[Congressional Record Volume 144, Number 81 (Friday, June 19, 1998)]
[Extensions of Remarks]
[Page E1180]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     BANKRUPTCY REFORM ACT OF 1998

                                 ______
                                 

                               speech of

                            HON. MAX SANDLIN

                                of texas

                    in the house of representatives

                        Wednesday, June 10, 1998

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 3150) to 
     amend title 11 of the United States Code, and for other 
     purposes:

  Mr. SANDLIN. Mr. Chairman, I rise today in qualified support of this 
legislation to overhaul our nation's bankruptcy laws. H.R. 3150 is an 
imperfect bill that addresses a very real and pressing problem. I will 
vote for this bill to advance it through this stage of the legislative 
process. However, if this bill does not improve in conference 
negotiations with the other body, I am prepared to vote against the 
conference report.
  Although the rate of personal bankruptcy filings in Texas in 1996 was 
well below the national average, it is still high at 8.4 bankruptcies 
per 1000 households. Nationally, filings increased 20% from 1996 to 
1997, and the economic cost of these bankruptcies is passed on to all 
consumers, creating a hidden tax of $400 on every household.
  While there are multiple factors contributing to this recent surge in 
bankruptcy filings, the ease with which a debtor can file for Chapter 7 
bankruptcy is surely one of them. There are certainly scattered cases 
of debtors running up their debt and then filing Chapter 7 bankruptcy 
to discharge that debt when they are capable of paying a substantial 
portion. The bankruptcy system should not assist debtors in evading 
debts they could otherwise pay. Instead, our nation's bankruptcy laws 
should offer a fair and honest way for those overwhelmed by financial 
pressures to pay off as much of their debt as they can and begin a 
fresh start.
  This bill takes a good initial step at limiting a debtor's ability to 
``game the system'' or take advantage of our bankruptcy code. However, 
the bankruptcy code affects millions of working Americans annually, and 
any changes to the code will have significant ramifications for many of 
them. We must undertake any rewrite of this code with extreme diligence 
and caution.
  Amendments to this bill, both in committee and on the House floor, 
addressing child support and alimony payments, have allayed some of my 
fears. However, I still have significant lingering concerns that making 
some credit card debt nondischargeable places this debt in direct 
competition with child support and alimony payments. Although child 
support and alimony payments retain priority designation, credit card 
companies will generally have a better ability to collect these debts 
than an ex-spouse. Before this bill is enacted into law, we must be 
absolutely certain that it will not benefit credit card companies at 
the expense of women and children who rely on these payments for their 
survival.
  This bill, as reported by the House Committee on Judiciary, would 
have preempted provisions in the Texas Constitution which protect a 
debtor's homestead from seizure. The bill would have capped the 
homestead exemption at $100,000, while Texas law has no monetary limit 
on the homestead exemption. I was adamantly opposed to this provision, 
and was pleased that it was eliminated from the bill on the House 
floor. However, I still have concerns that this bill would intrude on 
state law by prohibiting a debtor from exempting assets transferred 
into one's homestead within one year of filing for bankruptcy. I hope 
to see this provision eliminated from the bill in negotiations with 
Senate.
  I will vote for this bill now, but I urge the conference committee to 
address these very significant issues before this legislation returns 
to the House for final passage. If women and children are not 
adequately protected in this rewrite of the bankruptcy code, I will 
vote against the conference report.

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