[Congressional Record Volume 144, Number 51 (Thursday, April 30, 1998)]
[House]
[Page H2697]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           BANKRUPTCY REFORM

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Pennsylvania (Mr. Gekas) is recognized for 5 minutes.
  Mr. GEKAS. Mr. Speaker, very soon now the Chamber will be witnessing 
the great debate possibly of this year, namely, that which will be 
conducted on proposals for bankruptcy reform. Everyone in the country 
knows that a strange thing is occurring out in the economic world. 
While all the figures and all the reports as to the economy seem to be 
favorable with an expanding economy, more jobs, inflation kept under 
wraps, interest rates being held constant, all these excellent factors 
are occurring, while at the same time, Mr. Speaker, an astounding 
number of bankruptcies have been filed.
  In 1997 alone, 1,400,000 new bankruptcies were filed. That is a 
monumental increase from the year before and even a greater disparity 
from that which has occurred in the last several years. What does it 
mean? If indeed the economy is improving and yet we have these 
bankruptcies, something is wrong.
  We have witnessed now efforts to meet that crisis head on. And the 
bankruptcy reform bill which we have created and which is making its 
way through the Committee on the Judiciary even now and will reach the 
floor, as I said, shortly for our full debate on the floor carries two 
vital principles with it, which principles are at this core of what we 
are attempting to do.
  One is that we will make certain that every individual American who 
becomes so overwhelmed with debt that he and his family cannot survive 
if he has to meet those obligations that he has incurred, we want to 
accommodate that individual and make sure that the family will have a 
fresh start. That is one principle, the fresh start.
  On the other hand, the other principle is that in those cases where 
an ability to repay some of the debt is demonstrated, we must make 
every effort to produce a plan and to accommodate that individual in a 
way that some of that debt can be repaid.
  Those are the two principles: A fresh start for those who need it and 
an accommodation for repayment of some of the debt where the 
possibility of repayment is sound.
  What has happened, though, is that we hear rumors and innuendos about 
what we are attempting to do. But I must tell my colleagues that the 
cost of individual bankruptcies to the American public is something 
that has to be laid on the record. We are not simply talking about the 
loss to the lenders or the creditors who will not be repaid when 
someone goes bankrupt. That in itself is a loss. But when we 
interpolate that as to what it means to the consumers, we will 
recognize that when someone does not pay his debts, and the supermarket 
with which we are so familiar has bad debt on its books and is not 
repaid, what happens? The prices for consumer goods have to increase, 
so the rest of us are picking up the cost by increased prices of what 
has happened in that bankruptcy.
  Number 2, the interest rates that are so correlated with the lending 
and the credit establishment of our country are hurt when people file 
bankruptcy, especially in these record numbers. And so, we will see 
that those of us who require credit and want to seek a bona fide lender 
for a mortgage or an automobile will find that the interest rates are 
hurt by the fact that they were not able to retrieve bad debt in 
previous bankruptcies.
  Moreover, we lose as taxpayers. We learned during the testimony that 
we have conducted in several hearings in the last month that when 
taxing authorities like States and municipalities are themselves named 
in a bankruptcy and do not have the ability to recover, then they have 
a shortfall in the revenues in their municipality, in their 
neighborhood, in the county courthouse, and in the State coffers, 
meaning that the rest of us have to make up the difference with 
increased tax payments and revenues. So we pay all the way around.
  But what I want to emphasize in our plans for our reform measure is 
that we are going to do everything we can to help small businesses, to 
help the family, to make sure that support payments that are 
forthcoming from a breadwinner are not dischargeable in bankruptcy. 
That is, we want to make sure that the families that receiving support 
payments will continue to receive those support payments whether or not 
the individual goes bankrupt. And the entire country will be better off 
once we reform the bankruptcy system.

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