Involuntary Bankruptcy Improvement Act of 2003

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 1529) to amend title 11 of the United States Code with respect to the dismissal of certain involuntary cases.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 1529.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in strong support of H.R. 1529, the Involuntary Bankruptcy Improvement Act of 2003, a bill I introduced earlier this year that addresses a very serious and possibly growing problem with respect to abuse of the judicial process by extremists and others.

Under current law, a debtor can voluntarily commence a bankruptcy case or be involuntarily forced into bankruptcy by one or more creditors. Although rarely used, an involuntary bankruptcy petition can be a useful creditor collection tool. It can preserve and maximize assets for the benefit of creditors and provide for the appointment of a bankruptcy trustee to investigate a debtor's financial affairs.

Unfortunately, tax protesters and other extremists are now resorting to filing fraudulent involuntary bankruptcy petitions against public officials and private individuals as yet another weapon in their arsenal of abusive litigation tactics, such as filing false liens.

Last year, for instance, a tax protester filed fraudulent involuntary bankruptcy petitions against 36 local public officials in my district in Wisconsin, including the county sheriff, the circuit judge, and nearly every member of the county board of supervisors. Some of these individuals only discovered that they were the subject of a pending involuntary bankruptcy case after their lines of credit were terminated or they were charged higher interest rates. Worse yet, an involuntary bankruptcy filing, as with most bankruptcy cases, is a matter of public record and can appear on an individual's credit report for up to 10 years even if the involuntary bankruptcy filing is fraudulent and the case is dismissed by the court.

As a result, innocent individuals continue to experience credit problems long after these abusive cases are dismissed. As the Hartford Courant reported last month, it sometimes takes years for corrections to be made to a person's credit report. As a result, the individual may potentially be forced to pay higher interest rates until the proper steps can be taken to fix their credit report.

While abusive bankruptcy filings are not pervasive, they have occurred in various districts across the Nation. According to an informal survey conducted by the Administrative Office of the United States Courts and the National Conference of Bankruptcy Clerks, fraudulent involuntary bankruptcy cases have recently been filed in California, Ohio, Maine, Nebraska, and North Carolina. Organizations such as the Anti-Defamation League and the National District Attorneys Association have expressed concern that this litigation tactic may become even more widespread.

H.R. 1529 responds to the serious problems presented by abusive involuntary bankruptcy filings in two respects:

First, it amends the Bankruptcy Code to require the bankruptcy court, on motion of the debtor, to expunge all records relating to a fraudulent involuntary bankruptcy case from the court's files under certain conditions.

Second, it authorizes the bankruptcy court to prohibit all credit reporting agencies from issuing a consumer report containing any reference to a fraudulent involuntary bankruptcy case where the debtor is an individual and the court has dismissed the petition.

This bill offers great forward but very much-needed relief to innocent victims of abusive involuntary bankruptcy petitions. I urge my colleagues to support this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 1529, the Involuntary Bankruptcy Improvement Act of 2003, a bill which was reported by the Committee on the Judiciary with bipartisan support and without dissent.

I commend the gentleman from Wisconsin (Chairman Sensenbrenner) for moving so quickly to deal with a real and pernicious problem. This legislation is a good first step in providing bankruptcy courts with congressional guidance in dealing with the phenomenon of malicious and baseless involuntary bankruptcy petitions. It augments the existing powers of the bankruptcy court and makes clear Congress' intent to ensure that the targets of this abuse will have available to them meaningful protection from the lasting effects of meritless involuntary bankruptcy petitions.

An involuntary bankruptcy petition, even if no order for relief is entered, and even if dismissed expeditiously by the court, can inflict lasting damage. Credit reporting agencies generally list the filing of a bankruptcy petition on a person's credit report almost immediately. This can destroy the ability of an individual to obtain credit or to obtain credit on appropriate terms, even if the petition is wholly without merit. For this reason, the dismissal of the case alone does not provide adequate relief.

This problem is a real one. Cases have already been filed for malicious and harassing purposes. Congress must make clear that the bankruptcy system cannot be used to harass and injure people.

Mr. Speaker, there are other changes in the Bankruptcy Code that are equally pressing and equally noncontroversial. Many of these improvements have been unnecessarily held hostage to a larger and far more controversial bankruptcy bill, our family farmers and fishermen, the stability of our financial markets, and the rights of parties whose cases are unnecessarily delayed because of inadequate judicial resources deserve better. I hope we will be able to work with the chairman of the committee to deal as expeditiously with these problems as we have with this one. So I commend the chairman for his efforts, and I urge my colleagues to support the motion to suspend the rules and pass the bill.

Mr. Speaker, I yield back the balance of my time.