[Congressional Record Volume 144, Number 56 (Thursday, May 7, 1998)]
[House]
[Pages H2994-H3000]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           BANKRUPTCY REFORM

  The SPEAKER pro tempore (Mr. Miller of Florida). Under the Speaker's 
announced policy of January 7, 1997, the gentlewoman from Texas (Ms. 
Jackson-Lee) is recognized for 60 minutes as the designee of the 
minority leader.
  Ms. JACKSON-LEE of Texas. As I listened to my colleagues, Mr. 
Speaker, discussing issues regarding the family, I cannot help but 
comment as well on an issue as important as the marriage penalty under 
the IRS code, and agree with my colleagues that we need to move quickly 
and expeditiously to really do for families rather than talk about 
families.
  I offered in 1997 the Taxpayers Justice Act, which, among other 
things, had a provision to eliminate the marriage penalty, along with 
creating a taxpayers' advocacy board simplifying the Tax Code and 
making sure that those IRS employees who abuse their position were 
handled appropriately,

[[Page H2995]]

recognizing that there are many good hardworking Federal employees. But 
I think it is important that when we talk about family issues, we need 
to do for the families. And I believe that in many instances, it is 
important to do it in a bipartisan fashion.
  I want to thank my colleague as well, the gentleman from 
Massachusetts (Mr. McGovern), for his comments on the very vital and 
important issue of child care. For he is right; the President has 
presented a very extensive response to the needs of our working 
families on child care.
  Whenever I go to my district, if there is anything that is talked 
about more heartily, it is the needs of our children, working women, 
working men, working families, and single parents. If there is anything 
that creates a greater degree of panic and frustration, it is the 
inability to have safe and secure child care. And so the child care tax 
credit is extremely important.
  Flexibility in child care hours, likewise, are part of the necessity 
of the new work style with so many single parents and different shifts. 
That is important.
  And, clearly, a safe and nurturing environment is a key element to 
the concept of ensuring child care.
  Access. All parents with children should have the ability to be able 
to pay for child care, to access child care. In many instance, some of 
the concerns that have been expressed by some of my constituents is the 
enormous burden, the enormous number of dollars that it takes to 
provide for their children.
  So I rise to the floor, Mr. Speaker, to add another aspect of our 
concerns for families, for consumers, and something that I think we can 
do a lot about; and that is, as we move into next week, for the first 
time since 1978, we will be looking to do a major overhaul of the 
bankruptcy code.
  Now, Mr. Speaker, when we started this discussion just a few short 
months ago, we had hoped, many of us serving on the Committee on the 
Judiciary, that this would be not only a bipartisan discussion but, as 
we waited upon the bankruptcy commission's final review, we really had 
hoped that it would bring about bipartisan solutions.
  I do not know if any were aware of the process of 1978, but it was a 
serious process: 60 days of hearings over a 5-year period. It was 
intended to be instructive as well as lasting, long-lasting, in fact, 
and to bring about consensus. I think that should be the direction of 
this overhaul. To my sad dismay, we have not had the full hearing or 
airing of the many different aspects, the many needs that face 
individuals who find themselves unfortunately entangled in debt so much 
that they are required to file for bankruptcy.

  Now, I think it is important for us to recognize that bankruptcy is 
not a new concept. And, frankly, most consumers are not so much aware 
of their neighbor's bankruptcy as they are aware of the savings and 
loans debacle, the major corporations, real estate companies who 
folded, and many other large corporations who have taken advantage of 
bankruptcy through restructuring and reordering their debts.
  We know the airline industry faced dire times, and many of those 
companies went bankrupt. Some famous names that we used to fly; we 
wondered about their demise. Because of the excess of debt versus 
assets, they filed bankruptcy. And we do well know that they filed 
bankruptcy. They filed it and managed to save at least the shirts on 
the backs of the shareholders. They were able to consolidate debt. They 
were able to balance debt off of assets. Fair enough. Some people might 
have disagreed with that. They might have said those big corporations 
need to pay their bills. I would simply say that has been the American 
way.
  But the tragedy comes now that the brunt of this revision of the 
bankruptcy code falls on the backs of the consumers, hardworking 
Americans embarrassed by being overwhelmed with debt, looking to pay 
back their responsibilities. Now, this is not to say that there are not 
improvements that all of us should join in. In fact, it is also to 
acknowledge that it is important for the dialogue that has been going 
on with credit card companies, credit unions, banks, and landlords.
  This is an important and needed debate; what happens when a person 
files bankruptcy. But it cannot be the overriding factor in determining 
what the legislation will ultimately be.
  Why do I say that? One very prominent lawyer, representing the credit 
card industry in testimony in our hearings, admitted that the credit 
cards actually see only 4 percent of their debt go into default. 
Imagine that, Mr. Speaker. I think that many of us would want those 
odds. Four percent of the debt going into default at the same time when 
interest rates on credit cards are 19 percent, 17 percent, 21, 22. How 
high can I go? Many consumers complain about that; that they paid over 
and over the actual debt by way of paying the interest rates.
  So I believe that we are misdirected and misguided by the very fast 
and what I would think is a nondeliberative manner in which this 
legislation will be in markup and then moved to the floor of the House.
  Bankruptcy is not a new concept. We have applied the complex 
provisions of the bankruptcy code to thousands of bankruptcy cases 
filed by individual debtors. And I would like to share with my 
colleagues a letter from some of the experts in bankruptcy, the 
bankruptcy court judges. One hundred ten of them, Mr. Speaker. One 
hundred ten; many who have been bankruptcy judges for more than 10 
years. They have seen the downward trend of our economy. They now see 
the good times of our economy. They have no axe to grind. They are 
bipartisan. They are not elected, they are appointed. They have been 
appointed by circumstances that have input from Republicans and 
Democrats alike.
  They come from different political, intellectual, and economic 
perspectives and represent every Federal judicial circuit, but they 
share one common concern: that the legislation presently before 
Congress would make fundamental changes in bankruptcy for individual 
debtors that have not been sufficiently considered. Since 1898, the 
letter goes on to say, an individual's debt has been discharged upon 
surrender of the individual's nonexempt property and the property has 
been liquidated to pay the individual creditors.
  What does that mean? An individual takes what they have, they 
liquidate it, they pay off what they can, and they get a fresh start. 
Fair enough. They do not dodge, they do not run away from the 
community. They are ashamed, yes. Many people are. For these are people 
who have grown up in their neighborhoods. These are doctors and 
lawyers, small business persons, small banks. They have been 
contributors to their community. They are not scoundrels, criminals, 
and derelicts.
  This proposed legislation would deny this basis for discharge in many 
cases, listen to this, Mr. Speaker, requiring instead that individuals 
make payment out of their future earnings for as much as 7 years.
  Mr. Speaker, what does that mean? Shackled with their hands behind 
their back. Forever shackled to the tragedy of their life. Terrible 
medical conditions, downturn in the economy, tragedy in their family, 
loss of employment, collapse of their business, bad times. How many of 
us have not faced bad times?

                              {time}  1730

  And yet, rather than taking their assets, as I have seen so many 
people go through bankruptcy and cry at the loss of heirlooms and 
special items, or maybe it is just something simple like a bicycle or 
an old car, but yet those assets have been taken and the debts have 
been discharged, that person with barely nothing, maybe the roof over 
their head, can now start anew.
  Maybe they have learned a new lesson, to go on and to begin to put 
their life together again. This bankruptcy revision will say no to 
that. It will take the mother and the father, the children, maybe they 
are planning for their college education, they have now learned their 
lesson and it will shackle them for 7 years.
  All that says, Mr. Speaker, is that they will be back in bankruptcy 
again, maybe through a broken home, a family torn apart through money 
problems, children not able to go on to college, distressed and 
distraught.
  These bankruptcy judges go on to say that this bill is important, but 
the changes are too sweeping to be acted upon without thorough 
consideration. They are alarmed by how little study appears to have 
been given to the pending bills. They believe and they know

[[Page H2996]]

that they are on the verge of going to the floor, and they recount that 
fewer than a dozen hearings have been held on all of the bills 
combined.
  The oldest bill that has been offered, H.R. 2500, was introduced a 
little more than 6 months ago. The haste with which these bills are 
being processed can be seen by comparison, as I said, with the 
Bankruptcy Code of 1978, where we took 5 years.
  We have been discussing the IRS. Mr. Speaker, outrageous claims have 
been made of abuse of power. But this Congress has held several 
hearings; legislation is just now coming to the floor of the House in 
magnitude. I would venture to say that we will be discussing those 
bills for a long time. But they came out of great ire and frustration 
and people crying out.
  No one has heard from the general public on bankruptcy. No one is 
claiming that they have been taken advantage of by bankruptcy judges or 
trustees in large measure. In fact, Mr. Speaker, let me say, I do hear 
of disgruntled persons who filed bankruptcy and have thought that our 
trustees or judges have been unfair to them versus someone else. But 
the system overall does work, and it provides people with a second 
chance to come back, again to be part of the community.
  These judges go on to say that the proposed bills will fail to fully 
accomplish their intended purpose. Already they are a failure. They 
will generate unnecessary litigation over unclear terms. How many times 
have we heard, ``Washington, leave it alone. Leave it alone. Do not 
make anymore trouble''? We are going to generate more litigation and 
then impose excessive costs on all of the participants in the 
bankruptcy system.
  Those charged with responsibility for applying the bankruptcy laws, 
they are urging us, Mr. Speaker, they are urging us to pull the reins 
on our horse, hold up just a little bit more time, do not rush to the 
finish line. And they come from so many different parts of our 
community. The Southern District of California; the Districts of 
Oregon, of Ohio, Illinois, Arizona, and the Northern District of 
Georgia; the Northern District of Ohio; the Western District of 
Oklahoma; the District of Massachusetts; the Southern District of 
California; the Western District of Washington, Louisiana, North 
Carolina; the Western District of Texas; the Southern District of 
Florida; the District of Puerto Rico; the Western District of Kentucky; 
Wisconsin, New York, Pennsylvania, Kansas; the Western District of 
Arkansas; the District of New Jersey, Maine; the District of Indiana, 
Michigan, and Idaho, Iowa, Michigan, Connecticut. They come from so 
many different parts. Montana, as well, is noted, Mr. Speaker.
  That does not seem like a small outcry of reckless and 
unknowledgeable persons. Those individuals represent the depth of our 
experience, the individuals that implement the Bankruptcy Code; and 
they have asked us, Mr. Speaker, to not move this bill ahead. They have 
asked us to hold up the time and to recognize that we do not have the 
solutions.
  Mr. Speaker, let me share with my colleagues some additional 
excerpts, because I think it is important to realize that there are 
those who are speaking on behalf of the voiceless, probably bankruptcy 
persons who are filing bankruptcies who are in need and do not even 
realize that within moments the laws will change, totally throw askew 
the ability to fairly file for bankruptcy.
  Mr. Speaker, I draw to the attention of my colleagues a letter from 
57 academics who are, likewise, concerned about the proposed 
legislation. There are 875 years of experience combined in these 57 
professors who teach bankruptcy law, who understand what the tool was 
to be utilized for. They remind us again in 1978, 60 days and 5 years. 
They express their concern about the quality of information presented 
at the few hearings which we have held. Sitting through some of those 
hearings, I too recognized that much of what was said seemed to be 
focused specifically on those who are in the credit business.
  Mr. Speaker, I would think an immediate solution would be to 
acknowledge several things. Americans are bombarded by credit offers. 
Americans, starting at the age of a high school student, can probably 
get a credit card sooner than they can get their driver's license.
  Mr. Speaker, what about those letters that come in the mail and say, 
with a printed, look-alike check with someone's name on it preprinted, 
``Take this to your bank and you have got $10,000.'' That is a credit 
offer, Mr. Speaker.
  What about the many credit cards that come in through many different 
affiliations? Some of us get them from our alma maters. Of course, we 
take pride in those. But it is nothing more than credit, nothing more 
than free, loose credit.
  What we really need, Mr. Speaker, is a stand-alone bill that educates 
the consumers, educates the consumers about how to use credit 
effectively and responsibly. I would imagine, Mr. Speaker, that we 
would have all of these bankruptcy judges whom I have just alluded to, 
all of these academics whose letters I am about to share with my 
colleagues, joining us in saying, if nothing else, that is the right 
step. Teach the single parent, the divorced parent, the single person, 
the senior citizen, teach them, the small business owner, how to 
effectively use credit.
  Now, I am not charging that credit is not an important aspect of our 
financial infrastructure in America. In fact, it is well-known, and let 
me thank them, that many small businesses who are now successful today 
started with a credit card loan of $1,000 or $2,500. Might I add, as an 
additional insight, many of my constituents African Americans, 
Hispanics, and women who have had a tough time getting actual, 
traditional bank loans have started their businesses with credit cards; 
and they in fact have benefited, paid it back, and their businesses 
have grown.
  So this is not to undermine or to eliminate access to credit or 
credit cards. But I do not think there would be much disagreement that 
the overuse of credit cards, the bombarding of credit card offers have 
been some of the real reasons why we have seen in many instances the 
utilization of the Bankruptcy Code and process and why many of our 
citizens have fallen upon hard times, along with other items that might 
contribute.
  These particular academics said again that they are concerned about 
the kind of information that we got at the hearings. The studies that 
have been the driving force behind many proposed reforms appear to have 
been inadequate and to have emphasized the interest of institutional 
creditors. To date, virtually no one has spoken for those Americans who 
have declared bankruptcy or who may one day be forced into that 
position.
  In fact, Mr. Speaker, we were very short on persons who were there 
and who had filed for bankruptcy. How can we bring about a consensus by 
not having those true partakers of all shapes and sizes that can 
literally tell us what they went through, what would help them, what 
would help them not file again, how the code or the process worked for 
them? Are we ashamed of people who own up they just did not have the 
financial ability to pay their debts, help them out, and find a way to 
make sure that whomever they could pay, they would? I find it 
disappointing.
  How difficult it was that we as Democrats attempted to make the 
point, slow down, where are the other witnesses? But yet, our voices 
were unheard. We made the record. We will have the record to stand on. 
But, Mr. Speaker, I am here to get solutions. And I will be looking to 
draft legislation that stands alone, that speaks directly to the 
question of educating consumers responsibly about using credit. That is 
where we can get bipartisan support and help. And let the rest of these 
major revisions, which cause an imbalance on the scales of justice, 
creditors high up and debtors low down, let that be stalled until we 
can hear from a broader cross-section of Americans about this 
Bankruptcy Code.
  ``Aside from the Tax Code,'' the letter goes on to say, ``and the 
Social Security laws, no other Federal law affects more Americans.'' I 
think that is the point that I am trying to make, Mr. Speaker. 
Bankruptcy is not a popular discussion. April 15, everyone knows the 
IRS, the Internal Revenue Service. They are filling out those papers, 
willingly or unwillingly.
  Social Security has been the lifeblood of many in our community. They 
know those words, Social Security.

[[Page H2997]]

  Bankruptcy, albeit utilized quite frequently, the very reason why we 
should go slow is because many people do it under duress, unwillingly, 
because they are still struggling to try and pay those bills on their 
own.
  Just recently one of the talk shows had the youngest bankrupt filers, 
and I remember an excerpt in particular where a youngster, maybe a 
young woman or a teenager, used a credit card to buy something for 25 
cents.
  Mr. Speaker, credit is rampant in this country, and that is what we 
really need to be talking about. This is what this Congress needs to 
be, a problem solver, not a creator of problems. And that is what we 
are doing with this Bankruptcy Code, Mr. Speaker. Bankruptcy brings 
about shame, but yet it is equated with the Tax Code and Social 
Security.
  My colleagues would not see us overhaul the Tax Code. In fact, in my 
bill, the Taxpayers Justice Act that calls for the simplification of 
the Tax Code, I know that there is a long journey for that legislation 
to follow.
  We know that the Tax Code is enormous. But we are not going to do it 
with meager hearings. It is going to take a while.
  This whole question of preserving the Social Security Trust, now that 
we know that 2032 is when we will see it faltering, it is going to take 
an enormous number of years. We are committed to preserving Social 
Security. But what about bankruptcy and the procedures that keep this 
country going? Few people talk about it because they file in the dark 
of night, in silence, because, Mr. Speaker, people are not filing 
recklessly or they are not filing to abuse the system.
  They are not filing happily. They are filing, Mr. Speaker, because 
they have come upon hard times that any one of us could face, any one 
of us with catastrophic illnesses, children with catastrophic diseases 
requiring transplants, or long illnesses of a loved one who is 
tragically injured, personally injured or disabled, maybe the 
breadwinner, and that family now has to turn to other resources.
  Are we, Mr. Speaker, going to apply these new revisions raising the 
cap on who can apply, taking their earned income 7 years down the road?

                              {time}  1745

  For some of those families caring for a loved one, that is taking all 
of their money. You might literally be putting those families out on 
the street because they cannot clear their debts.
  It is very evident, Mr. Speaker, that most, as the letter goes on to 
say, individuals who file bankruptcy are average middle-class Americans 
focusing on one interest, that of creditors, and in particular 
creditors who hold credit card debt. But focusing on this one interest 
tends to mute the voices of the millions of other Americans affected by 
bankruptcy law. This imbalance affects more than debtors. When debt 
institutions hold the stage and suggest the changes, noninstitutional 
creditors such as former spouses with support claims stand to lose. Do 
you know who stands to lose? Children. Children of these individuals 
who have maybe gone a little bit over their head.
  These law professors as well come from all manner of political 
philosophies. Creighton University, the University of Kansas Law 
School, Rutgers, the University of Chicago, Emory Law School, the 
University of Iowa College of Law, Seton Hall, Indiana University, the 
University of Arizona, Cornell Law School, Emory again, Georgia State, 
University of California at Los Angeles, Creighton University, 
University of Memphis, the College of William and Mary, California 
Western School of Law, Northwestern University School of Law, Capital 
University, the University of Tulsa, Arizona State, the University of 
Connecticut. The University of North Carolina at Chapel Hill, the 
University of Pittsburgh, Franklin Pierce, Boston College Law School, 
Duke University, Indiana, New York University, University of California 
again at L.A., Florida State University, the University of Missouri 
Columbia, the University of Tennessee. So many. The University of 
Wisconsin, San Francisco, Harvard, University of Wyoming, University of 
Texas, Columbia University, George Washington University, University of 
Michigan, Tulane, Santa Clara, University of Miami, Washington & Lee, 
Gonzaga University, University of Baltimore.
  Mr. Speaker, this collective thought should be an overwhelming 
statement that we are going just too far. And so, Mr. Speaker, I think 
it is important that the facts be put on the table. We need to be able 
to understand that in order to address the question, you have also got 
to have the facts. I would add along with the facts, let us have a 
little compassion. In works done by Elizabeth Warren, Leo Gottlieb 
Professor of Law at Harvard Law School where she summarizes her 
research, she provides for us information that about 1.4 million 
families will file for consumer bankruptcy, a rise of about 400 percent 
since 1980.

       Virtually all independent academic study and all government 
     studies of the increase in bankruptcy demonstrate that the 
     rise in bankruptcy filings follows equally sharp rises in the 
     amount of consumer debt per household.

  So there it is. I would like to see someone refute the fact that this 
enormous amount of consumer debt has contributed to the upward climb in 
bankruptcy that rose sharply in 1986, dipped in the 1990s, and a 
steeper rise since 1994.
  ``Families carry short-term high interest credit card debt and they 
are more at risk for failure.'' Because what happens, Mr. Speaker, is 
when you have got that credit card debt, no savings, any setback such 
as a job loss or uninsured medical loss, catastrophic illnesses, 
divorce, death can bring about this debt. I know it full well. Houston, 
Texas in the 1980s suffered an oil bust that we never thought we would 
see. Texas is an oil State. We are proud of it. Much happiness and 
wealth came about through the speculation and the exploration of 
domestic oil deposits. We had people who were wildcatters and proud of 
it. As a lawyer in Houston, small energy companies proliferated, some 
successfully, some not. But when the oil bust hit, I can assure you, 
Mr. Speaker, tragedies befell our community. Many of those persons were 
the backbone of our charitable giving. We saw major layoffs. Similar to 
the defense fall in California, when people just walked away from their 
homes, when neighborhoods became valleys of desperation, that is what 
happened in Houston. Suburban communities became desolate. People in 
their frustration had to walk away. That was not a pretty sight. I can 
assure you those individuals who had the wherewithal to use the 
bankruptcy process were not doing it willingly.
  ``New academic research,'' Professor Warren says,

     demonstrates that as a group the debtors who file for 
     bankruptcy in the mid-1990s are worse off than their 
     counterparts who filed in the 1980s. Their incomes are lower, 
     their debts are higher. These data suggest that as a group 
     Americans are less willing to declare bankruptcy. They file 
     when they are so pressed financially that they have no 
     alternative.

  I think it is important, Mr. Speaker, to realize, maybe that is what 
will slow this down. Maybe if we could stop the name-calling and the 
belief that everyone is trying to run away from the credit debt that 
they have, the car loans that they have. Here it is right here. The 
data suggest that it is the last resort. Are we, Mr. Speaker, going to 
take the last lifeline from a drowning man or woman, this bankruptcy 
code, and tell them, ``You drown''? That is what this bill does.

       Bankrupt debtors are a cross-section of America. People who 
     file for bankruptcy have educational levels on par with all 
     other middle-class Americans. They work in the same 
     occupations and in the same industries as other middle-class 
     Americans. They are employed and they own homes in roughly 
     similar proportions to all other Americans.

  By every social measure, they are middle class. But, Mr. Speaker, the 
real point is they are decent Americans. We have got them, holding them 
up to ridicule, to embarrassment and now we are going to do the final 
blow. ``We will get you, we will change the requirements so you won't 
have any opportunity to save dignity, to remain in your community, to 
send your children to college.''
  Mr. Speaker, let me give you the roll call of the consumer 
bankruptcies as Professor Warren outlays for us. Let me give you the 
enemies list that this bill is going after. Older Americans. I tell 
you, they fight it tooth and nail.

[[Page H2998]]

 But because they take on less consumer debt per household, older 
Americans end up in bankruptcy less frequently than their younger 
counterparts. But when they do file, a larger fraction, 40 percent, 
explain that they are driven to bankruptcy by medical debts they cannot 
pay. Medicare does not pay it, insurance does not pay it. Older 
Americans also suffer from job losses and job erosion so that two-
thirds of the debtors age 50 to 65 cite either a medical reason or a 
job reason for their bankruptcy filings.
  The next culprit, the next one on the roll call list, the next enemy, 
women raising families. In fact, both men and women, the report goes on 
to say, file bankruptcy following a divorce. Collectively, the 
bankruptcy sample has 300 percent more divorced people than the 
population generally. I can attest to the many women who are divorced 
and who I have interacted with who have indicated the real difficulty 
of getting their financial situation in place. Texas is a community 
property State. But in many instances in a divorce, much is lost, the 
sharing of assets, many of it is debt. The women are left with limited 
assets. They may not have worked, they may have been homemakers caring 
for the children. They have to scramble to get employment. That 
employment does not pay the share of the debts left for them. Families 
already laden with consumer debt cannot divide their income to support 
two households and survive economically.

  Mr. Speaker, the real victim who is added to the enemies list now is 
and will be the child, the children of that family. This is outrageous. 
We have a bankruptcy bill, Mr. Speaker, that does not even protect 
child support as protected income when you file bankruptcy.
  Mr. Speaker, that is why I will offer amendments and, if need be, a 
freestanding bill to protect child support as protected income for the 
receiver of the child support and the renderer of the child support. 
How outrageous can we get? So that if you pay child support right now, 
as this bill proceeds you would have the opportunity, if you will, to 
lose it, because it goes into the pot that pays all the credit card 
companies, the car loan, and other debts while those children waiting 
for the monthly stipend to help pay for clothing and food and medical 
expenses goes untaken care of. And the payer of the child support, who 
is well-meaning and well-intended and the one who wants to escape, for 
there is no doubt that it is well-known of the enormous numbers of 
women and the custodial male parent who needs child support who do not 
get it because one parent escapes to another part of the country, that 
is one of the most serious problems that we are facing in many of our 
communities, children untaken care of, because the parent who is not 
the custodial parent does not provide support.
  Mr. Speaker, do we want to add more to the rolls? I would hope that 
everyone, women who receive child support, will join me in their ire 
but also their advocacy for ensuring that whatever happens, that we do 
not destroy the protection of child support, join me in support of this 
legislation and this effort to ensure a bill that is broken and should 
not proceed at least does not destroy the remaining remnants of a 
family trying to take care singularly of children who are in need.
  I already mentioned the oil bust, the defense bust, if you will, in 
California, many other busts throughout the country, farmers who we 
have worked with, particularly the black farmers who are facing strife 
in dealing with trying to be compensated for ills that this government 
perpetrated against them. Many had to file bankruptcy, many had to lose 
their property, many became unemployed, so the next culprit on the roll 
call list, unemployed workers. I did not say, Mr. Speaker, workers who 
never worked. I never said those who cast about in our community as 
some people allege, never looking to be responsible. I said unemployed 
workers, union workers, working men and women, defense contractors, 
workers who work for the government, local government, county 
government, and they have been laid off. More than half the debtors who 
file for bankruptcy report a significant period of unemployment 
preceding their filings. For single-parent households, a period of 
unemployment can be devastating. Of course, married couples may fare a 
little better than or slightly better than, but they still have the 
harshness of one person being unemployed. And you will find, as 
Professor Warren goes on to say, that many times the wife is unemployed 
before bankruptcy is filed.
  Just yesterday we addressed the question of the Riggs amendment about 
affirmative action and the question of whether it was needed in higher 
education. I want to thank the House of Representatives for, in a 
bipartisan manner, voting against eliminating affirmative action across 
this Nation. They took the high moral ground.
  Let me give you another population of persons that are uniquely 
placed on the bankruptcy rolls. Here is another group to add to the 
enemies list. African-American and Hispanic families are 
overrepresented in bankruptcy. Now, someone who wants to give a 
negative taint to this, Mr. Speaker, would simply say, ``Here they go 
again.'' But they don't go again. That is not accurate. They face job 
loss and medical debts as their counterparts in the larger community. 
But what happens is, is that in the African-American and Hispanic 
communities, their home represents their greatest asset. Their savings 
are limited. They do not have as much in savings as the larger 
community.

                              {time}  1800

  The deep pockets are not there. They do not have a lot of retirement 
plans and portfolios, stock portfolios and other real estate 
investment. So a larger fraction of the African-American and Hispanic 
filers are in position to lose their homes, and so they are reaching 
out for a lifeline in order to be able to save their home. Debt secured 
by home mortgage or home equity line of credit cannot be stripped down 
or reduced any way in bankruptcy. And most families will also continue 
to make car payments. They need their cars, and they will lose them if 
they do not pay.
  That goes to the answer of why people file bankruptcy, and what does 
it do. Chapter 7 discharges all its short-term, high-interest debt, 
principally credit card and finance company debt, along with some 
medical debts. However, after that, the bankrupt person must make all 
payments on the family home, including interest, late charges, and 
penalties or they will lose their homes. They must also pay off any 
second or third mortgages plus any home equity lines of credit or risk 
losing the house.
  They will do that, Mr. Speaker. The families will continue to make 
that effort. But they sure cannot do it if you going to take their 
future income for 7 years. They sure cannot get to work if you take 
their car because they are taking the money to pay off debts rather 
than having discharged it on the assets that they would have.
  Let me remind you again, Mr. Speaker, I gave you a number. Four 
percent of the credit card debt in America is defaulted. Thus, in fact, 
for people who believe that Chapter 7, Professor Warren says, is a get-
by type of relief, I got you, I got you; it is not, for families are 
still paying off debt. But what they can do is they can concentrate 
more effectively on the moneys that keep the roof over their head to 
pay the alimony and child support to take care of back taxes and 
education loans and the heavy burden of other debt, yes, that they 
mistakenly took, is off their shoulders. They can raise their head up a 
little bit, they can be part of the community, they can become more 
stable. They can possibly take classes that teach them how to be more 
responsible in the utilizing of credit.
  You will find that the mortgage company and the ex- spouse and the 
IRS and the child are more likely to collect, and to the extent that 
these debtors are thrown out of the bankruptcy system, they will not 
stabilize financially, this report goes on to say, they will just 
crumble and collapse. They will become nonentities, disappearing from 
the formal community structure, possibly going on public assistance 
and, as well, Mr. Speaker, going back rather than going forward.
  It is extremely important, Mr. Speaker, that we recognize that to 
destroy the bankruptcy system that has not cried out for major change, 
there has not been a public outcry or uprising, and here we are trying 
to fix something in Washington; here we go again, seeking to have 
people pay 7 years in

[[Page H2999]]

the future, taking literally the roof off over their head, the car out 
of their driveway, telling them that you just need to crumble.
  In the instance of Chapter 13; that is, as Professor Warren notes, 
these are people who volunteer to pay some portion of their debts over 
3 to 5 years. For over 15 years, however, two out of three of the 
debtors who filed for Chapter 13 do not make it through a repayment 
plan. Why? Many face unemployment; it is just too long. For many, 
however, the reason is simple; they do not earn enough money.
  So Chapter 13 repayment plans fail and they leave the system and they 
disappear, whereas Chapter 7 takes the debt away from them, gets them 
back into paying those most vital and important bills that they have to 
pay.
  I hope to be home this weekend, Mr. Speaker, and listen to the voices 
of my constituents. I have already listened, and I have not heard a 
major outcry of the consumers who use debt. I have not seen evidence of 
the need for the complete overhaul as expeditiously as we are doing it, 
Mr. Speaker. I do believe that more deliberative hearings, more 
balanced hearings, can answer the questions of the community of credit 
card companies, the community of retailers, the community of credit 
unions, all good people. In fact, quietly one might find that they know 
what filing bankruptcy means. It is not a respecter of persons, Mr. 
Speaker. But it does, it does help a drowning man or woman.
  Why would we want to be in the United States Congress and be the very 
articulators, if you will, the very implementors of legislation that 
would take away the lifeline of hardworking Americans?
  I want to take a moment, Mr. Speaker, to really focus on women as 
creditors, because I think that women need to realize that this quiet 
legislation working its way through the process like the bionic minute, 
going against time, traveling at the speed of light, really is going to 
hurt women.
  In Bankruptcy and Single Parents, again Professor Warren notes that 
current law gives women priority in collection. During 1997, an 
estimated 300,000 bankruptcy cases involved child support and alimony 
orders. In about half of these cases, Mr. Speaker, the woman was the 
creditor trying to collect alimony and child support. And, Mr. Speaker, 
as I have said, now we want to pass legislation that heightens credit 
cards and others and lowers women and children.
  Alimony and support obligations are not dischargeable. The pending 
legislation largely supported, as I said, by many of the credit card 
companies, would put credit card charges on the same footing as support 
obligations.
  Now what does that mean, Mr. Speaker?
  It simply says that the big guns will get that poor and despondent 
filer of bankruptcy over the ex-wife or the child, because when you 
have to enforce the order and you are equal, then I would simply say 
that the person with the deep pockets is going to be able to get that 
money first and faster.
  Currently, alimony and child support, past taxes and educational 
loans survive a Chapter 7 bankruptcy. Recipients of child support and 
alimony are benefited with their financially troubled ex-spouses, can 
discharge their own debts and get their finances in order so they can 
make the payment on their nondischargeable debts including their 
alimony and support payments.
  So what happens now is you get rid of those debts and you begin to 
pay those, where others are depending upon you for their actual 
survival. But now, if these changes are made, whereas right now we have 
a shot at getting that money, if the changes are made, you can be sure 
that the ex-spouse, the mother, the father who has custodial care, who 
needs those support payments or in fact alimony payments for that 
divorced person who has no other means of support, will be out there 
swimming with the sharks, if you will. They will be fighting with 
others, trying to get the few pennies that will keep the roof over 
their head, bread on their table, a doctor seeing them for their 
medical ailments.
  Mr. Speaker, if I sound dire and distressed, I am; because this 
bankruptcy revision is wrongheaded and misdirected.

  Even today in Chapter 13, ex-spouses currently enjoy a preference in 
repayment. Typically, past-due alimony and child support can be paid on 
an accelerated schedule in Chapter 13. The proposed amendments would 
force debtors to pay all unsecured debt in pro rata installments with 
nondischargeable debts, cited by Professor Warren in Bankruptcy and 
Single Parents.
  Mr. Speaker, what it would do is it would certainly draw the curtains 
down on the survival of many families in America.
  Mr. Speaker, this Congress rises to the floor of the House so many 
times, and it speaks about family values, protecting the family, the 
sanctity of the family. Well, I am ashamed to tell you, Mr. Speaker, 
that this bankruptcy revision, or revisionist bankruptcy activities, 
does not even protect our tithe.
  I offered an amendment there as well, Mr. Speaker. There are many in 
our communities, our religious communities, whose biblical teachings 
instruct them to tithe, to separate out moneys to give to the One that 
they believe in. We have always spoken, Mr. Speaker, of the separation 
of church and State. This Congress has also raised its voice about how 
important religion is, even to the extent where I disagree, where they 
have intruded upon religions by certain amendments forcing different 
religion on persons of different religions. I am a believer in the 
separation of church and State and the freedom of religion, and hold 
with high degree of respect and reverence the right for all Americans 
to practice their faith. I believe in that. But do you mean to tell me 
that we would have the audacity to pass legislation, Mr. Speaker, that 
would announce that a tithe is illegitimate?
  How can that be true; tithe is now illegitimate? And that means, Mr. 
Speaker, that I would be assessing your religious beliefs that tithe 
would not be protected income.
  Now, Mr. Speaker, I am not asking that this be allowed with no 
documentation. I am simply saying to you, Mr. Speaker, that there is 
all manner of ways to document that tithe has been given over to the 
religious institution. The religious institution can provide the 
receipt, certainly documentation on behalf of the debtor; but the 
importance factor, Mr. Speaker, is that we need to acknowledge that we 
have no business in taking money from those who cannot pay their other 
bills.
  I want to simply show you, Mr. Speaker, so that we can set the record 
straight about those individuals who apply for bankruptcy so that no 
one will have any impression again that these people are rolling in 
money.
  I think I heard testimony in one of the few hearings that we had: 
Well, you know it is these rich professionals that are running off and 
using the bankruptcy code recklessly and unfairly, and we are being 
burdened by their debt.
  Again I remind you that on the credit card debt we are paying high 
interest rates. I would imagine that many have paid that debt over and 
over again, over and over again.
  But this chart shows us, and that tall pole there that you might be 
seeing shows us, that the median income in filing for bankruptcy in 
1997 dollars, you have got $42,000; in 1981, $23,000; 1991, $18,000; 
1995, $17,000; and then 1997.

                              {time}  1815

  It shows, Mr. Speaker, that it is not the rich person that tries to 
take advantage on the consumer end, but it is the hard-working, 
struggling, taxpaying citizen of this country with a number of children 
who is trying to make ends meet.
  This proposed legislation would burden larger families. Again, I 
refer my colleagues, Mr. Speaker, to whole concept of the sanctity of 
families, preserving families. In fact, this legislation that would be 
revised, Mr. Speaker, would hurt families who are struggling to stay 
together.
  Mr. Speaker, I hope this evening that some eyes have been opened, 
that although the Bankruptcy Code does not ring special, does not have 
the ring of Social Security or the IRS, does not ring a bell, that what 
we have laid out this evening will certainly speak to the issue, hold 
it up.
  Do not mark it up and certainly do not bring this bill to the floor 
of the House, for if we talk about a revamping

[[Page H3000]]

of the financial services industry, which has taken some time, but 
within minutes we are talking about overhauling the bankruptcy 
structure, which, Mr. Speaker, will undermine the infrastructure of 
this country, will have people fleeing their communities. Tragedies 
will befall families who are overwhelmed with debt and are only looking 
for a lifeline to renew their commitment to this system and to begin to 
pay their bills, child support, not protected; alimony, not protected; 
older citizens, violated and cannot file on the basis of this 
legislation; unemployed persons now unable to do so; people with 
catastrophic illnesses.
  My call, Mr. Speaker, is to make sure we protect our children, and I 
am working on the support legislation and the alimony legislation to 
make it protected income. But most importantly, Mr. Speaker, I am 
calling for this bill not to be brought to the floor of the House, and 
if it does come here, that ultimately it is vetoed by the President of 
the United States. I am standing on behalf of hard-working Americans to 
ensure, Mr. Speaker, that we have a deliberative process that balances 
the needs of businesses with the needs of consumers, and educates 
consumers against credit use and abuse, and educates the credit-givers 
against bombarding America with all kinds of miscellaneous credit.
  Mr. Speaker, I think if we can do that, we can find a way for the 
bell to ring on the bankruptcy revisions in a consolidated manner that 
has consensus, Mr. Speaker, and speaks on behalf of the American 
people.

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