[Congressional Record Volume 144, Number 14 (Tuesday, February 24, 1998)]
[House]
[Pages H505-H506]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           BANKRUPTCY REFORM

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 21, 1997, the gentleman from Pennsylvania (Mr. Gekas) is 
recognized during morning hour debates for 5 minutes.
  Mr. GEKAS. Mr. Speaker, very shortly now we will be engaged in one of 
the most serious debates of the forthcoming remainder of the session, 
and that is on bankruptcy reform.
  I see that the gentleman from Virginia (Mr. Moran) is in the well 
here with me. He is one of the cosponsors, along with several others, 
of a bona fide bankruptcy reform measure that in this coming month of 
March will see four to five hearings, gaining testimony from every 
sector of our society, on the needs of the public and of the financial 
community, of the credit establishments and of the people who need a 
fresh start and really can use the bankruptcy laws to their advantage. 
And the best portions of all of those will be part of the hearings that 
we plan to hold.
  How has this come about? The last time that the Congress acted on an 
overwhelming set of proposals for bankruptcy was 1978. Since that time, 
we have had ups and downs in the financial health of our society, but 
in the last year, even with an economy that seems to be ever moving 
upward, we had 1,300,000 bankruptcy filings. That is an outrageous 
number and one that has worried financial houses and institutions, 
lending institutions, and people from every walk of life for a variety 
of reasons.
  How can it be that, with the economy continuing to draw strength, at 
the same time the curve of the economy goes up so does the curve of 
bankruptcy? There is something terribly wrong.
  We have endeavored to put together a bill that would in some way try 
to restore the way Americans do business, a sense of accountability and 
personal responsibility in how they deal with their finances.
  It appears that because of the statutes of 1978 it becomes a matter 
of financial planning many times for people to go bankrupt, a matter of 
convenience, a matter of how they can get out of a situation and keep 
all the materials, materials they have garnered over the years and 
still go bankrupt. So we have to fine tune it to bring this 
accountability.
  What we do generally in this bill that we are proposing is to say 
that when a person really needs a fresh start and we acknowledge that 
that is the fact, that some people become so overwhelmed by debt, so 
incapable of meeting the emergency strains on their pocketbook and 
other factors, that they have no recourse but to go bankrupt. And we 
acknowledge that, and we conform to that, and we make it easy for 
people to do that. But we also then take the extra step to say that 
when an individual is or an entity is contemplating

[[Page H506]]

bankruptcy and there is a demonstrable ability to repay some of the 
debt, even if not all of it, even if only a small proportion of it, 
that that moral obligation is in the forefront, they should be given 
the opportunity and, yea, they should be mandated to repay some of that 
debt.
  So we have a formula that would go into place; and when we determine 
that after all the bills are lined up and a person's ability to pay is 
gauged, if we determine that, indeed, some, maybe 20 percent, of the 
total outstanding bills could be paid in 5 years, over a period of 5 
years, then that individual should go into what we call Chapter 13 in 
order to enter into a plan whereby they can begin to repay some of the 
debt that they have built up over the years.
  Now, many will blame the rash of credit cards that seem to be 
floating around and that, therefore, we ought to have credit companies 
withhold those credit cards so that the people will not be overcharging 
and overdebting themselves. But we do not know if that is the answer or 
not. We will be looking into that. Is there a predator creditor in the 
picture? If so, we have to make sure that that does not happen.
  But, by and large, it is still a question of personal responsibility. 
If I am given five or six credit cards, does that mean I have to use 
all of them, exhaust the limitations of all of them and knowingly put 
myself into debt? And, if I do, should I then be excused from paying 
the debt because of the temptation of having four or five plastics in 
front of me?
  These are the questions that we have to pose and we have to answer as 
judiciously as possible in the forthcoming weeks. The way we have 
planned this is to end this debate.

                          ____________________