;
(3) by inserting ``541(b), 547(c)(9),'' after
``523(a)(2)(C),'' each place it appears;
(4) in pagagraph (1), by striking ``and 1325(b)(3)'' and
inserting ``1322(d), 1325(b), and 1326(b)(3) of this title
and section 1409(b) of title 28''; and
(5) in paragraph (2), by striking ``and 1325(b)(3) of this
title'' and inserting ``1322(d), 1325(b), and 1326(b)(3) of
this title and section 1409(b) of title 28''.
Mr. FEINGOLD. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. BIDEN. Mr. President, I ask unanimous consent that the order for
the quorum call be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BIDEN. Mr. President, I checked with the leader on our side, and
I hope it is all right with the Republican leader. I have no amendment
relating to the bill. I would like to proceed as if in morning business
until anyone has an opportunity to move on the bill, and I will cease
and desist at that moment.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
(The remarks of Mr. Biden are printed in today's Record under
``Morning Business.'')
(The remarks of Mr. Biden pertaining to the submission of S. Con.
Res. 17 are located in today's Record under ``Submission of Concurrent
and Senate Resolutions.'')
The PRESIDING OFFICER (Mr. Thune). The Senator from Tennessee.
Mr. FRIST. Mr. President, for the information of our colleagues, we
are about to have the last vote of the evening which is final passage
of bankruptcy legislation. I thank all Members for their hard work
today in the Chamber, as well as the Budget Committee and their efforts
on the budget resolution. They made huge progress today. We will start
on the budget Monday morning. We expect amendments during Monday's
session. Therefore, we do expect the next vote to be Monday evening at
5:30.
Mr. BIDEN. Mr. President, several years ago, when we were considering
this legislation, I spoke here on the Senate floor about some important
provisions that I think have been overlooked in our discussions. In my
remarks today I will repeat what I said back then, in March of 2001.
We have heard a lot in recent days about how this bill lacks
compassion--specifically, that it will hurt women and children who
depend on alimony and child support.
Critics claim that by making sure that more money is paid back to
other creditors, this bill will make it harder for women and children
to get what is coming to them.
I am particularly proud of my record of protecting women and children
during my career in the Senate. That record includes the Violence
Against Women Act to protect women threatened by domestic violence.
I am here again today to show that, contrary to a lot of the rhetoric
that has been tossed around, this bill actually improves the situation
of women and children who depend on child support. It specifically
targets the problems they face under the current bankruptcy system into
a virtual extension of the current national family support collection
system.
There may be other aspects of this legislation that we can debate:
the balance between creditors and debtors, between different kinds of
creditors, or between different kinds of debtors. But on the question
of child support and alimony, there should be no dispute.
Because this bill strengthens the collection of alimony. Period.
Over the many years we have discussed this bill, it has earned the
support of the National Child Support Enforcement Association, which
represents over 60.000 child support professionals.
It has earned the support of the National Association of Attorneys
General, which has sent a letter of support personally signed by
twenty-seven State attorneys general.
Over the years, the child support protections in this legislation
were endorsed by the Attorney General of the State of Vermont.
The Attorney General of Minnesota endorsed them, too, along with the
Attorneys General from Illinois, from Massachusetts, and from
California, Montana, North Carolina, Michigan, Maryland, Iowa, Hawaii,
and Washington.
The child support and alimony protections in S. 256 are so far
superior to current law that the National District Attorneys
Association, representing more than 7,000 local prosecutors, have
endorsed them.
In addition to those national associations, those protections have
earned the support of: the California Family Support Council, whose
2,500 enforcement professionals are responsible for carrying out the
Federal child support program in California;
The Western Interstate Child Support Enforcement Council, composed of
child support professionals from the private and public sectors west of
the Mississippi River;
The California District Attorneys Association, consisting of elected
district attorneys from each of every one of California's 58 counties
and over 2,500 deputy district attorneys; and finally,
The Corporation Counsel of the City of New York. Yes, even New York
City loves this bill.
Why has this legislation earned such overwhelming support from the
professionals out in the field and in the trenches who, ever single
day, seek and enforce child support orders?
One reason is the hard work of Phillip Strauss, who, speaking for the
National Child Support and Enforcement Association, has represented the
concerns of child support professionals in testimony before our
committee over the years we have debated bankruptcy reform. From his
personal experience with the problems women and children face under
current bankruptcy law, he brought together his fellow enforcement
officials to draft the provisions I am here to discuss.
As Mr. Strauss and his colleagues have told us, right now the
treatment of child support and alimony in bankruptcy is a mess, and
this bill fixes it.
When a deadbeat dad files for bankruptcy under the current system,
what happens to mom and the kids?
Well, if the dad is actually making the payments, those payments
stop. That's right, the payments stop cold. Mom then has to find a
lawyer or a government advocate, take time off of work, and go to
bankruptcy court to try to get those payments started
[[Page S2464]]
again. And when she goes to court, her claim may not be heard that day,
so she'll have to return again and again . . . or if she's late, she'll
miss her day in court.
What else happens under current law? When dad's bill collectors show
up in bankruptcy court, mom has to fight with them over dad's assets.
There's a good chance that mom not only needs her payments
started again, but she is due past support--support payments dad never
made last month, last year. She needs him to pay her back for all the
payments he failed to make.
And in asserting her claim, she is not the ``Number 1'' collector in
line. Under current law, she is Number 7. That's right--Not So Lucky
Number 7. The current Code permits other bill collectors to beat her in
the race to get at dad's assets. The current law handicaps her at the
starting line. She is forced to wage a fight to make sure she and the
kids receive their due.
And what happens after she fights it out with the bill collectors?
Well, under the current system, she might be lucky and get every dollar
due. But, she may only get a portion of what is due or she may not get
one red cent.
That's not right. If a bankrupt household is a sinking ship, then
women and children should be protected first. This is what the current
law fails to do, but it is what this bill does: it puts women and
children first.
S. 256 dictates that even if he files for bankruptcy, dad must
continue making those support payments that mom needs to feed and
clothe her children. Under this bill, women and children will continue
to receive their support payments during bankruptcy, while everybody
else, from the credit card bank to the department store, waits for the
bankruptcy judge's final order and plan.
That alone would be a major improvement over current law. But that is
just the beginning of the advances of this bill over current law.
This bill makes mom ``Number 1'' and places her ahead of all the bill
collectors on her past-due claim. No other bill collector--not the
credit card company, not the car loan company, not the student
lenders--can jump ahead of a mother and her children. Every other bill
collector must stand in line behind the family.
What is so great about the continuation of payments and making mom
``Number 1''? As a practical matter, she doesn't have to find room in
her hectic schedule to make appearances in a federal bankruptcy court--
an intimidating place for most people. She can go to work without
interrupting her day. She can complete her errands and pick up her kids
after school. Under the bill, she will be automatically first in line
on her claims and she will continue to receive her payments during
bankruptcy.
When we pass this bill, she does not have to work her way through the
bankruptcy system. The system will work for her, not against her.
That's the beauty of this bill: It is self-executing. The provisions
to be added to the Bankruptcy Code will function automatically. This is
vital. Unrepresented women will not be harmed by the process, as they
are under the current Code.
Today, under current law, these women have to get an attorney and go
to court to assert their claims.
In addition, under this bill, family support will never be
dischargeable. It must be paid in full. All of it.
This is important because, under the curren, domestic debts may not
be paid in full or at all . . . believe it or not. Right now, a
deadbeat father can file for bankruptcy and come out without paying one
penny of support. While his slate is wiped clean, a mother and her
children go without. When this bill passes and the President signs it,
the law will hold the deadbeat dad's feet to the fire: he will pay, he
will pay in full.
There are other important ways that this bill will remove real
obstacles to justice that exist in current bankruptcy law.
This bill not only lifts the stay on support payments during
bankruptcy, but it adds that, when a wife-beater files for bankruptcy,
a domestic violence restraining order against him must remain in
effect. It cannot be stayed. And the woman who needs a restraining
order against him can still get one.
I have here an order from a family court in my home state of
Delaware. A woman went to the court and requested a restraining order
against her abuser, who had already filed for bankruptcy. Incredibly,
the judge found, under the current Bankruptcy Code, that a proceeding
for a domestic abuse restraining order is automatically stayed ``by
operation of law.''
That's right. We have judges out there right now who look at today's
Bankruptcy Code, and they find that filing for bankruptcy stops all
proceedings. They find that we have failed to write an exception for
proceedings like those for domestic violence. They find their hands are
tied.
Then they send a woman in fear for her life off to a federal
bankruptcy court to lift the Code's automatic stay by filing a special
motion. Unbelievable.
If you think this is fair, if you prefer this state of affairs, then
I guess you will vote against this bill. Personally, I am proud of this
bill, and I wish that those who are fabricating wild claims about it
would stop. If they have their way, the women and children in this
country who depend on alimony and child support will be robbed of real
protections. That would be a crime.
Under current law, more than just child support and--alimony are
stopped in their tracks by the filing of bankruptcy. That automatic
stay, as it is called, stops a lot of other proceedings that could
provide real help to women and children.
This legislation changes that. It lifts the stay on a number of
methods that family support officials use to go after deadbeat dads,
who today can hide behind the bankruptcy system. Unlike current law,
this bill would permit reporting the deadbeat's overdue support
payments to a consumer reporting agency. Under current law, it would
permit restrictions on a deadbeat dad's driving, professional, or
recreational licenses. It would permit family support collection
officials to intercept his tax refunds.
The legislation also clarifies the definition of support payments,
ending conflicting bankruptcy decisions by different courts that today
question what support payments actually are.
Most significantly, though, this bill prevents a father from
completing bankruptcy unless he has paid all his support obligations
due after he filed for bankruptcy.
Let's think about this. Under current law, a father filed for
bankruptcy and can complete bankruptcy under a plan that relieves him
of his past-due domestic obligations. Under the bill, however, this
scenario will become obsolete. A father will never complete bankruptcy
until he is paid up. He must pay.
Moreover, the bill protects mom during a bankruptcy plan. Once a
father is under a bankruptcy plan and he fails to make his support
payments, a mother can march to the bankruptcy court and ask the court
to dismiss his plan. The court will call dad back in to explain
himself. He doesn't want to make payments during his bankruptcy plan?
Fine, he can be thrown out of bankruptcy, and find himself back at
square one.
Some claim that this bill lacks compassion. Well, right now, women
who want child support orders or who already have orders but fail to
enforce them slip through the cracks. If we pass this bill, the
Bankruptcy Code will empower women with the information they need.
Section 219 of the bill requires the U.S. Bankruptcy Trustee to
notify a woman of her rights to use the services of her state child
support enforcement agency and gives her the agency's address and phone
number. Better yet, the Trustee likewise notifies the agency
independently of the woman's claim. This is striking.
Women who need help will get the information they need, because the
bankruptcy system is charged with reaching out to family support
professionals--acting under federal family support collection law--and
putting them at the service of the women and children who need them.
This last item needs stressing, Mr. President, because so much has
been made about what will happen after someone who owes family support
payments comes out of bankruptcy. The claim is that other ``more
powerful'' creditors will push women and children aside and strip the
dad bare before he can make payments to his family.
That makes for a moving story, Mr. President, but it is fiction, not
fact.
[[Page S2465]]
This legislation requires the bankruptcy Trustee to notify both the
woman and the family support collection professionals about the dad's
release from bankruptcy, his last known address, the name and address
of his employer, and a list naming all the bill collectors who will
still be collecting from dad.
This section helps mothers both during and after bankruptcy.
The new notification process will help a mother and the support
enforcement agencies keep track of a father, where he is working, and
what other bills he is required to pay.
Because of this monitoring, which would be put in place by the
bankruptcy system under this bill, mothers and collection agencies can
more easily go to court and get that portion of a father's wages that
now really belongs to them. Dad may complete his bankruptcy plan, but
his obligations do not stop.
These new protections guarantee that family support claims of women
and children,will always receive ``Number 1'' priority--during and
after bankruptcy. The process for obtaining a portion of a father's
wages--through a wage attachment--gives priority to domestic support
orders over orders held by bill collectors, including credit card
companies.
That money is taken out of his paycheck before he even sees it. He
can't be forced by ``powerful creditors'' to choose between them and
his alimony or child support. Those payments are automatic. Again, the
picture of greedy bill collectors rushing to the front of the line
makes for dramatic storytelling. But it is only that--storytelling.
The legislation builds on the existing Federal Child Support
Enforcement Program, that exists to help women of all walks of life
receive their support payments. By tying Federal dollars to federal
standards, current law requires state and local support enforcement
agencies to enforce national standards.
A couple of the requirements under Federal family support law are:
first, that immediate wage withholding should be included in all child
support orders; and second, that the withholding of child support
obligations be given top priority over every other legal process under
State law against the same wages.
Therefore, after bankruptcy, when a mother and the bill collectors
walk into court to make claims against the father's wages, the mother
is again ``Number 1'' in priority and those bill collectors fall in
line behind her.
In response to some of my colleagues concerns--concerns that I would
certainly share if I listened to some of the claims out there--I looked
for ways to make the system even tighter.
I found out that the only way to do that was to require a wage
attachment, whether the woman wanted one or not. Maybe she wants
nothing to do with an abusive husband. Maybe she is afraid for him to
know her address. We have to leave that decision up to her, but she
will get all the help we can give to help her know her rights.
As I said, I looked for ways to make this bill stronger in support of
women and children who depend on support payments, and I simply
couldn't find any.
Even if a father does not earn wages, then support enforcement
agencies have many tools to use to ensure that the mother and her
children are paid. A support enforcement agency can intercept taxes and
unemployment benefits, revoke driver's, professional and recreational
licenses (like those used for fishing, hunting, and boating), deny
passports, and institute criminal and contempt actions.
That is why, even compared to any imaginary ``powerful creditor'' you
might be able to conjure up, mothers and children have real, tangible
protections and resources at their disposal to bring a first priority
claim against a father's wages after bankruptcy.
Finally, let me conclude where I began: with the enthusiasm for this
legislation that we have heard from the folks in the trenches.
Here is what the National Association of Attorneys General has
asserted: the bill ``improve[s] the treatment of domestic support
obligations'' and when the current Code's ``obstacles are removed, as
this legislation seeks to accomplish, we believe that our State and
local support offices will continue to be able to collect these monies
effectively, regardless of whether other lower-priority creditors
remain.''
As I mentioned before, the Association's letter was personally signed
by the State Attorneys General from twenty-seven States, including
the--State Attorneys General from Vermont, Minnesota, Illinois,
Massachusetts, California, North Carolina, Michigan, Montana, Maryland,
Iowa, Hawaii, and Washington.
The National District Attorneys Association, with more than 7,000
local prosecutors in their membership, does ``not believe that after
bankruptcy it would be more difficult to collect support simply because
credit card debts are not discharged. To the contrary, support
collectors have vastly more effective, and meaningful, collection
remedies before a bankruptcy case is filed, or after the case is
completed, than any other financial institution . . . It is under the
current law, during bankruptcy, that support collectors have the
greatest difficulty because they are in competition with all other
creditors for bankruptcy estate assets and because their most effective
collections remedies have been stayed . . . This legislation provides a
major improvement to the problems facing child support creditors in
bankruptcy proceedings.''
I support the reform that the enforcement professionals call for,
from New York City to California, from Minnesota to Vermont, from
Massachusetts to Michigan. I want to save women and children from
having to fight their way through a broken bankruptcy system. I want to
make the system work for them, not against them.
A vote against this bill is a vote in favor of the current broken
system. A vote for this bill is a vote to protect family support
payments in bankruptcy.
That is why I support this bill.
Mr. DORGAN. Mr. President, I know that the Senate is about to pass a
bankruptcy reform bill, and that this bill will be signed into law. And
it is with some regret that I say that I will not vote for it.
I do believe that there have been cases of abuse of our bankruptcy
system, and that some reform is needed. Nobody likes to hear of wealthy
people who walk away from their debts because they can game the system.
That's not fair to financial institutions, and perhaps more
importantly, it's not fair to Americans who pay their debts in full.
I voted for a bankruptcy reform bill twice in the past, most recently
in 2001. That bill passed in the Senate with significant bipartisan
consensus, and I had hoped that it would be signed into law. But the
House of Representatives refused to compromise with the Senate, and
ultimately the bill failed.
This time around, I would have liked to have reached another
bipartisan consensus. However, the bipartisan spirit seems to have
broken down.
My colleagues on the Democratic side offered a number of amendments
that were reasonable, common-sense tweaks to the bill, to reflect
changes in our country since the last time the bankruptcy bill was
considered.
There have been hundreds of thousands of National Guard and reserve
troops called up because of the conflicts in Afghanistan and Iraq. They
have left behind their jobs, their businesses, and their families. When
they find themselves in bankruptcy, why not allow them some
consideration? My colleague from Illinois, Senator Durbin, offered an
amendment that would have done precisely that, but it was voted down on
a largely partisan vote.
Or how about victims of identity theft? In the last few years,
identity theft has become a plague on law-abiding citizens. My
colleague from Florida, Senator Nelson, offered a most reasonable
amendment, which simply said that if someone is forced into bankruptcy
because of identity theft, he should receive some consideration. That
amendment was also voted down along partisan lines.
Or how about Americans who suffered major medical problems and were
driven into bankruptcy? A very recent Harvard Medical School study
found that about half of all people that have been driven to bankruptcy
have suffered a major medical problem. Many of these people have lost
their homes. So Senator Kennedy offered an amendment that would have
allowed such
[[Page S2466]]
Americans to keep their home--not a mansion, mind you, but a modest
home, while they try to get back on their feet. But this amendment also
was shot down.
We have not heard good arguments for why these amendments should have
failed. The majority party have really only had one argument: that they
want to avoid displeasing the House of Representatives, and don't dare
modify the Senate bill even with modest, reasonable amendments.
Well, I am just not going to support a bill that turns its back on
service members and veterans, or on hardworking people that just happen
to have had a medical crisis, and have been driven into bankruptcy not
because they are gaming the system, but because of circumstances beyond
their control.
One other point. This bankruptcy bill was supposed to be about
preventing cheating in the bankruptcy system. Well, I offered an
amendment, along with Senator Durbin, that would have dealt with a
different kind of cheating: the fraud, waste, and abuse that has been
rampant in many of the reconstruction contracts in Iraq. My amendment
said, let's appoint a bipartisan special committee of the Senate to
investigate these abuses. But that amendment did not even get a vote.
In 1941, a Senator from Missouri by the name of Harry S Truman heard
allegations of wasteful and fraudulent spending in the preparations for
World War II. He thought this waste and fraud could undermine the war
effort, so he drove around the country, visiting military bases. And
when he came back, he called for the creation of a special committee.
That committee, which came to be known as the Truman Committee, saved
the U.S. government an estimated $15 billion--and that's in 1940s
dollars.
That was a case of a Democrat calling for investigations of contracts
handled by a Democratic Administration. But for Harry Truman, this
wasn't about politics--it was about looking out for the U.S. taxpayer,
and not squandering resources that were meant for the war effort.
We need a Truman Committee again, because the majority party is not
calling for oversight hearings on these contracting abuses in Iraq. My
amendment would have created a bipartisan special committee to do just
that. But it did not even get a vote, because the majority party rested
on a technicality in Senate rules to deny a vote.
Under these circumstances, I am, regretfully, not going to vote for
the bankruptcy bill.
Ms. MIKULSKI. Mr. President, today I rise to oppose S. 256, the
Bankruptcy Reform Bill. This bill is unfair to the little guy--to
families who are struggling to overcome medical bills, unemployment, or
divorce and find themselves forced to declare bankruptcy. Under the
guise of reform it makes it tougher on families who have done the right
thing. That's not what we should be doing in the United States Senate.
Our job is to make sure we are protecting middle-class Americans and
small businesses who are the lifeblood of our economy, not hurting
them. While some of the reforms of the bill are good steps it goes too
far to favor credit card companies and corporations over working
families.
This bill creates such strict standards that many of our nation's
most vulnerable families are treated unfairly when they are forced to
file bankruptcy because of the loss of a job, the high cost of health
care or a divorce. This bill does nothing to address the problems these
individuals are having, the problems that have driven them to
bankruptcy and it provides virtually no discretion for courts dealing
with these bankruptcy claims.
I have supported bankruptcy reform legislation in the past--but it
was not this bill and it was not this process. This bill was rushed
through Committee with the promise that amendments would be considered
on the floor, that there would be debate and an opportunity to improve
the bill. Yet, none of the amendments were truly considered, most were
opposed by Republicans marching in lock step to defeat every amendment
to the existing bill. In short, there was no real opportunity to
improve the bill. What came to the floor leaves the floor virtually
unchanged and truly unfair to many of our citizens who are forced to
file bankruptcy because of unforeseen circumstances like job loss,
divorce or medical costs.
Half of all families filing for bankruptcy have faced illness or high
medical costs. Medical costs, especially for seniors, are one of the
fastest growing causes of bankruptcy. These are not folks who use their
credit cards to buy fancy suits, designer wares or other luxury goods.
They are paying for the basic necessities of their lives with their
credit cards. They are putting their food, clothing and medical bills
on the credit cards. Nearly 9 out of 10 people file bankruptcy because
of health care problems, job loss or divorce. These individuals don't
want to file bankruptcy--in fact, they have tried to avoid bankruptcy.
That's why they pay those medical bills with credit cards when they
simply can't afford any other way. Or they skip going to the doctor all
together because they know have no means to pay. And what happens--they
get sicker, incur greater costs for catastrophic care and that sends
them spiraling further into debt and forcing many into bankruptcy.
We ought to be doing something to help those individuals--not
creating a law that will make matters worse. The Senate should be on
the side of those Americans who are facing hard times and hard
decisions. We should be addressing the lack of health care and working
to ensure that we are creating good, high paying jobs.
I am opposing this version of the Bankruptcy Reform Bill because it
creates needless and unfair hoops for these individuals to jump through
and the rigid means test puts those in real need of relief at a
disadvantage. It imposes new burdens on families already overburdened
by the debt they must shoulder. Certainly we all agree that those who
can afford to should pay their creditors back--that they should be
responsible for their debt. Those debtors who charge thousands of
dollars on luxury goods, new cars and the like, only to then declare
bankruptcy, should be held accountable. Many of us can remember a
mother or father who taught us about debt, taught us the dangers of
getting into debt and to be responsible for paying all our debts back.
But we need to be fair in how we calculate who can pay. And we need to
make sure that the provisions are not so rigid that they allow courts
no discretion to take into account the circumstances that lead to the
bankruptcy.
The legislation that the Senate considers today is different from
past versions that I have supported. There is obviously the removal of
the Schumer amendment which held those who block access to abortion
clinics accountable for the court judgments that they have incurred.
But it also gives women, single parents, families and those living in
poverty less opportunity to overcome their hardships and get a fresh
start. This bill punishes people, assumes that all those filing for
bankruptcy have purposefully created their debt problems, imposes a
strict standard that does not take into account the circumstances
surrounding the bankruptcy and the real means of individuals to pay
their debt back. That's not fair, it's not right, and it makes life
tougher on working families. I urge my colleagues to join me in
standing up for women, children and working families by opposing this
bill.
Mr. REED. Mr. President, today I share my concern over S. 256, the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, and
urge my colleagues to vote against this flawed legislation. This
legislation provides a misguided and uneven approach to combating
bankruptcy abuse, especially because it leaves so many causes of
bankruptcy unaddressed.
Most provisions in this bill were written years ago and do not target
abuses which have recently gained public attention. When this bill was
originally drafted, corporate fraud at Enron and elsewhere had not yet
come to light. The executives at these corporations had not yet been
caught enjoying huge personal gains at the expense of shareholders and
employees only to later file for bankruptcy. This bill does not fully
address these types of bankruptcy abuses, and unfortunately efforts to
close these loopholes failed.
At the time this bill was drafted, companies were less likely to file
for bankruptcy to shed health care and pension obligations to their
retirees. In fact, the number of senior citizens in bankruptcy tripled
from 1992 to 2001,
[[Page S2467]]
representing the largest increase of any group. Today, nearly a million
Americans have had their pension plans taken over by the Pension
Benefit Guarantee Corporation and their benefits reduced; this is a
substantial increase from when the bill was drafted. I am disappointed
that this body not only voted against the Feingold amendment that would
have helped elderly Americans protect their houses, but also against
the Rockefeller amendment to improve employees' claim for owed wages
and benefits. The Rockefeller amendment would have also required
companies that dropped retiree health benefits to reimburse each
affected retiree for 18 months of COBRA coverage upon reemerging from
bankruptcy.
The bill adds a means test, which supporters of the bill say will
significantly reduce abuse. The nonpartisan American Bankruptcy
Institute found that over 96 percent of families seeking to go into
chapter 7 bankruptcy would be judged as unable to pay under the new
means test. However, the means test would likely deter qualifying
families from filing for bankruptcy due to the addition of regulatory
requirements and legal costs.
I am not opposed to sensible bankruptcy law reform, but this is a
reverse Robin Hood--squeeze the down-on-their-luck middle class and
impoverished Americans and give the proceeds to the financial services
industry. Contrary to the claims of creditors, many of these families
simply cannot pay. About half of families going into bankruptcy have
had their utilities or phone shut off, and 60 percent went without
medical care. One in five families that are bankrupt because of medical
bills went without food. Surveys have shown that many of them want to
repay their bills but are unable to, and they must ultimately file for
bankruptcy to stop the harassment of collection agents.
This bill does nothing to prevent bankruptcy by targeting its causes.
We should work to ensure adequate worker compensation, lower the high
cost of health care, improve financial education, and stem predatory
lending.
Our middle class is increasingly squeezed. Median family income has
been relatively stagnant, rising by only 12 percent in constant dollars
from 1978 to 2003. This increase has not kept up with families' sharply
increasing costs. Health care costs have risen by 327 percent in
constant dollars from 1988 to 2004. The real cost of tuition at a four
year public university increased by 646 percent from 1978 to 2003.
Child care costs have risen by 35 percent more than inflation from 1986
to 2003.
With less disposable income, families are less able to make it
through difficult financial times and can be devastated by a single
unexpected event. It saddens me that many of my colleagues in the
majority voted against Senator Kennedy's amendment to raise the minimum
wage for the first time in eight years. This measure could have meant
the difference to countless Americans between being able to pay their
bills and having to file for bankruptcy.
Indeed, according to a new Harvard Law School study, illness or high
medical costs cause half of personal bankruptcies. Certainly this is
sure to affect the 45 million uninsured Americans, up from 30 million
in 1978. It also has a traumatic effect on those who do have health
insurance, one-third of whom lost it while they were sick. Yet again, I
believe it was a mistake for this body to have killed an amendment to
offer protections to patients with high medical bills.
We also continue to see some banks cross the line into predatory
lending practices. We must continue to find a balance between providing
access to credit and capital and protecting individuals from predatory
lending. Unfortunately, as many of my colleagues have pointed out,
members of our Armed Forces have become a top target of these unsavory
practices. Senator Durbin's G.I. protection amendment would have
extended protections to military members who have been forced into
bankruptcy because of income loss connected to their service. It would
also have protected them from predatory ``pay day'' loans.
Unfortunately, this amendment was voted down.
For all of these reasons, I intend to vote against this flawed
legislation, and I urge my colleagues to do the same.
Mr. LAUTENBERG. Mr. President, we are now into our second week of
debate on this bill, but in fact, we have been talking about it for 8
years, since it was originally introduced.
During that time, personal bankruptcies in our Nation have surged,
while the profits of credit card companies have soared.
We had an opportunity to pass a good bill that would have curbed real
abuses of bankruptcy, while protecting consumers who fall on hard times
because of a medical catastrophe, divorce or the loss of a job.
Instead, the majority rejected dozens of amendments that would have
protected the homes of senior citizens, and required credit card
companies to level with consumers about how much they would really pay
in interest and penalties.
Now we are left with a bill that punishes consumers and lines the
pockets of the credit card companies, a bill that protects the mansions
of multimillionaires who file for bankruptcy protection but makes it
easier for landlords to evict tenants from their homes if they are
forced into bankruptcy, and, a bill that makes no distinction between a
family struck by catastrophic illness, and a spendthrift who maxes out
his credit cards on a shopping spree.
I mentioned catastrophic illness because half of all bankruptcies
today are the result of medical debts. Most families who are driven
into bankruptcy by a medical problem probably think it can never happen
to them because they have health insurance. But it can happen to
anyone, and it does.
Three-fourths of the people who file for bankruptcy because of
medical debts have health insurance when the medical problem begins.
But eventually their insurance runs out or certain treatments are not
covered. And the next thing they know, they are facing financial ruin.
Bankruptcy also hits families that have been torn apart by divorce.
On Sunday, the Washington Post published a front-page article about
this bill.
The article described how a woman who was left alone by her husband
to raise three children had fallen behind on her credit card payments.
Even though she worked a second job and paid $2,000 a month to the
credit card companies, her debt continued to pile up because of
exorbitant late fees and interest rates. This woman was almost an
indentured servant to her credit card companies, struggling to pay off
a debt that could never be satisfied.
This is not an isolated incident. The trend in the credit card
industry today was described by one expert as a ``fee feeding frenzy.''
Credit card companies collected almost $15 billion in penalty fees
last year--nearly 10 times the $1.7 billion they collected in 1996.
Penalty fees have become so important to the bottom line that some
banks refer to customers who pay their bills on time as ``deadbeats,''
because they cannot be hit with exorbitant penalties.
It has become commonplace for credit card companies to jack up the
interest rates of customers who are slightly late with their payments--
in some cases, by no more than one day.
Credit companies already charge late fees of up to $39 for every late
payment. Piling a higher interest rate on top of that late fee is like
double jeopardy, and that is not fair to consumers.
There are many reasons why a consumer might be a day or two late in
making a credit card payment. Maybe a child got sick and had to see a
doctor, and his mom was too busy taking him to the hospital to worry
about a credit card payment. Maybe a car broke down, and it had to be
fixed so a worker could get to their job. Maybe the mail was a little
slow that week.
Whatever the reason, a consumer should not be unfairly and harshly
punished for one late payment.
At the very least, credit card companies should give consumers fair
warning before hiking their interest rates. If there is a problem, the
consumer should have a chance to correct it before their rate can be
increased.
But the credit card companies are not interested in fairness. In
fact, they actually hope customers will be late with a payment so they
can be hit with penalty fees.
[[Page S2468]]
To that end, they engage in ``bait and switch'' tactics to lure
consumers with low rates, then automatically jack those rates up the
first time a payment is a day late.
One example of this is the Capital One Platinum MasterCard.
Customers going to the Capital One Web site to apply for a credit
card will find the following ad, which touts ``a great low rate''--an
``8.9 percent fixed APR.''
This ad is pretty prominent. As you can see, the type is large and
easy to read, and there is a nice picture.
On an entirely separate Web page, buried in pages of fine print,
Capital One discloses that:
All your APRs may increase to a default rate of up to 25.9%
ANNUAL PERCENTAGE RATE if you default under this Card
Agreement because you fail to make a payment to us when due,
you exceed your credit line or your payment is returned for
any reason. Default APRs will be effective . . . immediately.
In other words, despite advertising a ``fixed'' rate of 8.9 percent,
Capital One can almost triple a customer's rate to a whopping 25.9
percent--just for sending one payment one day late.
The cost of this rate hike to a customer with a balance of $5,000
would be as much as $880 in interest payments over the following year.
That is simply too harsh of a penalty for sending one payment one day
late.
This is the dire situation in which many consumers find themselves.
Even though they make payments every month, and don't charge any new
purchases to their credit card, they fall deeper and deeper into debt.
Eventually, seeing no other way out, some of these people declare
bankruptcy.
Many States have passed laws to protect consumers from unscrupulous
penalties and rate increases. Unfortunately, these laws cannot be
enforced, as courts have ruled that the banks are bound by the laws of
the States where they are located, not where their customers reside.
As a result, credit card companies have flocked to States with weak
consumer protections, creating a ``race to the bottom.''
With this bill, we had an opportunity to put a stop to that, and end
the unscrupulous gouging of consumers. By giving consumers a chance to
correct problems before they were hit with higher interest rates, we
could have prevented many bankruptcies. Unfortunately, we have
squandered that opportunity.
This bill does nothing to address the roots of the bankruptcy problem
in our country today. And it does nothing to help consumers. For that
reason, I must vote against S. 256.
Mrs. MURRAY. Mr. President, today I voted against a bankruptcy bill
that puts credit card companies and politics ahead of ordinary
Americans. Rather than providing balanced reform, this bill punishes
those who have fallen on hard times--particularly our military families
and those who are struggling under the weight of soaring medical bills.
I have heard from residents across Washington State that the cost of
medical care is forcing them into bankruptcy. In fact, a report last
summer by the Working for Health Coalition found that half of
Washington State bankruptcies were due to rising health care costs.
Most of these families are working and more than half have health
insurance, but the growing cost of health care is so overwhelming it
pushes them into bankruptcy. A national study last month found that 61
percent of bankruptcy filers did not seek the medical care they needed.
These families deserve help, but instead this bill punishes them for
circumstances beyond their control.
This bill also fails to adequately protect our military families,
particularly our Guard and Reserve members. These patriotic families
have had to struggle with half their normal income during long--and
often extended--deployments. Many have seen their businesses collapse
at home while they have served overseas. I have met with Washington
State Guard and Reserve families and have seen how they are struggling
to meet the financial burdens of long deployments. They deserve a
lifeline, not more paperwork, legal fees, and threats from collection
agencies. The Senate had an opportunity to protect our soldiers through
Senator Durbin's amendment, but that was rejected for a Republican
amendment that falls far short. Our military families deserve better.
If Republicans had been willing to make the bill less punitive toward
ordinary Americans, they would have adopted a number of reasonable
amendments in committee and on the Senate floor, but they refused. For
example, Republicans blocked an amendment that would have protected
workers and retirees if their company files for bankruptcy. Republicans
also voted down amendments to ensure the elderly don't lose their homes
and to discourage predatory lending. And they even failed to protect
people who have had their identities stolen by criminals who then run
up huge credit card bills. These are all examples of how Republicans
are protecting corporate interests at the expense of vulnerable
individuals.
This bankruptcy bill also stacks the deck against women and children.
For example, this bill will make it harder for single mothers to
collect the past-due child support they and their children are owed.
I am also disappointed that the Senate rejected the Schumer
amendment, which would have assured that those who commit violent
crimes at reproductive-health facilities against women and doctors do
not escape paying their debts and fines by declaring bankruptcy.
Looking at the big picture, this bill fits a pattern of Republican
proposals that turn the tide against average Americans. Last month,
Republicans tipped the scales of justice against working families by
limiting their ability to seek compensation for a death or injury
caused by a company's negligence. On Monday, Republicans rejected a
proposal to raise the minimum wage. Taken together, these actions will
make life harder for working families and represent a dangerous trend
that threatens average Americans.
In the past, I have voted for bankruptcy reform legislation, but
today families find themselves in a much different place financially
because of the costs of healthcare and military service. Congress
should not punish them for things beyond their control with this
unbalanced, unfair bill. American families deserve reform, not
retribution.
Mr. LEVIN. Mr. President, I cannot vote for this legislation,
although I support bankruptcy reform. It is clear that some people
abuse the bankruptcy system. However, this bill would make it more
difficult for individuals and families who have suffered genuine
medical and financial misfortune to get a fresh start. Nearly half of
all of those studied in a recent research effort by Harvard Law School
said that illness or medical bills drove them to bankruptcy and nine
out of ten have faced health problems, job loss, divorce or separation.
A letter to the Chairman and ranking member of the Judiciary Committee,
signed by nearly a hundred bipartisan bankruptcy law professors from
law schools across the country, said, ``The bill is deeply flawed, and
will harm small business, the elderly, and families with children.''
I have in the past supported reasonable bankruptcy legislation. The
legislation which is before the Senate today could have been greatly
improved by a number of reasonable Democratic amendments which have
been offered over the last several days. However, the Republican
majority has largely, on a party-line basis, rejected all amendments
out of hand.
I am disappointed that we did not add some reasonable flexibility
measures to the ``means test.'' The purpose of the means test is to
prevent consumers who can afford to repay some of their debts, from
abusing the system by filing for chapter 7 bankruptcy. It makes sense
to require those who are able to repay their debts to do so. However,
there are some situations that warrant an exception to the means test.
For example, the Senate defeated an amendment that would have exempted
members of the armed services, veterans, and spouses of service members
who die while in military service from application of the ``means
test'' provisions of the bill. This would have helped them if their
family or their business goes into bankruptcy. That amendment was
defeated. Further, an amendment offered by Senator Kennedy that would
have exempted from the means test debtors whose severe
[[Page S2469]]
medical expenses have caused the financial hardship was also defeated.
Senator Corzine also offered an amendment that would have exempted
economically distressed caregivers from the means test, but that
amendment was also defeated by a largely party line vote. The
Republican majority even rejected Senator Nelson's common sense
amendment that would have exempted victims of identity theft from the
means test.
Further, the Senate defeated amendments that would have protected the
homes of our elderly and people forced into bankruptcy after a medical
crisis.
I am also disappointed that the Senate defeated several amendments
that would have closed loopholes used by wealthy individuals seeking
bankruptcy protection.
The Senate had an opportunity to close an increasingly popular
loophole where the very wealthy shield millions of dollars before
declaring bankruptcy by setting up so-called asset protection trusts.
Senator Schumer proposed an amendment to put an end to this abuse of
the tax system by limiting the use of these trusts to shield assets
only up to $125,000. The amendment was defeated 39 to 56.
The Republicans also rejected an amendment offered by Senator Durbin
to curtail the abusive practices of executives at companies like Enron
and WorldCom who received millions of dollars in compensation shortly
before the companies filed for bankruptcy protection. The chamber also
defeated an amendment proposed by Senator Akaka that would have
provided credit card users with information to assist them in making
more informed choices about their credit card use and repayment. This
amendment would have helped consumers understand the consequences of
their financial decisions, such as making only minimum payments, so
that they can avoid the kind of financial pitfalls that lead to
bankruptcy. Sadly, this amendment was also rejected.
The Schumer amendment, which in the past has been strongly supported
on a bipartisan basis by the Senate, was stripped from the bill this
year. The amendment, which provides that debts arising from violence
and threats of violence could not be discharged in bankruptcy
proceedings, should have been adopted by the Senate.
We do need bankruptcy reform, and I wish that the Senate had taken
this opportunity to pass equitable reform. This bill does not achieve
that goal and therefore I cannot support it.
Mr. GRASSLEY. Mr. President, I rise to urge my colleagues to vote for
final passage of the bankruptcy reform bill. I have been working on
this piece of legislation for a long time, and I am pleased to see that
we are nearing the end. This bipartisan bill has been maligned by many,
and I want to set the record straight. What we are trying to do is fix
a bankruptcy system that has gone awry, where individuals who have the
ability to repay their debts don't do so, and the rest of us are left
holding the bag.
What we have tried to do with this bill is inject some fairness into
the system, whereby people who have assets and the ability to repay
back their debts go into a chapter 13 repayment plan, and people who do
not have any means and no ability to repay go into chapter 7. We've
kept the safety net of full chapter 7 bankruptcy discharge for those
who truly need it, and channeled others that can pay their creditors
into a repayment plan.
This is done through a means test, which is fair and flexible enough
to take into account all the unique circumstances a debtor and his
family face. The means test takes into account all reasonable and
necessary expenses for a debtor and his family. We provide for a court
to consider ``special circumstances'', so that a debtor can show that
he doesn't have the ability to repay, and should stay in chapter 7. The
bill excludes from the means test poor people, those individuals who
are below the median income. So if individuals can pay and they really
don't have the ability to pay, they will continue to have their debts
fully discharged in chapter 7 bankruptcy, while those who do have
assets cannot hide them from their creditors and escape repayment.
Let me mention a couple of things this bill does not do. This bill
doesn't put the credit card companies first or leaves hard working
families out to dry, as some of the bill's detractors have claimed. In
fact, the bill helps women and children and improves their situation
when someone files for bankruptcy because it provides new priorities
and tools so that child support and alimony will be collected before
other creditors. We move child support up in priority, up to number one
from number seven in line, and that means that they will be paid before
a lot of other creditors, including the credit card companies. The bill
makes staying current on child support a condition of discharge. We
provide that debt discharge in bankruptcy is made conditional upon full
payment of past due child support and alimony.
Domestic support obligations are automatically non-dischargeable,
without the costs of litigation. The bill also makes payment of child
support arrears a condition of plan confirmation. The bill provides
better notice and more information to facilitate child support
collection, and tracking down deadbeat parents. Further, the bill
protects the name of a debtor's minor children from public disclosure
in a bankruptcy case.
This bill also doesn't help credit card companies and other lenders
take advantage of honest consumers, as some have alleged. In fact, the
bankruptcy bill contains some new real and significant consumer
protections. The bill requires credit card companies to make new
disclosures that benefit customers and prohibits deceptive advertising
of low introductory rates. It requires credit card companies to provide
key information about how much money people owe and how long it will
take to payoff their credit card debt by only making a minimum payment.
The bill requires lenders to prominently disclose when late fees will
be imposed, the date on which introductory or teaser rates will expire,
and what the permanent rate will be after that time. The bill also
prohibits lenders from canceling an account because the consumer pays
the balance in full each month to avoid finance charges.
The bill also provides that consumers will be given a toll-free
number to call where they can get information about how long it will
take to payoff their own credit card balances if they only make minimum
payments on their balance. This will educate consumers about their
financial situations. In addition, the bill allows for more judicial
oversight of reaffirmation agreements, to protect consumers from being
pressured into onerous agreements.
The bankruptcy bill also includes a debtor's bill of rights to
prevent bankruptcy mills from preying upon those who are uninformed of
their rights. The bill provides for penalties on creditors who refuse
to renegotiate reasonable payment schedules outside of bankruptcy. The
bill provides for penalties on creditors who fail to properly credit
plan payments in bankruptcy. The bill strengthens enforcement and
penalties against abusive creditors for predatory debt collection
practices. Finally, the bill contains credit counseling programs to
help consumers avoid the cycle of indebtedness.
So with the bankruptcy bill, we've tried to close loopholes in the
system and eliminate abuses. We've created new consumer protections.
We've made chapter 12 permanent. We've made sure that financial markets
are not subject to risk. Although the bill doesn't contain everything I
would have liked to include, it is a good start to putting an end to
the abuses.
It has been a long haul, but I think we are finally seeing this bill
through to the end. And there are many people that I'd like to thank
because they've been instrumental in getting us to this point. I've
been quite busy lately as chairman of the Finance Committee, working on
social security, medicare and tax reform. I take that responsibility
very seriously. Because of Finance Committee markup and hearing
conflicts, I have had to rely on my colleagues to manage this bill on
the floor. But the job has been in very good hands.
In' particular, I appreciate Senator Hatch and the diligence that he
has shown towards this bill. On more than one occasion, he made sure
that the bankruptcy bill made it through the committee process so that
we could have it considered on the floor. He has stepped up to the
plate many a time to manage the bill, work on compromises, and keep the
engines running. Senator
[[Page S2470]]
Hatch is a good friend and colleague, and I respect his perseverance as
well as his legal expertise. I'm glad to see that all his hard work
during the years has finally come to fruition. Senator Hatch has been a
true stalwart through the years, and I thank him for his dedication to
bankruptcy reform. I also want to thank his able staff, Perry Barber,
Kevin O'Scanlin and Bruce Artim for all their help on this bill.
I especially want to thank Senator Sessions for being a tireless
champion of bankruptcy reform here in the Senate. I have relied on his
intellect and legal prowess for the last eight years that we've been
working on this bill. I believe that Senator Sessions has brought a
unique perspective to the bankruptcy bill with his dedication to
eliminating abuses in the bankruptcy process. He is a firm believer
that if you borrow money, you have to pay it back. So I truly am
thankful for all the work that Senator Sessions has done, especially in
managing this bill on the floor. He is one sharp lawyer, and I am
honored to have him as my friend. I also want to thank his staff for
their excellent work, in particular his talented Chief Counsel William
Smith, Cindy Hayden, Amy Blankenship and Wendy Fleming.
I want to thank Chairman Specter for placing this bill at the top of
the agenda in the Judiciary Committee, and for moving it so quickly and
ably in this Congress. His staff, Harold Kim, Mike O'Neill, Ivy
Johnson, Hannibal Kemmerer, Tim Strachan, Brendan Dunn and Ryan
Triplette have been extremely helpful in getting the job done. I want
to thank Majority Leader Frist and his staff, Allen Hicks, Eric Ueland,
Sharon Soderstrom and Dave Schiappa, as well as Senator McConnell and
his staff, John Abegg, Kyle Simmons, Malloy McDaniel and Brian Lewis.
I would be remiss if I didn't thank our friends on the House side,
and in particular Chairman Sensenbrenner and his staff, Phil Kiko,
Susan Jensen and Ray Smietanka. Chairman Sensenbrenner has really been
a leader on bankruptcy reform, and a true driving force behind this
legislation. I look forward to additional collaborations with him.
In addition, I want to thank Senator Carper, Senator Nelson, Senator
Biden and Senator Johnson. This is truly a bipartisan bill, and it
couldn't have gotten done without their help.
Finally, I thank my own staff, my Finance Committee Chief of Staff
and Legislative Director Kolan Davis and my Judiciary Committee Chief
Counsel Rita Lari Jochum, for their hard work on the bill. I also want
to thank my former staffer John McMickle, for his expertise and advice
on this important piece of legislation. Good staff is hard to find, and
I am proud to say that my staff is probably the best in town.
Mr. NELSON of Nebraska. Mr. President, today, I am pleased to see the
passage of S. 256, the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005. This bill has been under consideration in
Congress since before I was elected to the Senate. Since my arrival, I
have been a proponent of the goals it strives to attain to ensure that
abuse of America's bankruptcy laws is curtailed and that Americans who
find themselves in unanticipated financial duress and have legitimate
reasons to seek bankruptcy protections will have the opportunity to do
so.
The goal of the bill is to prevent certain abuses of the bankruptcy
system. It includes more than five hundred pages of new and reformed
law, but key provisions include the following.
First and foremost, the bill will curb abuse of the bankruptcy system
by implementing a means test to ensure that those who can afford to
repay some portion of their unsecured debts are required to do so.
Bankruptcy petitioners with relatively high incomes could be required
to file under chapter 13 instead of chapter 7, and repay some of their
debt out of future income. The means test takes into account the
petitioner's income, debt burden, and allowable living expenses, which
can vary significantly according to the debtor's place of residence and
particular circumstances. Filers who cannot afford to repay at least
$6,000 will be given unfettered access to chapter 7 liquidation
proceedings.
The bill has a safeguard that will allow judges to consider
extenuating circumstances in each bankruptcy case. After determining
this means test calculation, the judge can then take any ``special
circumstances'' into consideration before making a decision to shift
the debtor into chapter 13. This will allow judges to consider cases
where catastrophic illnesses or other unexpected financial calamities
that have impacted a family or individual to the point where their
debts are too heavy a load to carry. This provision made many of the
amendments considered on this bill redundant.
The bill implements an important safeguard for family farmers by
making permanent the extension of chapter 12 bankruptcy rules. Chapter
12 has expired every year, necessitating the need for an extension.
Last year, Senator Grassley and I worked in a bipartisan fashion to
secure the chapter 12 extension. The bill also bumps the exemption
level for family farmers from $1.5 million to nearly $3.24 million,
which will be adjusted periodically for inflation.
The bill includes an important provision to safeguard our children.
It contains provisions that strengthen the ability of women and
children to collect child support and marital dissolution obligations.
This provision will enable some families to continue to provide for the
needs of their children.
Consumers also benefit from protection measures in this bill. By
requiring new minimum payment and introductory rate disclosures for
credit cards, consumers will be protected from surprise fees and
unexpected rate fluctuation. It also contains a `debtor's bill of
rights' requiring that bankruptcy attorneys and petition preparers
disclose their services and fees for those services to consumers.
It is important to note that no American will be denied access to the
bankruptcy system under these reforms. However, those trying to shield
their assets while abandoning their financial responsibilities will
find it much more difficult to abuse the system and leave their debts
for other Americans to cover through higher interest rates and fees.
As I mentioned earlier, there were many amendments to this bill
offered for consideration. As I considered each of these amendments, I
measured the intended impact of each amendment on the bill. In voting
against many of the amendments I did so knowing that the groups of
individuals singled out by the amendments, such as veterans,
individuals with chronic health problems, or military personnel, were
already adequately protected in the underlying bill.
I carefully considered each amendment offered to the bill on a case
by case basis to determine if the amendment improved the bill. Because
I believe the bill already covered most of the issues presented in the
amendments, it was my determination than many of the amendments did not
improve the bill and thus, I voted against them.
Again, this bill includes a safeguard for judges to consider
``special circumstances'' like medical bills, deployment to war and
other circumstances. In addition to this safeguard, I supported an
amendment to the bill that clarified the circumstances that might be
considered by a judge. That language provided specific examples a judge
might consider including ``a serious medical condition or a call to
order to active duty in the armed forces.'' I voted for this amendment
because it provided an improvement, in the form of clarity on special
circumstances.
It is important that creditors, retailers, and small businesses who
in good faith provide people with credit do not bare the brunt of the
cost when debtors find themselves unable to pay. It is also critical
that we protect consumers who have found themselves in unanticipated
situations where their inability to meet their debts is beyond their
control. And it is important to safeguard consumers against predatory
lending practices.
I worked hard to find the correct balance among these competing goals
on this bill and feel that the Senate did a good job in accomplishing
that overriding principal. I am pleased to support this bill because I
believe it provides needed improvements to our bankruptcy protection
laws that will benefit every American.
Mr. AKAKA. Mr. President, I am in opposition to the bankruptcy
legislation.
[[Page S2471]]
The financial services industry has become increasingly complex with
new technology, products, and services. However, this dated legislation
has not had significant changes made to it since the 107th Congress.
Predatory lending has surged since the initial development of this
bankruptcy legislation. In the early 1990s, there were fewer than 200
payday lenders nationwide. Now, there are more than 20,000. Payday
lenders made 100 million loans in 2003. These loans represent more than
$40 billion. Most alarmingly, according to the Consumer Federation of
America, interest rates on these loans begin at 390 percent.
Yet, Congress has failed to act to prevent the exploitation of
working families that are short on cash due to unexpected medical
expenses or other needs. I am afraid that the passage of this
legislation will further reduce the risk for predatory lenders, and as
a result, they will aggressively market their products even more. We
must act to protect consumers from these unscrupulous lenders. I remain
committed to restricting all forms of predatory lending, including
payday loans, and to providing consumers with alternative affordable
short-term loans.
Access to credit has increased significantly and household debt has
skyrocketed as a result. Revolving debt, mostly compromised of credit
card debt, has risen from $54 billion in January 1980 to more than $780
billion in November 2004. A U.S. Public Interest Research Group and
Consumer Federation of America analysis of Federal Reserve data
indicates that the average household with debt carries approximately
$10,000 to $12,000 in total revolving debt. This legislation tightens
the grip that creditors have on consumers, but it fails to restrict the
aggressive marketing practices of credit card companies.
In addition, this bankruptcy bill fails to provide adequate, timely,
and meaningful disclosures for consumers. As we make it more difficult
for consumers to discharge their debts in bankruptcy, we have a
responsibility to provide additional information so that consumers can
make better informed decisions. S. 256 includes a requirement that
credit card issuers provide a generic warning about the consequences of
only making the minimum payment. This provision fails to provide the
detailed information for consumers on their billing statements that my
amendment would have provided. My amendment would have given consumers
the detailed personalized information necessary for them to make better
informed choices about their credit card use and repayment. It would
have required companies to inform consumers of how many years and
months it would take to repay their entire balance and the total cost
in interest and principal, if the consumer makes only the minimum
payment. The amendment would also have required consumers to be
provided with the amount they need to pay to eliminate their
outstanding balance within 36 months. Finally, my amendment would have
required that creditors establish a toll-free number so that consumers
can access trustworthy credit counselors. Unfortunately, this amendment
was defeated.
I appreciate the willingness of the Chairman of the Banking
Committee, Senator Shelby, to continue to work with me on this very
important consumer awareness issue.
I also proposed an amendment that would have required credit card
companies to make concessions to individuals in debt management plans
so that credit counseling could be a viable alternative to bankruptcy.
Unfortunately, that amendment was also defeated.
I fear that this bill will end up significantly harming families that
have suffered financially due to illnesses, the loss of a job, or the
death of a loved one. I supported other reasonable amendments intended
to protect low-income families, the elderly, and other vulnerable
populations from this overly restrictive legislation. However, these
amendments also failed.
Instead of making improvements to the legislation, an old, outdated
bill has been approved by the Senate. It is low-income working families
that will be hardest hit by this anti-consumer legislation. After
passage of this legislation, we will need to take additional steps to
prevent further exploitation of consumers by unscrupulous lenders and
to improve relevant and useful information about credit to consumers. I
will continue to fight to protect working families from predatory
lenders and overly aggressive creditors.
Mr. KERRY. Mr. President, I strongly believe that reform of our
bankruptcy laws is necessary. Too often, bankruptcy is used as an
economic tool to avoid responsibility for unsound decisions and
reckless spending.
Last year Americans paid interest on about $690 billion in revolving
debt. Most of that debt is credit card debt. According to a Consumer
Federation of America study, the average household carries between
$10,000 and $12,000 in credit card debt and has nine credit cards.
Consumers pay an average interest rate of 12.4 percent or approximately
$85 billion annually in credit card debt interest.
Let me point out that during both the 105th and 106th Congress, I
supported legislation to reform bankruptcy laws and end the abuse of
the system.
However, I am unable to support the Bankruptcy Reform Act before us
today because I believe it is unfair and unbalanced, does far too
little to help consumers and curb creditor abuses, and includes an
inflexible ``means test'' that will harm many debtors who are genuinely
in need of the protections and the ``fresh start'' that bankruptcy is
intended to provide.
The Bankruptcy Code currently offers two alternatives for
individuals: chapter 7, under which a debtor's assets are sold and the
proceeds are divided among creditors, and chapter 13, under which
debtors who have a regular income develop a repayment plan for a
portion of the debt. In many cases, debtors filing under chapter 13
repay a greater proportion of their debt than those filing under
chapter 7.
The Bankruptcy Reform bill creates a ``means test'' that will make it
more difficult for individuals earning above the median income level to
erase debts under chapter 7, forcing them to file under chapter 13,
which would require them to repay a greater portion of their debt. I
believe that those who can afford to repay a greater portion of their
debts during the bankruptcy process should be required to do so.
A narrowly targeted reform bill designed to reduce abuse of the
system would provide bankruptcy judges with the discretion to dismiss
or convert a case to chapter 7, but would not mandate it. It would have
provided creditors the opportunity to ask for a dismissal or conversion
without putting the burden on every filer to prove that he or she
deserves the protections of chapter 7.
However, the ``means test'' included in the bill is inflexible, and
it provides no room for a bankruptcy judge to determine whether the
circumstances that led to the debtor's financial situation warrant
treatment under chapter 7. A parent with a sick child bankrupted by
medical bills is treated the same way as a reckless spender who ran up
debt on luxury items. That's simply not right.
Again and again, Senators offered amendments that sought to increase
the flexibility of the ``means test'' and offered other changes to
improve many aspects of this legislation. Unfortunately, in almost
every case, these amendments were defeated.
The Senate voted against giving any relief to families forced into
bankruptcy by devastating health care costs. One million men and women
each year turn to bankruptcy protections in the aftermath of a serious
medical problem--and three-quarters of them have health insurance.
Senator Kennedy offered amendments to exempt from the means test
debtors who have incurred large medical expenses and other reasonable
considerations. Both his amendments were defeated.
The Senate voted against relief for children caught up in their
parents' bankruptcy. And it voted against relief to help military
families who are struggling with the burdens in Iraq and around the
world.
The Senate defeated critical consumer protections that would simply
give consumers more information and might help end some of the abusive
and deceptive practices of some credit card companies. The industry
pushes out an incredible 5 billion solicitations every year. Under
current regulations companies can change interest rates at almost any
time. They market aggressively and, I believe for some, deceptively.
Only last year, the Office of the
[[Page S2472]]
Comptroller of the Currency issued an advisory letter warning national
banks that engaged in deceptive credit card marketing and account
management practices that they would face compliance and reputation
risks.
Remarkably the bill does protect the wealthiest Americans by allowing
them to continue hiding their assets from creditors during bankruptcy
and never making good on their debt. Senator Schumer offered an
amendment to eliminate and end this abuse, and it was defeated. And it
does not stop corporate executives from looting their companies and
leaving workers, stockholders, and creditors holding the bag. How can
we target middle-class families and ignore the wealthiest Americans as
they hide their assets?
This bill is needlessly punitive to families. It is as if we have
gone out of our way to harm and not help them. For example, when a
debtor receives a bankruptcy discharge, the legislation sets up new
classes of nondischargeable debt that will compete for payment along
with child and family support. Senator Dodd offered an amendment to
enable parents to better meet the needs of their children during
bankruptcy. Unfortunately, it was defeated. The credit card companies
beat the kids on that vote.
This bill is not only detrimental to consumers, but it also hurts our
small businesses. This effort to reform our bankruptcy laws will make
it more difficult for entrepreneurs to start a small business and
imposes additional regulations and reporting requirements on small
businesses who file for bankruptcy.
I believe we must do everything possible to ensure the viability of
small businesses and to assist in fostering entrepreneurship in our
economy. Regulatory and procedural burdens should be lowered for small
business wherever possible. However, the bill fails to meet this
challenge. Instead, this legislation promotes additional red tape and a
government bureaucracy. It imposes new technical and burdensome
reporting requirements that are more stringent on small businesses that
file for bankruptcy than they are on big business. Further, the bill
will provide creditors with greatly enhanced powers to force small
businesses to liquidate their assets.
Any big business would have difficulty complying with these new
burdensome reporting requirements. But think of the difficulties an
entrepreneur or a mom-and-pop grocery store will have in complying with
this dizzying array of new and complex requirements. These small
businesses are the most likely to need, but least likely to be able to
afford, the assistance of a lawyer or an accountant to comply with
these new requirements. I cosponsored an amendment offered by Senator
Feingold to strike many of the small business provisions in the bill
because they would increase reporting requirements on small businesses
and make it easier for creditors to force liquidations of small
business during the bankruptcy process. Unfortunately, that amendment
was not adopted.
I am pleased that an amendment sponsored by Senator Collins and
myself which will extend chapter 12 bankruptcy protections to our
family fishermen, has been included in the bill. The small, family-
owned fishing businesses are in serious trouble. We are making progress
in rebuilding stocks; however, the cost of this progress has been
carried by fishermen working Georges Bank and the Gulf of Maine. The
Collins-Kerry amendment will help ensure that fishermen have the
flexibility under chapter 12 of the Bankruptcy Code to wait out the
rebuilding of our commercial fish stocks without back tracking on our
conservation gains to date. It will help preserve the rich New England
fishing heritage in Massachusetts.
Despite some provisions, which I do believe improve the system,
overall this bill does not provide bankruptcy reform. Inexcusably, this
bill helps creditors without helping consumers. It will let the very
rich continue to hide money in homes and trusts. It gives no relief to
families hit by medical bills or other financial hardship. It even puts
credit card companies ahead of children when debt is allocated to
creditors. I will vote no.
Mr. SESSIONS. Mr. President, today, for me, marks the culmination of
8 long years of hard work, and I am glad we have finally reached this
point, where we will not only pass this bill, but the House will do so
as well and the President will sign it into law. I believe that we have
eliminated some abuses with this bill. I wish we could have
accomplished more, but we could not let the perfect be the enemy of the
good. Let me say to my colleagues, that there are some issues like
homestead and asset trusts that will come back, and I look forward to
working on those, but make not mistake about it, this is a good bill
and I am excited to see it pass.
The policy questions we have been addressing are these:
(1) whether bankruptcy is a necessary and permitted way to recover
from overburdening debt; and
(2) when is bankruptcy being abused and used as an escape valve for
individuals capable of repaying some, if not all, of their debt.
The goal of this bill has never been to create additional burdens for
those who have over-extended themselves for one reason or another, but
to help them achieve financial responsibility after bankruptcy, so that
they can avoid similar setbacks in the future.
It is clear to me that when you have statements from debtors that
they are using bankruptcy to ``[take] advantage of one of the
opportunities the Government offers,'' that the responsibility for
slowing down the 1.6 millions consumer bankruptcy filings per year lies
with Congress.
As we approached this bill, our goal was not to punish those who
legitimately need the fresh start that bankruptcy offers. However, our
goal was to disallow people from filing bankruptcy simply for the sake
of taking advantage of a financial opportunity provided by the
government. People who can afford to pay all or a part of their debts
over a limited period of time should not get off Scot free.
Let me just for a moment, talk about the concept of bankruptcy. The
term derived from the medieval Italian phrase ``broken bench.''
Merchants would sell their wares in the marketplace from benches. If
the merchant ever reached a point where he could not pay his debts, his
creditors would seize all of his wares and divide it among themselves.
They did not stop with the seizing of wares, however. The creditors
would break the merchants' bench, to bankrupt the merchant from
reopening.
Our goal under this legislation was not and we did not ``break the
bench.'' Instead of trying to prevent merchants or individuals from
having a second opportunity, we accomplished just the opposite. People
who need a fresh start under this bill will get one. The people who can
pay some of their debts back will have to do that. Let me just
highlight a few of the benefits in this bill.
First, S. 256 requires that individuals receive credit counseling
prior to filing for bankruptcy. This counseling will help an individual
decide if bankruptcy is the appropriate mechanism to remove debt and
will help the individual understand what filing bankruptcy actually
means. In many instances, the deceptive and fraudulent advertising
practices of bankruptcy mills lure consumers into bankruptcy
unnecessarily. Debtors should know that there are many ways to get back
on their feet financially--such as entering into voluntary repayment
arrangements.
To curb the practice of preying upon debtors, S. 256 establishes the
Debtor's Bill of Rights. The Bill of Rights requires that debt relief
organizations disclose the nature of the services they offer, explain
the alternatives to filing bankruptcy, disclose the rights and
obligations of debtors who file for bankruptcy, and explain the
consequences of filing for bankruptcy.
Second, S. 256 establishes a means test to help determine whether
people are capable of paying back a meaningful portion of their debts.
This test might help the debtor avoid a Chapter 7 filing, where
creditors will liquidate the individuals assets and where the debtor
will have a very hard time getting creditors to extend credit to them
in the future. If a debtor files under Chapter 13 and learns how to
manage money under a structured repayment plan that requires some
discipline, the debtor learns financial responsibility and should be
able to avoid future financial turmoil. Chapter 13 bankruptcies allow
debtors to keep their assets and pay back a portion of their
[[Page S2473]]
debts over a 5 year period. In exchange, the remaining portions of
their debt are discharged and the debtor gets a fresh start.
Third, S. 256 creates new protections for consumers, especially in
the area of credit cards. We require credit card companies to disclose
the dangers of making only a minimum payment and we prohibit deceptive
practices like advertising low introductory rates--rates used to bait
and switch the credit card holder. We also require that a toll-free
number be provided to consumers, where they can obtain information on
how long it will take to payoff their credit card balances.
The consumer benefits of this bill are enormous. Instead of breaking
the bench, this bill promotes financial responsibility. The bill vastly
improves the current situation in bankruptcy for certain categories of
individuals. For example, it provides special benefits to women and
children, through child support and alimony, and provides parents the
ability to deduct expenses such as school tuition. Make no mistake
about it, while the bill provides some increased protection for
unsecured creditors, it provides more protection for
consumers. Logically, there is absolutely no reason to oppose it.
Mr. President, over time, many people have worked on this bill, and I
would just like to take a moment to express my appreciation for their
work.
First, it has been an honor to work closely with Senators Grassley
and Hatch to make this legislation a reality. I appreciate both of them
so much and I believe they both have done yeomen's work on this bill. I
thank Senator Frist for making this bill one of his top priorities and
I appreciate the leadership of Senator McConnell.
I think it is appropriate that we take just a moment to express
appreciation to some people who gave extraordinary effort to make this
successful conclusion.
First, I note that in my office it has taken three chief counsels to
get through this bill. I appreciate the hard work of Kristi Lee, my
first Chief Counsel and currently a magistrate judge in the Southern
District of Alabama. She did an outstanding job on this bill during the
first years that this legislation was in the Senate. I also appreciate
the work of my former Chief Counsel Ed Haden, who is currently doing
appellate litigation at one of Alabama's outstanding law firms, Balch
and Bingham. While I also appreciate the work of my current Chief
Counsel, William Smith, and legislative counsels Amy Blankenship and
Wendy Fleming for their efforts in this endeavor, my Deputy Chief
Counsel Cindy Hayden has really given an extraordinary effort on this
bill.
These fine staffers have worked night and day for two weeks to guide
this bill to passage. William Smith has given every ounce of his
strength to successful passage. He deserves particular praise.
Additionally, I appreciate the work of Lloyd Peeples, a former
counsel of mine who has clerked for a bankruptcy judge and now serves
as an AUSA in the Northern District of Alabama. He provided invaluable
assistance on this bill.
Sean Costello, a former counsel of mine who now works for the Office
of Justice Programs at the Department of Justice, provided outstanding
work to help make this bill a reality.
Brad Harris, a former counsel of mine who now works for the Burr and
Forman firm in Birmingham, never failed in working long hours and
providing key assistance in seeing this bill through.
And finally, Brent Herrin, my former counsel who worked hard on cram
down and other issues, did outstanding work. Brent practices tax law
for the Deloitte Touche firm in Atlanta.
For eight years, these lawyers have all worked on this legislation. I
know they are happy to see it come to a conclusion. I am too.
In the past I have thanked the former staffers from other offices
that have worked on this bill, I will not name them individually today,
save John McMickle who served Senator Grassley and played a major role
in helping to craft this bill. John believes in the underlying
principles in this bill and I appreciate his work.
I also want to thank Rita Lari Jochum, Senator Grassley's current
Chief Counsel. I have seen very few staffers with her drive and
dedication and she is to be commended for her efforts on this bill. Her
good demeanor has been a source of calm in the storm.
I appreciate the work Perry Barber, Brendan Dunn, Kevin O'Scannlain,
and Bruce Artim of Senator Hatch's staff, and the work of Harold Kim,
Ivy Johnson, Tim Strachman, Mike O'Neill, Hannibal Kemmerer and Ryan
Triplette of Senator Specter's staff.
I must also thank Dave Schiappa, Allen Hicks, Eric Ueland, Sharon
Soderstrom, John Abegg, Kyle Simmons, Malloy McDaniel and Brian Lewis
from the Leadership staffs of Senators Frist and McConnell, all who
have provided tremendous assistance along the way in shaping this bill
into its final form.
Mr. President, I also want to thank Chairman Sensenbrenner and his
staff for their remarkable work in getting this bill done. Phil Kilko
and Susan Jensen did outstanding work on this bill.
I thank the senior Senator from Alabama, Senator Shelby, for his work
on this bill. He guarded his banking jurisdiction like a roaring lion.
This is a great day, Mr. President. I thank the Chair and yield the
floor.
Mr. FRIST. Mr. President, the Senate will soon vote on final passage
of the bankruptcy reform bill. This bill constitutes the most sweeping
overhaul of bankruptcy law in 25 years. Like class action, bankruptcy
reform curbs abuse of the legal system. I am hopeful that it will pass
with a strong bipartisan vote.
Bankruptcy reform has long been in the works. Similar bills have
passed the Senate in the 105th, the 106th, and 107th Congresses. Today,
in the 109th we will finally deliver a package that restores fairness
and personal responsibility to the bankruptcy system.
The House has agreed to take up the legislation, pass it quickly, and
send it to the President for his signature.
I thank my colleagues for their hard work and leadership. In
particular, I would like to thank: Senator McConnell, a good friend and
counselor, who has made sure that we have the votes on every amendment
and who has helped secure final passage; Senator Grassley, the bill's
lead sponsor, who has been a tireless advocate for bankruptcy reform
for nearly a decade; Chairman Specter, who skillfully led the bill
through Committee; Senator Hatch, who, as a floor manager, has led on
the substance of each and every amendment; and Senator Sessions, who
has led debate on the floor again and again, and who lent his expertise
to explain the finer points of the law.
Like class action, the bankruptcy reform bill is another example of
bipartisan cooperation. Nearly every vote on every amendment has been
bipartisan. Our work has been a great example of how thoughtful,
bipartisan negotiation can deliver meaningful solutions for the
American people.
America has always been a place for second chances. As Americans, we
value innovation, reinvention and risk taking. It's part of our
national DNA, part of why we are so spectacularly successful. It's also
why America has long supported generous bankruptcy law. We recognize
that sometimes people get in over their head, or are hit with an
unexpected set back, and they need a fresh start, a second chance.
Congress has passed, and courts have upheld, Federal bankruptcy laws
for over 100 years. The Constitution gives Congress the express power
to ``establish uniform laws on the subject of bankruptcies throughout
the United States.''
As the Supreme Court has stated, ``One of the primary purposes of the
Bankruptcy Act is to give debtors a new opportunity in life and a clear
field for future effort, unhampered by the pressure and discouragement
of preexisting debt.''
Unfortunately, however, the system has veered away from its original
positive intent. In the past two decades, bankruptcies have
skyrocketed--actually accelerating during the economic boom years of
the 80's and 90's.
Last year, we reached an historic high of over 1.6 million filings
per year. The total number of bankruptcies more than doubled during the
1980's and then doubled again from 1990 to 2003. Personal bankruptcies
outnumber business bankruptcies by a multiple of more than 45.
We all pay the price for these bankruptcy filings. Every bill you and
I pay
[[Page S2474]]
includes a hidden ``bankruptcy tax'' of $400 per year per household.
That tax is figured into in every phone bill, electrical bill, mortgage
payment, furniture purchase, or car loan we pay.
For many people, bankruptcy has become a first step rather than a
last resort. Opportunistic debtors who have the means to repay use the
law to evade personal responsibility. In some cases, they even plan
their bankruptcy, buying a mortgage and running up credit cards and
then declaring they're broke.
With this bill, we are putting an end to the abuse. Wealthy debtors
who have the means to pay some, or all, of their debt will be required
to do so.
The bankruptcy bill establishes a means test based on a simple, fair
principle: those who have the means should repay their debts. The
legislation specifically exempts from consideration anyone who earns
less than the median income in their state. It allows every filer to
show ``special circumstances'' if they cannot handle a repayment plan.
And it makes clear that active duty military, low income Veterans,
and debtors with serious medical conditions are protected by these safe
harbor provisions.
But for those individuals who are abusing the system, they will no
longer be able to hide behind the law. Nor will they be able to duck
their family responsibilities. These new reforms make child support a
high priority.
Most people who get into financial trouble want to do the right
thing. They want to make good on their obligations and pay what they
owe. But they are in over their head and need a fresh start. This
legislation will not affect the vast majority of these filers. What it
will do is close loopholes that have let unscrupulous debtors slip
through.
Today's impending vote is a victory for fairness, compassion and
common sense. It took eight years, but we are finally here.
I applaud my colleagues for their leadership. Together with class
action reform, we are returning fairness and common sense to the legal
system.
When the legal system gets off track, it affects us all, consumers,
creators, and innovators alike. Jobs are lost. Prices go up. We pay in
big and small ways. By reforming the system, we strengthen our ability
to grow. We keep America moving forward.
I look forward to tackling other lawsuit abuse issues including gun
manufacturer liability, medical liability, and asbestos reform. I am
hopeful that we will continue to work together delivering meaningful
solutions to the American people.
The PRESIDING OFFICER. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed for a third reading and was read
the third time.
The PRESIDING OFFICER. The bill having been read the third time, the
question is, Shall it pass?
Mr. CRAIG. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. DURBIN. I announce that the Senator from New York (Mrs. Clinton)
is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 74, nays 25, as follows:
[Rollcall Vote No. 44 Leg.]
YEAS--74
Alexander
Allard
Allen
Baucus
Bayh
Bennett
Biden
Bingaman
Bond
Brownback
Bunning
Burns
Burr
Byrd
Carper
Chafee
Chambliss
Coburn
Cochran
Coleman
Collins
Conrad
Cornyn
Craig
Crapo
DeMint
DeWine
Dole
Domenici
Ensign
Enzi
Frist
Graham
Grassley
Gregg
Hagel
Hatch
Hutchison
Inhofe
Inouye
Isakson
Jeffords
Johnson
Kohl
Kyl
Landrieu
Lincoln
Lott
Lugar
Martinez
McCain
McConnell
Murkowski
Nelson (FL)
Nelson (NE)
Pryor
Reid
Roberts
Salazar
Santorum
Sessions
Shelby
Smith
Snowe
Specter
Stabenow
Stevens
Sununu
Talent
Thomas
Thune
Vitter
Voinovich
Warner
NAYS--25
Akaka
Boxer
Cantwell
Corzine
Dayton
Dodd
Dorgan
Durbin
Feingold
Feinstein
Harkin
Kennedy
Kerry
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Murray
Obama
Reed
Rockefeller
Sarbanes
Schumer
Wyden
NOT VOTING--1
Clinton
The bill (S. 256), as amended, was passed.
(The bill will be printed in a future edition of the Record.)
Mr. HATCH. I move to reconsider the vote, and I move to lay that
motion on the table.
The motion to lay on the table was agreed to.
Mr. HATCH. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. McCONNELL. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________Legislative Activity
Stay on top of the latest movement without scrolling through every action
Floor
Latest Action
Senate amendment agreed to: Amendment SA 92 as modified agreed to in Senate by Unanimous Consent.
March 10, 2005
View full timeline
Floor
Senate amendment agreed to: Amendment SA 92 as modified agreed to in Senate by Unanimous Consent.
March 10, 2005
Floor
Considered by Senate. (consideration: CR S2416, S2463)
March 10, 2005
Floor
Amendment SA 92 as modified agreed to in Senate by Unanimous Consent. (text as modified: CR S2463)
March 10, 2005
Floor
Considered by Senate. (consideration: CR S2307, S2342)
March 9, 2005
Floor
Considered by Senate. (consideration: CR S2200)
March 8, 2005
Floor
Senate amendment submitted
March 7, 2005
Floor
Senate amendment proposed (on the floor): Amendment SA 92 proposed by Senator Feingold.
March 7, 2005
Floor
Amendment SA 92 proposed by Senator Feingold. (consideration: CR S2134-2138) To amend the credit counseling provision.
March 7, 2005