[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                    MEDICAL BANKRUPTCY FAIRNESS ACT
=======================================================================



                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   COMMERCIAL AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   ON

                                H.R. 901

                               __________

                             JULY 15, 2010

                               __________

                           Serial No. 111-141

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov



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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee               STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
  Georgia                            LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               TED POE, Texas
JUDY CHU, California                 JASON CHAFFETZ, Utah
TED DEUTCH, Florida                  TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DANIEL MAFFEI, New York
JARED POLIS, Colorado

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
                                 ------                                

           Subcommittee on Commercial and Administrative Law

                    STEVE COHEN, Tennessee, Chairman

WILLIAM D. DELAHUNT, Massachusetts   TRENT FRANKS, Arizona
MELVIN L. WATT, North Carolina       JIM JORDAN, Ohio
DANIEL MAFFEI, New York              HOWARD COBLE, North Carolina
ZOE LOFGREN, California              DARRELL E. ISSA, California
HENRY C. ``HANK'' JOHNSON, Jr.,      J. RANDY FORBES, Virginia
  Georgia                            STEVE KING, Iowa
ROBERT C. ``BOBBY'' SCOTT, Virginia
JOHN CONYERS, Jr., Michigan
JUDY CHU, California

                     Michone Johnson, Chief Counsel

                    Daniel Flores, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             JULY 15, 2010

                                                                   Page

                                THE BILL

H.R. 901, the ``Medical Bankruptcy Fairness Act''................     3

                           OPENING STATEMENTS

The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Chairman, Subcommittee on Commercial 
  and Administrative Law.........................................     1
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, Chairman, Committee on the 
  Judiciary, and Member, Subcommittee on Commercial and 
  Administrative Law.............................................     8
The Honorable Daniel Maffei, a Representative in Congress from 
  the State of New York, and Member, Subcommittee on Commercial 
  and Administrative Law.........................................    13
The Honorable Trent Franks, a Representative in Congress from the 
  State of Arizona, and Ranking Member, Subcommittee on 
  Commercial and Administrative Law..............................    13
The Honorable William D. Delahunt, a Representative in Congress 
  from the State of Massachusetts, and Member, Subcommittee on 
  Commercial and Administrative Law..............................    15
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Member, Subcommittee on 
  Commercial and Administrative Law..............................    15
The Honorable Steve King, a Representative in Congress from the 
  State of Iowa, and Member, Subcommittee on Commercial and 
  Administrative Law.............................................    17
The Honorable Melvin L. Watt, a Representative in Congress from 
  the State of North Carolina, and Member, Subcommittee on 
  Commercial and Administrative Law..............................    17
The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Member, Subcommittee on Commercial 
  and Administrative Law.........................................    18
The Honorable Robert C. ``Bobby'' Scott, a Representative in 
  Congress from the State of Virginia, and Member, Subcommittee 
  on Commercial and Administrative Law...........................    20
The Honorable Judy Chu, a Representative in Congress from the 
  State of California, and Member Subcommittee on Commercial and 
  Administrative Law.............................................    22

                               WITNESSES

The Honorable Cecelia G. Morris, United States Bankruptcy Judge, 
  Southern District of New York
  Oral Testimony.................................................    85
  Prepared Statement.............................................    88
Ms. Aparna Mathur, Ph.D., Resident Scholar, American Enterprise 
  Institute
  Oral Testimony.................................................    96
  Prepared Statement.............................................    99
Mr. Peter S. Wright, Jr., Director of Clinical Programs, Consumer 
  and Commercial Law Clinic, Franklin Pierce Law Center
  Oral Testimony.................................................   120
  Prepared Statement.............................................   122

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, 
  Chairman, Committee on the Judiciary, and Member, Subcommittee 
  on Commercial and Administrative Law...........................     9
Material submitted by the Honorable Steve Cohen, a Representative 
  in Congress from the State of Tennessee, and Chairman, 
  Subcommittee on Commercial and Administrative Law..............    25
Prepared Statement of the Honorable Henry C. ``Hank'' Johnson, 
  Jr., a Representative in Congress from the State of Georgia, 
  and Member, Subcommittee on Commercial and Administrative Law..    83
Material submitted by the Honorable Trent Franks, a 
  Representative in Congress from the State of Arizona, and 
  Ranking Member, Subcommittee on Commercial and Administrative 
  Law............................................................   142

                                APPENDIX
               Material Submitted for the Hearing Record

Response to Post-Hearing Questions from the Honorable Cecelia G. 
  Morris, United States Bankruptcy Judge, Southern District of 
  New York.......................................................   185
Response to Post-Hearing Questions from Aparna Mathur, Ph.D., 
  Resident Scholar, American Enterprise Institute................   189
Response to Post-Hearing Questions from Peter S. Wright, Jr., 
  Director of Clinical Programs, Consumer and Commercial Law 
  Clinic, Franklin Pierce Law Center.............................   191


                    MEDICAL BANKRUPTCY FAIRNESS ACT

                              ----------                              


                        THURSDAY, JULY 15, 2010

              House of Representatives,    
                     Subcommittee on Commercial    
                            and Administrative Law,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 11:32 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Steve 
Cohen (Chairman of the Subcommittee) presiding.
    Present: Representatives Cohen, Conyers, Delahunt, Watt, 
Maffei, Johnson, Scott, Chu, Franks, Coble, and King.
    Staff present: (Majority) James Park, Counsel; Adam 
Russell, Professional Staff Member; and Daniel Flores, Minority 
Counsel.
    Mr. Cohen. This hearing of the Committee on the Judiciary, 
Subcommittee on Commercial Administrative Law will now come to 
order. Without objection, the Chair will be authorized to call 
a recess of the hearing. I will recognize myself for a short 
statement.
    Today we will revisit the issue of medical debt as a 
contributor to bankruptcy. Last year the Subcommittee held a 
hearing on this issue focusing on a Harvard study in 2007 on 
nationwide filing for bankruptcy. Disturbingly, that study 
concluded that 62.1 percent of bankruptcy debtors can trace at 
least part of the cause of their bankruptcies to medical debt. 
The 2007 data also indicates that there was a 49.6 percent 
increase in medical bankruptcies as a proportion of bankruptcy 
filings between 2001 and 2007.
    Three years ago this Subcommittee held a hearing on a 
predecessor Harvard study, which examined the 2001 bankruptcy 
filing data inside select judicial districts around the 
country. That study concluded that illness or high medical 
bills contributed to almost half of all the bankruptcy filings 
that were studied.
    The study further suggests that medical debt was driving 
middle-class families into bankruptcy. Of these classified in 
this study as medically bankrupt, more than 60 percent had 
attended college, more than 66 percent at one point owned a 
home, and 78 percent had health insurance at the time they 
became sick or injured.
    H.R. 901, the ``Medical Bankruptcy Fairness Act,'' 
introduced by Representative Carol Shea-Porter of New 
Hampshire, represents an important step forward to addressing 
this problem of debtors forced into bankruptcy because of 
overwhelming health care costs. This legislation would increase 
the Federal homestead exemption to $250,000, and if state law 
requires that a debtor claim a lower state law homestated 
exemption, it allows the debtor to nonetheless choose the 
higher Federal homestead exemption.
    These measures would allow a debtor who was forced into 
bankruptcy because of high medical debt to protect his or her 
interest in their home from being transferred into the 
bankruptcy estate and sold or liquidated. They would also 
provide some peace of mind for medically distressed debtors, 
who have enough to worry about without also having to wonder 
whether their hard-earned home equity will be lost because of 
accident or illness.
    H.R. 901 would also exempt medically distressed debtors 
from the Chapter 7 means test. Other Subcommittee Members and I 
are on record as being critical of the means test and other 
provisions of Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2005, otherwise known as BAPCCA, or something 
like that--BAPCPA--BAPCPA.
    The unnecessary expense and burden that it places on 
debtors should not be placed upon those who seek bankruptcy 
relief because of medical costs or loss of income associated 
with providing care. In 2005, BAPCPA supporters pointed to a 
Department of Justice court record analysis that concluded the 
majority of the sample had no medical debt at all; that among 
those with medical debt, the average medical debt was under 
$5,000 and medical debt comprised only 5.5 percent of the total 
unsecured debt of the sample.
    A recent Law Review article examined the Department of 
Justice analysis and concluded that the protocol used by the 
DOJ, which relied solely on documents filed by debtors in 
connection with the bankruptcy cases ``produced a skewed 
undercount of medical bills and failed to account for 
bankruptcy filers with significant medical hardship, who had no 
debt on Schedule F that could be identified as medical.''
    As the authors of the Law Review article noted, the clock 
cannot be turned back to 2005, when the Dow Jones--excuse me--
the Department of Justice analysis enabled lawmakers to vote 
with a clear conscience in favor of BAPCPA and against 
amendments that Members of Congress proposed to protect people 
with medical problems from certain harsher effects of the bill.
    H.R. 901 is a critical first step in correcting this 
legislative oversight by restoring balance for medically 
distressed individuals facing financial ruin. I thank 
Representative Shea-Porter for introducing H.R. 901 that brings 
together two of the most important issues that this Congress 
and America has faced recently, which is our lack of a national 
health care policy, which we rectified this past year, an 
historic vote taken in by mostly, almost entirely, Democrats, 
and the terrible home foreclosure crisis that continues to 
ravage and wreck this country and take people into terrible 
bankruptcies and debt caused by years and years of neglect 
during the previous Administration.
    And I thank our witnesses for their participation today.
    [The bill, H.R. 901, follows:]
    
    
    
    
    
    
    
    
    
    
                               __________
    Mr. Cohen. I now recognize my colleague, Mr. Franks, who is 
not here, but I would recognize Mr. Coble, if he would like to 
take his moment in the limelight in lieu thereof, in place 
thereof.
    Mr. Coble. Thank you, Mr. Chairman. I am told that the 
Ranking Member from Arizona is en route, so I will waive any 
opening statement.
    Mr. Cohen. Thank you.
    We will then put in reserve the opportunity for Mr. Franks, 
the distinguished Ranking Member, to make his opening remarks. 
I would now like to recognize Mr. Conyers, the most esteemed, 
distinguished and erudite Chairman of this Committee, for any 
opening remarks he would like to add.
    Mr. Conyers. Thank you, Mr. Chairman.
    For the benefit of our friends that are here today, that is 
a very expansive introduction that I get from him on a regular 
basis.
    The only thing I wanted to do was to welcome Dr. Mathur 
today--she has testified before us--and also to welcome, extend 
a welcome, to her parents, who are here as well. We are proud 
of your daughter, except in one respect. And that is that she 
is still questioning the fact that 60 percent of all 
bankruptcies are created by medical indebtedness.
    Now, this is not the most complicated issue that has ever 
been before the Committee, and the 60 percent figure is 
affirmed by all--well, almost everyone except our witness 
today, Dr. Mathur herself. And so what we are trying to do is 
to persuade her that everybody else isn't wrong.
    And I don't think that that would be too hard a subject 
with all my distinguished friends, Mr. Chairman. And so I ask 
unanimous consent to put my statement into the record.
    Mr. Cohen. Without objection, it will be done.
    [The prepared statement of Mr. Conyers follows:]
    
    
    
    
    
    
    
    
                               __________

    Mr. Cohen. And the Chair of the Subcommittee likewise 
recognizes Dr. Mathur and her parents. And even if one person 
may be considered wrong, one woman with courage. And there is 
something else that follows it up, I think.
    Is there anybody else who would like to make an opening 
statement or recognize any of the other panelists or their 
parents?
    Mr. Maffei, you are recognized.
    Mr. Maffei. Thank you, Mr. Chairman. I will be very brief. 
But I do appreciate the Subcommittee having this hearing.
    It is clear that medical bankruptcy is reaching epidemic 
proportions. Whatever the percentage is, it continues to be a 
huge problem in my district, and the percentage does seem to 
continue to rise in this squeeze, where family budgets are 
shrinking and yet medical costs continue to skyrocket. It seems 
to be affecting more seniors in my district.
    The other thing--just a note in my district, we have not 
had the kind of home foreclosure crisis in the rest of the 
country, mainly because we haven't seen the big bubble, so our 
bubble never burst in terms of home foreclosures. So most of 
the plurality of the bankruptcies coming that are actually 
affecting regular people are because of medical costs. And 
often these are people who have insurance.
    And so that is the other point I would make is that while 
clearly we made a step in the right direction in our health 
care actions in this Congress, we are still going to have this 
problem into the future.
    Whether Ms. Shea-Porter's bill is the answer or something 
else, I am not sure. I will proceed to this hearing without 
prejudice about that, but clearly something is necessary to 
address it.
    And it is my feeling, just to conclude, that given that the 
overall costs of health care tend to involve five basic chronic 
conditions, and not necessarily catastrophic illness, is that 
it seems that this is a problem that should have a solution.
    But, you know, look, if we pool all of our risk together, 
we should be able to find a way to be able to make sure that 
families don't go bankrupt in the relatively rare instance 
where they have these catastrophic diseases. And yet, of 
course, to that family it is huge.
    And my last point, you know, given when a family faces very 
difficult illness of a loved one, the last thing that we should 
do as a society is then put on top of that this incredible 
financial burden and the possibility of losing their home and 
et cetera.
    And so whatever we can do on this, I appreciate the 
panelists coming to testify. Thank you very much.
    Mr. Cohen. Thank you, Mr. Maffei.
    I would now like to recognize the distinguished Ranking 
Member of the Subcommittee, the gentleman from Arizona, Mr. 
Franks, for his opening statement.
    Mr. Franks. Well, thank you, Mr. Chairman. I apologize. I 
just got back from votes, but I got there a little late, so 
that made me late here. But thank you.
    Mr. Chairman, in July 2009 this Subcommittee held a hearing 
on whether medical debt was bankrupting Americans. And the 
conclusion was that the answer was no. The evidence continues 
to support that answer today, and there is thus no need for the 
legislation that is the subject of today's hearing. And I am 
surprised that the biggest piece of news since our hearing has 
not convinced my colleagues on the other side of the aisle of 
that conclusion.
    The big news was, of course, Obamacare. Obamacare was 
pitched to the American people as the magical legislation that 
would increase coverage and simultaneously decrease costs. It 
was the silver bullet that would somehow protect Americans from 
rising medical costs while spending at least a trillion of 
those same Americans' dollars.
    Of course, the American people didn't believe that sales 
pitch, Mr. Chairman. The majority of them today want Congress 
to repeal Obamacare. Instead of being a silver bullet, they 
believe Obamacare is proving itself to be a lead balloon.
    That being said, every one of my colleagues on the other 
side of the aisle today voted for Obamacare. Is today's hearing 
the other party's admission that Obamacare won't work? Are my 
colleagues worried that the millions who will lose their 
medical insurance of their choice under Obamacare will be 
bankrupted by the effect of that legislation?
    Are my colleagues worried that small business owners, who 
face higher insurance benefit costs and higher Medicare taxes 
under Obamacare, will be forced into bankruptcy because of it? 
Or are my colleagues worried that the $569 billion in new 
health care taxes, taxes that violate the President's promise 
not to raise taxes on the middle class, will threaten 
individuals and small business owners with bankruptcy?
    Are my colleagues worried that the $311 billion in rising 
health care costs under the Obamacare that the Department of 
Health and Human Services' own actuaries identified will 
bankrupt Americans, who will have to pay for that?
    Now, I don't see those issues addressed specifically in 
today's bill, and I wonder if one of my colleagues could point 
me to where they are addressed. Of course, perhaps they are not 
addressed at all, Mr. Chairman, because Obamacare supporters 
have steadfastly refused to admit that realities like these 
exist.
    In a rose-colored world painted by Obamacare's backers, 
oppressive medical debts that bankrupted Americans and American 
businesses were supposed to become a thing of the past. They 
weren't supposed to become permanent features of the landscape 
that meant we had to pass medical debt bankruptcy legislation.
    Now, Mr. Chairman, let me just close by a couple of 
comments. Under this legislation as it is written, if I went 
out and ran my credit cards up to $50,000, all I would have to 
do to get rid of those would be to go out and run my health 
care costs up to $10,000 and then wipe the entire $60,000 
clean. And that puts the situation beyond even the ostensible 
scope of this legislation.
    And I guess I have to suggest in the context, you know, a 
little over a week ago, this country had a 1-day deficit--1 
day--of $166 billion. Now, that is larger than the entire 2007 
deficit. That is the last time Republicans totally controlled 
the budget process for the entire year, and yet in 1 day under 
the Obama administration, we have raised that more than we did 
in an entire year under the last Republican-controlled process.
    And, of course, that is $20 billion more than Obamacare was 
supposed to save over 10 years. And, of course, I would just 
say, and finally, you know, I want so much. I mean, I have had 
16 surgeries, and my parents were burdened with incredible 
medical challenges when I was a little baby, and I want you to 
know that I identify so much with the people that deal with 
these kinds of things.
    But under this situation in the final analysis, the 
socialized approaches and these things that just simply ignore 
the laws of mathematics end up hurting more people, and usually 
the ones that need it most in the long run. And I am just 
suggesting to you that if we don't start recognizing realities 
here, we are going to hurt everybody in the country. And the 
people at the bottom rung of the economic ladder are going to 
be hurt the worst.
    And so with that, Mr. Chairman, I just wonder where it will 
all end and yield back.
    Mr. Cohen. Mr. Johnson, you are----
    Mr. Delahunt, do you seek--appreciate your----
    Mr. Delahunt. Yes, I would be very brief, Mr. Chairman. 
Thank you.
    I just want to remind my good friend from Arizona that the 
financial collapse that has immersed us into this economic 
quagmire occurred in September of 2008. We all remember the 
panic, the concern and the uncertainty. It was devastating. It 
will take time to emerge.
    I believe we are heading in the right direction. There are 
some pieces of light that are piercing the darkness. But let us 
not forget--and I don't want to make this partisan, but clearly 
the Ranking Member refers to Obamacare and people on the other 
side of the aisle, and I have got respect for him, and I know 
he is very sincere when he expresses his empathy and sympathy 
for people who find themselves in this situation.
    But I also can't let go without some rejoinder that it was 
a Republican administration and a Republican Congress that is 
responsible for policies that led us to the disaster that we 
saw consume us in September of 2008.
    We can talk about the deficit. Every night during special 
orders, or every other night, I spoke to that deficit. It is a 
Republican deficit. Let us understand that. That is really what 
it is. That is what we inherited when President Obama came to 
office and a new majority came to both the House and the 
Senate.
    We landed on a ship of state that could best be described 
as the Titanic in economic terms. We managed to steer and 
scrape the iceberg. We still have some shoals that have to be 
navigated. But where we are today is the result of the Bush-
Cheney administration that received overwhelming support from 
Republicans in both the House and the Senate. And with that, I 
yield back.
    Mr. Cohen. Thank you, sir.
    Does anybody else seek recognition?
    Mr. Johnson of Georgia?
    Mr. Johnson. Thank you, Chairman, for holding this hearing 
on the Medical Bankruptcy Fairness Act. And fairness is so 
important, as we adjust the scales from my colleagues on the 
other side's predisposition to always support the big business 
over consumers.
    And, you know, I mean, it was my friend on the other side 
of the aisle fought with the vengeance of a mother whose child 
was under attack like a bear, a mama bear trying to take care 
of her cubs, fought so hard to keep the bankruptcy laws as they 
are so that people, say, like my friend, my good friend John 
McCain, who forgot how many houses that he owned--it was about 
seven, I believe--and fought hard to make it legal for him to 
be able to select which of those seven houses he is going to 
declare as his residence under bankruptcy, should something 
happen and he would have to file.
    And they can get the mortgage totally reworked on the other 
six homes of his choosing. They can--that beach home, the 
chalet in Vail, you know, the Florida, Miami, you know, seaside 
villa, the Arlington, Virginia, condo, the Ritz-Carlton condo 
in D.C., whatever the case--just take one of those and if you 
get into trouble, you can turn yourself right-side up in 
bankruptcy. You can get your balance reduced to what the home 
is worth now, as opposed to what it was when you took out the.
    And they fought so hard for that, and they fought hard to 
maintain the right of those folks with the six and seven homes 
to be able to get their interest rate reduced, should the need 
arise. But they fought so hard against just allowing consumers 
to be able to--with the only home that they have--to have that 
debt restructured.
    And so I am not surprised at the righteous indignation that 
has been on display today from my friend on the other side of 
the aisle and I mean, you know, folks calling BP, apologizing 
to BP, and then calling financial regulatory reform an ant, you 
know. These things are just--it is part of a clear pattern of 
supporting big business over consumers.
    And I am glad that we are having this hearing today, Mr. 
Chairman, because this gives the Members the opportunity to 
explore whether the Medical Bankruptcy Fairness Act is a tool 
that should reform the bankruptcy code to respond to the needs 
of distressed medical debtors, most of whom are just working 
people, just ordinary consumers.
    And I applaud the Chairman for exploring the solutions to 
the overall problem of rising medical debt. According to the 
IXIS project in 2007, the most recent year for which data are 
available, an estimated 72 million Americans have medical bill 
problems. Many of these Americans made paying off medical bills 
a top priority, and therefore struggled to pay for other basic 
necessities like food, rent, clothing and the mortgage note.
    According to that report, more than 30 million American 
adults used about all their savings or borrowed against their 
homes in order to pay off medical bills. This, however, did not 
stop the bill collector from knocking on their door if they 
came up short.
    According to a June 2009 American Journal of Medicine 
study, 62 percent of all bankruptcies filed in 2007 were linked 
to medical expenses. And of those who filed for bankruptcy in 
2007, nearly 80 percent had health insurance.
    And so that is why I like to refer to the medical care 
reform not as Obamacare, as it is derisively referred to by my 
colleagues on the other aisle, singing from a script in unison, 
not even in harmony, but in unison, and that is why I like to 
refer to medical care reform as medical insurance reform. And 
they love to protect those insurance companies also.
    According to the same study, most medical debtors were 
well-educated and middle-class. Due to the recent recession and 
record unemployment, more and more Americans cannot afford 
health insurance. Last year Families USA released a report that 
showed nearly 3 million people under the age of 65 in my home 
state of Georgia were uninsured at some point in 2007 or 2008.
    This session Congress scored a historic victory in the 
century-long battle to reform the Nation's broken health care 
system. Passing health care reform will definitely improve the 
situation, but a number of the provisions do not kick in until 
2014. Thus, medical debt is a problem that must be adequately 
addressed.
    I hope this hearing will give us all the opportunity to 
understand the serious consequences that medical debt has on 
our constituents, and I look forward to hearing the witnesses' 
views on how Congress can solve this problem.
    Thank you, Mr. Chairman, and I yield back the balance of my 
time.
    Mr. Cohen. Thank you, Mr. Johnson. I appreciate your 
warming Mr. King up. I imagine Mr. King is ready.
    Now on deck, the next batter will be from Iowa, Mr. Steve 
King.
    Mr. King. Thank you, Mr. Chairman. Appreciate the testimony 
of the witnesses, and I regret that I wasn't here to hear it 
all, but, of course, it is a matter of record.
    And I would like to first just explore something. I am 
always interested in foundational things that we do and turn to 
Judge Morris, because I know she will know this, as this is a 
completely simple softball question. Where does the Federal 
Government get the authority to control bankruptcy?
    Judge Morris. Constitution.
    Mr. King. Thank you. I knew you would know the answer right 
away. And so when I look at Article I, Section 8, it says that 
the Congress shall have the power to--excuse me.
    Oh, excuse me.
    Mr. Cohen. Would the clerk make note that Judge Morris 
answered the first question correctly? Our second question?
    Mr. King. Well, thank you, Mr. Chairman. I have just been 
advised that I came in--this is for an opening statement 
invitation, rather than questioning the witnesses, so as I 
listened to Mr. Johnson, I got the wrong impression. And so 
what I will do instead is say that I will be interested in the 
testimony of the witnesses here and looking forward to hearing 
that and evaluating that testimony. And I would be happy to ask 
those questions at the appropriate time. Thank you. And I yield 
back.
    Mr. Cohen. You are welcome, Mr. King.
    Mr. Watt, you are recognized.
    Mr. Watt. Mr. Chairman, I was trying to stay out of this 
very partisan debate but I was just going to try to give some 
content to Mr. Delahunt's statement.
    I was feverishly looking through my BlackBerry, because for 
months and months and months I kept in my BlackBerry a magic 
date back in September of 2008 on which on a Friday afternoon 
at 3:30 in the afternoon, 185 members of our Democratic caucus 
were on a nationwide conference call about the impending 
meltdown that was about to occur in our economy.
    And I was trying to recall whether President Obama--he 
wasn't President at that time--was on that call. And I recall 
that he specifically was not. That call was with Secretary of 
the Treasury Paulson in the Bush administration, the chairman 
of the Federal Reserve, Chairman Bernanke, and the leadership. 
And we were advised that a similar call had taken place earlier 
that day with members of the Republican conference to advise 
them of the dire straits that our economy we are in.
    And as best I recall that--as best I recall that 
conversation--and I am trying to be equal about this; this not, 
you know, I just want the record to be square about where we 
were at that time--it was Secretary Paulson, a member of the 
Bush administration, who likened the condition of our country 
at that time to what could, according to him, become worse than 
the condition that we faced in the Great Depression unless we 
took dramatic action to address that.
    So my good friend from Arizona needs to understand that all 
of these things take place in an historic context, that this 
situation in which we find ourselves didn't just all of a 
sudden happen one day when President Obama became President of 
the United States or didn't happen one day when we passed what 
he characterizes as Obamacare. There is historical context to 
this economic meltdown.
    There is also historical context to the deficit in which we 
find ourselves, because I happened to be here and took one of 
the very difficult votes in 1993 or 1994 that people attribute 
to the Republican majority becoming a reality in 1994, a very 
difficult vote for a number of members of our caucus, but a 
vote which led to, by the end of the Clinton administration, a 
surplus in our Federal budget projected out as far as the human 
eye could see.
    It took almost that whole 8-year term of the Clinton 
administration to get us there. This is a process. I am 
confident that we are moving in the right direction, and we 
will be a lot closer at the end of the Obama administration, 
either 2 years from now or 6 years from now, than we were at 
the end of the Bush administration.
    But we need to put this in historical context, that the 
Clinton administration left the Bush administration with a 
serious surplus projected as far as out into the future as we 
could and that within 6 months after the Bush administration 
started, we were back into a deficit situation.
    So we can be partisan about this. I try not to be partisan 
about our economy. To be honest with you, you know, our economy 
is something that should be above politics. Our national 
defense should be above politics or partisanship. So I just 
want to set the record straight that there are some historical 
facts that exist here in which we are operating.
    And with that, Mr. Chairman, I yield back.
    Mr. Coble. Mr. Chairman?
    Mr. Cohen. Do I hear a voice from North Carolina? Another 
voice from North Carolina?
    Mr. Coble. A brief voice.
    Mr. Cohen. Mr. Coble, you are recognized, and you are 
respected and appreciated.
    Mr. Coble. Thank you, sir. I am going to insert my oars 
into these partisan waters.
    There is nothing wrong with being partisan, by the way. But 
I think during the time that Mr. Watt referred to during the 
Clinton administration, the surplus, I believe a good part of 
that time there was a Republican majority, at least in the 
House. So I think we need to have some credit for that as well.
    Mr. Watt. If the gentleman will yield, I am happy to give 
whoever voted for the turnaround the credit that they deserve. 
My recollection there was not a--there were maybe two or three 
people who on your side who voted for it, but I think the 
turnaround occurred in a Democratic majority House----
    Mr. Coble. Well, this is my time.
    Mr. Watt [continuing]. Not a Republican majority.
    Mr. Coble. Mr. Franks asked for this. Let me yield to the 
gentleman from Arizona for the remainder of my 5 minutes.
    Mr. Franks. Well, I thank the gentleman. And I don't want 
to carry this much further, but there is no question that the 
past Administration has responsibility in these challenges. I 
was one of the members of my own party that did vote against 
some of the so-called solutions to those problems.
    But let me just say to you whatever the Bush administration 
did in terms of debt, the Obama administration has surpassed 
them profoundly. This Administration has done for spending what 
Stonehenge did for rocks. And let me suggest to you that when I 
mentioned that 160 billion--$166 billion of spending deficit in 
1 day was higher than the last totally controlled--Republican-
controlled deficit for 1 year, that is a matter of fact.
    But in any case we just have to realize that sometimes we 
got to get back to 101 economics and realize that no matter how 
much money we have in our pockets, if there is nothing being 
produced in this country in terms of goods and services, it 
won't work. And everything I see coming out of this Democrat 
majority has put a burden on the jobs market and has weighed 
down the economy in ways that I will suggest to you that the 
future will manifest in fairly dramatic terms. It already has 
done that.
    And I guess I would have to go ahead and take one last 
thought here, Mr. Chairman. My friend says that we shouldn't 
politicize the defense of this country. I couldn't agree with 
him more. And yet the last two defense authorization bills 
passed by this Congress has had major social engineering forced 
on the backs of our soldiers by this majority. So I just would 
suggest that that is something that probably he probably should 
have left off.
    And with that, I will yield back.
    Mr. Conyers. Could the gentleman yield?
    Mr. Franks. I would be glad to yield to the gentleman.
    Mr. Conyers. I just wondered what were those social 
engineering projects that were forced upon the----
    Mr. Franks. Well, this is the hate crimes legislation, the 
Don't Ask, Don't Tell. That should be legislation that should 
be voted separately, not when we are trying to fund the people 
out there pouring their blood out on some battlefield for all 
of us.
    Mr. Watt. Gentleman yield?
    Mr. Coble. Well, it is my time. I will yield very briefly, 
Mel, but I think the Chairman wants to get on with the witness, 
but I will yield.
    Mr. Watt. Well, we didn't----
    Mr. Cohen. No, I think we are all enjoying this.
    Mr. Watt. We are just trying to finish it on a very 
positive note, my friend from North Carolina. And just to let 
him know that people who don't ask and don't tell of all 
persuasions shed their blood, too. So, you know, that is not 
social engineering. That is personal characteristics of people, 
and all of them are Americans just like we are.
    Mr. Franks. Mr. Chairman, could I move that we just put the 
witnesses' statement in the record and continue this debate up 
here? That might be a quick--okay. I see that we got the 
Chairman here. I think we got a consensus here at last.
    Mr. Coble. Let me reclaim and yield back.
    Mr. Cohen. Mr. Coble, normally you are much more temperate, 
but look what you have got us into.
    Mr. Coble. Hold me harmless for that, Mr. Chairman.
    Mr. Cohen. You are. You have got many credits.
    Mr. Scott of Virginia?
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Chairman, I am a Member of the Budget Committee, and 
when I hear the other side talking about fiscal responsibility, 
I would first like to point out that there was--everybody knows 
we have a big deficit, and there was a suggestion in the Senate 
that we have a budget commission to make the tough choices that 
nobody likes to make when you are dealing with the budget. If 
you got a deficit, you have to raise taxes or cut spending, and 
nobody wants to do that.
    And we had a suggestion to have a budget commission to make 
the tough choices. It is a bipartisan idea in the Senate. When 
the President endorsed it, it came out to vote and was defeated 
in the Senate, because at least seven Republicans, co-sponsors 
of the bill, voted no. So this, you know, that is how serious 
this debate is.
    Now, the fact of the matter is we have a big budget 
deficit, but we would like to be precise as to what the 
criticism is. The criticism is that the policies we have now 
were instituted during the Bush administration. We have a 
deficit because of Republican policies, and Democrats now in 
control haven't cleaned it up fast enough. Okay.
    We haven't cleaned it up fast enough, because we made a 
deliberate choice that we would deal with jobs first. We didn't 
want to increase taxes or cut spending in the middle of the 
worst recession since the Great Depression. So we will take the 
criticism. We haven't cleaned up the mess as quickly as we 
should have, because we had another mess that we were dealing 
with.
    Now, the gentleman from North Carolina, Mr. Watt, talked 
about the 1993 vote where we turned around and went on a course 
of fiscal responsibility that included PAYGO, and we fixed the 
budget. We went on a trajectory that got us to the point where 
in 2001 we had a surplus, a projected surplus sufficient to pay 
off the national debt held by the public by 2008. If we hadn't 
messed up, we would have paid off the debt held by the public.
    And to show you what was going on, Chairman Greenspan in 
answering questions had to answer questions like what will 
happen when we pay off the national debt? What will happen to 
interest rates? What is going to happen to the bond market when 
we pay off the national debt after the first tax cut? That was 
the last time you heard anybody talking about paying off the 
national debt.
    Now, the gentleman from Arizona says--or somebody over 
there said, ``But wait. We were in control after 1995 of the 
Congress, so we deserve some credit.'' Now, that is a bold 
statement when you look at the facts.
    In 1995 when they came in, they passed a budget. It had 
reckless fiscal policies in it, and President Clinton promptly 
vetoed it and would not sign the bill. He let the government 
get shut down rather than sign those irresponsible budgets. And 
as a result of his vetoes and enough Democrats left over to 
sustain the vetoes, we went on course to be paying off the 
national debt. We would have finished paying off the national 
debt by 2008.
    For someone to take credit for being there when they tried 
to dismantle the policies that were in effect and institute 
policies that would take us in the direction, and they want 
some credit, that is a bold idea. And do you want to know what 
would have happened if President Clinton had signed it? We 
found out in 2001. President Bush signed it, and we promptly 
went right into the ditch with the worst fiscal policy, the 
worst stock market, the worst job performance since the Great 
Depression, for 8 consecutive years.
    Now, we are going to fix the problem. In 1993 when the 
bills passed, we passed that great budget without a single 
Republican vote in the House, not a single Republican vote in 
the Senate. And as a matter of fact, when Marjorie Margolies-
Mezvinsky cast the 218th vote to pass the bill, the Republicans 
started chanting, ``Bye-bye, Marjorie,'' and they used that 
vote to defeat her in an upcoming election.
    We are going to fix the job situation. We are going in the 
right direction. We haven't gotten where we need to be, but we 
are going in the right direction. We passed the jobs bill 
without a single Republican vote in the House or the Senate.
    And then we are going to attack the deficit, and we don't 
expect any support from the Republicans. We are going to just 
go and fix it over their objections. But to be lectured by 
somebody about fiscal responsibility with that history is a bit 
much for somebody on the Budget Committee to take.
    Now, one of the things that we passed--again, without any 
Republican votes--was medical health care reform. And talking 
about medical bankruptcies because of health care reform when 
it is fully implemented, there will be caps on how much money 
the insurance companies can make you pay out of pocket. And so 
when you reach the cap, all the rest is on the insurance 
companies. And this will significantly reduce the need for 
bankruptcy because of health care expenses.
    The gentleman from Georgia talked about people going 
bankrupt with medical expenses. Most of them have insurance. 
There are the co-pays and deductibles that killed them. And so 
with the limit on out-of-pocket expenses and no caps on 
insurance companies having a cap on how much they are going to 
spend a year or how much they are going to spend on a lifetime, 
people will be able to have their health care needs addressed 
without having to resort to bankruptcy. It will take a couple 
of years to fully implement it, but that is what we did--again, 
without a single Republican vote on final passage of that bill.
    Thank you, Mr. Chairman. We just thought we would get all 
the facts on the table so that we can talk about fiscal 
responsibility and health care.
    Mr. Cohen. Ms. Chu?
    Ms. Chu. Mr. Chair, I would like to yield my time to the 
distinguished Chair of our entire Judiciary Committee, Mr. 
Conyers.
    Mr. Conyers. Thank you very much.
    I want to hear the witnesses, believe it or not. But this 
is a pretty interesting conversation going on, you have to 
admit, because there is really wonderful recall on the part of 
Bobby Scott and Mel Watt about the history of how we got to 
where we are.
    But Trent Franks happens to be a friend of mine. The fact 
that we have differences in some approaches doesn't bother me a 
bit. But for a person who has had so many surgeries in his own 
personal life, it is difficult for me to understand why he 
would resist health care reform with such fervor.
    Those surgeries were probably pretty expensive, and we have 
50 million people in America that don't have a dime's worth of 
insurance right now. And for him to say and to talk in a 
derogatory manner about health care reform being Obamacare--I 
never mind him using that phrase, because it is to Obama's 
credit that he got this bill through.
    It took a year-and-a-half to finally get through a very 
modest set of measures that brought health care to 31 million 
people that weren't qualified. It ended pre-existing conditions 
as an excuse to kick people off of insurance. And so, as modest 
as it was, he called it socialized approaches. That is a veiled 
way of saying it is socialized medicine.
    Mr. Franks. Correct.
    Mr. Conyers. And the whole idea strikes me as inappropriate 
for someone who, not by choice, was required to go through so 
much medical attention himself. It really leaves us something 
to talk about, and I would be pleased to yield to the 
gentleman, if he would like me to.
    Mr. Franks. Well, Mr. Chairman, I will be really brief, 
because I appreciate your intent and your heart, and I know 
that our disagreement here is based not on any sort of 
humanitarian foundation, but on a genuine conviction that the 
strategies to pursue the desired end are different.
    I truly believe--and I really didn't mean to get 
personalized in this situation--that if I had been born under a 
socialized medicine era, that I simply would not have gotten 
the level of care that I got, because if there is anything that 
one might say--I mean, history has borne out. I think Bastiat 
said it best. He said, ``Government is that great fiction 
through which everyone endeavors to live at the expense of 
everyone else.''
    And in the final analysis, over time nothing has dragged 
more people--poor people--out of poverty, nothing has given 
more children born with deformities like myself or others, 
nothing has done more for those who needed it--needed help--
more effectively over a sustained period of time than free 
people pursuing their dreams, whether it is as a doctor or 
whatever it might be, so they are able to provide these kinds 
of services in the most effective, efficient manner.
    And somehow we just think that it all appears magically by 
simply saying, ``Well, the government will pay for it.'' We 
don't realize that when the government gets in the middle of 
all this, it actually retards the situation, actually hurts the 
situation.
    If I had been born in the Soviet Union--it wasn't that 
people aren't smart over there. It is that their system's no 
damn good. And unfortunately, if I had been born there, I 
wouldn't be able to speak here at this Committee. And so I 
first of all thank God for the chance to do that, but I will 
say to you that I am convinced with all of my heart that my 
motivation here for free enterprise is so people like me can be 
born and have the kind of care that they need, and I don't 
think socialized medicine will deliver. It never has.
    Mr. Conyers. Well, thank you very much for that statement, 
because I know it is heartfelt. Trent, in the Soviet Union they 
have a communist system of government, not a socialist system 
of government. They are two quite different things.
    Mr. Franks. [Off mike.]
    Mr. Conyers. Of course, there is a difference. And you 
still persist in describing the health care reform bill that 
was passed by a majority of the House and the Senate as a 
socialist system. What is socialized medicine about allowing 
more people on Medicaid by raising the ceiling eligibility? 
What is socialist about that?
    Mr. Franks. [Off mike.]
    Mr. Conyers. Of course, I do.
    Mr. Franks. Mr. Chairman, the difference in--you know, I 
guess socialism is sort of socialism on a retail basis, and 
communism is socialism on wholesale basis. But the reality is 
that when you put government in control, where government is in 
control of the mechanisms for delivery, you inevitably create a 
socialist environment. And it just doesn't work.
    I mean, it is true that free enterprise is sometimes the 
unequal distribution of wealth. That is true. But socialism is 
always the equal distribution, ultimately, of poverty. It 
always ends in that direction. And I don't think we realize 
that unless the system incents productivity, in the final 
analysis there is nothing there for anyone.
    And it is hard to express it in terms that sound, you know, 
humanitarian, but that is what I want to do. I think, for 
instance, I think all of us have a right to run for office 
here. But not all of us have a right to call on the government 
to make sure that we win. All of us have a right to have access 
to our courts, but not all of us have a right to say to the 
government, ``You must make sure that I win my case.''
    Equal opportunity and equal outcomes are different. And I 
just think that if there is anything that has taught us it is, 
I mean, the highway of history is littered with the wreckage of 
socialism. And I don't know why we have to continue to learn 
this lesson. And yes, I do think Obamacare moves us 
precipitously and dramatically in that direction.
    And so with that, I don't want to--you know, I state all of 
this respectfully to the Chairman and yield back.
    Mr. Conyers. Of course, Trent. Thank you very much.
    Well, perhaps you may be right. Let me ask you. Who runs 
Social Security in this country? Who runs Social Security in 
this country?
    Mr. Franks. Mr. Chairman, I think you make a good example. 
I think if we had a long time ago created a system where it 
said to people, ``You must put a certain amount of your money 
into the mechanism of your choice,'' and we require that as a 
referee, we could have done that. But instead, government took 
it over, and now it is going to hell in a hand basket. So you 
make my point for me.
    Mr. Conyers. I see. Okay. Let me ask you this. Who runs 
Medicare in this country?
    Mr. Franks. Well, I just would repeat my last statement.
    Mr. Conyers. All right. Then finally, Mr. Chairman, my 
friend Trent said that the majority of people in this country 
do not like the health care reform bill that was passed. And I 
am passing over to you a article--I think this is from the New 
York Times.
    Mr. Franks. Where is this from?
    Mr. Conyers. Associated Press--in which it says, ``Support 
for health care bill hits new high. More now support plan than 
oppose it.'' And I would pass it to my dear friend for his 
scrutiny and further discussion on it at another time.
    Mr. Franks. Well, Mr. Chairman, I would just leave you with 
this. Not that the poll should be our deciding conclusion here, 
but the ones I have seen show in excess of 50 percent of the 
American people want to fully repeal the plan. So, and----
    Mr. Conyers. Do you have any citation for that, sir?
    Mr. Franks. Could we try to find that for you?
    Mr. Conyers. I would like you to.
    Mr. Franks. I will try to do that. I think I saw it just 
recently.
    Mr. Conyers. All right. Thank you.
    Mr. Franks. Thank you.
    Mr. Conyers. And I want to thank the Chairman for his 
indulgence.
    Mr. Cohen. I want to thank everybody for their input. It 
has been quite enlightening. I am a little confused, though, 
because Mr. Franks, who I respect, and I suspect knows a lot 
about socialism and communism, said communism is wholesale and 
socialism is retail. And my mother always told me to buy 
wholesale. So, you know, but I am confused.
    And I would like to conclude this, if I could. It is my 
prerogative as Chairman to quote the former speechwriter of 
President George Bush, David Frum, who said on his Web site 
that the Republican Party's decision to uniformly oppose health 
care reform backfired. ``We went for all the marbles. We ended 
with none. It was the Republican Party that made the big 
mistake,'' he argued, ``by losing its grand bet that uniform 
opposition to Obamacare could prevent the measure from becoming 
law.''
    He said it is hard to exaggerate the magnitude of the 
disaster. He wrote while Republicans may win a short-term 
benefit, add more seats in Congress in November, he argued, 
``they will get little compensation for the enactment of a 
liberal--little compensation for the enactment of a liberal 
policy objective that could last generations and will be 
difficult, if not impossible, to repeal.''
    So we will see if Mr. Frum is correct.
    With that said, I would like to ask unanimous consent to 
include in the record an article in the Yale Journal of Health 
Policy Law and Ethics titled ``Managing Medical Bills on the 
Brink of Bankruptcy.'' Without objection, it will be done.
    [The information referred to follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    


                               __________
    Mr. Cohen. Now, thanking everyone for their statements, 
without objection other Member statements will be put in the 
opening record--placed in the record.
    [The prepared statement of Mr. Johnson follows:]
    
    
    
    
                               __________

    Mr. Cohen. I am now pleased to introduce the witnesses and 
hear their testimony.
    First, thank you for all participating in today's hearing. 
Without objection, your written statements will be placed into 
the record, and we would ask you to limit your oral remarks to 
5 minutes. We have a lighting system. Green means you have 
started and you have got 5 or less minutes to go. Yellow means 
you are in your last minute, and red means you should have 
finished.
    After each witness has presented his or her testimony, 
Subcommittee Members will be permitted to ask you questions 
with the same 5-minute limitation.
    Our first witness is the Honorable Cecelia G. Morris. Judge 
Morris was appointed United States bankruptcy judge for the 
Southern District of New York and took the bench on July 1 of 
2000. Prior to appointment to the bench, Judge Morris served as 
assistant district attorney in the Child Support Recovery Unit 
of the District Attorney's Office of the Spalding Judicial 
District headquartered in Griffin, Georgia.
    Judge Morris also worked in private practice and served as 
clerk of the court for the United States Bankruptcy Court for 
the Southern District of New York from 1988 to 2000, the first 
bankruptcy court to implement electronic filing of original 
documents to the court via the Internet.
    She is a frequent writer and lecturer on issues related to 
bankruptcy, published articles on mediation, consumer credit 
counseling requirement in bankruptcy, and cross border 
insolvency cases under Chapter 15. She has roots in Texas and 
Georgia and though she claims now to be a northerner, she is a 
southerner at heart.
    Thank you, Judge Morris. Will you begin your testimony?

  TESTIMONY OF THE HONORABLE CECELIA G. MORRIS, UNITED STATES 
        BANKRUPTCY JUDGE, SOUTHERN DISTRICT OF NEW YORK

    Judge Morris. Thank you, Chairman Cohen and Ranking Member 
Franks and other distinguished Members of the Subcommittee. 
Good morning. Thank you for inviting me to testify concerning 
H.R. 901. I testify today at your invitation. I do not 
represent any group or organization. The thoughts expressed are 
mine.
    As someone with over 25 years experience in the bankruptcy 
field and as the former clerk of court for the Southern 
District of New York and, as has been noted from my accent, the 
Middle District of Georgia, and now for the past 10 years as a 
judge in a busy, mostly consumer division of one of the largest 
consumer courts and commercial courts in the world, the 
Southern District of New York, I come before you.
    You have many sources, including quotes from my written 
materials about the statistics concerning medical debts and 
bankruptcy. And I agree that this has been a very interesting 
discussion, and I have been so pleased to be an eavesdropper on 
the discussion that you have had amongst yourselves.
    I would like to share with you a courtroom observation. Day 
before yesterday--Tuesday--is my regular hearing day. This is 
often the first time I see the debtors. They are in court with 
their attorney, or they come alone. They are in attendance for 
confirmation of chapter 13 plans, to defend motions to dismiss 
or motions to lift the automatic stay, and that, of course, is 
usually so that a foreclosure can proceed.
    Many matters are before me on Tuesdays, and because that 
day has many different types of issues, I begin to know the 
debtors and their stories. This Tuesday was typical. Tuesdays 
are long, hard days made harder by the emotional moments 
revealed during proffers by the lawyers and testimony of the 
debtors. And this Tuesday was no exception.
    A gentleman came to a counsel table with his lawyer. The 
debtor was vaguely familiar. The lawyer, who often appears in 
my court, is experienced and one of the best in representing 
consumer debtors, immediately informed me, as she should, that 
the debtor was a repeat filer. He had been before me 
previously, and he was unable to make his Chapter 13 plan 
payment and to physically attend the first meeting of 
creditors.
    The lawyer knows that while I am a supporter and believe in 
the bankruptcy system and feel that we--and as Congressman 
Franks, Ranking Member Franks has suggested--that as citizens 
of this country we are really blessed with many things, and one 
of the things that we are blessed with is a debt forgiveness 
statute.
    I lose patience with those, though, who take advantage of 
our system and do not work with their attorneys and the 
trustees and the court. So you can imagine how quickly I 
regained my patience when the lawyer quietly told me that the 
debtor had now progressed to stage IV cancer. A once robust 
man, now a shadow of himself, he had been unable to fulfill the 
requirements of his previous bankruptcy filing.
    The lawyer was unaware of the client's battle with cancer. 
She had prepared his petition. Remember, this is a good lawyer. 
She had looked at his financial information. She had gone over 
these bills. Significant medical debt was not apparent in 
reviewing this information. It was characterized as other debt.
    Under H.R. 901 debtors like this gentleman will be able to 
pass the means test, an important step.
    Additionally, under the current bankruptcy code, lenders 
can be compelled to--can't--excuse me--can't be compelled to 
agree to loan modifications on the first mortgage for a primary 
residence. At least in the Southern District of New York, 
debtors suffering from chronic medical problems, such as this 
debtor, or caregivers have an opportunity to negotiate to keep 
their homes.
    Using the Civil Justice Reform Act of 1990, the bankruptcy 
judges of the Southern District of New York adopted a loss 
mitigation program aimed at bringing debtors and secured 
creditors together.
    The Southern District of New York's loss mitigation program 
opens communication in two significant ways. First, it requires 
the lender to disclose direct contact information for a person 
with full authority to make a decision on a re-mod--re-fi. And 
second, it provides the lender with protection from the 
violation of the automatic stay allowing them to speak directly 
with the debtor.
    Who knows what awaits this debtor in my court with stage IV 
cancer magically? We do know that he needs to stay within the 
protection of the bankruptcy law, and he needs to have an 
ability to speak with an accountable human being from the 
secured lender to make sure he and his family are not disrupted 
from their home during a time when he needs to be concentrating 
his energies on healing. I thank you.
    [The prepared statement of Judge Morris follows:]
         Prepared Statement of the Honorable Cecelia G. Morris

















                               __________
    Mr. Cohen. Thank you, Judge Morris. I do wonder, and I am 
not supposed to ask you questions now, when you said somebody 
was a good lawyer as suggesting that there were something else 
other than? So anyway, thank you for your testimony.
    And our next witness is Dr.----
    Judge Morris. That is another day.
    Mr. Cohen [continuing]. Aparna Mathur--Mathur?
    Ms. Mathur. Mathur.
    Mr. Cohen. Mathur.
    Dr. Mathur is an economist who writes about taxes and 
wages. She has been a consultant to the World Bank and has 
taught economics at the University of Maryland. Her work ranges 
from research on carbon taxes and the impact of state health 
insurance mandates on small firms to labor market outcomes. Her 
research on corporate taxation includes the widely discussed, 
co-authored 2006 ``Taxes and Wages'' paper, which explored the 
link between corporate taxes and manufacturing wages.
    She is fortunate to have the parents she has, and genetics 
proves that intelligence and attractiveness can be passed from 
one generation to the next.
    Dr. Mathur, you are recognized.

 TESTIMONY OF APARNA MATHUR, Ph.D., RESIDENT SCHOLAR, AMERICAN 
                      ENTERPRISE INSTITUTE

    Ms. Mathur. Chairman Cohen, Mr. Conyers, Ranking Member 
Franks and distinguished Members, thank you for inviting me to 
testify here--I am happy to be back--and especially for 
recognizing my parents. I am sure they are thrilled.
    I am going to talk about the Medical Bankruptcy Fairness 
Act, I am sorry to say that I will not be--you now have two 
people in this room who do not accept the hypothesis that 60 
percent of the filings are due to medical reasons.
    The Medical Bankruptcy Fairness Act is intended to 
institute amendments to the bankruptcy code of 2005 to make the 
bankruptcy process easier for medical debtors. I am sure all of 
us would agree that a person who is undergoing a medical crisis 
needs help more than someone who recklessly spends money on the 
credit cards.
    We all have friends and family who are struggling with 
illness and death and yet have to deal with hospital and 
medical bills. However, I would like to caution the Committee 
about the act, which may be an example of good intentions that 
could go bad.
    My testimony will show how the act could harm exactly the 
people, the debtors, that you are trying to help. The Medical 
Bankruptcy Fairness Act focuses on medical debtors, and as is 
clear to me, the urgency to tackle the issue of medical 
bankruptcies is being largely justified on the basis of the 
Himmelstein studies claiming that more than 60 percent of court 
filings are caused by medical debt.
    These statistics are simply not borne out by household 
surveys carried out by institutions like the Federal Reserve as 
well as other datasets widely used by academics.
    While bankruptcy filings have increased by 25 percent since 
the start of this decade, medical debts--or even if you think 
that medical debts are all part of credit card debts--have not 
changed significantly as a share of total debt over this 
period, as per the Federal Reserve data.
    To put things in perspective, in 2007 only 2.4 percent of 
families reported any medical debt. In fact, the large 
economics literature using standard estimation techniques to 
study the link between medical debt and bankruptcies has found 
little in back, if any, of medical debts on bankruptcy filings. 
That seems obvious to me that medical debts could not be a 
significant factor in rising consumer bankruptcies.
    The reason the Himmelstein studies find such a significant 
impact is because of methodological problems, which I deal with 
in my longer written testimony.
    To take a simple example, it seems to me that the 
Himmelstein studies by including in medical bankruptcies anyone 
who missed 2 weeks of work due to illness or anyone reporting 
any medical problem at all are overstating the problem. We have 
all experienced illness and taken sick days off from work, 
sometimes for a week or more, and yet the bankruptcy filing 
rate for the Nation as a whole is less than 1 percent. So just 
the fact that in their sample people also reported these 
problems cannot be taken to imply that these problems caused 
the bankruptcy.
    The point I am making is that if we are misdiagnosing the 
problem, if we are saying that medical debts are the largest 
single factor responsible for bankruptcies, when in fact 
something like involuntary unemployment is, then the solutions 
we come up with will be equally mis-targeted. We cannot afford 
to make those mistakes today and divert scarce resources when 
people need help urgently in other areas like unemployment, 
which we all know is at a historical high.
    Now, to get back to my point about good intentions gone 
bad, I would like to caution that the act itself may be open to 
abuse and fraud, even if we believe that we really want to help 
medically bankrupt people.
    The act defines a medically distressed debtor as a debtor 
who has medical debts in excess of 25 percent of household 
income or $10,000, whichever is less. So imagine a filer with 
$70,000 in annual income, which is almost double the average 
income in the country. If he accumulated $10,000 in medical 
debts, then he or she can file for medical bankruptcy under 
Chapter 7.
    The problem with this is that a study of bankruptcy filers 
by income in 2000 to 2002 show that credit card debts averaged 
approximately $42,000 for this group. While such provisions are 
unlikely to affect honest debtors, we all know that there are 
borrowers who behave strategically when faced with such 
incentives.
    In the worst-case scenario, such opportunistic debtors 
could, by not paying off their medical debt, take advantage of 
the high exemptions and the debt discharge provisions of 
Chapter 7 to get rid of their high credit card debts.
    Further, removing the means testing requirement from 
medically distressed debtors and allowing the much higher 
homestead exemption would simply perpetuate these perverse 
incentives. Doing away with the means test would allow high-
income individuals to walk away from not only the medical 
debts, but also all other debts.
    Now, the reason we care about this kind of strategic 
behavior and these unpaid costly debts is that it has 
implications for medical debtors and other debtors who are 
caught in a helpless situation.
    Study after study has shown that when you make filing for 
bankruptcy easier through removal of means testing through 
providing high exemptions, credit markets react adversely. 
Lenders account for the high risk of lending by raising 
interest rates on loans charged or by rationing credit. 
Borrowers are more likely to get their loan requests rejected. 
Medical service providers pass on the costs of bad debt to 
consumers in the form of higher prices----
    Mr. Cohen. Dr. Mathur, we are getting into the red world.
    Ms. Mathur. Yes. I am almost done. I will--imagine----
    Mr. Cohen. You are beyond almost done.
    Ms. Mathur. Imagine not getting a loan to pay for your 
prescriptions and other medical bills. In short, the lives of 
borrowers--particularly honest borrowers--are made worse off. 
In my opinion the 2005 law introduced the means testing 
requirement to restrict this kind of strategic behavior, and 
there is no real justification to amend that law.
    To conclude, we obviously cannot wish illness away. 
However, some solutions may help families deal with the 
situation better. For example, employers and employees could 
try to come up with flexible work arrangements that would 
enable the employee to function even in the middle of a medical 
crisis. Job loss should not be the inevitable result of a 
prolonged medical condition.
    Finally, the act could be modified to allow debtors to 
obtain relief under Chapter 7 only on the medical debts rather 
than all of their other debts as well. This may reduce the 
misuse of the system by opportunistic debtors.
    Thank you.
    [The prepared statement of Ms. Mathur follows:]
                  Prepared Statement of Aparna Mathur










































                               __________

    Mr. Cohen. Our next witness is Professor Wright. Professor 
Wright is the director of clinical programs, Consumer and 
Commercial Law Clinic at the Franklin Pierce Law Center. During 
18 years of practice in the public and private sectors, 
Professor Wright handled civil trials and appeals in state, 
Federal and bankruptcy courts on behalf of individuals and 
corporate clients.
    His public service included 4 years as a member of the New 
Hampshire Workers Compensation Appeals Board, 2 years as 
mediator at the New Hampshire Department of Labor, and 12 years 
as a hearing officer in the Federal Medicare program. Actively 
involved in efforts to improve the Administration of justice, 
in 1993 and 1995 he was chair and co-chair of state conferences 
devoted to this subject. Professor Wright has been here before. 
He is aware of our 5-minute system.
    And I would ask you to accept that. You are now recognized.

    TESTIMONY OF PETER S. WRIGHT, JR., DIRECTOR OF CLINICAL 
 PROGRAMS, CONSUMER AND COMMERCIAL LAW CLINIC, FRANKLIN PIERCE 
                           LAW CENTER

    Mr. Wright. Thank you. Chairman Cohen, distinguished 
Members, good morning.
    I have got the button on. Is it? Oh, all right. I am sorry. 
How is that? Better? All right.
    I appreciate the opportunity to be here to share with you 
the perspective that I might offer as a clinical professor, who 
is essentially running a legal aid program in which the 
students serve as lawyers. Because our focus is on consumer 
credit, these days the kind of cases we are handling involve 
foreclosure defense, credit card defense and consumer 
bankruptcy.
    I appreciate the opportunity to speak to the merits of H.R. 
901, because in our clinic we have witnessed many examples of 
the types of debtors which are described in H.R. 901 as a 
medically distressed debtor. I would like to give you a couple 
of examples of the profile of these clients. And I think this 
will be instructive, because within H.R. 901 there is actually 
a very thoughtful definition of the medically distressed 
debtor.
    The issue that we spend so much time talking about of the 
percentage of people who are driven to bankruptcy by massive 
debt is only one of the definitions. The other two definitions 
actually capture the type of debtor that we most frequently see 
as medically distressed. And that is the type of debtor who is 
unable to work or experiences a severe and prolonged loss of 
income, because they are caring for a family member or they 
themselves are stricken with a serious medical condition.
    Examples of such clients--we saw one family where the wage 
earner was a over-the-road or door-to-door salesman for 
Comcast, selling cable subscriptions. And he would drive around 
in his own vehicle making his rounds. He was involved in a 
head-on accident, head-on automobile collision, which put him 
in the hospital for 6 weeks.
    When he was released and undergoing physical therapy, he 
really couldn't pursue his work of driving and walking and 
knocking on doors, so he got behind on everything. He had 
insurance, because he worked for Comcast, but what he didn't 
have was any means of paying his mortgage, so that fell into 
default along with this car payment and everything else.
    Another example is a young couple. They owned a 
condominium. The husband, who worked as a roofer, developed 
cancer. He could not work, as he devoted his full time and 
attention to handling that medical problem. He was successful 
in overcoming the cancer, but during the time he was out of 
work, his mortgage fell into arrears, his car was repossessed, 
and he was not able to pay the credit card bills and other 
bills for the family.
    Net result was he had to file bankruptcy to clear up the 
deficiency after his condominium was foreclosed. Again, this is 
an example of someone who, because of the medical condition, 
was unable to pay the ongoing bills to hold on to the 
necessities--house, car, et cetera.
    And finally, we just took a case in this last week where 
the individual who is the wage earner, who happened to be a 
mortgage broker, made a lot of money during the bubble, had a 
heart attack while he was driving, and the impact of the 
accident and the heart attack had him laid up enough that he 
ran up $200,000 in medical bills. Then he died, leaving his 
widow with a house in foreclosure, plus all these medical 
bills.
    This last situation illustrates what I think is the 
significance of high medical bills. They are often a symptom or 
an incidental impact caused by a severe medical problem, which 
is really the hallmark of the distressed medical debtor.
    Now, H.R. 901 is very skillfully crafted and carefully 
crafted and narrowly drawn to provide relief to people who are 
truly medically distressed debtors as defined in the last two 
parts of the definition--that is, who have experienced either 
loss of child support, alimony or who have lost their income 
because of a medical catastrophe. The first definition, of 
course, is the one where there is massive--or actually medical 
debt which reaches the levels that we discussed earlier.
    Now, what is the relief that 901 provides? It is an 
enhanced version--an enhanced amount of the homestead 
exemption. As you know, it would increase the homestead 
exemption to $250,000 regardless of whether the debtor is 
filing using the Federal exemption, which would otherwise only 
be $20,200 for homestead, or the state exemptions.
    It raises both of those exemption levels to $250,000. And 
this is laudable, because it enables a debtor to hold onto the 
homestead, even if they lose everything else through a Chapter 
7, but it also enables them to have a workable and feasible 
Chapter 13, if they are able to remove the value of their 
homestead from the liquidation test, which we could talk about.
    It is a little technical, but it really is a major plus, 
because many elderly people, who have a lot of equity in their 
homes, are not able to qualify for Chapter 13, because they 
can't pass the liquidation test.
    And as I am out of time, I will not speak to the means test 
right now, but thank you for the opportunity.
    [The prepared statement of Mr. Wright follows:]
               Prepared Statement of Peter S. Wright, Jr.




















                               __________

    Mr. Cohen. Thank you very much.
    I want to thank all our witnesses for their testimony, and 
I will start with the questions.
    And first of all, Professor Wright, I would like to ask you 
what your thoughts are on the means test.
    Mr. Wright. Well, generally or as it applies to this 901?
    Mr. Cohen. As it applies to this bill.
    Mr. Wright. So as----
    Mr. Cohen. Dr. Mathur made a point that possibly high-
income individuals could get away with things. Is there a way 
to see to it that high-income individuals don't and that it is 
strictly tailored to medical bills?
    Mr. Wright. If we viewed 901 as a whole and appreciate that 
the only way the homestead exemption benefits a debtor is if 
that debtor has substantial equity in their house, you are 
going to eliminate a lot of debtors right off. You are going to 
eliminate all the debtors who use their homes as ATM machines, 
so-called during the bubble, those who did practice abusive 
borrowing.
    You are really going to be targeting and benefiting elderly 
people, who worked their whole life to pay off their mortgages 
and then as they approach their retirement, they simply want to 
be able to hold onto their homestead. Those debtors who then 
face a catastrophic illness, which interrupts their income or 
saddles them with medical debt, will be able to retain their 
home. They don't need to be tested under the means test, 
because they are not gaming the system.
    To be the victim of a medically--well, as someone, I think, 
the Chairman may have put it--the medically lost life lottery 
to be suddenly stricken with a serious medical illness is not 
part of gaming the system. They don't need to be means tested.
    Mr. Cohen. Thank you, Dr. Wright.
    Dr. Mathur, let me ask you this. As Professor Wright has 
mentioned and I have said before, the lottery of life, the 
people that have these great health care disasters, 
catastrophic illnesses, is that it just happens. It is, most 
cases, not just unfortunate.
    Do you agree that some people who get catastrophic 
illnesses--cancers, heart disease, whatever--end up getting 
massive medical debt that causes some people to go into 
bankruptcy?
    Ms. Mathur. Absolutely. I absolutely agree that there are 
people with medical debt who will go into bankruptcy, and I 
believe that the current bankruptcy code in fact allows those 
low-income debtors to take advantage of the bankruptcy filing.
    Mr. Cohen. Those who, debtors?
    Ms. Mathur. The low-income.
    Mr. Cohen. What if you are not low income, but you got 
cancer and you have been wiped out?
    Ms. Mathur. And then if the means test shows that you still 
have an ability to repay some part of your debt, then I believe 
that the current bankruptcy system will----
    Mr. Cohen. So you don't believe if you have got tremendous 
medical debt and you are a middle-class person and you have got 
some income, but you have got enormous debt, hundreds of 
thousands of dollars worth of debt, and you have got cancer and 
maybe, you know, maybe you potentially lose your job, that 
there shouldn't be relief somehow fashioned for you?
    Ms. Mathur. I think the chapter code redeeming procedure 
allows for the medical expenses to be deducted in calculating 
what your ability to repay is, so I don't see what the new act 
is trying to achieve by saying that we should not have means 
testing at all.
    Mr. Cohen. Judge Morris, can you explain why that is 
important that we give some relief to people who have been 
wiped out because of the lottery of life?
    Judge Morris. I think this is hard for me to explain. And I 
have been listening to the means test question here. And once 
upon a time before 2005, you wouldn't confirm a Chapter 13 plan 
unless the unsecured creditors were going to get a substantial 
amount. Now you confirm a .003, which is basically a Chapter 7. 
And the reason you do it is for some of the matters that they 
talked about.
    You know, I see the medical people in--the medical debtors 
in front of me all the time. They walk in. In my testimony I 
talk about the five--my written testimony--my courtroom deputy 
coming in to me and saying, ``It is going to be a hard day 
today, Judge.'' ``Why is it going to be hard today?'' ``There 
are five women in the courtroom with turbans on. Your Honor, 
you are going to have to hear the story of those five 
cancers.'' And sure enough, I have to hear the story of the 
five cancers.
    The means test is simply meant that it moves them to 
Chapter 13. It just simply means that it is more expensive for 
them to file. Those people needed--most of those people need to 
be in 7. They need to be able to get rid of some debt and move 
on.
    We are in a wonderful place in this world, in this country, 
in this here that we have the ability to file bankruptcy, that 
we have an ability to start anew. And sometimes we need to just 
take and look, and they need to be able to cut their losses and 
move on.
    I don't agree that--the means test is just more expensive. 
It just makes it more difficult for them to come in and forgive 
the debt and move on.
    Mr. Cohen. Thank you, Judge.
    Dr. Mathur, are you familiar with the study by Melissa 
Jacoby and Miyra Holman published in the Yale Journal that 
debunks the 2005 Department of Justice survey that you have in 
your written testimony?
    And being familiar with it, do you still hold to your 
belief that this 2005 DOJ study has validity?
    Ms. Mathur. I think the Jacoby study tries to say that 
there could be a lot of hidden medical debt that you are not 
actually observing in the bankruptcy filing. And that, you 
know, that is entirely possible, and we have debated that issue 
a lot of times.
    So that is why it makes more sense to not sort of rely on 
just those kind of, you know, bankruptcy statistics, but to 
actually see what household surveys are saying about medical 
debt and how, you know, what is really happening to medical 
debts over this period.
    And there is nothing to suggest that there has been, you 
know, that tremendous a jump that, you know, medical 
bankruptcies should have risen by 50 percent in the 7-year 
period, because if that had really been the case, then when 
bankruptcies went up, you should have seen a tremendous 
increase in the medical debts as well, which you don't see.
    So I completely agree that there could be problems with the 
DOJ study, but that doesn't deny the fact that they--you know, 
that neither of those studies has conclusively proven that 
medical debts are a significant fraction of all bankruptcies.
    Mr. Cohen. Thank you, Doctor.
    Mr. Franks, you are recognized.
    Mr. Franks. Mr. Chairman, could I pass on to Mr. Coble for 
his questions?
    Mr. Coble. I thank the Ranking Member, thank the Chairman.
    Good to have you all with us today.
    Dr. Mathur, this is not unlike much proposed legislation. 
There are loopholes. What loopholes do you think are most 
unfair in this bill?
    Ms. Mathur. I think the biggest loophole in the bill is the 
requirement to do away with the means test, because I think the 
reason we had the means test instituted in 2005 was because we 
saw a lot of instances where people were exploiting the system 
by having a lot of wealth in their homes, having a lot of 
incomes, but they had the choice to still file under Chapter 7 
bankruptcy and have their, you know, million-dollar debts paid 
off and still retain a million-dollar house.
    And so I think the biggest loophole that could be exploited 
under the Medical Bankruptcy Fairness Act is the fact that 
high-income debtors could take advantage of the system to 
basically have the same provisions that they had before 2005, 
which is, you know, you accumulate a certain amount of medical 
debt and you still get all the advantages of Chapter 7.
    I think if we had a system where we said you could only do 
away with the medical debts by filing under Chapter 7, then, 
you know, I think that would correct some of these loopholes.
    Mr. Coble. I thank you, Doctor. It seems to me that this--I 
will qualify this is my opinion--I think Obamacare has failed 
its stated goal of decreasing health care costs and probably 
will in fact increase health care cost. Given the incentives in 
H.R. 901, will this bill not increase health care costs, making 
the health care system perhaps even more unsustainable?
    Ms. Mathur. Yes, I think that any time we sort of--if we 
think that we are going to keep absorbing the cost of all these 
unpaid debts, you know, infinitely into the future and that it 
is not going to have an impact on how people behave and how 
creditors and how lending markets behave, then, you know, you 
are wrong.
    At some point all of these unpaid debts and all of these, 
you know, huge costs that we think we are subsidizing, at some 
point they are going to tremendously increase costs on 
borrowers.
    Mr. Coble. Your Honor, Chapter 7's means that there was 
never intent to inquire into whether the causes of someone's 
bankruptcy were either good or bad, it seems to me----
    Judge Morris. Right.
    Mr. Coble [continuing]. But simply whether the debtor had 
the income sufficient to repay a substantial or meaningful 
portion of unsecured debt.
    Do you believe--well, strike that. It is my belief, and I 
will ask you if you believe this, that Congress may be opening 
a Pandora's box if it started to pursue down that path of 
choosing which kinds of debt are ``good'' or which kinds of 
debt are ``bad.'' What do you say to that?
    Judge Morris. I don't disagree with you, but I think the 
door that opened in 2005, and I think this might go some ways 
to helping some people that need the help.
    Mr. Coble. I thank you both.
    And, Professor, I don't want to ignore the gentleman from 
New England. My favorite New England state, by the way, 
Professor, is New Hampshire. Professor, do you have the fear 
that abusive filings might promote or distract from the court's 
ability to process promptly the cases of the truly needy--that 
is, those who may abuse it?
    Mr. Wright. Well, I think that abusive filings are never 
good for the system, but I don't believe abusive filings will 
be any easier if H.R. 901 were to pass because of the way it is 
drawn.
    Mr. Coble. Dr. Mathur, do you want to weigh into that?
    Ms. Mathur. I am not clear why it would not, because, I 
mean, the fact that you are doing away with the means test does 
mean that there would be high-income people with the ability to 
repay, who you are now saying should be excused from using 
them.
    Mr. Wright. The reason I think that the chances are very 
low is because, at least from my experience, when a family or 
an individual bases one of these catastrophic injuries that 
interrupt income flow, you no longer have a high-roller high-
wage earning debtor.
    They--in my cases, in fact--I mean, I don't want to say in 
all cases they are going to pass the means test, but given the 
way we calculate current monthly income by looking at the last 
6 months, if there has been a tragic and unanticipated medical 
problem, whether it is an injury or a disease, a lot of times 
the income is so disrupted that the means test isn't really 
going to be an issue.
    Mr. Coble. I got you. Thank you, Professor.
    Mr. Chairman, I want you to note that the red light has 
illuminated, and I am yielding back.
    Mr. Cohen. Thank you, Mr. Coble. I appreciate your 
continual courtesies.
    Now the Chairman, Mr. Conyers, is recognized.
    Mr. Conyers. Thank you.
    I would like to ask Dr. Aparna Mathur if when Professor 
Wright was giving his explanation about the nature of medical 
indebtedness, did he say anything that disturbed you or that 
you didn't agree with?
    Ms. Mathur. I think the kind of examples that Professor 
Wright gave would typically file under Chapter 7 bankruptcy, 
and they would meet the means test. But they are the kind of 
people that he was speaking about with no incomes, who have 
mainly had a catastrophic, you know, medical expense.
    You know, from all that I think I understand about how the 
bankruptcy code currently works, those people should meet the 
means test, and they should be allowed to file under Chapter 7.
    The people who will not meet the means test are people who 
do have an ability to repay, and I think that they--you know, 
the current system, the way it is functioning would--you know, 
should make them repay a part of those debts. I don't see why 
we need to do away with that particular feature of the current 
code.
    Mr. Conyers. Professor Wright, did she accurately interpret 
your examples?
    Mr. Wright. Yes, I think she is right. In all three of 
those cases, those individuals would not have a problem with 
the means test. In fact, in the very first one with the car 
accident, we put them into Chapter 13 to save his home. So even 
though he passed the means test as consumer bankruptcy lawyers 
say, meaning he wasn't forced to go into Chapter 13, he 
voluntarily went into 13 to catch up on a delinquent mortgage 
and to save his home.
    So, yes, she did accurately gauge the impacts, at least on 
those three cases. They would not have been--they would not 
have been caught up or forced to file a different chapter than 
they chose.
    Mr. Conyers. Well, does that mitigate your examples, then?
    Mr. Wright. No, because the examples--well, I 
unfortunately--I don't have an example of a high-roller who 
suffers a major medical calamity and then runs up against the 
means test, partly because my clinic only represents low-income 
people. I mean, we are not allowed to represent the high-
rollers or just the upper middle class, because we don't do 
that.
    But I really--I still--when I studied this in preparation 
for coming down here, I don't really understand all the fuss 
about the means test, to tell you the truth, because I really 
think that people who are overtaken by one of these terrible 
medical tragedies, if they had any inclination to game the 
system, their fight for their lives or for that of a family 
member becomes paramount in their minds.
    And it certainly would be more convenient for them if they 
didn't have to go through all the paperwork that Judge Moore 
spoke about and the added expense that lawyers are able to 
charge because of the paperwork. But given that they may very 
well lose their income as their sole--they are just so fixated, 
and their attention and thought is all devoted to obtaining a 
cure, I think the gaming question is really irrelevant at that 
point.
    And I also have to say that I don't think that--I just 
don't quite understand how someone can game or contrive or 
conjure up medical bills to try to invoke this as a way to game 
the system. I mean, even at the level of $10,000, that is a 
little hard to envision, frankly.
    Mr. Conyers. Do you agree, Dr. Mathur, with what the 
professor said?
    Ms. Mathur. I don't believe that people can conjure up 
medical bills, but I do believe that you could create the 
incentive that if you had medical debt and you had other kinds 
of debt, that the incentive to sort of accumulate the medical 
debt and not pay it off and pay off the other kinds of debt, 
you might perverse those kinds of incentives, because you know 
that if you had a certain amount of medical debt, then your 
lawyer would tell you, ``Well, you know, if you had so much in 
medical debt, then you could take advantage of Chapter 7.''
    So a person who--I am not saying that they are going to 
conjure up an illness, but you could change incentives for them 
by saying, you know, if you had so much in medical debt, then, 
you know, you can take advantage of all the Chapter 7 
exemptions and the high exemptions and the debt discharge that 
comes with that. Those are the kinds of incentives that I am 
talking about.
    Mr. Conyers. That does not sound persuasive to me.
    Judge Morris, what is your experience in this area?
    Judge Morris. Well, as I am listening, the one thing I am 
thinking is now we have it, a system where the medical debt is 
hidden as credit card debt or second mortgages, because the one 
thing you want to do is not go bankrupt against your doctor, 
because you will be fearful that the doctor will not treat you.
    Mr. Conyers. Of course.
    Judge Morris. So right now the debtors come in, and they 
paid the medical bill with--their co-pays with the credit card. 
They have paid it by taking out the second mortgage.
    I had personal experience of a dear friend who lost his 
wife to cancer. It was the secondary cost, too. Tell me, 
anybody, if you have a family member that needs a heating pad, 
if you have a family member that needs a humidifier, and in the 
mail comes your checks, those little credit card checks, that 
is not going to be attributed to medical bills.
    So when I hear this talking about that they will now run up 
a medical bill as opposed to a credit card bill, when in fact 
it has been the opposite right now, where they have been 
running up a credit card bill in order to maintain the medical 
care for their family, it just seems unconscionable to me.
    Let us have a real--let us have a real reason for the 
bankruptcy. And if the real reason for the bankruptcy is a 
medical catastrophe, then why not give people like that in 
those situations a break?
    Mr. Conyers. Do you agree, Dr. Mathur?
    Ms. Mathur. I think that it all comes down to how would you 
in your bankruptcy--Medical Bankruptcy Fairness Act define what 
is a medical debt. I mean, it is then we need the act to be 
clearer on what you are saying----
    Mr. Conyers. There is no question about what constitutes a 
medical debt.
    Ms. Mathur. Yes, but that is what Judge Morris just said, 
that we cannot distinguish between credit card debt and medical 
debt. And so if that happens to be the problem, then you are 
going to see $10,000 in credit card debt, and you won't know if 
it is----
    Mr. Conyers. But that is the problem. That is what she is 
saying. The medical debt is hidden by using your credit cards.
    Ms. Mathur. Yes. And so how would you----
    Mr. Conyers. So don't you agree with her? Or you don't 
agree with her.
    Ms. Mathur. So what I want to know is if there is----
    Mr. Conyers. Do you agree or not with her?
    Ms. Mathur. Yes, there is some medical debt on credit card 
debt. Absolutely.
    But even if you are saying that that is--I mean, there are 
two issues. If you are saying that, you know, that debt has 
somehow been going up and that is causing the bankruptcy, there 
are no data to support that either, because even if you look at 
total credit card debt, that has gone up by .3 percentage 
points between 2000 and 2007.
    The other issue is if we say that, you know, is credit--are 
we going to sort of try to uncover all the medical debt that 
people have on credit cards and, you know, is the second 
mortgage really a form of medical debt, then the act needs to 
be clear on what all it is going to--you know, how are we going 
to distinguish all the sources of medical debt rather than just 
what we see as a medical bill.
    Mr. Conyers. Well, Professor Wright was complementing our 
drafters on putting together a proposed piece of legislation 
that does take care of some of that problem.
    Isn't that right, Professor?
    Mr. Wright. Yes. Yes, I think that the--when I sat down and 
carefully studied the act, I was impressed by how thoroughly 
the drafters understand the problem of medical catastrophe 
first and then applied it to the plight of debtors.
    So you covered all the possibilities--massive debt, then 
prolonged interruption of income from earnings, and finally 
interruption of child support, alimony and support, the 
domestic support obligations, as they are called. So you 
covered all the main drivers that force people into bankruptcy 
when they have lived through or are living through catastrophic 
medical problems.
    Mr. Conyers. Dr. Mathur, do you agree more with Judge 
Morris or Professor Wright?
    Ms. Mathur. I have problems with both.
    Mr. Conyers. You probably agree with some of both, what 
both are saying.
    Ms. Mathur. I think that if you prove that that actually 
drove the bankruptcy, then we have the case that we have a 
medical bankruptcy.
    If, like in this Himmelstein study, we simply found that 
someone reported that at some point in the previous 2 years we 
had, you know, a week's worth of lost, you know, work, and then 
we say, ``Okay, that is a medical debtor and that is a medical 
bankruptcy,'' then that is overstating the problem.
    I think if we had a way, a convincing way of showing that, 
you know, this is what drove the person to bankruptcy, then I 
would agree with Professor Wright.
    Mr. Conyers. Well, all you have to do is show that their 
medical debt is on the credit card and that--what else--what 
more would you need?
    Ms. Mathur. Pardon me?
    Mr. Conyers. What else would you need to prove what the 
real costs of the--the real reason for the credit card 
indebtedness was because of medical bills?
    Ms. Mathur. Yes, if you can show that the credit card----
    Mr. Conyers. It is easy. All you do is read. It says it is 
from X hospital.
    Ms. Mathur. Yes, I understand that.
    Mr. Conyers. $20,000. You don't need any more than that, do 
you?
    Ms. Mathur. Yes, that is absolutely credible. Yes.
    Mr. Conyers. Well, then you agree with both Morris and 
Wright.
    Ms. Mathur. I agree that if we could have a procedure for 
determining exactly where the debt was. So, for instance, she 
said if----
    Mr. Conyers. It is easy. You have to identify. On a credit 
card you have to--when you are going into bankruptcy, you have 
got to identify where the indebtedness came from.
    Ms. Mathur. Right.
    Mr. Conyers. You got to name it. You can't just say 
$150,000 worth of debt. They are saying, ``What debt?'' Well, 
when you see it is from doctors, clinics and hospitals, that is 
pretty obvious where it came from.
    Ms. Mathur. I completely agree with that. I think if you 
had a certain way you could make the debtor show that there was 
so much medical debt on credit cards, then that is exactly the 
way to show how much medical debt you had. But if you say, 
``Oh, I took out a second mortgage because of this,'' or ``I 
did''--you know, if there is no way of actually tracking it, 
then I don't think----
    Mr. Conyers. But there is a way. When you go in--have you--
are you familiar with--well, no, you are not a lawyer. You are 
an economist.
    Professor Wright?
    Mr. Wright. Well, the fact is on Schedule F of the official 
forms, which every debtor must fill out, there is a column as 
part of the description of unsecured debt where the debtor is 
required to say what was the debt for.
    So if you have a $15,000 charge because you paid a clinic, 
it should say Capital One or Visa, and then the consideration 
for the debt is where you would state this was for the clinic 
or the hospital for whatever the care was, and then the total. 
So there is provision currently in the official forms for 
revealing that information.
    Mr. Conyers. You should know, Dr. Mathur, that there is no 
way you can go through a bankruptcy proceeding without 
identifying the source of your indebtedness.
    Ms. Mathur. I thought that was the point that Judge Morris 
was making, that there is so much debt on credit cards, there 
is so much, you know, other kinds of debt that is arising 
because of medical illnesses that we are not able to track.
    If that was the point that she was making, then, you know, 
that is what I thought she was making. If you are saying that 
we can track medical debt on credit cards, then you can 
easily----
    Mr. Conyers. Well, you can. And they do.
    Ms. Mathur. Exactly.
    Mr. Conyers. That is the only way they can pay it.
    Ms. Mathur. Exactly.
    Mr. Conyers. Because they don't want to----
    Ms. Mathur. Then I think the best----
    Mr. Conyers [continuing]. They don't want to name----
    Ms. Mathur. Then I think----
    Mr. Conyers [continuing]. They don't want to----
    Ms. Mathur. And I think that the best modification you 
could make to the act would be to say that you would only 
forgive the medical debt under Chapter 7, because if you are 
trying to help medical debtors, then that is exactly what you 
want to do.
    Mr. Conyers. But sometimes you go into a different form of 
bankruptcy, because you don't want to lose your house. That is 
what Professor Wright was saying.
    Professor Wright, as I close down, do you know how many 
pages this--that is in a statement, a means test? Have you seen 
this?
    Mr. Wright. I am familiar with the----
    Mr. Conyers. No, I mean have you read it?
    Mr. Wright. No.
    Mr. Conyers. This is more complicated than the average 
income tax form.
    Mr. Wright. Oh, you are just speaking about the code 
itself?
    Mr. Conyers. No, I am speaking about the means test--Form 
22A.
    Mr. Wright. Yes, in fairness and so the Committee is fully 
apprised, most bankruptcy practitioners use software, which 
greatly eases. To draw a rough analogy, it is like the 
difference between filling out the IRS forms for your taxes and 
using TurboTax. There are fields that you can fill in, which 
does ease--just so you know, it does ease the burden of that. 
So it is not as onerous as you might think, looking just at 
the----
    Mr. Conyers. Yes, but suppose a person going into 
bankruptcy can't afford that?
    Mr. Wright. Well, that is true. Or if they can't afford the 
lawyer, who has the software----
    Mr. Conyers. Exactly.
    Mr. Wright [continuing]. And they don't have a clinic like 
mine that does it for free, yes, that is a problem. That has 
been a problem with the means test all along.
    Mr. Conyers. May I give you this form as a thank you for 
coming before the Committee and invite you to read it? To me it 
is very complicated. Now, to tell me that, ``Don't worry. Your 
lawyer has a computerized form to expedite this'' is--most 
debtors can't afford that.
    Am I incorrect, Judge Morris?
    Judge Morris. Not only can most debtors not afford it, I 
think it can be discouraging, if you do not have an attorney. 
If they start reading it, it is more difficult than the income 
tax return, as you said, so it is very discouraging. So if you 
don't have an attorney that says, ``I understand this. Let me 
walk you through it,'' then you are discouraged.
    And if you add on top of that someone that is going through 
a medical catastrophe that has to file insurance forms, which 
we all know are also complicated----
    I mean, I have the same insurance you do. My insurance is 
good. And yet I get turned down. Right. And I call them up. We 
are blessed. I get to pick them up on the--and honestly, when 
they changed my first name to Judge, people answer the phone a 
little quicker. Well, not everybody has that asset. But even I, 
when I have to go through all the medical insurance forms, find 
that difficult.
    So in the middle of trying to heal, in the middle of going 
to chemotherapy or going to physical therapy or going to the 
doctor, and like I had in front of me not this past week, but a 
month ago, where their child was dying, and I was insisting 
that somebody come to court not knowing that a child is dying, 
they have to go through that test, appear at the first meeting 
of creditors, have the U.S. trustee try to decipher are not 
whether or not they are abusive, and do all of that at the same 
time.
    I think there is something going on at the table here, 
though, that I think I just need to give a little insight from 
me. Dr. Mathur talked about lending markets and credit markets.
    Professor Wright and I are the boots on the ground. We look 
in the eyes of the people that are filing. We don't look at 
statistical data. We see what comes in front of us. We can't 
look at statistical data. That is not our job. Our job is to 
deal with the case that is in front of us and the people that 
come before us asking for relief.
    By its very definition, bankruptcy has to do with the 
debtor. Yes, we are fair to creditors. Yes, we listen to 
creditors. Yes, we follow the law. That is what we are sworn to 
do, and we do it. But by definition we are looking at those 
debtors, and we see them eyeball-to-eyeball.
    Mr. Conyers. Thank you, Judge Morris, because you reminded 
me. Heaven help the poor debtor that goes into a law office 
where the lawyer is not familiar with bankruptcy proceeding.
    Judge Morris. Yes. Exactly.
    Mr. Conyers. And I think----
    Judge Morris. I just asked for the license of two New York 
State people because of what they did to debtors by not knowing 
bankruptcy law.
    Mr. Conyers. Yes.
    Thank you, Mr. Chairman.
    Mr. Cohen. Thank you, Mr. Conyers.
    And we will now recognize Mr. Franks, and we will do these 
5 minutes. We have votes coming up, and we should----
    Mr. Franks. I will stick to the 5 minutes, I promise.
    Mr. Chairman, I just wanted to just out of courtesy here, 
not trying to prove any special point, but I had mentioned in 
the opening statement that 53 percent or a majority was in 
favor of the repeal of Obamacare, and this is a Rasmussen poll 
done on--it came out July 12th, just a few days ago. And 53 
percent of the voters nationwide favor the repeal of the 
recently passed national health care law.
    And I don't say that to prove anything, because I don't 
think we should base policy on polls. I just wanted you to know 
that I was being forthright when I mentioned that statistic to 
you.
    And also, Mr. Chairman, I am hoping that I can put into the 
record the Obama administration report confirming that the 
health care law actually increased the health care spending. 
And I will ask it to be placed in the record.
    Mr. Cohen. Without objection.
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    Mr. Franks. All right.
    Mr. Chairman, I guess here is the thing I hope we are not 
missing here is that all of us want for there to be a way for 
people in crises to be able to have a bankruptcy action. I want 
that very much. I have never had to do that, but I have been so 
poor I couldn't pay the lawyers to file for bankruptcy. And so 
I always want that.
    But we are losing sight of what we are really talking about 
here. We are talking about doing away with a means test, and I 
know the means test can sometimes be complicated. But apart 
from that--and we are not talking about a catastrophic standard 
here--apart from that, someone like myself, you know, could 
under this--under this law, if I--you know, I am tall, dark and 
harelip.
    If I decide to go out and get plastic surgery, which 
probably my wife might even appreciate--I don't know--or a 
tummy tuck or something, my insurance company wouldn't pay for 
that. But that would put me over the $10,000 amount. And even 
if I had a lot of money, I could game the system pretty 
significantly.
    And here is the problem. I realize maybe that doesn't 
happen as much as a lot of people try to portray. But whenever 
it does, whenever there is a bankruptcy, whenever someone 
doesn't pay--especially if they have it--that means someone 
else either pays or doesn't get the care. And that is the thing 
here that we always miss.
    We think that somehow there is just a magic way to wipe 
these things clean. But unfortunately, it doesn't work that 
way. It means that someone else is deprived of care or has to 
pay for it.
    And I want everybody to have access to care. And I wish 
everybody could have free care, if it didn't mean that we had 
to force somebody else to pay for it. That is the problem with 
socialism is after a while you run out of other people's money. 
That is a quote I stole, but let me just quickly ask a couple 
of questions here.
    Judge, I will ask you. Under this legislation, if I had 
$100,000 in credit card debt and I did my tummy tuck and my 
plastic surgery for $10,000, could I get rid of the $100,000 in 
the process?
    Judge Morris. I don't think so, because I think both you 
and I, again, are under the same medical care. We also 
understand we have our health savings plan. They are not going 
to pay for your tummy tuck.
    Mr. Franks. That is right. But I mean----
    Judge Morris. So and I think you could be----
    Mr. Franks. But that means I am in debt now $10,000, 
because I didn't want to pay for it either. And so I am coming 
to you----
    Judge Morris. But you are not going to get a medical--you 
are not going to get a medical reprieve for that.
    Mr. Franks. Well, I am saying, what would change that? I 
mean, that is money I owe for medical care, and there is 
nothing in this legislation that says it can't be a tummy tuck.
    Judge Morris. I don't think that is called medical care, 
but I will let you legislate that.
    Mr. Franks. All right. Well, I would challenge the majority 
to counter that, if that is true.
    Let me suggest to you--ask you also, then. If I lived with 
someone, if my wife lost her income for 4 weeks in the last 3 
years, would that qualify me under this?
    Judge Morris. I don't know the answer to that.
    Mr. Franks. Well, I am suggesting to you the answer is yes, 
according to the law.
    And I am just saying, Mr. Chairman, that--and I am done 
here--the bottom line is that we all want a bankruptcy to be 
there for those people who desperately need it, and I know that 
happens. But we don't want to have a system that just says all 
you have to do is to come up with $10,000, and you can game the 
system, and in the process make either somebody else pay for it 
or deprive someone else of medical care.
    Let us help those who really need it, and let us don't let 
this socialist train keep roaring down the track and absolutely 
decimate everybody long-term.
    And with that, I yield back.
    Mr. Cohen. Thank you, Mr. Franks. I appreciate you cutting 
your questions short and Mr. Johnson for yielding, as I have 
corrected Ms. Chu, because we do have votes.
    I would like to thank all the witnesses for their testimony 
today. Without objection----
    Mr. Johnson. Oh, oh, oh, Mr. Chairman, no, I didn't yield. 
If I could have----
    Mr. Cohen. Mr. Johnson, quickly, because we got a vote.
    Mr. Johnson. Yes, I feel compelled.
    Mr. Cohen. Sorry. I got the wrong information.
    Mr. Johnson. Okay. All right.
    The Bankruptcy Abuse Prevention and Consumer Protection Act 
of 2005 was a revision to bankruptcy law so that it would make 
it more difficult for consumers to avoid payment of credit card 
debt. Isn't that correct, Dr. Mathur?
    Ms. Mathur. The 2005 law was to prevent against 
exploitation of the system by high-income borrowers who have 
the ability to repay that debt, but were still filing----
    Mr. Johnson. By high-end borrowers, you say?
    Ms. Mathur. By high-income borrowers.
    Mr. Johnson. High-income, but it----
    Ms. Mathur. Who had the ability to repay.
    Mr. Johnson [continuing]. Mostly affects, though, lower 
income individuals----
    Ms. Mathur. No, I don't think that is true, though.
    Mr. Johnson [continuing]. Middle-class people.
    Ms. Mathur. I don't think that is true, though, because as 
Professor Wright, I am sure----
    Mr. Johnson. Well, let----
    Ms. Mathur [continuing]. Will agree that a lot of people 
who were earlier able to file under Chapter 7 are still able to 
do so.
    Mr. Johnson. Well, let me ask Judge Morris, who practices 
in this area daily as a bankruptcy judge.
    Judge, how long have you served in bankruptcy court?
    Judge Morris. Well I have been a judge for 10 years.
    Mr. Johnson. And----
    Judge Morris. And before that I was the clerk of the court 
in Georgia.
    Mr. Johnson. Okay.
    Judge Morris. And in New York. I know. It is a difficult 
move, but I did it.
    Mr. Johnson. Yes, yes. Well, that is all right. Did you 
have experience under the old bankruptcy law?
    Judge Morris. No, actually, I did not. I did not practice 
bankruptcy law at the time. But what I did practice was family 
practice.
    Mr. Johnson. I see.
    Judge Morris. I had a domestic practice, so I do 
understand, and sent some people to bankruptcy lawyers, so, 
yes, I know a lot about that.
    Mr. Johnson. Okay.
    Judge Morris. And one thing I saw is the means test could 
have possibly been corrected, if you had just simply changed 
the exemption in five states.
    Mr. Johnson. Well, exemptions in Georgia, by the way, are 
quite puny.
    Judge Morris. Exactly. Same thing in New York. As the law 
was coming into effect, New York State changed their law. It 
was only 10,000 in equity in a home, and they changed it to 
50,000 in response to the law.
    Mr. Johnson. I think Georgia was----
    Judge Morris. No bankruptcy person had anything to do with 
it.
    Mr. Johnson. Yes. I think Georgia was--and still is--$7,500 
equity.
    Judge Morris. But basically, you would have gotten rid of 
most of the, I think, at least from what I hear, if you just 
change the five states that had unlimited amount.
    Mr. Johnson. So this is an ant being killed by a 
sledgehammer by their 2005 so-called Abuse Prevention and 
Consumer Protection Act.
    But isn't it a fact that in your testimony, Ms. Mathur--Dr. 
Mathur, you state that it is surprising that the Medical 
Bankruptcy Fairness Act focuses on medical debt to the 
exclusion of other debtors in the current economic climate? You 
state that. And are you suggesting that this bill should be 
expanded to other types of debtors?
    Ms. Mathur. I am suggesting that the reason why you are 
having hearings on this bill is because of the Himmelstein 
studies, and if we did not have those studies, which are 
flawed, then we would not be sitting here.
    Mr. Johnson. And should medical debt, though, get special 
treatment, especially since Americans, due to no fault on their 
own, fall victim to sickness and disease?
    Ms. Mathur. There are debtors who are in bankruptcy for no 
fault of theirs, the people who are losing jobs, the people who 
are going through painful divorces. And we need a policy that 
either helps all of them, which I think the current bankruptcy 
code does, and we don't need this bill.
    Mr. Johnson. Well, you know, perhaps high-cost or high-
income individuals, million-dollar homes, that kind of thing, 
may not need it, but certainly working people who may be 
overextended on credit for whatever reason, whether or not it 
was for a pair of shoes or whether or not it was to pay a 
medical bill for a doctor for treatment that they need on an 
ongoing basis to remain able to pay the bills----
    Ms. Mathur. Absolutely. And I think----
    Mr. Johnson. And I just think that we need to have some 
heart for regular working people, who get caught up in the 
economic conditions that they did not create.
    Ms. Mathur. Absolutely. And I think those kind of people 
will be helped--are being helped under the current code.
    Mr. Johnson. Well, I take exception, and I believe that 
people are being hurt. Even if you can't go to court unless you 
have an attorney, you cannot pro se file anymore for--and get 
accomplished in bankruptcy what you could have prior to the 
2005 changes. You have got to go through a lawyer, and then 
even lawyers are not capable, some of them, of having the 
proper tools to produce a satisfactory result in bankruptcy 
court.
    So with that I will conclude. Thank the witnesses for 
coming.
    And, Professor, I appreciate the work that you do with your 
indigent persons.
    Thank you.
    Mr. Cohen. I thank all the witnesses. Without objection, 
Members have 5 legislative days to submit additional questions. 
You will have the opportunity to respond to them, and I hope 
you will do them promptly as possible. They will be part of the 
record.
    Without objection, the record remains open for 5 
legislative days for submission of any other additional 
materials.
    Thank everybody for their time and patience. The hearing of 
this Subcommittee is adjourned, and we will vote. Thank you.
    [Whereupon, at 1:28 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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               Material Submitted for the Hearing Record

   Response to Post-Hearing Questions from the Honorable Cecelia G. 
 Morris, United States Bankruptcy Judge, Southern District of New York










                                

     Response to Post-Hearing Questions from Aparna Mathur, Ph.D., 
            Resident Scholar, American Enterprise Institute






                                

Response to Post-Hearing Questions from Peter S. Wright, Jr., Director 
  of Clinical Programs, Consumer and Commercial Law Clinic, Franklin 
                           Pierce Law Center









                                 
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