[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
            IN SUPPORT OF BANKRUPTCY REFORM BILL, H.R. 5116

  Mr. DOMENICI. Mr. President, I rise today to express my support for 
the bankruptcy bill now before us. After over 3 years of work, it 
appears we are about to pass comprehensive reform of the Bankruptcy 
Code. I applaud the efforts of those who worked so hard to get this 
done.
  We passed by 94-0 a version of this bill in the spring. I thought it 
was a good bill then, and I still think it's a good bill. But after we 
passed it, a loophole in the Code was brought to my attention by a 
constituent in New Mexico.
  I want to briefly tell you this man's story, because it illustrates 
very well the serious problem this loophole can create.
  It has been alleged that my constituent's daughter had been sexually 
molested by another individual. When that individual heard of my 
constituent's intention to file a criminal complaint and a civil suit 
for damages arising out of the molestation, the alleged perpetrator 
filed for bankruptcy protection Chapter 13.
  This section of the Code allows you to use your income, beyond what 
you need to live, to pay as much of your debt as possible over a fixed 
time. After that time is up, so is your obligation to pay. This is 
called a ``wage earner's plan.''
  If you reach the end of that fixed period and haven't paid your debts 
fully, that doesn't matter. The Code gives you a ``fresh start.'' All 
debts, except for a few like those for child or spousal support, can be 
erased in this manner.
  My focus today is on those debts which cannot be avoided through the 
use of this part of the Code.
  I mentioned child support. When Congress enacted the Bankruptcy Code, 
it decided that parents should not be able to avoid their obligations 
to their dependent children by using the bankruptcy laws. The interests 
of children and their well-being outweighed giving the parents a 
``fresh start'' financially. Therefore, the responsibility to pay these 
types of debts is not eliminated by the bankruptcy process.
  Amazingly, if you commit a willful and malicious act against someone, 
like an innocent child, you still can get that ``fresh start,'' and the 
victim will be left with a meaningless and uncollectible right to 
damages.
  Imagine that. Child molesters can avoid full civil liability for 
their actions merely by filing for personal bankruptcy. That's what may 
happen to my constituent in New Mexico.
  While this Chapter 13 works well for individuals who may have made 
some bad financial decisions and need to get their personal finances in 
order, it should not be used by individuals who willfully and 
maliciously injure other people to avoid full liability.
  I say no ``fresh starts'' for child molesters or anyone else who 
knowingly commits a violent act against another person.
  Upon hearing of this problem the Code, I proposed that we amend 
Chapter 13's laws to make sure that debts arising out of willful and 
malicious acts are not forgiven. That proposal has not found its way 
into this bill.
  I have been told that this bill increases the amount of debt which 
must be paid to creditors under Chapter 13 from $350,000 to $1 million. 
Presumably, this will give victims of intentional and malicious acts a 
greater chance for a full recovery of their claim.
  However, it does not, as I believe it should, assure victims of 
complete compensation.
  The bill's report also cautions bankruptcy judges, lawyers, and 
debtors that the bankruptcy laws should not be used as an artifice to 
avoid civil liability for intentional misconduct. I commend the authors 
of the report for including this language.
  I hope that Federal bankruptcy judges will closely scrutinize these 
cases and properly penalize those debtors who in bad faith use the Code 
solely to avoid liability for their intentional acts.
  I appreciate the difficult compromises which must be made to pass 
this type of comprehensive legislation and believe that this bill's 
approach to the problem is a step in the right direction. However, I 
would prefer to assure victims of willful and malicious acts that they 
will be fully compensated for their injuries, not merely increase their 
chances of success.
  For that reason, I intend to continue to push for a change in this 
area of the law in the 104th Congress.
  Today, however, the interests of comprehensive bankruptcy reform are 
more important than disagreement over a single issue or provision. This 
bill contains important changes agreed upon after years of work, and I 
won't stand in its way.

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