[Congressional Record Volume 146, Number 127 (Thursday, October 12, 2000)]
[House]
[Pages H9826-H9840]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONFERENCE REPORT ON H.R. 2415, BANKRUPTCY REFORM ACT OF 2000
Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 624 and ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 624
Resolved, That upon adoption of this resolution it shall be
in order to consider the conference report to accompany the
bill (H.R. 2415) to enhance security of United States
missions and personnel overseas, to authorize appropriations
for the Department of State for fiscal year 2000, and for
other purposes. All points of order against the conference
report and against its consideration are waived. The
conference report shall be considered as read.
The SPEAKER pro tempore (Mr. Pease). The gentleman from Texas (Mr.
Sessions) is recognized for 1 hour.
Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield
the customary 30 minutes to the gentleman from Texas (Mr. Frost),
pending which I yield myself such time as I may consume. During
consideration of this resolution, all time yielded is for the purpose
of debate only.
Mr. Speaker, the resolution before us provides for the consideration
of H.R. 2415, legislation that will reform our Nation's bankruptcy
laws. This rule waives all points of order against the conference
report and against its consideration. The rule provides that the
conference report may be considered as read.
The underlying legislation is important legislation that
fundamentally reforms the existing bankruptcy system into a needs-based
system. I am very proud of the tireless efforts of the Members of both
the House and the Senate who have worked to reach this bipartisan
agreement to ensure that our bankruptcy laws operate fairly,
efficiently and free of abuse.
There is a strong support for bankruptcy reform. The House version of
this bill passed with more than 300 votes earlier this year. The Senate
passed their version with 88 votes. There is a great need for this
legislation. A record 1.42 million personal bankruptcy filings were
recorded in 1998. This is a stunning increase of 500 percent since
1980. Despite an unprecedented time of economic prosperity, low
unemployment and rising disposable income, personal bankruptcies are
rising, costing over $40 billion in the past year.
Without serious reform of our bankruptcy law, these trends promise to
grow each year costing business and consumers even more in the form of
losses and higher costs of credit.
Mr. Speaker, the bankruptcy reform that we will consider is based
upon two important tenets: number one, the bankruptcy system should
provide the amount of debt relief that an individual needs, no more and
no less; and, point two, bankruptcies should be the last resort and
financial crisis, not the first resort using it as a financial planning
tool.
A record 1.4 million personal bankruptcies were filed in 1998. That
is one out of every 75 households in America.
[[Page H9827]]
The debts that remained unpaid as a result of those bankruptcies cost
each American family that did pay their bills over $500 a year in the
form of higher costs for credit, goods, and services. Unfortunately,
the debt was eventually passed on to consumers last year and the cost
to consumers is what bankruptcy filers have added on to the system.
{time} 1145
That is why it is so important that we pass real bankruptcy reform.
Opponents of this bill have tried to divert the discussion away from
the merits of the bill, and to claim that it would make it more
difficult for divorced women to obtain child support and alimony
payments. However, nothing could be further from the truth. This
bankruptcy reform bill protects the financial security of women and
children by giving them a higher priority than under the current law.
The legislation closes loopholes that allowed some debtors to use the
current system to delay or evade child support and alimony payments.
The bill recognizes that no obligation is more important than that of a
parent to his or her children.
Currently, child support payments are the seventh priority, behind
such things as attorney's fees. Make no mistake, this bankruptcy bill
puts women and children first, well ahead and at the top of that list.
We should provide greater protection to families who are owed child
support, and this bill will do just that.
One important part of this legislation is known as the homestead
provision. Protection of one's home is something that is very important
to myself and my constituents in Texas. The homestead provision in this
legislation maintains the long-held standard that allows the States to
decide if homesteads should be protected, yet stops these purchases or
purchase of a home before filing bankruptcy as a means to evade
creditors.
The bill also addresses other problems, including needs-based
bankruptcy. The heart of this legislation is a needs-based formula that
separates filers in Chapter 7 or Chapter 13 based upon their ability to
pay.
While many families may face job losses, divorce, or medical bills
and therefore legitimately need the protection provided by the
bankruptcy code, research has shown that some Chapter 7 filers actually
have the capacity to repay some of what they owe.
The formula directs into Chapter 13 those filers who earn more than
the national median income, which is roughly $51,000 for a family of
four, if they can pay all secured debt and at least 20 percent of the
unsecured non-priority debt.
This bill recognizes the need for customer education and protection.
It includes education provisions that will ensure that debtors are made
aware of their options before they file for bankruptcy, including
alternatives to bankruptcy such as credit counseling, and the bill
cracks down on bankruptcy mills, which are law firms and other entities
that push debtors into bankruptcy without fully explaining the
consequences.
The bill also imposes new restrictions and responsibilities upon
creditors with the goal of preventing borrowers from getting in over
their heads. For example, the bill requires creditors to disclose more
about the effect of paying only the minimum payment, and establishes
new creditor penalties designed to encourage good-faith pre-bankruptcy
settlement with debtors.
I believe Congress has a special responsibility to address this issue
and to ensure that our bankruptcy laws operate fairly, efficiently, and
free of abuse.
Mr. Speaker, this conference report meets those two tenets I
mentioned earlier. It allows those who truly need a fresh start, and
compels those who can pay back part of their debt to do so.
I urge my colleagues to support this rule and the underlying
legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I support passage of bankruptcy reform, and so, in order
for it to pass before the adjournment of the 106th Congress, I will
vote for this rule and for the conference report.
But the reason the Republican leadership has been forced to resort to
this kind of parliamentary game is because the Republican majority in
this Congress has left unfinished the agenda that matters most to the
people of this country.
It is October 12, Mr. Speaker, and there is not an end in sight to
this Congress, and there is little hope left that the real American
agenda will be finished. Thus, in order to pass legislation which has
overwhelming bipartisan support, the Republican leadership has resorted
to using tricks and games, rather than regular order.
Were this situation not so sad, Mr. Speaker, it would be laughable.
Mr. Speaker, for 2 years Democrats in this body have asked the
Republican leadership for the opportunity to address the issues that
matter most to Americans: real Medicare prescription drug coverage,
real help for America's schools, a real and meaningful Patients' Bill
of Rights, an increase in the minimum wage, campaign finance reform,
saving social security and Medicare, paying down the national debt.
These are real issues that matter to real people. But in those 2
years, what have my Republican colleagues done? They have brought
forward legislation that does everything but what the American people
want. When the Republican leadership's position has been soundly
defeated on a bipartisan basis, they have simply shelved the wishes of
the bipartisan majority in this House.
For example, in August of 1999, the House passed a real Patients'
Bill of Rights, a bipartisan Patients' Bill of Rights, passed it by a
vote of 275 to 151. It took the Speaker until November 3 of 1999 to
appoint conferees. When he did, he failed to appoint a single
Republican conferee who supported the bill that passed the House, not a
single one.
Today that conference has still not reported back to either the House
or Senate. The Patients' Bill of Rights sits on a shelf.
In September of last year, the House passed a bipartisan campaign
finance reform bill by a bipartisan vote of 252 to 177. That bill has
also disappeared into the legislative dustbin of the 106th Congress.
The Democrats in this body, as well as in the Senate, have repeatedly
asked for further consideration of that legislation. But our requests
have gone unanswered.
Mr. Speaker, yet another meaningful bill sits on the shelf in the
Republican leadership's closet. We asked that the House consider
legislation that would give seniors a real Medicare prescription drug
benefit, but we were prevented from getting a vote on the Democratic
version of the bill.
We have asked that the Congress consider legislation which would
provide more well-trained teachers for schools across the country in
order to reduce class size. We have been ignored. We have asked for a
clean vote on increasing the minimum wage, and our Republican
colleagues loaded up the bill with tax cuts that would benefit the
wealthiest while begrudgingly offering a $1 an hour over 2 years wage
increase for Americans who are at the very low end of the income scale.
We have asked repeatedly for this Congress to consider issues that
really matter to real Americans, the people who pay mortgages, who pay
rent, who make car payments, who send their children to school, that
they want to be safe.
But we have been ignored, Mr. Speaker, so we find ourselves in this
situation today. While the House has rules which regulate how and when
legislation and amendments can come to the floor, the other body does
not. As a consequence, the refusal of the congressional Republican
leadership to consider real legislation that would mean something to
real Americans, the refusal of the congressional Republican leadership
to sit down and work on a bipartisan basis with the Democrats in the
House and Senate and with the President of the United States, has
resulted in the need to play these kinds of legislative games we are
engaged in today.
Mr. Speaker, I have long supported reform of our bankruptcy laws. I
support this conference report. It will allow Americans who need a
fresh financial start to get one, but it will also prevent those who
have indebted themselves and who are able to pay those
[[Page H9828]]
debts from just walking away from their obligations.
This bill affords new protections for consumers by requiring that
credit statements include more detailed disclosures. It protects the
homes of individuals who live in States with homestead exemptions, but
not those who move there simply to claim the exemption in a bankruptcy.
It gives permanent Chapter 12 relief to farmers.
Mr. Speaker, many Members are concerned about the process. Quite
frankly, I share their views. It is not proper that the House should be
considering this important legislative reform within a shell of a bill
that has already been passed and signed into law.
But given the hour, given the inability of the Republican leadership
to manage the business of this House and the Congress any better than
it has in the past 6 years, I will reluctantly vote for this rule so we
may at least pass some meaningful legislation before the end of this
Congress.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I, too, would like to have this House not only consider
important pieces of legislation, as we are doing today, but also, as
the gentleman from Texas has outlined, that there are a good number of
things that we have yet to do that have not been done, just as we have
not seen the ability to take social security to a lockbox that is being
held up in the Congress of the United States because of the Democrat
party.
There are frustrating things that are occurring every day. The fact
of the matter is, and I would remind my colleague, we are working
together. We are going to continue until we have resolved the
differences that we have. This is part of the bipartisan approach, but
the fact of the matter is that rather than us sitting here and
bickering, we need to get our job done on this important piece of
legislation that has been passed numerous times.
Mr. Speaker, I will once again remind my colleagues, this bankruptcy
reform passed with more than 300 votes from this body. I am proud of
the work that we are doing. We have not gone home, we are working
together feverishly, not only among our House colleagues but also with
the other body and our colleagues there, as well as the White House, on
things that are of great importance not only to America but to families
and to Members of Congress.
Mr. Speaker, I yield 5 minutes to the gentleman from Virginia (Mr.
Goodlatte).
Mr. GOODLATTE. Mr. Speaker, I thank the gentleman for yielding time
to me, and for his help in bringing this very important piece of
legislation to the floor. I rise in strong support of the legislation
and the rule on this conference report.
Mr. Speaker, I want to particularly commend the gentleman from
Pennsylvania (Mr. Gekas), the chairman of the Subcommittee on
Commercial and Administrative Law of the Committee on the Judiciary
where this legislation originated, because he has been working on this
legislation for years now trying to break the gridlock that has kept
this very, very important reform of our bankruptcy laws from being
signed into law.
I think we are now getting very close to accomplishing that if we can
get this conference report passed today, as I am confident we will,
with the same kind of overwhelming support, bipartisan support, that we
have already had.
Our bankruptcy laws are in grave need of reform. We are at very, very
high levels of bankruptcy filings in this country, and part of this
problem is that all of the incentives exist for people to file
bankruptcy and none of the responsibilities for people to consider the
consequences of their actions and to pay something when they indeed
have the ability to pay a part of those debts.
The reason for that is that today a debtor has a complete opportunity
to choose whether they have a Chapter 7 bankruptcy, where they can file
all of their debts and discharge them and walk away, or a Chapter 13
bankruptcy, where they are required to make payments.
This legislation reforms that in a very, very important way by
allowing people who are responsible consumers to not have to bear this
debt themselves. That is what happens today. Every time a bankruptcy is
filed, all of those consumers who are responsible, who pay their
payments on a monthly basis, who keep good credit ratings, are picking
up, in the increased costs of goods and services, in the increased
costs of consumer and other types of loans, the difference in the cost
of all of those people who file bankruptcies who could make some
payments.
This bill is reasonable in its approach. People who make less than
$50,000 a year will not be required to participate in what are called
mandatory Chapter 13s, but people with significant income but who do
not have a lot of other assets and therefore are not worried about
filing a Chapter 7 because they are not worried about those assets
being taken by a bankruptcy creditor or the trustee to sell and
distribute to the creditors right now have the ability to do that and
walk away. They should not be able to do that if they are able to pay a
portion of those obligations. This will be a significant reform in the
law to do just that.
Mr. Speaker, I just want to make the point that this legislation
helps protect people who are receiving child support payments by
increasing the priority level of protection for those folks.
This is important legislation. I thank the gentleman from
Pennsylvania for his leadership and his perseverance on this issue. I
thank the gentleman from Texas for bringing forward this excellent
rule, and I hope that people will support both the rule and final
passage of this conference report.
{time} 1200
Mr. FROST. Mr. Speaker, I yield 4 minutes to the gentleman from North
Carolina (Mr. Watt).
Mr. WATT of North Carolina. Mr. Speaker, I thank the gentleman for
yielding me the time.
Mr. Speaker, I rise in opposition to the rule, and I am going to try
to shield as best I can my absolute disappointment, indeed outrage, at
the process by which this bill has come to the floor and at the rule
under which it is coming to the floor. And if the Members would just
kind of put themselves in my position, perhaps they will understand the
outrage that I feel about the process.
I am a member of the subcommittee of the Committee on the Judiciary
that considered the House bill for bankruptcy. I sat through almost all
of the hearings, discussions, the markups in the subcommittee. The bill
then went to the full committee, and I sat there and dealt with the
bill.
Then the bill came to the floor, and it passed the House. Then all of
a sudden, yesterday afternoon conferees were appointed who never met
and out of the shadows of the back room, a bill emerges and gets
substituted in the place of a State Department authorization, so that a
bill where we thought we were going to debate American embassy security
and State Department matters ends up being a bankruptcy bill, and then
the Committee on Rules then turns around and waives all points of order
against the bill.
What are we as members of the committee supposed to think under those
circumstances? Notwithstanding the substance of the bill, we cannot
even get to the substance of the bill when the House is being operated
in such a sinister and backhanded way, when the authorizing committee
and the committee that is supposed to consider the substance of the
bill gets cut out of the process.
The conferees never get an opportunity to meet to discuss what is
going to be brought to the floor. How should we as members of the
committee feel other than disappointment and outrage? And I think we
ought to send a resounding message to the leadership here that this
process is unacceptable.
We ought to vote this rule down, and then we can talk about the
substance of the bill, which I have some reservations about, too. But
right now, we are talking about the process by which this bill got to
the floor, and we should all be outraged.
We should not be here considering a bill that brings itself here as
an embassy security matter, as a State Department authorization bill
and ends up being a bankruptcy bill which has nothing to do with the
title of the bill that we are considering. We should be
[[Page H9829]]
outraged by this, and we should not conduct this body like this.
Mr. Speaker, I ask my colleagues to oppose the rule and let us at
least send this bill through the regular process and get some regular
order in this House.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I would like to forthrightly address the issues that
have been talked about, the outrage from my colleagues on the left. The
process that we are going through was done in the light of day. It was
a bipartisan agreement. It was initiated on behalf of the Senate.
I have the signature of one of the most distinguished Members of the
United States Senate who happens to be a Democrat, who fully supported,
not only this process, but agreed that this should be a way that we
should get this done.
Bankruptcy reform is important for us to do, and I am proud that
Members from the other body forthrightly approached the issue.
Ms. JACKSON-LEE of Texas. Mr. Speaker, will the gentleman yield?
Mr. SESSIONS. I yield to the gentlewoman from Texas.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman for his
explanation. I think the one difference or the one response to the
gentleman's point is that yesterday, I believe, the House voted
enthusiastically for there to be an open conference with full
opportunity for presentation or viewing by the public and media
present. I do not believe in the last 18 hours, I do not even think it
has been 24 hours, that we have had that to occur, that a conference
opportunity has happened. Now the bill is on the floor, for a vote.
Mr. SESSIONS. Mr. Speaker, reclaiming my time, I have great respect
for what the gentlewoman from Texas (Ms. Jackson-Lee) talks about. It
would be untruthful to suggest this was not a bipartisan agreement. It
is a bipartisan agreement on a very important piece of legislation, and
I believe that the truth should not be held hostage on this issue.
Mr. Speaker, I yield 5 minutes to the gentleman from Pennsylvania
(Mr. Gekas), the chairman of the Subcommittee on Commercial and
Administrative Law.
Mr. GEKAS. Mr. Speaker, I thank the gentleman for yielding the time.
Mr. Speaker, I was intrigued by the opening statement of the
gentleman from Texas (Mr. Frost), who with my gratitude, asserts that
he is going to support the rule and the bill to bring to fruition our
efforts on bankruptcy reform.
But then he went on to, in a sense, modify his own position by saying
that, implying that it is not important to the American people like the
matters which the minority have obstructed, like patients' bill of
rights, like they have obstructed versions of Medicare reform, like
they have obstructed other things. Those things are more important to
him, implying that this is not important to the American people.
Let me tell my colleagues this, everyone should recognize that the
consumers of our country, the private citizens, the families of our
country are affected by bankruptcy. When someone files bankruptcy, the
price paid for goods at the supermarket, for the cereals and the
oranges and the beefsteak, all of those are subject to price rises
because someone has failed to pay a debt, and that has to be made up by
the general consuming public.
Mr. Speaker, not only that, but when someone goes bankrupt and a
consumer, an average citizen, wants to buy an automobile and contracts
to pay over a period of time, the interest rate that he pays, or she,
for that automobile is impacted by a bankruptcy, which potentially
makes that interest rate rise in cost.
So the consumers are hurt in just two ways that I mentioned: one,
prices at the supermarket; and, two, interest rates for goods that the
family requires, like an automobile or a refrigerator.
Are not those bankruptcies harmful to the consumer, to the people of
our country? That is why we were able to get 313 votes in the House,
because the people who represent the consumers back home voted in favor
of bankruptcy reform, to make it possible for some of this debt to be
recovered, where it can be recovered.
Furthermore, what about the consumer who is also a taxpayer, the
taxpayer-consumer, and they are inextricably intertwined in most cases
in our country, suffers when someone files bankruptcy, because the
taxing authorities, like the State or a school board or a township or
some municipality in their inability to recover monies from someone who
is declared bankrupt, that means that that uncollected tax from an
individual has to be spread among everybody else?
All of a sudden, we have the consumer-taxpayer having to pay
additional taxes. We have the consumer paying extra for the cereal,
extra for interest rates to purchase an automobile, and extra monies to
make up for losses by a taxing authority from someone who has gone
bankrupt and has put into that pot, under today's law, the taxes that
he owes to a particular entity.
What happens if there is a shortfall of the school district's taxes
by $10,000, shall we say, that someone has failed to pay and gone
bankrupt to try to avoid? Where do they make up that $10,000? That is
correct, from the pockets of the consumer taxpayer.
So I say to the gentleman from Texas (Mr. Frost) that he is correct
in voting for the rule. He is correct in voting for the conference
report, and he will have to understand and perhaps acknowledge that the
people of our Nation will also be benefited from the bankruptcy reform
at our hands here this afternoon.
Mr. Speaker, I ask every Member to keep in mind the two themes of
bankruptcy reform, each one of which is supremely important: the first
is that every single soul who files bankruptcy who needs a fresh start
so overwhelmed by debt, so burdened by the obligations that there is no
way out but bankruptcy, that person is guaranteed a fresh start under
this bankruptcy reform bill. That is extremely important.
Then the other balancing feature is that those individuals who file
bankruptcy who have an ability to repay some of the debt over a period
of time will be compelled to do so with the mechanism that we place in
the bankruptcy reform bill.
With those two balancing features, there is no reason why we cannot
match the 313 votes by which this legislation passed the last time it
was presented to the Members of the House.
Mr. FROST. Mr. Speaker, I yield 4 minutes to the gentlewoman from
Texas (Ms. Jackson-Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, might I take the opportunity
to correct the gentleman from Pennsylvania (Mr. Gekas), my good friend
and colleague, the chairman of the Subcommittee of Commercial and
Administrative Law, and offer to say to him that this is a travesty. It
is hypocrisy. Let us call it what it is.
We hope that those of us who disagree will have the opportunity to
represent our constituents, represent Americans in this debate.
Yesterday we were on the floor of the House, and we asked simply to
have a conference committee that would be open and that would have a
meeting and that would have the opportunity for the public to be
present, so we can see whether this is really reform or a sham.
We did this at 6:22; the House voted almost unanimously. At 8:20
p.m., this conference report was sealed, signed, and delivered. I might
say it might not have been signed. I have lived with this issue for
almost 4 years, and I am gratified to say that because of the economy,
bankruptcies have gone down. There is not the crisis that we thought
there was some years ago.
In addition, the bankruptcy judges and trustees oppose this
legislation. It is not reform. Interestingly enough, as we look at what
this legislation says, even the bankruptcy commission did not agree for
means testing. What does that mean? That means before you can file
bankruptcy, good hard-working citizens, senior citizens who have
catastrophic illnesses, divorced individuals who have fallen upon hard
times, you must submit data to be determined whether you can even go
into court. It is called a means test, and those hard-working Americans
who may have missed the standardized formula, by the way, designed by
the IRS, will be
[[Page H9830]]
kicked out and cannot even go to reconstruct their lives.
Mr. Speaker, $40 million was utilized to lobby for this law; but yet
in States like Texas, where our home is our life and our land, they did
not even allow language that states who had their own provisions on
homestead could opt out States rights. That is not even in the
legislation. So if your parents have lived in a home that has increased
in value, but they have fallen upon hard times because of bad health,
they cannot even utilize the homestead exemption if, in fact, it is
more than $100,000 under this bankruptcy bill.
In this economy we know that has occurred if families have lived in
homes for over 40 years. Our divorcees that need child support, in
Chapter 13, the child support payments are put in along with credit
cards. Can you imagine that? Who is going to be able to be the winner,
the child needing child support, the parent who cannot get a lawyer, or
the credit card company that says you better pay my credit card debt
before you pay child support or alimony?
In Chapter 7, for example, there are no assets, and mostly you pay
administrative costs. How will someone pay alimony or child support
unless it is isolated?
Let me share with my colleagues what the gentleman from Illinois (Mr.
Hyde), chairman of the Committee on the Judiciary, said, ``to say that
substituting a reasonably necessary standard, providing some
flexibility in determining what a debtor can live on, because what this
bill does, it tells you while you are in bankruptcy, you have to be
governed by the Internal Revenue Service expenses.'' Can you imagine
that?
{time} 1215
The chairman says, why are we using the IRS standards? This is the
only place in town, this bankruptcy bill, where the IRS is popular.
When he got to the floor of the House and he was arguing about this
bill, in the Congressional Record on May 5, 1999, the gentleman from
Illinois (Chairman Hyde) said, ``Lastly, let me pay my respects to the
creditor lobby. They are awesome.''
I only ask that we respect the American people. We know that the
American people believe in responsibility. That is what this Nation was
founded on. We work every day. We pay our bills. We pay our mortgages.
But I tell my colleagues if one had a catastrophic illness, a tragic
accident, which some of my constituents have had, devastating car
accident, one cannot work and one falls upon hard times, does one need
the IRS telling one what one can live on? Does one need one's house
being taken away from one. Does one need the credit card people telling
one they are more important than one?
I am voting against this rule, against the bill, and I ask my
colleagues to stand up for the American people.
Mr. SESSIONS. Mr. Speaker, may I ask how much time is remaining on
both sides, please.
The SPEAKER pro tempore (Mr. Simpson). The gentleman from Texas (Mr.
Sessions) has 10 minutes remaining. The gentleman from Texas (Mr.
Frost) has 17\1/2\ minutes remaining.
Mr. SESSIONS. Mr. Speaker, I appreciate the dialogue from the
gentlewoman from Texas (Ms. Jackson-Lee). I would like to, once again,
ask the gentleman from Pennsylvania (Mr. Gekas) to respond.
Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania
(Mr. Gekas).
Mr. GEKAS. Mr. Speaker, I thank the gentleman for yielding to me.
Mr. Speaker, it is peculiar to hear the argument against our
provisions on homestead exemption and the modification we made to it.
If we do nothing, if we pass no bankruptcy reform at all, the opponents
of the current bankruptcy reform say we like the present system, well,
the present system is the one against which the President has railed as
being one where the rich can go to these homestead exemption States and
escape their obligations. He is opposed to that kind of an exemption
for the rich.
So now we offer a compromise which preserves the homestead exemption
status of the States that employ it and then put into place a reform
measure that discourages the rich from shopping to go to a homestead
just for the purpose of avoiding bankruptcy.
But now we hear the gentlewoman from Texas (Ms. Jackson-Lee)
criticizing the homestead exemption. Does she want us to stay where we
are, to benefit the rich, as the President of the United States has
said? That is a salient question.
On the homestead exemption, I think I am going to engage in a
colloquy later with people who are interested in the specifics of that,
and I will be glad to engage in that. But the other point that the
gentlewoman from Texas attempted to make about the stand up for the
American people, that is what we did; 313 of us stood up for the
American consumer, the people who suffer at the hands of people who go
bankrupt and have to pay higher costs at the supermarket and interest
rates and the taxes and all of that.
The priorities that we set for women and children are very important
and high priorities. The gentlewoman from Texas would say that she is
not satisfied with those priorities. She wants what is the current law
to prevail here. If that is the case, then she should recognize and we
should be truthful about the fact that the current law gives no
priorities to that.
Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from
Michigan (Mr. Conyers).
Mr. CONYERS. Mr. Speaker, I thank the gentleman from Texas for
yielding time to me, and I yield to the gentlewoman from Texas (Ms.
Jackson-Lee).
Ms. JACKSON-LEE. Mr. Speaker, I will not take all of the gentleman's
time. I thank the ranking member very much, and I thank him for working
on this issue.
Let me just say to the gentleman from Pennsylvania (Mr. Gekas) I
appreciate his work on this bill. But he is inaccurate.
What happens in the discharge of alimony and child support? They are
lumped in with credit card debt. It is a big lump of prioritization.
What those of us who oppose this bill are asking for is to put credit
card debt below that of alimony and child support, which represents
real life or death issues in the lives of children and families.
All this bill does is give the single parent, man or woman, with
limited resources an opportunity to fight to get child support and
alimony. We know who is going to be the victor in that fight against
the big credit card companies.
The other thing is, just on the homestead issue, let me be very
clear, the language in the conference report does not have the opt-out
language that protects State rights to allow them to opt out if they
have other homestead exemptions. That is hurting senior citizens who
have lived in their home for 50 years and the value of their homes are
assessed at more than $100,000 because the value has increased. That is
what I am crying out against. This is not reform. This bill is punitive
to many Americans.
Mr. CONYERS. Mr. Speaker, as more and more Members begin to examine
this, I think the awesome power of the credit lobby is becoming very,
very clear. We are making a bill that makes bankruptcy worse. So for
the chairman of the subcommittee to be telling us that, because we
oppose this bill, we want to go back to the existing circumstance is
inaccurate at least for my part. What we want is a better set of
provisions than the ones that exist now, and this bill does not contain
them.
Mr. SESSIONS. Mr. Speaker, the gentleman from Texas (Mr. Frost), my
colleague on the Committee on Rules, indicates he does not have further
speakers. I have indicated back that I do have two additional speakers.
I am well aware there is an imbalance on time on both sides. I will
proceed with that understanding. I will proceed with two additional
speakers, then I will offer the gentleman from Texas (Mr. Frost) the
opportunity to close, and then I will do the same.
Mr. Speaker, I yield 4 minutes to the gentleman from Del Mar,
California (Mr. Cunningham).
Mr. CUNNINGHAM. Mr. Speaker, I was not even going to speak on this
issue until I heard the Democrat leadership's partisan attacks which
has flowed through these Chambers over the last year.
When one takes a look at the Democrat leadership and their interest
to recapture the majority and gridlock this
[[Page H9831]]
House and fight against every single thing that we try and do, campaign
finance reform was mentioned. The other night when the Presidential
debate went forward and Vice President Gore looked at Governor Bush and
said, ``would you sign the McCain-Feingold,'' I wanted to jump in the
television and ask Governor Bush to ask Vice-President Gore would he
sign the Paycheck Protection Act to control the unions. Gore would say
no of course.
I went in 18 different congressional districts over the last few
weeks. The minimum amount that the union goons had spent against our
vulnerable candidates was a million dollars each. But yet my colleagues
on the other side, because their campaign coffers are filled by the
union bosses, will they do that? Absolutely not.
So when my colleagues talk about campaign finance reform and their
extreme rhetoric, no, we will not support those kinds of things.
The Patients' Bill of Rights was mentioned that the Democrats push.
It would be so easy for this House to come together. Instead, in an
election year, they choose to try to make it a partisan issue. The
Patients' Bill of Rights not only has unlimited lawsuits, but unlimited
amounts with the intention of killing HMOs. If one kills an HMO, what
is left, only a Hillary Clinton government type of health care plan. If
one demonizes insurance companies, what is left for prescription drugs?
A government-controlled health care system. They say, well, it is under
Medicare, but yet the cost would be driven up instead of having
insurance.
I had pneumonia last year. My wife is a teacher. I used her
insurance. I went down and needed augmentin, and I went to the
prescription place, and I got augmentin for a much reduced price. That
is an insurance company, but which my colleagues tend to demonize and
talk about their patients' bill of rights.
The second aspect of that, they then, the liberal trial lawyers who
also fill their campaign coffers, then go down and sue the small
businesses with unlimited lawsuits, the people that hire in good faith
those HMOs or those organizations to provide health care for their
workers. Absolutely not, we are not going to go along with the liberal
Democrat leadership agenda.
One takes a look in NFIB and the Chamber of Commerce who produce the
jobs in this country they fight it.
Talk about education. Talk about school construction. Why do my
colleagues think they want school construction to come out of the
Federal Government instead of local, because all Federal monies go down
and have to go at the prevailing Davis-Bacon union wage. Again, quote
the union boss wage which costs 35 percent more money to build our
schools.
Does one think that my colleagues, if we had a bill that said, hey,
we will support your construction bill, waive Davis Bacon and the Union
wage, and let us put 35 percent more in building schools, but does one
think they would do that, no, because it upsets the unions and the
money going to their campaign coffers.
It makes me sick on this house floor. Like I said, I had not planned
on even speaking on this. In 1993, did you have a minimum wage
increase? You had the White House, House and the Senate. Absolutely
not.
What did you do? You tried to government control health care, you
increased the tax on Social Security, you stole every dime, your
leadership took every dime out of the Social Security Trust Fund. Al
Gore was the deciding vote on that.
Mr. SESSIONS. Mr. Speaker, I appreciate the gentleman from California
taking time to discuss this with us.
Mr. Speaker, I yield 3 minutes to the gentleman from Addison,
Michigan (Mr. Smith).
(Mr. SMITH of Michigan asked and was given permission to revise and
extend his remarks.)
Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman very much
for yielding me this time.
Mr. Speaker, I think this legislation is very important and it is so
important that we move ahead and send it to the President. I became
interested and concerned with bankruptcy laws when I became chairman of
the Michigan Senate Agricultural Committee back in the early 1980s.
Farmers came to me with their frustrations and I note those were
tough times for farmers. Farmers came to me with their frustration that
they were not allowed to reorganize. They were forced to sell their
equipment and then told, well, if you can find a way to pay your way
out of this, fine. With out their equipment it didn't work.
I met with my congressman, wrote many others and it was in 1986 that
we first came up with chapter 12 to allow special considerations for
farmers. In 1992 and 1993, when my son Brad Smith became a law clerk
with Judge Edith Jones in Houston, Texas with the Fifth Circuit Federal
Court of Appeals. I become more aware of problems with the federal law,
talking to my son Brad and Judge Jones. If bankruptcy is to easy
lenders raise interest rates for everybody else. Because thru
bankruptcy it was too easy for many to get out of paying what they owed
somebody else other borrowers are charged more to cover the unpaid
bills.
So there must be a balance. One wants to be fair, but on the other
hand, one does not want to punish everybody to make it too easy so a
few people can declare bankruptcy and not pay what they owe.
I have two bills that I introduced that are now incorporated in this
bankruptcy law. One is the child support payments that are owed to
local units of government. They have been dischargeable. Now, under my
amendment and this legislation they are not.
The other, of course, is making section 12 of the bankruptcy law
permanent. In tailoring chapter 12 to meet the economic realities of
family farming, this bill has eliminated many of the barriers that
family farmers have faced when seeking to reorganize successfully under
either chapter 11 or chapter 13 of the Bankruptcy Code.
For example, chapter 12 is more streamlined. It is less complicated.
It is directed towards family farmers, not the giants, not the
corporation, but family farmers. It provides that they can reorganize
in such a way that they do not have to sell their tractors, their plows
and their corn planter. It gives them a chance to get back on their
feet. Chapter 12 provisions no longer exist in current law. Farmers are
not allowed to use these provisions, because they have expired.
This bill, this legislation makes chapter 12 permanent. I hope we
move ahead and support this rule and the bill.
Mr. SESSIONS. Mr. Speaker, I have indicated this would be the
remaining speakers that we have in line with the agreement that the
gentleman from Texas (Mr. Frost) and I had, and I would like to let him
know we have now finished our speakers.
Mr. Speaker, I reserve the balance of my time.
Mr. FROST. Mr. Speaker, I yield 1 minute to the gentleman from
Michigan (Mr. Conyers), the ranking member on the committee, and then
we are prepared to close.
Mr. CONYERS. Mr. Speaker, I would like to ask the gentleman from
Michigan (Mr. Smith), would he join me in pushing legislation to pass a
freestanding bill to make chapter 12 permanent should this bill not
succeed in the Senate as most expect? Right now, chapter 12 is being
held hostage to this bill.
Mr. Speaker, I yield to the gentleman from Michigan (Mr. Smith).
Mr. SMITH of Michigan. Mr. Speaker, I ask the gentleman from Michigan
(Mr. Conyers) to repeat the question.
Mr. CONYERS. Mr. Speaker, would the gentleman from Michigan join me
in supporting legislation in a freestanding bill to make chapter 12
permanent should this bill not succeed in the Senate as most expect
that it will?
Mr. SMITH of Michigan. Yes, Mr. Speaker. But I certainly hope the
other provisions that are so important, such as the discharge of those
debts owed in child support, et cetera, somehow need to be corrected.
But, yes, I have introduced such a bill. It is very important to
farmers. I would hope we would pass the provisions in this bill.
{time} 1230
Mr. FROST. Mr. Speaker, I yield myself such time as I may consume to
simply state once again, as I indicated in my opening statement, that I
intend to vote for this rule and I intend to vote for the bill. We
would have preferred that it come up under a regular
[[Page H9832]]
procedure; and obviously, we would prefer that other matters obviously
be voted on by this House, but I will vote in favor of the rule.
Mr. Speaker, I have no further requests for time, and I yield back
the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume
to tell my colleague, the gentleman from Texas (Mr. Frost), that I
appreciate his support. I too would ask Members to vote for this rule.
Mr. Speaker, I have no further requests for time, I yield back the
balance of my time, and I move the previous question on the resolution.
The previous question was ordered.
The resolution was agreed to.
A motion to reconsider was laid on the table.
Mr. GEKAS. Mr. Speaker, pursuant to House Resolution 624, I call up
the conference report on the bill (H.R. 2415) to enhance security of
United States missions and personnel overseas, to authorize
appropriations for the Department of State for fiscal year 2000, and
for other purposes.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. Simpson). Pursuant to House Resolution
624, the conference report is considered as having been read.
(For conference report and statement, see proceedings of the House of
October 11, 2000 at page H 9723.)
The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. Gekas)
and the gentleman from Michigan (Mr. Conyers) each will control 30
minutes.
The Chair recognizes the gentleman from Pennsylvania (Mr. Gekas).
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
It is important, for the purpose of the Congressional Record and for
the purpose of reenlightening the Members of the House as to the
purpose of the mammoth effort that we expended over the last 3 years
and more to bring about needed, necessary and cogent bankruptcy reform,
to outline the two main theses that apply and on which we banked our
experience and our intent to bring about bankruptcy reform. They are
worthy of repetition and rerepetition. And every ounce of prevention
that we can add to this debate about all those who oppose the concepts
that we are employing we repeat and will repeat time and time again.
Everyone and anyone who becomes so flooded with and burdened with and
overextended by reason of obligations for a variety of reasons, whether
it be divorce or drinking or gambling or overextension of credit in its
many different forms, whatever the reason might be that someone became
hopelessly indebted and found no reason to do anything except to file
bankruptcy, that person, who is so overburdened will find at the hands
of the bankruptcy system a fresh start. We guarantee that. That is one
of the purposes of bankruptcy from its first usage back in colonial
days. The fresh start will be available to every American who needs it.
But by the same token, we cannot permit people to use the bankruptcy
system as a mechanism for financial planning for themselves. If we take
an objective look at someone's resources, their status in society,
their earning power, their status in the financial system of which our
economy is a part, if we, upon examination, determine, through the
bankruptcy system that we put in place, that there is an ability on the
part of this individual to repay some of the debt, albeit not all of
it, and not immediately, but over a period of years, then we should
compel that individual, through a sympathetic system of transferring
that obligation or set of obligations from Chapter 7 to Chapter 13, we
should allow that individual to work his way out of that debt. We do
not demand that he pay every penny back, but that he return some of the
money to the general wheel that keeps our economy going.
It is unfair for such an individual, who could repay, to be absolved
of any obligation and then lay his burden at the footstep of every
other consumer and taxpayer in the country. Because our country is so
wealthy, it is difficult to portray how one bankruptcy that loses in a
stream of commerce just $10,000 truly matters. One might say, well,
what is that? But that $10,000 of debt unpaid has to be made up somehow
in the general economy. And who makes it up? The consumer, the seeker
of credit, the purchaser of large items, like automobiles, homes, et
cetera.
So this is not an issue that is out there in the ether someplace,
that has no connection with everyday living in our communities and the
struggles of every family. This touches the heart of the pocketbook of
every family. To dismiss it as being a giveaway to somebody or other,
or that benefits only one segment of society, one must take a look at
individual cases of bankruptcy.
I defy anyone to comment or to assert that our bankruptcy reform
crashes down on the poor or the low-income people, when the very
threshold upon which the bankruptcy system begins under our reform
measure exceeds the median income. Therefore, people under the median
income, in whatever quarter in our country, if it is below that
standard, there is almost an automatic fresh start accorded that
individual when he or she files bankruptcy.
That is a magnanimous view of the low-income stratum of our society.
And we say that when that individual from that stratum does find
himself or herself overburdened, we are going to help. That fresh start
will be available. So I reject contentions that this is a bill biased
towards any segment of our society. Rather it is biased, if it is
biased at all, towards rectitude, towards balancing the equation in the
economy in which we find ourselves.
Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
(Mr. CONYERS asked and was given permission to revise and extend his
remarks.)
Mr. CONYERS. Mr. Speaker, this measure imposes indiscriminate means
tests to determine the eligibility for bankruptcy relief and the amount
a bankruptcy filer is required to pay a creditor. This test does not
account for such items as child care payments, most health care costs,
and the costs of caring for individuals unable to care for themselves.
Further, families will be required to go through a series of means
tests to justify their medical bills and other expenses. These
standards are so extreme that they have been rejected by the Internal
Revenue Service.
So when the chairman of the subcommittee, the gentleman from
Pennsylvania (Mr. Gekas), says that the two themes of this bill is to
give people a fresh start and then to have, number two, some
accountability for those who can and should pay, this bill flunks the
test right from the beginning on both counts. It does not allow for a
fresh start, and the accountability is so extreme that we are using
standards that even the Internal Revenue Service rejected.
The proposal is highly damaging to a single mother's access to the
bankruptcy system. It would treat an individual's credit card debt on
the same level of obligation as there is to paying child support or
alimony. So, therefore, I would argue that it does not make
accountability an important consideration because, as again we see the
awesome power of the creditor lobby, they have now elevated credit card
obligations to the same level as those for child support or alimony.
Now, how that meets theme two is beyond my understanding.
So, therefore, a mother who relies on payments to feed or clothe her
children would be competing from the same pool of money as a major
credit card company. Thanks a lot, I say to the gentleman from
Pennsylvania. That really makes accountability a strong theme in this
so-called reform measure.
Next, the business provisions of the proposal will impose harsh time
deadlines, massive new legal and paperwork burdens on businesses, real
estate concerns and, by design, will lead to premature liquidation and
job loss. So much for theme one of the so-called reform and fresh start
of the gentleman from Pennsylvania. Thanks a lot. By leading to
premature bankruptcy or liquidation and job loss, we are giving folks a
fresh start. Well, my colleagues, there is the awesome power of the
creditor lobby working again.
Instead of giving businesses a fresh start and a chance to
reorganize, this would cripple an organization and defeat the true
purpose of a bankruptcy process, even the one that we have now. At the
same time, the conference report addresses the alleged rampant
bankruptcy abuse by debtors. It gives
[[Page H9833]]
next to no attention to the lending industry.
By the way, are bankruptcy filings going up or down? Is there any
Member in this body that does not know that they are going down? We
have tables to show that the decrease in bankruptcy filings, personal
bankruptcy, in the period ending June 30 of this year, ran 8.29 percent
below the year earlier levels, and per capita personal bankruptcy rates
ran 9.15 percent below the year earlier levels.
So as the bankruptcy courts themselves tell us, the bankruptcy
filings are down, not up, according to their figures. So what are we
doing here? Well, I think we are genuflecting to the awesome power, as
the chairman of the Committee on the Judiciary says, the awesome power
of the creditor lobby. So what we have, due to deregulation of credit
cards and the resulting deluge of credit card solicitations, is that
customer debt has skyrocketed to more than $1.3 trillion.
But what attention do we give to the lending lobby, the lending
industry, which has encouraged this? Is there anyone that does not get
one or two a week or a month of credit cards that say this card is
operative, it is for you; if you need it, use it? They send them to
students in colleges in their dorms. They are being flooded with them.
So our response to this irresponsible activity of the creditor industry
is to say that we are going to make it tough by making it harder to get
started again, and then hold at the same level the family's need for
their support of children. We are going to elevate the credit card
obligation to the same as the ones of people who have families in need.
{time} 1245
And so the conference report fails in yet another respect. It fails
to require credit card companies to fully disclose the total amount of
time it takes an individual to complete payment on a credit card
balance if only the minimum is paid.
The conference report also omits an important Senate provision that
would prevent protesters found guilty of violence and of harassment at
abortion clinics from declaring bankruptcy to avoid paying court
judgments.
And so, without such a provision, I say to the subcommittee chairman,
we are allowing the abortion bombers to intimidate, maim and kill women
without suffering any adverse financial consequence. And so, Mr.
Speaker, I obviously oppose the conference reports before us.
Mr. Speaker, I reserve the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield 4 minutes to the gentleman from
Tennessee (Mr. Bryant) a former member of our Committee on the
Judiciary who, notwithstanding the fact that he abandoned us, I am
still willing to yield to him to talk about bankruptcy reform.
Mr. BRYANT. Mr. Speaker, I thank the gentleman for yielding me the
time.
Mr. Speaker, I do want to thank the gentleman and commend him and
other Members and especially the staff who have worked so closely with
us over the last 4 years to make this bankruptcy reform a reality. I
know a lot of hard work and compromise went into this legislation, and
I am confident that the consumers and the creditors will be better off
because of it.
In recent years, bankruptcy has truly become a first stop rather than
a last resort. In 1998, approximately 1.4 million people filed for
bankruptcy, which is the equivalent of more than one in 100 households
across this country. This increase in the bankruptcy filings costs the
American families, those of us who do not file bankruptcy, on average
$400 a year because of these higher prices for their credit and
consumer needs that have to be made up because of these filings.
The reform agreement before us today will protect responsible
consumers while cracking down on abusive bankruptcy practices.
Now, the object of this bill is to reduce repeat filings and to
prevent the gaming of the bankruptcy system, that is running up credit
card bills right before they file bankruptcy or filing and dismissing a
bankruptcy case and refiling as a stalling tactic. Also, this bill
hopes to improve the administration of bankruptcy cases in providing
debtors with information about alternatives to bankruptcy such as
credit counseling services.
This bill also maintains a needs-based test, a means test so to
speak, and it provides safeguards for women and for children and it
assists farmers who may be forced into Chapter 7 bankruptcies by
extending that particular Chapter 7.
Now, I do want to mention something about this means testing. I sat
through a lot of debate this morning on this particular rule and on the
general debate and I hear from the other side the opponents, the people
who oppose this reform, saying that it is means testing, it is harmful
to people who are poor. But then I hear other people from that same
side oppose it because it fails to protect the homestead exemption on
houses, $250,000 is not enough.
It strikes me kind of strange that we are talking about bankruptcy
here and a concern about people who live in houses that have equity of
more than $250,000. I think that is an inaccurate figure, too, I might
add. Because it is not right that people who file bankruptcy ought to
be able to keep houses regardless of how much they have in it or have a
value of $250,000.
We have reduced that, in a compromise spirit, down to a $100,000
where it is obvious that they bought the house with the intention of
trying to protect their equity and mess over all those creditors out
there.
But let me go on to say, too, that I am also pleased to point out
that this bill, H.R. 2415, offers my State of Tennessee specific relief
by providing additional bankruptcy judges, one in the Western District
of Tennessee that is a permanent judge, and a temporary judge in the
eastern part of the State.
For example, in the Western District, talking about the tremendous
number of bankruptcies cases, we have four judges and it is the highest
filing district in the Nation. And we believe these four judges have
worked too hard for too long. In fact, when we case-weight the numbers
in the Western District based on filings through June of 1999, each
judge has had 2,380 cases. And I would point out that 1,500 cases per
judge is the level that they should be working at according to their
own Judicial Conference.
So by providing this additional judgeship, we can at least reduce
their caseloads down to 1,904 cases, still well above the recommended
level.
Mr. Speaker, this bill does provide common sense reform and I urge
its adoption.
Mr. CONYERS. Mr. Speaker, I am pleased to yield 3 minutes to the
gentleman from Virginia (Mr. Moran).
Mr. MORAN of Virginia. Mr. Speaker, I thank the ranking member very
much for yielding me the time. I think he knows how fond I am of him
personally and how much I respect his intellect and his heart. But I
rise today in support of H.R. 2415 and the much needed bankruptcy
reform measures contained in this legislation.
The American people find it unacceptable and inherently unfair that
those who do pay their bills have to foot the bill for those who in
many instances have the ability to pay but choose not to. It has been
conservatively estimated that personal bankruptcies cost every American
family $400 per household per year and it takes 15 responsible
borrowers to cover the cost of one bankruptcy of convenience.
The system will continue to be unjust if debtors persist in using it
as a tool of first resort rather than a tool of last resort when all
other financial options have been exhausted.
Clearly, this Nation's bankruptcy system is broken when it enables
individuals to avoid paying their debts despite their ability to do so.
What this Congress must do is to undertake genuine needs-based
bankruptcy reform to require those who have the ability to repay a
portion of their debts to enter a Chapter 13 repayment plan while also
preserving the historic fresh start in Chapter 7 for those people who
have truly fallen on hard economic times.
The goal of our bankruptcy system should be to protect those who need
protecting, to provide those who experience genuine and serious
financial hardship the opportunity to wipe the slate clean. What we
must do is return our system back to its original fair and
compassionate mission through a simple legislative fix.
[[Page H9834]]
Bankruptcy reform is not a Republican or a Democratic issue. It is a
consumer issue. According to a recent National Consumer League survey,
76 percent of Americans believe that individuals should not be allowed
to erase all of their debts in bankruptcy if they are able to repay a
portion of what they owe. This survey merely reflects the American
public's belief that individuals should be responsible for their own
action.
This bill would help to remedy the glaring problems of today's
bankruptcy system by creating a needs-based system, subject to judicial
oversight, which would similarly continue to protect the rights of
those citizens who need a fresh start, while at the same time requiring
those who do not to meet their personal responsibilities.
H.R. 2415 represents a true compromise product between the House and
Senate-passed bankruptcy reform bills. Both Chambers passed bankruptcy
reform by strong bipartisan margins. The House passed their version
last June by a vote of 314-108 with the support of 96 Democrats. The
Senate passed theirs by 83-14.
This bill contains a number of pro-consumer items, including a host
of new disclosure requirements for credit card companies. Specifically,
it requires credit card statements to disclose late payment fees. It
also mandates that statements must include a toll free number for
consumers to receive estimates on how long it would take to repay their
existing balancing by making only the minimum monthly payments.
The legislation also requires improved disclosures on introductory
rates and prohibits creditors from closing an account solely if the
customer does not incur finance charges.
We need to pass this legislation, and I urge my colleagues to support
it.
General Leave
Mr. GEKAS. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
on H.R. 2415.
The SPEAKER pro tempore (Mr. Simpson). Is there objection to the
request of the gentleman from Pennsylvania?
There was no objection.
Mr. GEKAS. Mr. Speaker, it gives me pleasure to yield 5 minutes to
the gentleman from Virginia (Mr. Boucher).
(Mr. BOUCHER asked and was given permission to revise and extend his
remarks.)
Mr. BOUCHER. Mr. Speaker, I thank the gentleman from Pennsylvania for
yielding me the time, and I want to congratulate him on his fine work
in bringing this measure to the floor today.
Mr. Speaker, I am pleased to rise in support of the conference
agreement and to urge its approval by the House. With this measure, we
bring to conclusion a process that we launched 3 years ago to bring a
much needed reform to the Nation's bankruptcy laws.
In an era in which disposable incomes are growing, unemployment rates
are low, and the economy is strong, consumer bankruptcy filings should
be rare. Contrary, however, to this expectation, there are now more
than 1.4 million annual bankruptcy filings, a 40 percent increase from
1996 and a 95 percent increase over the number of filings 1 decade ago.
Bankruptcies of convenience are driving this increase. Bankruptcy was
never meant to be used as a financial planning tool, but it is
increasingly becoming a first stop rather than a last resort, as many
filers who could repay a substantial part of what they owe are using
the complete liquidation provisions of Chapter 7 of the Bankruptcy Code
rather than the court supervised repayment plans that are provided for
in Chapter 13.
The legislation that we bring to the floor today would direct more
filers to use Chapter 13 plans. Those who can afford to make a
substantial repayment of what they owe would be required to do so.
This is a consumer protection measure. As the gentleman from Virginia
(Mr. Moran) just indicated, the typical American family is paying a
hidden tax of at least $400 every year arising from the increased cost
of credit and the increases in the prices for goods and services
occasioned by the discharge of more than $50 billion annually in
consumer bankruptcy filings. By requiring that people who can repay a
substantial part of their debt do so in Chapter 13 plans, we will
lessen substantially that hidden tax.
Another key point should be made about the provisions of this
conference report. The alimony or the child support recipient is
clearly better off under this conference agreement than she is under
current law. At the present time, she stands number seven in the rank
of priority for payment of claims in bankruptcy proceedings. This
conference report places her number one. Her priority is elevated from
number seven in current law to number one in this conference agreement.
Her claim will be first in line for payment, and other provisions of
the conference agreement make it easier for her to execute against the
assets of the estate of the bankrupt person than under current law.
In May of last year, this reform passed the House by the overwhelming
vote of 315-108. A similar reform was approved in the other body by the
vote of 83-14. The consensus in support of this reform is broad and it
is bipartisan.
I would note that the conference agreement we consider today actually
moves in the direction of the bankruptcy filer. It contains a means-
testing threshold for the use of Chapter 7 that is more generous to
bankruptcy filers than the provision in the House bill. It provides
that the filer can still use Chapter 7 if he cannot repay at least 25
percent of his unsecured debt over a 5-year period, and that is after
accounting for his normal and necessary living expenses. The House
provision was a somewhat less generous 20 percent.
The conference agreement also provides that the filer can still use
Chapter 7 unless he can repay at least $6,000 of what he owes over a 5-
year period, and that also is after necessary living expenses. And that
$6,000 figure over 5 years is compared to the less generous $50 per
month over that same period in the House bill.
The conference agreement also contains the credit card consumer
disclosure guarantees that were in the Senate bill and assure that
consumers have a better understanding of the consequences of only
paying the minimum amount on their credit card statement.
{time} 1300
I want to commend the gentleman from Pennsylvania (Mr. Gekas) for his
leadership on this and the gentleman from Florida (Mr. McCollum), who I
was pleased to join as the original cosponsor of the first bankruptcy
reform that we introduced. I want to commend the gentleman from
Virginia (Mr. Moran) for his excellent work in support of this effort
and say that this is a balanced bipartisan measure which will provide a
substantial reform and deserves the support of this House.
I am pleased to urge approval of the conference report.
Mr. CONYERS. Mr. Speaker, I yield myself 2 minutes, because my dear
friend the gentleman from Virginia (Mr. Boucher) whom I tried to get on
the conference as a conferee has made a case that on the surface sounds
pretty good. But those who are concerned about the payment of alimony
and child support have expressed strong opposition to this bill.
Now, why? The proposed legislation does not live up to its billing.
It fails to protect women and children adequately. And I think we ought
to have a thorough discussion on that part of the report. The child
support provisions of the bill fail to ensure that the increased rights
the bill would give to commercial creditors do not come at the expense
of families owed support. And so what we are saying is that this is a
bill that does not improve the status of women and children in
bankruptcy proceedings. Absolutely not. That is also why the National
Organization for Women is strongly opposed to the measure. The National
Partnership for Women and Families is unalterably against this bill.
The National Women's Law Center is opposed to the bill. The National
Conference of Bankruptcy Institute is opposed to the bill. And one of
the main reasons they are opposed to the bill is that contrary to the
assertion that it allows a fresh start and a better fresh start than
the existing legislation is that it does not. It would raise up the
credit card creditor to the same status as those who are seeking
alimony and child support
[[Page H9835]]
payments, and that is precisely why the women's organizations are
seriously opposed to this measure.
Mr. Speaker, I reserve the balance of my time.
Mr. GEKAS. Mr. Speaker, it pleases me to yield 2 minutes to the
gentleman from South Carolina (Mr. Graham).
Mr. GRAHAM. I thank the gentleman for yielding me this time.
Mr. Speaker, I, too, would like to echo my congratulations to the
gentleman from Pennsylvania (Mr. Gekas) and all those who have worked
so hard to bring this bill to the floor. We are in the last hours of
the Congress and I believe we are on the verge of doing something good
for the American consumer and business community. This bill is the
reaction to a problem. Under the old bankruptcy code, there were people
throughout the land running up hundreds of thousands of dollars of
debts, making incomes of $100,000, being able to file bankruptcy and
walk away from their obligations, leaving a lot of the American
business community holding the bag.
This bill has a balance to it. It is going to change the culture of
our country. It is going to allow people to start over in a very fair
fashion but it is going to ask people, if you can pay, to pay your
debts the best that you can. Chapter 7 if you get under that provision,
you discharge all of your debts and you basically walk away. This bill
is saying, Wait a minute. If your income is such after you take your
food, your clothing, private school expenses, necessary living expenses
in a liberal fashion and compute it, that if you can afford to pay $100
a month over a 5-year period to your creditors, pay it. Because that is
good for the American business community. It is good for the economy. I
think it is good for America, to try to get people who owe something to
someone else back on their feet without leaving anybody hanging.
I disagree with my friend the gentleman from Michigan (Mr. Conyers).
Child support payments are elevated in this bill. That is the balance
that we need. From being seventh you are now first. And you cannot get
discharged from Chapter 13 if you file under that chapter if you do not
keep your child support payments current. We tell the credit card
community, you are just not going to be able to inundate people with
free credit. You have to inform them better. There is a debtor's bill
of rights that tells people options to bankruptcy and ways to make your
payments and try to get people together so you do not have to file
bankruptcy.
This is long overdue. This is not only good for our business
community, good for consumers, it is going to change our culture. I am
proud to have been a part of it. I urge its passage.
Mr. CONYERS. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Texas (Mr. Bentsen).
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Mr. Speaker, I would like to enter into a colloquy with
the gentleman from Pennsylvania if I might to understand the homestead
provisions in this. The House had adopted my amendment earlier in the
proceedings that would have allowed the States to opt out. Now, as I
understand it there is a 2-year residency requirement under section 322
of the conference report. So a homeowner who purchased their home and
files a petition for bankruptcy within 2 years would be subject to a
Federal cap but after that 2 years, would not be subject to a Federal
cap?
Mr. GEKAS. If the gentleman will yield, that is exactly correct. The
purpose is to say to someone who would move into Texas, if you move
into Texas, purchase a property and within 2 years file bankruptcy, you
would still preserve a $100,000 exemption but you would not have a
total exemption.
Mr. BENTSEN. But after that 2 years you would be under State law?
Mr. GEKAS. After that he is a true Texan and does not have to worry
about anything except the State law.
Mr. BENTSEN. The other question is after you have exceeded the 2-year
period and you increase the value of your home through addition or
property values rise, are you under a new 2-year period?
Mr. GEKAS. No. After 2 years, the person under our provisions and
under the intent and under the law generally, after 2 years that
individual is a true Texan for all purposes of residency and lives
under the homestead exemption laws of your State.
Mr. BENTSEN. And to the extent that one after the 2 years changes
residence within the State, the equity they roll over, as I understand
it, would be an exempt item under the State homestead law. Would it be
additional equity rolled into the new purchase that would be under the
$100,000 cap for 2 years or not?
Mr. GEKAS. It would not.
Mr. BENTSEN. I thank the gentleman.
Mr. GEKAS. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from
Ohio (Mr. Chabot).
(Mr. CHABOT asked and was given permission to revise and extend his
remarks.)
Mr. CHABOT. Mr. Speaker, I rise in support of this very pro-consumer
bankruptcy reform conference report. This vital legislation protects
individuals and businesses from having to pick up the tab for
irresponsible debtors, debtors who are capable of paying off a
significant portion of their debts.
This bankruptcy reform bill establishes a clear causal link between a
debtor's ability to pay and the availability of Chapter 7 bankruptcy
super-discharge. It requires those who can afford to pay their debts to
honor their commitments.
Let me emphasize at the outset that individuals who make below the
median income will not be forced into Chapter 13 under this bill,
although they may still voluntarily choose to file there. What this
bill does do is require individuals who make above the median income
and are determined to have significant repayment capabilities to file
in Chapter 13.
Mr. Speaker, there are people who truly have a legitimate need to
declare bankruptcy. No one is denying this. At times hardworking people
come up against special circumstances that are beyond their control.
Family illness, disability, or the loss of a spouse may necessitate the
need to seek relief. This legislation effectively protects these
individuals. Too frequently, however, people who have the financial
ability or earnings potential to repay their debts are simply seeking
an easy way out of repaying debts. While this may prove convenient for
the debtor, it is not fair to their friends and neighbors who are
ultimately stuck with the bill.
Estimates show that the average American pays as much as $550 per
year as a bad debt tax in the form of higher prices and increased
consumer credit interest rates to cover the economic costs associated
with the excessive bankruptcy filings of others. Nationally, consumer
bankruptcies reached a record 1.4 million in 1997 and those numbers
have remained high. What makes these statistics particularly alarming
is the fact that this trend began in 1994 during a time of solid
economic growth, low inflation and low unemployment, during an
unprecedented peacetime boom in our economy.
The primary culprit of this dramatic increase in bankruptcy filings
is a system that allows consumers to evade personal responsibility for
their debts. Under this legislation, individuals who can pay their
debts will be moved to Chapter 13 where they will be given a generous 5
years to establish a fair repayment plan and get their financial houses
in order.
I would like to take this opportunity to thank the gentleman from
Pennsylvania (Mr. Gekas) and the gentleman from Florida (Mr. McCollum)
for their leadership in this area, and I urge its passage.
Mr. CONYERS. Mr. Speaker, I am happy to yield 3 minutes to the
gentlewoman from New York (Mrs. Maloney).
Mrs. MALONEY of New York. I thank the gentleman for yielding time and
for his leadership.
Mr. Speaker, it is with great regret that I come to the floor in
opposition to this bill. I supported this bill when the House first
voted on it. Unfortunately, the majority has taken a bill in which I
thought we had made good progress and chosen to railroad it through the
House without really holding a conference and by tying it to a totally
unrelated embassy bill.
[[Page H9836]]
Furthermore, I appreciate the comments and would like to be
associated with the gentleman from Michigan's comments about the many
leading women's organizations that oppose the bill. Also, the majority
has deleted a critical provision that Senator Schumer added to the
bill. This provision prevents those who commit acts of violence at
reproductive health clinics from escaping paying penalties for these
actions. Clinic bombers should not be allowed to excuse penalties
assessed on them by the courts through bankruptcy. This bill would
allow them to excuse these debts and to walk away from these penalties.
Mr. Speaker, bankruptcy reform is important to the American people,
but so is protecting women's safety and reproductive freedom. This is a
growing problem that the majority is ignoring. Between 1993 and 2000,
three doctors, two clinic employees, one clinic escort and one security
guard have been murdered in acts of violence at clinics. There have
been 16 attempted murders since 1991. More than 2,400 acts of violence
have been reported at clinics since 1997. These included bombings,
arsons, death threats, kidnappings, and other acts of harassment. The
Senate approved this amendment by a vote of 80-17. Why has the majority
now excluded it? Why should clinic bombers be allowed to excuse their
penalties by declaring bankruptcy?
I urge all Members who care about women's safety to vote against this
bill for this reason and also because of the abusive procedure under
which it has been brought to the floor.
Mr. Speaker, I include for the Record a letter from John Podesta,
chief of staff to the President, in which he writes that the President
will veto the bill because, and I quote, it gets the balance wrong.
The White House,
Washington, DC, October 12, 2000.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives,
Washington, DC.
Dear Mr. Speaker. I understand that the House will take up
today the conference report on H.R. 2412, which apparently
incorporates the text of S. 3186, a recently filed version of
bankruptcy legislation. If this bankruptcy legislation is
sent to the President, he will veto it.
Over the last few months, this Administration has engaged
in a good faith effort to reach agreement on a number of
outstanding issues in the bankruptcy legislation. The
President firmly believes that Americans would benefit from
reform legislation that would stem abuse of the bankruptcy
system by, and encourage responsibility of, debtors and
creditors alike. With this goal in mind, we have pursued
negotiations with bill proponents on a few key issues,
notwithstanding the President's deep concern that the bill
fails to address some creditor abuses and disadvantages all
debtors to an extent unnecessary to stem abuses by a few.
An agreement was reached in those negotiations on an
essential issue--limiting homestead exemptions--with
compromises made on both sides. Unfortunately, H.R. 2412
fails to incorporate that agreement, instead reverting to a
provision that the Administration has repeatedly said was
fundamentally flawed. The central premise of this legislation
is that we must ask debtors, who truly have the capacity to
repay a portion of their debts, to do so. This would benefit
not only their creditors but also all other debtors through
lower credit costs. Unlimited homestead exemptions allow
debtors who own lavish homes to shield their mansions from
their creditors, while moderate-income debtors, especially
those who rent, must live frugally under a rigid repayment
plan for five to seven years. This loophole for the wealthy
is fundamentally unfair and must be closed. The inclusion of
a provision limiting to some degree a wealthy debtor's
capacity to shift assets before bankruptcy into a home in a
state with an unlimited homestead exemption does not
ameliorate the glaring omission of a real homestead cap.
Moreover, the President has made clear that bankruptcy
legislation must require accountability and responsibility
from those who unlawfully bar access to legal health
services. Yet the conference report fails to address this
concern. Far too often, we have seen doctors, health
professionals and their patients victimized by those who
espouse and practice violence. Congress and the States have
established remedies for those who suffer as a result of
these tactics. However, we are increasingly seeing the use of
the bankruptcy system as a strategic tool by those who seek
to promote clinic violence while shielding themselves from
personal liability and responsibility. It is critical that we
shut down this abusive use of our bankruptcy system and
prevent endless litigation that threatens the court-ordered
remedies due to victims of clinic violence. The U.S. Senate
was right in voting 80-17 to adopt an amendment that would
effectively close down any potential for this abuse of the
Bankruptcy Code. We fail to understand why the bill's
proponents refuse to include this provision and shut down the
use of bankruptcy to avoid responsibility for clinic
violence.
I repeat President Clinton's desire to see balanced
bankruptcy reform legislation enacted this year. The
President wants to sign legislation that addresses these
known abuses, without tilting the playing field against those
debtors who turn to bankruptcy genuinely in need of a fresh
start. He will veto H.R. 2412 because it gets the balance
wrong.
Sincerely,
John Podesta,
Chief of Staff to the President.
Mr. GEKAS. Mr. Speaker, I yield 3 minutes to the gentleman from Texas
Mr. Bentsen for the purpose of wrapping up a colloquy.
Mr. BENTSEN. I thank the gentleman for yielding me this time.
Mr. Speaker, to follow up where we were, a question that I think is
extremely important is the question of homeowners today in Texas and
other States which have a broader homestead exemption.
{time} 1315
Are these provisions prospective in nature in that if one has resided
in their home for 2 or more years today, or of the date of enactment,
if this bill is to become enacted into law, would they thus be exempted
from the Federal cap provided for in this bill? Would they be under
State law at that time and any subsequent purchase they make using the
equity from the home they own today be exempted from that cap?
Mr. GEKAS. In the hypotheticals that the gentleman pronounced, it
would come under State law. The only time that there is a look-back is
the initial 2 years of residency in a homestead-exemption State.
So 2 years, and thereafter the State laws would apply.
Mr. BENTSEN. Including today. So one who has resided today in their
home for at least 2 years is under State law and would not be under
this cap?
Mr. GEKAS. That is exactly correct.
Mr. BENTSEN. The other is on section 308, the 7-year look-back
provision which is designed, as I understand it, to prevent the
diversion of nonexempt assets into exempt property, is the burden of
proof on the debtor or the creditor?
Mr. GEKAS. It is on the creditor, and that really conforms to the
general state of the law in such cases. There has to be affirmative
evidence of fraud having been committed so that the creditor must come
forth.
Mr. BENTSEN. The question is raised on the roll-over period and the
prospective nature talks about interest acquired. The bill reads the
homestead as interest acquired by the debtor, and this is getting
somewhat technical or minute, I guess, during that 2-year period, would
interest be assumed to include such things as routine principal
payments or rise in property value?
Mr. GEKAS. Does the gentleman mean during the 2 years for a look-back
in the 2 years?
Mr. BENTSEN. Right, during the 2-year look-back.
Mr. GEKAS. I would have to say yes, that in the look-back it would
generally be determined what the value was of the claimed exemption and
the $100,000 would apply.
Mr. BENTSEN. To close, for general purposes after 2 years of
residency and so long as one is a resident of a State, regardless of
where they live or how many places they live, the first 2 years exempts
them from the Federal cap for the equity that they gain?
Mr. GEKAS. That is correct. The State laws apply.
Mr. BENTSEN. Any appreciation that applies in equity?
Mr. GEKAS. Yes, on anything that occurs after 2 years.
Mr. CONYERS. Mr. Speaker, I yield 3 minutes to the gentlewoman from
New York (Mrs. Lowey).
Mrs. LOWEY. Mr. Speaker, I thank the gentleman from Michigan (Mr.
Conyers) for yielding me this time, and I thank him for his leadership
on this issue.
Mr. Speaker, I rise in opposition reluctantly to this conference
report because I am shocked, frankly, and outraged about the way in
which this bill was brought to the floor of the House. After months of
negotiations on this bill, we have been given a day's notice to
consider a measure that does not represent a true compromise and is
still in the process of being worked out. I support efforts to ensure
that those
[[Page H9837]]
who are able to pay their debts are required to do so and to ensure
that creditors extend and manage credit in a responsible manner; and I
would like to see balanced, fair legislation that protects Americans
from predatory lending practices and protects the assets of creditors
from those who would abuse bankruptcy to avoid their debts; but this
bill is lacking in a number of areas, and I would like to focus on one
in particular.
The Senate version of the bankruptcy bill included a provision
requiring accountability from those who terrorize reproductive health
clinics, their employees and the women who need their services. This
provision, which received 80 votes, eight zero votes, in the Senate,
would prevent those who are convicted of a crime from hiding behind the
bankruptcy system in order to shield themselves from paying the
consequences of their actions.
Now, despite the fact that the President has said, again, that the
clinic violence language must be included in final bankruptcy
legislation for it to win his support, the provision was dropped. The
proponents of the bill claim it will stop people from abusing the
bankruptcy system; but by excluding the Schumer amendment individuals
and organizations found to violate FACE, the Freedom of Access to
Clinic Entrances law, will have carte blanche to abuse the system. This
is wrong. It does not make sense.
Mr. Speaker, let us agree on a simple principle: violence and
harassment have no place in our democratic system and using the
bankruptcy code to evade the law, any law, is wrong and should not be
tolerated.
FACE passed with a broad bipartisan consensus. It has dramatically
reduced violent incidents at health clinics, but we need the tools to
fully enforce it, and any bankruptcy bill that does not hold these
criminals accountable for their actions is a disgrace. So I urge my
colleagues to oppose this conference report.
Mr. GEKAS. Mr. Speaker, I reserve the balance of my time.
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I will have a motion to recommit the entire conference
report to the committee of conference to insist that according to the
motion to instruct conferees that we have at least one meeting of the
conference committee as required by House rule XXVIII, clause 6. I
intend to do that.
What we have found in the course of the study of this bankruptcy
anti-reform measure are three myths. One is that it is a pro-consumer
bill. It clearly is not.
Two, that it will permit a fresh start for people that are brought
into bankruptcy. It actually precludes a start as efficacious as the
one that already exists in the existing bankruptcy law. It is a move
backwards from fresh start.
The myth of a fair accountability has been destroyed completely in
the course of this discussion.
In other words, this is a one-sided measure that is guaranteed to
empower the creditors' lobby in a fine new way. Of course, the reality
of where this bill is going is known to many of the Members on the
Committee on the Judiciary, perhaps not a lot of other Members in the
body. That is to say that it is going to again be subject to some
delaying tactics in the Senate and that the President has promised to
veto on this measure.
So I think that that would be an appropriate conclusion to this
measure and give us a chance in the next Congress to begin again.
The bill fails to address the unlimited homestead cap, which is
currently enjoyed by Texas and Florida, even though there is a 2-year
wait before it kicks in. It imposes a nominal cap on homestead
exemptions, but it is so filled with loopholes as to be next to
meaningless.
Anyone who lives in a State for more than 2 years will be able to
thumb their noses at their creditors and remain in their multimillion
dollar mansions, and this goes contrary to a provision that we had that
would have cured this.
So this measure before us in the form of a conference report, shot
through with all kinds of process defects, is mean-spirited, will have
a negative impact on the most vulnerable elements of our society and so
is appropriately opposed by the United Automobile Workers, the AFL-CIO,
AFCSME, a raft of consumer organizations, women and family
organizations. I think it is very clear that we should now vote against
this measure, and I hope that many of the Members who supported the
bill in an earlier vote will reconsider and vote no when this
conference report comes for a vote.
Mr. Speaker, I reserve the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield such time as he may consume to the
gentleman from Texas (Mr. Sessions), which that is a reward that I am
granting him on the basis that he has been tremendously helpful to this
chairman on many separate issues in this bankruptcy reform bill,
primarily what we have discussed thoroughly, the homestead exemption.
We owe a great deal to the gentleman from Texas (Mr. Sessions).
Mr. SESSIONS. Mr. Speaker, I appreciate the chairman, the gentleman
from Pennsylvania (Mr. Gekas), for his thoughtfulness in allowing me an
opportunity to stand up to respond to my colleague, the gentleman from
Michigan (Mr. Conyers).
Mr. Speaker, I have been a student of this process. Perhaps I could
be accused of changing what was the Democrat option on this bankruptcy.
I appeared before the Committee on the Judiciary. The prior amount was
$100,000. It is very clear that the Democrat Party wanted to take
people's homes from them for as little as $100,000 of a home. The
Democrat Party, as exemplified by the chairman, wants to make it easier
for the middle class of this country to lose their homes if they are
engaged in a bankruptcy. I stood up before the Committee on the
Judiciary, and I said millionaires and billionaires are talked about
taking advantage of this circumstance and it is blamed on people that
have a home worth $100,000. I understand the gentleman from Michigan
(Mr. Conyers) disagrees with me. I understand the Democrat Party
disagrees with me. The fact of the matter is, is that that figure has
been moved to $250,000. The gentleman from Massachusetts (Mr. Delahunt)
agreed with me that day as a result of testimony back in the Committee
on the Judiciary. That is why we are at $250,000. $100,000 is a wrong
amount, and I believe that we should be forthright in understanding
that a figure of $100,000 would mean that the middle class of this
country, if faced with a bankruptcy, could then be thrown out of their
own home. That is the reason why we have made the changes. That is the
reason why it is what is in the best interest of people not only in
Texas but all across this country.
It preserves the States' rights, but the most important thing is that
we aim at the problem. The problem is not the middle class of this
country attempting to get out of paying their bills. It is about a
problem of someone hiding their money in an asset or a resource like a
home and trying to hide from their creditors. The problem, I believe,
has been amply addressed.
I disagree with the gentleman's assessment and would ask that we
support this because it is the right thing for America.
{time} 1330
Mr. CONYERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I think the three myths that have been the basis of this
bill's long life have now been exposed. There is no fresh start. The
accountability is very severe. This is a very definitely an anti-
consumer bill.
People of all incomes are subject to new coercive creditor motions,
including being able to challenge the discharge of even small cash
advances. In this bill, it defines current monthly income as the
previous 6 months' income, even if they have lost their job.
I say, thanks a lot. I just sort of thank the generous, thoughtful,
sympathetic people that wrote that into the bill. I will repeat it for
the subcommittee chairman's benefit. It defines current monthly income
as the previous 6 months' income, even if they lost that job and will
not have the income in the future, thereby skewing the whole means
test.
If the expenses exceed what the IRS says they should, they have to go
to court and litigate it. Thanks a lot. That was a very thoughtful and
sympathetic and moving provision, because they are telling an honest
bankrupt to
[[Page H9838]]
go in and litigate in another court any questions about expenses that
exceed the IRS limit.
It is just the idea, it is just an indication of the great concern
and touching sympathy that the other side has for the people of limited
means that go into bankruptcy court.
``Disclosure of how deep you are getting into debt, and how long it
would take you to pay the balance at the minimum payment.'' There is
just an 800 number. And then, 80 percent of all the banks would be
exempted from even that requirement.
Mr. Speaker, this is a mean-spirited bill. This is a measure that
does not meet the tests of anybody.
Finally, I would like to just reiterate the comment made by my good
friend, the member of the Committee on the Judiciary, the gentleman
from Virginia (Mr. Boucher), about moving child support from the
seventh to the first priority. That is meaningless. It does it, but the
order of priorities apply only in Chapter 7 among unsecured creditors
during the bankruptcy proceeding.
Ninety-six percent of all the consumer debtors do not have any assets
to distribute to prior unsecured creditors, so that has no meaning. It
is a fig leaf. It is phony. It does not improve child support, for
those who need the child support at all, because it moves the credit
card debtors to the same priority as those who need child support.
Sorry to have to tell everyone about this at the end of this
discussion, but I am afraid that those are the sad and sorry
consequences of a bill that has the earmarks of the creditor lobby,
that awesome creditor lobby that has had such an undue influence on the
measure before us.
Mr. Speaker, I have no further requests for time, and I yield back
the balance of my time.
Mr. GEKAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I do this for one small purpose, to reiterate for the
record, for the Members of the House, that every contention made by the
gentleman from Michigan (Mr. Conyers), every action taken by those who
oppose bankruptcy reform, every debate that they offered over the
course, every one of them has been thoroughly discussed, thoroughly
debated, and each one of them considered in the overwhelming vote
granted bankruptcy reform by the Members of the House.
Mr. BEREUTER. Mr. Speaker, this Member rises today to express his
support for the Conference Report of H.R. 2415, which is amended with
the Bankruptcy Reform Act. It is important to note that this Member is
an original cosponsor of H.R. 833, the Bankruptcy Reform Act, which
passed the House on May 5, 1999, by a vote of 313-108.
First, this Member would thank the distinguished gentleman from
Pennsylvania (Mr. Gekas), Chairman of the Judiciary Subcommittee on
Commercial and Administrative Law, for introducing the House bankruptcy
legislation (H.R. 833). This Member would also like to express his
appreciation to the distinguished gentleman from Illinois (Mr. Hyde),
the Chairman of the Judiciary Committee, for his efforts in getting
this measure to the House Floor for consideration.
This Member supports the Bankruptcy Reform Act for numerous reasons;
however, the most important reasons include the following:
First, and of preeminent importance to the nation's agriculture
sector, this Member supports the provision in H.R. 2415 which
permanently extends Chapter 12 of the Bankruptcy Code for family
farmers. Chapter 12 bankruptcy allows family farmers to reorganize
their debts as compared to liquidating their assets. Chapter 12
bankruptcy has been a viable option for family farmers nationwide. It
has allowed family farmers to reorganize their assets in a manner which
balances the interests of creditors and the future success of the
involved farmer.
If Chapter 12 bankruptcy provisions are not permanently extended for
family farmers, this will have a drastic impact on an agricultural
sector already reeling from low commodity prices. Not only will many
family farmers have to end their operations, but also land values will
likely plunge downward. Such a decrease in land values will affect both
the ability of family farmers to earn a living and the manner in which
banks, making agricultural loans, conduct their lending activities.
This Member has received many contacts from his constituents regarding
the extension of Chapter 12 bankruptcy because of the situation now
being faced by our nation's farm families--although the U.S. economy is
generally healthy, it is clear the agricultural sector is hurting.
Second, this Member supports the provision in H.R. 2415 which
provides for a means testing (needs-based) formula when determining
whether an individual should file for Chapter 7 or Chapter 13
bankruptcy. Chapter 7 bankruptcy allows a debtor to be discharged of
his or her personal liability for many unsecured debts. In addition,
there is no requirement that a Chapter 7 filer repay many of his or her
debts. However, Chapter 13 bankruptcy filers, on the other hand, commit
to repay some portion of his or her debts under a repayment plan.
Some Chapter 7 filers actually have the capacity to repay some of
what they owe, but they choose Chapter 7 bankruptcy and are able to
walk away from these debts. For example, the stories in which an
individual filed for Chapter 7 bankruptcy and then goes out takes a
nice vacation and/or buys a new car are too common. Moreover, the
status quo is costing the average American individual and family in
increased costs for consumer goods and credit because of the amount of
debt which is never repaid to creditors.
As a response to these concerns, the needs-based test of H.R. 2415
will help ensure that high income filers, who could repay some of what
they owe, are required to file Chapter 13 bankruptcy as compared to
Chapter 7. This needs-based system takes a debtor's income, expenses,
obligations and any special circumstances into account when determining
whether he or she has the capacity to repay a portion of their debts.
Third, this Member supports the additional monthly expenses that are
not considered as a factor under the needs-based test of H.R. 2415
which determines whether a person can file Chapter 7 or 13 bankruptcy.
These expenses include the following: reasonable expenses incurred to
maintain the safety of the debtor and debtor's family from domestic
violence, an additional food and clothing allowance if demonstrated to
be reasonable and necessary; and reasonable and necessary expenses for
the care and support of an elderly, chronically ill, or disabled member
of the debtor's household or immediate family.
In closing, for these aforementioned reasons and others, this Member
would encourage his colleagues to support the Conference report of H.R.
2415.
Ms. DeLAURO. Mr. Speaker, I regret I was absent from the floor of the
House on October 12. Had I been present, I would have voted for the
motion to instruct conferees to have an open conference on bankruptcy
reform.
I look forward to this conference. An issue as crucial as this
deserves a full and fair debate. Bankruptcy reform should expect
responsible efforts from both debtors and creditors that extend credit
far beyond what individuals are capable of paying back.
Mr. CONYERS. Mr. Speaker, the following is a letter which clarifies
what will happen to child support obligations if this bill passes. It
answers the myth that this bill will not harm children.
National Women's Law Center,
Washington, DC, June 7, 2000.
Hon. Robert Menendez,
Cannon House Office Building,
Washington, DC.
Dear Representative Menendez: The undersigned organizations
are long-time advocates for women and children, including
economically vulnerable single parents and their families. We
are writing in response to your May 24 letter to your
colleagues which criticizes the recent TIME magazine article
on bankruptcy and asserts that the pending bankruptcy bill
would help children obtain child support. We must
respectfully, but emphatically, disagree. The bill would give
many creditors, including credit card companies, finance
companies, auto lenders and others, greater claims to a
debtor's limited resources than they have under current law.
This would intensify the competition for scarce resources
between children owed child support and sophisticated
commercial creditors both during and after bankruptcy.
Your letter characterizes as a ``myth'' the statement in
the TIME Magazine article that: ``The proposed legislation
would treat a bankrupt man's credit card debt the same as his
obligation to pay child support.'' However, the effect of
several provisions of the bill, taken together, would indeed
have this result. As the National Association of Attorneys
General, commenting on a similar, earlier version of the
bankruptcy bill warned, it:
Would encourage credit card companies to treat all debts as
secured even though the resale value of the personal property
charged on such cards would rarely approach the amount of the
debt and even though the interest rates charged for such debt
are set in recognition of the fact that such debts are
essentially unsecured; and
As a consequence, could allow credit card debt to be
elevated to the same or a higher level than domestic support
claims and make it far more difficult to ensure that debtors
will be able to satisfy their obligations to their spouses
and children. (Emphasis added) (Resolution of the National
Association of Attorneys General, March, 1999)
Your letter states the following ``fact'':
Bankruptcy reform moves child support to the number one
priority position in bankruptcy proceedings. Currently it is
priority number seven, behind things like attorney
[[Page H9839]]
fees! Just as important, the reform bill ends the ``automatic
stay'' provision, which currently allows bankruptcy filers to
avoid paying child support while their cases are pending--and
which gives filers and their attorneys an incentive to drag
out the process. Finally, the bill prevents a debtor from
discharging their debt under Chapter 13 until all child
support payments are made.
Unfortunately, the child support provisions that you
mention in your letter would not solve the serious problems
the rest of the bill would create for children in need of
support.
Moving child support from seventh to first priority sounds
good, but is virtually meaningless. This order of priorities
only applies in Chapter 7, among unsecured creditors, during
the bankruptcy proceeding. Even today, fewer than five
percent of consumer debtors in Chapter 7 have any assets to
distribute to priority unsecured creditors after secured
debtors receive the value of their collateral. Under the
bill, there would be even less for priority unsecured
creditors in Chapter 7 cases. Only the poorest debtors will
have access to Chapter 7 under the means test, and the claims
of secured creditors, who are paid before even ``priority''
unsecured creditors, will be increased. Thus, in effect,
children owed support will have ``first priority'' to
nothing. And, once the Chapter 7 proceeding is over, these
priorities have no effect. Under current law, child support
and alimony obligations are among the few debts that cannot
be discharged in bankruptcy. However, under the bill, many
more debts, including credit card debts, will survive
bankruptcy and compete for the debtor's resources.
In Chapter 13, current law already requires child support
owed to families to be paid in full. (The major change in
this section of the bill would be an increase in the rights
of States to be paid in Chapter 13 for child support that was
assigned to them as reimbursement for public assistance.)
However, other provisions of the bill would make it less
likely that children would actually receive all the child
support they are due in Chapter 13. For example, the bill
would require debtors in Chapter 13 to pay many other
creditors in full--including credit card companies claiming
security interests in property of little or no value. The
bill may say that debtors must pay all these debts in full;
but if there is not enough money to go around, it simply will
make it less likely that children will get the support they
need during the Chapter 13 proceeding, much less afterward.
Under current law, the ``automatic stay'' does not allow
bankruptcy filers to avoid paying child support while their
cases are pending; relief from automatic stay for child
support enforcement is routinely granted, and some
jurisdictions do not even require the filing of a motion. The
elimination of the automatic stay would simplify the process
of collecting child support during bankruptcy in some
cases. However, the potential benefit of this provision is
outweighed by the hundreds of pages of other provisions
that increase the rights of commercial creditors, during
and after bankruptcy, at the expense of children.
Our organizations are committed to making sure that
children get the support they need and deserve. We have
opposed this Bankruptcy Reform Act because it will reduce the
ability of parents to pay their most important debt--their
debt to their children.
Sincerely,
ACES (Association for Children for Enforcement of Support)
American Association of University Women
Business & Professional Women/USA (BPW/USA)
International Women's Insolvency & Restructuring
Confederation (IWIRC)
National Association of Commissions for Women
National Center for Youth Law
National Organization for Women
National Partnership for Women & Families
National Women's Law Center
NOW Legal Defense and Education Fund
The Woman Activist Fund, Inc.
Women Employed
Women's Institute for Freedom of the Press
Mr. HOBSON. Mr. Speaker, I support the long-awaited bankruptcy reform
legislation included in H.R. 2415. As a small businessman, I know the
importance of improving the bankruptcy system for Americans.
While the bankruptcy process should continue to be a life preserver
for those who have debt that is insurmountable, this bill makes the
needed for reforms to prevent abuse of the system. Not reforming the
system amounts to a hidden tax on American consumers, who currently
subsidize individuals who walk away from mountains of debt, yet can
afford to pay back a portion of their debts.
The number of bankruptcies has trended upwards, despite the economy's
overall good health. In 1997, the figure climbed to 1.35 million, more
than triple the number recorded in the early 1980s. The rise in
bankruptcy filings is often attributed to a rise in household debt
burdens. Since 1980, household debt has risen from about 61 percent to
85 percent of total disposable personal income.
This bill provides for the increased use of Chapter 13 bankruptcy,
which allows for the repayment of some debts. This is an appropriate
step to ensure that our bankruptcy laws ensure that individuals who can
repay a portion of their debts, pay their fair share. I commend my
colleagues for their hard work and years of effort to reduce the
``abuse'' of the bankruptcy system while continuing to protect low-
income consumers.
Ms. PRYCE of Ohio. Mr. Speaker, I am in strong support of this
conference report. We have before us a fair and even-handed conference
report that will allow us to consider this important legislation to
reform the nation's bankruptcy system.
Procedure in the House is not always all that we might want it to be,
but when we are presented with legislation that is so needed and so
desired by the American people, we must take hold of it and champion it
to see that it becomes law.
This bankruptcy reform legislation will remedy weaknesses in existing
law that allow higher income taxpayers to escape their responsibilities
even when they are able to repay a portion of what they owe. This bill
will take steps to eliminate the ``bankruptcy of convenience.''
At the same time, this legislation will protect those who truly need
a second chance and maintain their ability to obtain a fresh start.
Further, this legislation contains important protections for children
and spouses who are owed child support or alimony.
By equipping state child support collection agencies with the
necessary tools and codifying the importance of child support and
alimony obligations, this legislation will increase our commitment to
children and families, and will hold parents, husbands, and wives to
their responsibilities.
Over 70 percent of Americans have indicated their desire for
bankruptcy reform. We can do no less than what the American people have
overwhelmingly asked of us.
I urge your support of this important legislation, and yield back the
balance of my time.
Mr. CASTLE. Mr. Speaker, I rise today in strong support of the
bankruptcy reform conference report.
This legislation has been a long time coming. Since 1980,
bankruptcies have risen 400 percent, imposing a heavy burden on
American families. Some estimate that bankruptcies cost each household
$400 a year in the form of higher interest rates on their credit cards,
car loans, school loans, and mortgages.
The means testing approach championed by my colleague, George Gekas,
will make bankruptcy abuse much harder in the future. Wealthy
individuals who can hire savvy lawyers will no longer be able to game
the bankruptcy system at the expense of the American consumer.
What this bill says is that if you file bankruptcy, you will not be
able to walk away from your debt if after all your reasonable monthly
expenses are taken into account, you still have $166 in your pocket. If
you are one of these people, then you will have to enter into an
agreement to repay at least part of your debt in a 5 year plan, unless
you can prove special circumstances to the judge. That is taking
responsibility for your debt instead of imposing the cost on other
consumers.
I also want to thank Chairman Gekas for his support in helping my
home State of Delaware receive an additional bankruptcy judgeship. As I
testified before a joint House-Senate Judiciary Committee hearing
earlier this year, Delaware's bankruptcy judges have the highest
average bankruptcy caseloads in the Nation according to the U.S.
judicial conference. The need for relief has reached critical levels
and Chairman Gekas has been quick to recognize this.
Recognition also must go to Speaker Hastert and Majority Leader
Armey, who fulfilled their commitment to finding an appropriate vehicle
that would allow the will of the House and the will of the Senate to
proceed on this legislation. They did the honorable thing by taking our
unrelated riders from both sides of the aisle and presenting this body
with a clean bill for us to vote on. I thank them for their leadership.
Finally, I want to thank Chairman Gekas for his support in removing a
provision in the bill that would have eliminated a business' place of
incorporation as an acceptable venue for filing a bankruptcy.
Delaware's bankruptcy judges and the Delaware bar are among the finest
in the Nation in resolving bankruptcies quickly, fairly and
efficiently. We need to keep the courtroom doors open in Delaware.
Therefore, I urge my colleagues to support this clean, balanced
bankruptcy reform conference report.
Mr. GEKAS. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the conference report.
The previous question was ordered.
Motion to Recommit Offered by Mr. Conyers
Mr. CONYERS. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the conference
report?
Mr. CONYERS. Yes, sir, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
[[Page H9840]]
The Clerk read as follows:
Mr. Conyers moves to recommit the conference report on the
bill (H.R. 2415) to the committee of conference with
instructions to the managers on the part of the House to
insist on conducting at least one meeting of conferees as
required by House Rule XXII, cl. 12, and in accordance with
the motion to instruct conferees approved by the House of
Representatives yesterday by a vote of 398 to 1, before
making any report on the bill.
Mr. GEKAS (during the reading). Mr. Speaker, I ask unanimous consent
that the motion be considered as read and printed in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
There was no objection.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The motion to recommit was rejected.
The SPEAKER pro tempore. The question is on the conference report.
The conference report was agreed to.
A motion to reconsider was laid on the table.
____________________