[Congressional Record Volume 144, Number 54 (Tuesday, May 5, 1998)]
[House]
[Pages H2778-H2779]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      REVISING THE BANKRUPTCY CODE

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Texas (Ms. Jackson-Lee) is recognized for 5 minutes.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I want to turn our attention 
to an issue that probably has not caught the momentum of the national 
media or the attention of our constituents back home.
  When we first begin to hear about any discussions on revising the 
bankruptcy code, long yawns begin to come out of those who might want 
to understand what we are engaged in. Certainly I think when we talk 
about credit card debt and credit cards and 19 percent, 21 percent, and 
30 percent interest rates, most consumers would understand, Mr. 
Speaker, what we are talking about.
  The bankruptcy code and the bankruptcy procedures were used to allow 
both businesses and consumers to, with dignity, remain in their 
communities and restructure their debts; in many instances help to keep 
employees employed, and help to keep people with a roof over their 
head.
  In 1978, the last time we reformed or reviewed or revised the 
bankruptcy code, we took, Mr. Speaker, some 5 deliberative years. We 
studied, we assessed, we questioned. Now, unfortunately, as H.R. 3150 
moves toward markup in the Committee on the Judiciary, I venture to say 
that we have looked and given this bill as much attention as we would 
give a quick hot dog while we are eating it at a baseball game. What I 
am saying, Mr. Speaker, is that this massive overhaul of the bankruptcy 
code is too fast, too far, and too soon.

  In fact, Mr. Speaker, I am prepared today to ask the President of the 
United States to veto this bankruptcy bill, which we expect, as I said, 
to be before the Committee on the Judiciary next week and, yes, to be 
before the House in the coming weeks and for the President to sign.
  Let me share with my colleagues my concerns. First of all, I think it 
is important that we in America take credit lightly and sometimes 
frivolously. Maybe it is because we are bombarded with letters from 
credit card companies time after time after time, from the minute we 
graduate from high school, the time we are in college, to take this 
card, take that card, use this credit, use that credit. And, of course, 
if someone says use it, we will. So I do support educating the public 
about the responsible use of credit.
  But there are certain gaping holes in this credit review or the 
review of the bankruptcy code: one, less than 10 hearings, less than 20 
hours of testimony. And, in fact, let me say to those who have been 
pushing elevating credit card debt over their mortgages, over providing 
food for the family, over taking care of their children, the problem 
is, when we had hearings, only 4 percent of all credit card debt is 
actually defaulted on.
  How many of us have had the frequent ``hellos'' from the harassing 
calls from credit card companies. I can venture to say these folk get 
their money. Only 4 percent default. But yet this bill elevates credit 
card debt above mortgages, above serious responsibilities, like child 
support.
  In an amendment that I offered in committee last week, which was 
turned back, I offered to protect, in protected income, child support 
for our children; those bankrupt petitioners who had to pay child 
support and those bankrupt petitioners who receive child support. 
Protected income so that the credit card companies would not take the 
money that they had for their children.

                              {time}  1845

  Was it accepted? No, it was not. And as well, I cannot imagine why 
tithing and charitable deductions should not be protected income. In 
the spirit of volunteerism, in the freedom of religion, in protection 
of religion, why would we not want to protect the bankrupt petitioners 
from those who believe in tithing and donating, as we would those who 
want to pay credit card debt?
  I simply say that this meager utilization of the process of review 
gives me shudders as to what kind of bill will come to the floor of the 
House. Voluminous pages, but with little knowledge; only five hearings, 
a markup coming up before we had any serious markup in subcommittee. 
This legislation is moving too quickly.
  My objections have been echoed by the National Bankruptcy Conference, 
the American Conference on Bankruptcy, the National Conference of 
Bankruptcy Judges, the National Association of Chapter 13 Trustees; and 
57 of the Nation's leading professors of bankruptcy law, with over 500 
years of experience collectively, have said this is moving too fast. If 
they revise this bankruptcy code, what they could have rather than 
having the scales of justice, they will have the unequal weights, the 
debtors down here and the creditors up here.
  Mr. Speaker, that is not a fair way to address the working men and 
women.

[[Page H2779]]

 This is a drive-by approach to revising the bankruptcy code.
  Our Constitution tells us that there is a fair balance between the 
responsibilities of those in this country with the rights that they 
have. Mr. Speaker, I would simply say that it is crucial that, one, we 
protect our children; two, we respect the freedom of religion by 
tithing; we respect our children by supporting protected income for 
support contributions.
  And finally, Mr. Speaker, let me simply say this bill is moving too 
fast. Let us support the 24 percent of American women and men who are 
supported and their children supported by child support. This bill 
should go back to committee; and, if not, it should be vetoed by the 
President of the United States.
  Mr. Speaker, I want to take a moment this evening to discuss the many 
troubling issues that are currently swirling around the world of 
consumer and commercial bankruptcy. And in particular, H.R. 3150, the 
Bankruptcy Reform Act of 1998, scheduled for full committee mark-up in 
the Judiciary Committee next week. In general, I must say that I am 
particularly concerned about the financial impact that on-going abuses 
of our present bankruptcy system could have on the American taxpayer, 
and how we, in the Congress, can take action to minimize them. However, 
I seriously question whether H.R. 3150, as it now stands, is the best 
means to accomplish this goal. Frankly, in its philosophical approach 
and legislative function, it appears to unnecessarily burdening the 
rights of the bankrupt debtor. I believe unequivocally that our reforms 
must be balanced in their treatment of both debtor and creditor. Sure, 
some debtors probably do abuse the current bankruptcy system, but let 
us not pretend that creditors do not do so also.
  Many financial institutions just seem to be too loose in their 
extension of credit to consumers, and it would seem that they continue 
the practice because it is profitable for them. As Mr. Lloyd Cutler of 
Wilmer, Cutler and Pickering, shared with us in one of our hearings, 
only 4 percent of all credit card debt is actually defaulted upon, and 
therefore, that is not the source of the problem. If this is the case, 
why are we being urged by the credit industry to change the current 
bankruptcy laws? Either way you look at this issue, it is definitely a 
questionable move for Congress to seek to insulate the credit industry 
from their own questionable lending policies, and H.R. 3150 seems to do 
this.
  But, friends and colleagues, this is not the only problem with this 
bill. I must openly question Subcommittee Chairman Gekas' schedule of a 
total five hearings on this subject over the three weeks before the 
April recess, and then, a rush to mark-up this bill immediately after. 
But as if that was not bad enough, the Chairman actually offered two 
substantial revisions of this bill by way of substitute, within 48 
hours of the Subcommittee mark-up of the bill. This process has been 
more than merely a ``rush to judgment'', actually, it has been a 
travesty.
  My objections about the swift consideration of this legislation, as I 
am sure that I can speaking for the rest of my colleagues on the side 
of the aisle, are not well-crafted partisan tactics to delay Chairman 
Gekas' legislation, but instead, legitimate and heart-felt concerns 
about the rapidity of this process. Furthermore, these objections have 
been echoed by the National Bankruptcy Conference, the American College 
of Bankruptcy, the National Conference of Bankruptcy Judges, the 
National Association of Chapter 13 trustees, and 57 of the nation's 
leading professors of bankruptcy law, amongst others. But despite it 
all, the spending train called H.R. 3150, continues to rush along. For 
decades now, bankruptcy legislation in the Congress has been a bi-
partisan effort. Our bankruptcy laws traditionally have been carefully 
shaped by the contrasting views of the two parties; but not now.
  Ultimately, I think that the Chairman's brisk ``drive-by'' approach 
to the complexities presented to us by bankruptcy reform, will have 
drastic consequence for our constituencies. Consumer bankruptcy reform, 
must not be taken lightly. Simply stated, the Congress should not 
attempt to pass untested legislative policy without first reviewing 
every reasonable option, possibility, and alternative to radical 
structural reform. If not, let me say it again, the American people are 
the ones that will have to deal with the consequences of our hasty 
choices.

  I need not remind anyone that we have not been elected to act as 
social scientists empowered by the Constitution of this great country 
to test our ideological theories on this nation's millions of 
unexpected human subjects. Rather, we are the chosen Representatives of 
the People of the United States charged to protect and serve their 
interests to the fullest extent of our powers. But how can we fulfill 
this sacred responsibility to our constituents if we do not take the 
necessary time to contemplate serious matters?
  I know that there are legitimate merits to this legislative 
initiative (like its debtor education provisions), but I also know that 
there are still both detected and undetected deficiencies in it as 
well. We must take the time to analyze, criticize, contest, debate, 
consider and then review these measures before taking decisive action. 
This is why the Congress took five(5) years to pass reforms after the 
last report by the National Bankruptcy Review Commission; because these 
weighty matters truly deserve our lasting and full attention. As 
distinguished as our witnesses were in the hearings on this matter, 
hearings do not make up the totality of the process of legislative 
review; in the end, every member must have the necessary time to make 
up their own mind. Now, all we can do is wonder what could have and 
what should have been, if this process had worked right.
  Another primary issue of concern for me with H.R. 3150, has been its 
utter disregard for the care and safety of our children. In 
subcommittee, I offered an amendment to this bill that was ``turned 
back'' by the Chair, which would have protected the right of bankrupt 
parents to continue to make or receive adequate child support payments 
for their children, even though, they were participating in a Chapter 
13 repayment plan. More importantly, however, my amendment allows a 
parent to pay or receive an amount that exceeds their court-mandated 
child support contribution. We need parents to give as much as they can 
to the support of their children.
  Listen to the staggering statistics, only 24% of families headed by a 
woman never married to the father receive regular child support 
payments, and in addition to the fact that only 54% of the families 
headed by a woman divorced from the father receive regular and full 
child support payments. So what is the result on our children? 50% of 
White children in single parent households, who do not receive regular 
and full child support, live at or below the poverty line. While 60% of 
Hispanic children and 70% of Black children in single parent households 
live at or below the poverty line. And frighteningly, Chairman Gekas 
has offered a bill that would seek to widen this poverty gap. Under 
current law, child support payments are considered a non-dischargeable, 
priority debt in a bankruptcy proceeding, but under the Gekas bill, our 
children will be battling with Visa, Mastercard and your local 
department store, Macy's, Foley's, Hecht's, Hudson's or Neiman-Marcus, 
to receive their sorely-needed monthly payments.
  The answer is as simple as this. I believe that our laws should seek 
to protect those who can protect themselves, most notably, our 
children. My amendment to H.R. 3150 would not encourage debtors to 
evade their financial responsibilities, it merely allows bankrupts to 
continue to care for their children. Just because an individual files 
for bankruptcy, that does not mean that they should be forced to 
abdicate their most essential duties. Often bankrupt debtors are 
parents, too, and they deserve the same opportunity to care for their 
children. If not, these funds will be left as prey for the many 
creditors seeking to take a significant portion of a debtor's available 
income. If it is a choice between enriching a powerful multi-national 
conglomerate and the welfare of a child, every day of the week and 
twice on Sunday, I would choose the child. Thus, I urge you friends, 
colleagues and those within the sound of my voice, to work diligently 
with me to care for the truly innocent members of our society, our 
children. Thank you.

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