[Congressional Record Volume 151, Number 28 (Thursday, March 10, 2005)]
[Senate]
[Pages S2462-S2474]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005--
                               Continued


                            amendment no. 90

  The PRESIDING OFFICER. There will now be 2 minutes of debate, equally 
divided, on the Feingold amendment No. 90.
  Mr. FRIST. Mr. President, for the information of my colleagues, in 
consultation with the Democratic leader, we would like to have all of 
the remaining votes be 10-minute votes. We are going to be enforcing it 
strictly, so we have a reason to keep moving along. We ask that 
everybody, once we start voting shortly, stay in the Chamber and 
continue to vote. We will have 10-minute votes for the remainder of the 
evening.
  The PRESIDING OFFICER. The Senator from Wisconsin is recognized.
  Mr. FEINGOLD. Mr. President, if we have a brief quorum call, I 
believe we may be able to eliminate the need for some of the votes.
  Mr. FRIST. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FEINGOLD. Mr. President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator is recognized.
  Mr. FEINGOLD. Mr. President, I appreciate the fact that we have had 
some opportunity to make a few modest modifications at the end of this 
process. Obviously, I hoped for more, but I do thank the Senator from 
Utah, Mr. Hatch, the Senator from Alabama, Mr. Sessions, the Senator 
from Iowa, Mr. Grassley, and the Senator from Pennsylvania, Senator 
Specter, who are working on a number of changes and accepting a couple 
of amendments so we can move this process through. The result will be 
that the next five votes on my amendments will not be necessary, if 
this agreement is made. So I hope that causes the unanimous consent 
agreement to go through.

[[Page S2463]]

              Amendments Nos. 90, 93, 95, and 96 Withdrawn

                     Amendment No. 92, As Modified

                     Amendment No. 87, As Modified

  I ask unanimous consent that my amendments No. 90, No. 93, No. 95, 
and No. 96 be withdrawn; that my amendment No. 92, as modified and as 
at the desk, be adopted; and that a modification of my amendment No. 87 
which was agreed to last night be accepted as well.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The amendment (No. 92) as modified, was agreed to, as follows:

       Credit Counseling Amendment:
       (1) On page 34, after line 25, insert--
       ``(4) The requirements of paragraph (1) shall not apply 
     with respect to a debtor whom the court determines, after 
     notice and hearing, is unable to complete those requirements 
     because of incapacity, disability, or active military duty in 
     a military combat zone. For the purposes of this paragraph, 
     incapacity means that the debtor is impaired by reason of 
     mental illness or mental deficiency so that he is incapable 
     of realizing and making rational decisions with respect to 
     his financial responsibilities; and ``disability'' means that 
     the debtor is so physically impaired as to be unable, after 
     reasonable effort, to participate in an in person, telephone, 
     or Internet briefing required under paragraph (1)'';
       (2) On page 42, line 15, strike ``and''; and
       (3) On page 43, between lines 3 and 4, insert the 
     following:
       ``(E) if a fee is charged for the instructional course, 
     charge a reasonable fee, and provide services without regard 
     to ability to pay the fee.''
        (4) On page 35, line 12, insert ``who is a person 
     described in section 109(h)(4) or'' after the word 
     ``debtor.''
       (5) On page 36, line 9, insert ``who is a person described 
     in section 109(h)(4) or'' after the word ``debtor.''

  The amendment (No. 87) as modified, was agreed to, as follows:
       On page 445, strike lines 10 through 13, and insert the 
     following:

     SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.

       Section 104(b) of title 11, United States Code, as amended 
     by this Act, is further amended--
       (1) by inserting ``101(19A),'' after ``101(18),'' each 
     place it appears;
       (2) by inserting ``522(f)(3) and (f)(4),'' after 
     ``522(d),'' each place it appears;
       (3) by inserting ``541(b), 547(c)(9),'' after 
     ``523(a)(2)(C),'' each place it appears;
       (4) in pagagraph (1), by striking ``and 1325(b)(3)'' and 
     inserting ``1322(d), 1325(b), and 1326(b)(3) of this title 
     and section 1409(b) of title 28''; and
       (5) in paragraph (2), by striking ``and 1325(b)(3) of this 
     title'' and inserting ``1322(d), 1325(b), and 1326(b)(3) of 
     this title and section 1409(b) of title 28''.
  Mr. FEINGOLD. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BIDEN. Mr. President, I ask unanimous consent that the order for 
the quorum call be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BIDEN. Mr. President, I checked with the leader on our side, and 
I hope it is all right with the Republican leader. I have no amendment 
relating to the bill. I would like to proceed as if in morning business 
until anyone has an opportunity to move on the bill, and I will cease 
and desist at that moment.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  (The remarks of Mr. Biden are printed in today's Record under 
``Morning Business.'')
  (The remarks of Mr. Biden pertaining to the submission of S. Con. 
Res. 17 are located in today's Record under ``Submission of Concurrent 
and Senate Resolutions.'')
  The PRESIDING OFFICER (Mr. Thune). The Senator from Tennessee.
  Mr. FRIST. Mr. President, for the information of our colleagues, we 
are about to have the last vote of the evening which is final passage 
of bankruptcy legislation. I thank all Members for their hard work 
today in the Chamber, as well as the Budget Committee and their efforts 
on the budget resolution. They made huge progress today. We will start 
on the budget Monday morning. We expect amendments during Monday's 
session. Therefore, we do expect the next vote to be Monday evening at 
5:30.
  Mr. BIDEN. Mr. President, several years ago, when we were considering 
this legislation, I spoke here on the Senate floor about some important 
provisions that I think have been overlooked in our discussions. In my 
remarks today I will repeat what I said back then, in March of 2001.
  We have heard a lot in recent days about how this bill lacks 
compassion--specifically, that it will hurt women and children who 
depend on alimony and child support.
  Critics claim that by making sure that more money is paid back to 
other creditors, this bill will make it harder for women and children 
to get what is coming to them.
  I am particularly proud of my record of protecting women and children 
during my career in the Senate. That record includes the Violence 
Against Women Act to protect women threatened by domestic violence.
  I am here again today to show that, contrary to a lot of the rhetoric 
that has been tossed around, this bill actually improves the situation 
of women and children who depend on child support. It specifically 
targets the problems they face under the current bankruptcy system into 
a virtual extension of the current national family support collection 
system.
  There may be other aspects of this legislation that we can debate: 
the balance between creditors and debtors, between different kinds of 
creditors, or between different kinds of debtors. But on the question 
of child support and alimony, there should be no dispute.
  Because this bill strengthens the collection of alimony. Period.
  Over the many years we have discussed this bill, it has earned the 
support of the National Child Support Enforcement Association, which 
represents over 60.000 child support professionals.
  It has earned the support of the National Association of Attorneys 
General, which has sent a letter of support personally signed by 
twenty-seven State attorneys general.
  Over the years, the child support protections in this legislation 
were endorsed by the Attorney General of the State of Vermont.
  The Attorney General of Minnesota endorsed them, too, along with the 
Attorneys General from Illinois, from Massachusetts, and from 
California, Montana, North Carolina, Michigan, Maryland, Iowa, Hawaii, 
and Washington.
  The child support and alimony protections in S. 256 are so far 
superior to current law that the National District Attorneys 
Association, representing more than 7,000 local prosecutors, have 
endorsed them.
  In addition to those national associations, those protections have 
earned the support of: the California Family Support Council, whose 
2,500 enforcement professionals are responsible for carrying out the 
Federal child support program in California;
  The Western Interstate Child Support Enforcement Council, composed of 
child support professionals from the private and public sectors west of 
the Mississippi River;
  The California District Attorneys Association, consisting of elected 
district attorneys from each of every one of California's 58 counties 
and over 2,500 deputy district attorneys; and finally,
  The Corporation Counsel of the City of New York. Yes, even New York 
City loves this bill.
  Why has this legislation earned such overwhelming support from the 
professionals out in the field and in the trenches who, ever single 
day, seek and enforce child support orders?
  One reason is the hard work of Phillip Strauss, who, speaking for the 
National Child Support and Enforcement Association, has represented the 
concerns of child support professionals in testimony before our 
committee over the years we have debated bankruptcy reform. From his 
personal experience with the problems women and children face under 
current bankruptcy law, he brought together his fellow enforcement 
officials to draft the provisions I am here to discuss.
  As Mr. Strauss and his colleagues have told us, right now the 
treatment of child support and alimony in bankruptcy is a mess, and 
this bill fixes it.
  When a deadbeat dad files for bankruptcy under the current system, 
what happens to mom and the kids?
  Well, if the dad is actually making the payments, those payments 
stop. That's right, the payments stop cold. Mom then has to find a 
lawyer or a government advocate, take time off of work, and go to 
bankruptcy court to try to get those payments started

[[Page S2464]]

again. And when she goes to court, her claim may not be heard that day, 
so she'll have to return again and again . . . or if she's late, she'll 
miss her day in court.
  What else happens under current law? When dad's bill collectors show 
up in bankruptcy court, mom has to fight with them over dad's assets. 
There's a good chance that mom not only needs her payments 
started again, but she is due past support--support payments dad never 
made last month, last year. She needs him to pay her back for all the 
payments he failed to make.

  And in asserting her claim, she is not the ``Number 1'' collector in 
line. Under current law, she is Number 7. That's right--Not So Lucky 
Number 7. The current Code permits other bill collectors to beat her in 
the race to get at dad's assets. The current law handicaps her at the 
starting line. She is forced to wage a fight to make sure she and the 
kids receive their due.
  And what happens after she fights it out with the bill collectors? 
Well, under the current system, she might be lucky and get every dollar 
due. But, she may only get a portion of what is due or she may not get 
one red cent.
  That's not right. If a bankrupt household is a sinking ship, then 
women and children should be protected first. This is what the current 
law fails to do, but it is what this bill does: it puts women and 
children first.
  S. 256 dictates that even if he files for bankruptcy, dad must 
continue making those support payments that mom needs to feed and 
clothe her children. Under this bill, women and children will continue 
to receive their support payments during bankruptcy, while everybody 
else, from the credit card bank to the department store, waits for the 
bankruptcy judge's final order and plan.
  That alone would be a major improvement over current law. But that is 
just the beginning of the advances of this bill over current law.
  This bill makes mom ``Number 1'' and places her ahead of all the bill 
collectors on her past-due claim. No other bill collector--not the 
credit card company, not the car loan company, not the student 
lenders--can jump ahead of a mother and her children. Every other bill 
collector must stand in line behind the family.
  What is so great about the continuation of payments and making mom 
``Number 1''? As a practical matter, she doesn't have to find room in 
her hectic schedule to make appearances in a federal bankruptcy court--
an intimidating place for most people. She can go to work without 
interrupting her day. She can complete her errands and pick up her kids 
after school. Under the bill, she will be automatically first in line 
on her claims and she will continue to receive her payments during 
bankruptcy.
  When we pass this bill, she does not have to work her way through the 
bankruptcy system. The system will work for her, not against her.
  That's the beauty of this bill: It is self-executing. The provisions 
to be added to the Bankruptcy Code will function automatically. This is 
vital. Unrepresented women will not be harmed by the process, as they 
are under the current Code.
  Today, under current law, these women have to get an attorney and go 
to court to assert their claims.
  In addition, under this bill, family support will never be 
dischargeable. It must be paid in full. All of it.
  This is important because, under the curren, domestic debts may not 
be paid in full or at all . . . believe it or not. Right now, a 
deadbeat father can file for bankruptcy and come out without paying one 
penny of support. While his slate is wiped clean, a mother and her 
children go without. When this bill passes and the President signs it, 
the law will hold the deadbeat dad's feet to the fire: he will pay, he 
will pay in full.
  There are other important ways that this bill will remove real 
obstacles to justice that exist in current bankruptcy law.
  This bill not only lifts the stay on support payments during 
bankruptcy, but it adds that, when a wife-beater files for bankruptcy, 
a domestic violence restraining order against him must remain in 
effect. It cannot be stayed. And the woman who needs a restraining 
order against him can still get one.
  I have here an order from a family court in my home state of 
Delaware. A woman went to the court and requested a restraining order 
against her abuser, who had already filed for bankruptcy. Incredibly, 
the judge found, under the current Bankruptcy Code, that a proceeding 
for a domestic abuse restraining order is automatically stayed ``by 
operation of law.''
  That's right. We have judges out there right now who look at today's 
Bankruptcy Code, and they find that filing for bankruptcy stops all 
proceedings. They find that we have failed to write an exception for 
proceedings like those for domestic violence. They find their hands are 
tied.
  Then they send a woman in fear for her life off to a federal 
bankruptcy court to lift the Code's automatic stay by filing a special 
motion. Unbelievable.
  If you think this is fair, if you prefer this state of affairs, then 
I guess you will vote against this bill. Personally, I am proud of this 
bill, and I wish that those who are fabricating wild claims about it 
would stop. If they have their way, the women and children in this 
country who depend on alimony and child support will be robbed of real 
protections. That would be a crime.

  Under current law, more than just child support and--alimony are 
stopped in their tracks by the filing of bankruptcy. That automatic 
stay, as it is called, stops a lot of other proceedings that could 
provide real help to women and children.
  This legislation changes that. It lifts the stay on a number of 
methods that family support officials use to go after deadbeat dads, 
who today can hide behind the bankruptcy system. Unlike current law, 
this bill would permit reporting the deadbeat's overdue support 
payments to a consumer reporting agency. Under current law, it would 
permit restrictions on a deadbeat dad's driving, professional, or 
recreational licenses. It would permit family support collection 
officials to intercept his tax refunds.
  The legislation also clarifies the definition of support payments, 
ending conflicting bankruptcy decisions by different courts that today 
question what support payments actually are.
  Most significantly, though, this bill prevents a father from 
completing bankruptcy unless he has paid all his support obligations 
due after he filed for bankruptcy.
  Let's think about this. Under current law, a father filed for 
bankruptcy and can complete bankruptcy under a plan that relieves him 
of his past-due domestic obligations. Under the bill, however, this 
scenario will become obsolete. A father will never complete bankruptcy 
until he is paid up. He must pay.
  Moreover, the bill protects mom during a bankruptcy plan. Once a 
father is under a bankruptcy plan and he fails to make his support 
payments, a mother can march to the bankruptcy court and ask the court 
to dismiss his plan. The court will call dad back in to explain 
himself. He doesn't want to make payments during his bankruptcy plan? 
Fine, he can be thrown out of bankruptcy, and find himself back at 
square one.
  Some claim that this bill lacks compassion. Well, right now, women 
who want child support orders or who already have orders but fail to 
enforce them slip through the cracks. If we pass this bill, the 
Bankruptcy Code will empower women with the information they need.
  Section 219 of the bill requires the U.S. Bankruptcy Trustee to 
notify a woman of her rights to use the services of her state child 
support enforcement agency and gives her the agency's address and phone 
number. Better yet, the Trustee likewise notifies the agency 
independently of the woman's claim. This is striking.
  Women who need help will get the information they need, because the 
bankruptcy system is charged with reaching out to family support 
professionals--acting under federal family support collection law--and 
putting them at the service of the women and children who need them.
  This last item needs stressing, Mr. President, because so much has 
been made about what will happen after someone who owes family support 
payments comes out of bankruptcy. The claim is that other ``more 
powerful'' creditors will push women and children aside and strip the 
dad bare before he can make payments to his family.
  That makes for a moving story, Mr. President, but it is fiction, not 
fact.

[[Page S2465]]

  This legislation requires the bankruptcy Trustee to notify both the 
woman and the family support collection professionals about the dad's 
release from bankruptcy, his last known address, the name and address 
of his employer, and a list naming all the bill collectors who will 
still be collecting from dad.
  This section helps mothers both during and after bankruptcy.
  The new notification process will help a mother and the support 
enforcement agencies keep track of a father, where he is working, and 
what other bills he is required to pay.
  Because of this monitoring, which would be put in place by the 
bankruptcy system under this bill, mothers and collection agencies can 
more easily go to court and get that portion of a father's wages that 
now really belongs to them. Dad may complete his bankruptcy plan, but 
his obligations do not stop.
  These new protections guarantee that family support claims of women 
and children,will always receive ``Number 1'' priority--during and 
after bankruptcy. The process for obtaining a portion of a father's 
wages--through a wage attachment--gives priority to domestic support 
orders over orders held by bill collectors, including credit card 
companies.
  That money is taken out of his paycheck before he even sees it. He 
can't be forced by ``powerful creditors'' to choose between them and 
his alimony or child support. Those payments are automatic. Again, the 
picture of greedy bill collectors rushing to the front of the line 
makes for dramatic storytelling. But it is only that--storytelling.
  The legislation builds on the existing Federal Child Support 
Enforcement Program, that exists to help women of all walks of life 
receive their support payments. By tying Federal dollars to federal 
standards, current law requires state and local support enforcement 
agencies to enforce national standards.
  A couple of the requirements under Federal family support law are: 
first, that immediate wage withholding should be included in all child 
support orders; and second, that the withholding of child support 
obligations be given top priority over every other legal process under 
State law against the same wages.
  Therefore, after bankruptcy, when a mother and the bill collectors 
walk into court to make claims against the father's wages, the mother 
is again ``Number 1'' in priority and those bill collectors fall in 
line behind her.
  In response to some of my colleagues concerns--concerns that I would 
certainly share if I listened to some of the claims out there--I looked 
for ways to make the system even tighter.
  I found out that the only way to do that was to require a wage 
attachment, whether the woman wanted one or not. Maybe she wants 
nothing to do with an abusive husband. Maybe she is afraid for him to 
know her address. We have to leave that decision up to her, but she 
will get all the help we can give to help her know her rights.
  As I said, I looked for ways to make this bill stronger in support of 
women and children who depend on support payments, and I simply 
couldn't find any.
  Even if a father does not earn wages, then support enforcement 
agencies have many tools to use to ensure that the mother and her 
children are paid. A support enforcement agency can intercept taxes and 
unemployment benefits, revoke driver's, professional and recreational 
licenses (like those used for fishing, hunting, and boating), deny 
passports, and institute criminal and contempt actions.
  That is why, even compared to any imaginary ``powerful creditor'' you 
might be able to conjure up, mothers and children have real, tangible 
protections and resources at their disposal to bring a first priority 
claim against a father's wages after bankruptcy.
  Finally, let me conclude where I began: with the enthusiasm for this 
legislation that we have heard from the folks in the trenches.
  Here is what the National Association of Attorneys General has 
asserted: the bill ``improve[s] the treatment of domestic support 
obligations'' and when the current Code's ``obstacles are removed, as 
this legislation seeks to accomplish, we believe that our State and 
local support offices will continue to be able to collect these monies 
effectively, regardless of whether other lower-priority creditors 
remain.''
  As I mentioned before, the Association's letter was personally signed 
by the State Attorneys General from twenty-seven States, including 
the--State Attorneys General from Vermont, Minnesota, Illinois, 
Massachusetts, California, North Carolina, Michigan, Montana, Maryland, 
Iowa, Hawaii, and Washington.
  The National District Attorneys Association, with more than 7,000 
local prosecutors in their membership, does ``not believe that after 
bankruptcy it would be more difficult to collect support simply because 
credit card debts are not discharged. To the contrary, support 
collectors have vastly more effective, and meaningful, collection 
remedies before a bankruptcy case is filed, or after the case is 
completed, than any other financial institution . . . It is under the 
current law, during bankruptcy, that support collectors have the 
greatest difficulty because they are in competition with all other 
creditors for bankruptcy estate assets and because their most effective 
collections remedies have been stayed . . . This legislation provides a 
major improvement to the problems facing child support creditors in 
bankruptcy proceedings.''
  I support the reform that the enforcement professionals call for, 
from New York City to California, from Minnesota to Vermont, from 
Massachusetts to Michigan. I want to save women and children from 
having to fight their way through a broken bankruptcy system. I want to 
make the system work for them, not against them.
  A vote against this bill is a vote in favor of the current broken 
system. A vote for this bill is a vote to protect family support 
payments in bankruptcy.
  That is why I support this bill.
  Mr. DORGAN. Mr. President, I know that the Senate is about to pass a 
bankruptcy reform bill, and that this bill will be signed into law. And 
it is with some regret that I say that I will not vote for it.
  I do believe that there have been cases of abuse of our bankruptcy 
system, and that some reform is needed. Nobody likes to hear of wealthy 
people who walk away from their debts because they can game the system. 
That's not fair to financial institutions, and perhaps more 
importantly, it's not fair to Americans who pay their debts in full.
  I voted for a bankruptcy reform bill twice in the past, most recently 
in 2001. That bill passed in the Senate with significant bipartisan 
consensus, and I had hoped that it would be signed into law. But the 
House of Representatives refused to compromise with the Senate, and 
ultimately the bill failed.
  This time around, I would have liked to have reached another 
bipartisan consensus. However, the bipartisan spirit seems to have 
broken down.
  My colleagues on the Democratic side offered a number of amendments 
that were reasonable, common-sense tweaks to the bill, to reflect 
changes in our country since the last time the bankruptcy bill was 
considered.
  There have been hundreds of thousands of National Guard and reserve 
troops called up because of the conflicts in Afghanistan and Iraq. They 
have left behind their jobs, their businesses, and their families. When 
they find themselves in bankruptcy, why not allow them some 
consideration? My colleague from Illinois, Senator Durbin, offered an 
amendment that would have done precisely that, but it was voted down on 
a largely partisan vote.
  Or how about victims of identity theft? In the last few years, 
identity theft has become a plague on law-abiding citizens. My 
colleague from Florida, Senator Nelson, offered a most reasonable 
amendment, which simply said that if someone is forced into bankruptcy 
because of identity theft, he should receive some consideration. That 
amendment was also voted down along partisan lines.
  Or how about Americans who suffered major medical problems and were 
driven into bankruptcy? A very recent Harvard Medical School study 
found that about half of all people that have been driven to bankruptcy 
have suffered a major medical problem. Many of these people have lost 
their homes. So Senator Kennedy offered an amendment that would have 
allowed such

[[Page S2466]]

Americans to keep their home--not a mansion, mind you, but a modest 
home, while they try to get back on their feet. But this amendment also 
was shot down.
  We have not heard good arguments for why these amendments should have 
failed. The majority party have really only had one argument: that they 
want to avoid displeasing the House of Representatives, and don't dare 
modify the Senate bill even with modest, reasonable amendments.
  Well, I am just not going to support a bill that turns its back on 
service members and veterans, or on hardworking people that just happen 
to have had a medical crisis, and have been driven into bankruptcy not 
because they are gaming the system, but because of circumstances beyond 
their control.
  One other point. This bankruptcy bill was supposed to be about 
preventing cheating in the bankruptcy system. Well, I offered an 
amendment, along with Senator Durbin, that would have dealt with a 
different kind of cheating: the fraud, waste, and abuse that has been 
rampant in many of the reconstruction contracts in Iraq. My amendment 
said, let's appoint a bipartisan special committee of the Senate to 
investigate these abuses. But that amendment did not even get a vote.
  In 1941, a Senator from Missouri by the name of Harry S Truman heard 
allegations of wasteful and fraudulent spending in the preparations for 
World War II. He thought this waste and fraud could undermine the war 
effort, so he drove around the country, visiting military bases. And 
when he came back, he called for the creation of a special committee. 
That committee, which came to be known as the Truman Committee, saved 
the U.S. government an estimated $15 billion--and that's in 1940s 
dollars.
  That was a case of a Democrat calling for investigations of contracts 
handled by a Democratic Administration. But for Harry Truman, this 
wasn't about politics--it was about looking out for the U.S. taxpayer, 
and not squandering resources that were meant for the war effort.
  We need a Truman Committee again, because the majority party is not 
calling for oversight hearings on these contracting abuses in Iraq. My 
amendment would have created a bipartisan special committee to do just 
that. But it did not even get a vote, because the majority party rested 
on a technicality in Senate rules to deny a vote.
  Under these circumstances, I am, regretfully, not going to vote for 
the bankruptcy bill.
  Ms. MIKULSKI. Mr. President, today I rise to oppose S. 256, the 
Bankruptcy Reform Bill. This bill is unfair to the little guy--to 
families who are struggling to overcome medical bills, unemployment, or 
divorce and find themselves forced to declare bankruptcy. Under the 
guise of reform it makes it tougher on families who have done the right 
thing. That's not what we should be doing in the United States Senate. 
Our job is to make sure we are protecting middle-class Americans and 
small businesses who are the lifeblood of our economy, not hurting 
them. While some of the reforms of the bill are good steps it goes too 
far to favor credit card companies and corporations over working 
families.
  This bill creates such strict standards that many of our nation's 
most vulnerable families are treated unfairly when they are forced to 
file bankruptcy because of the loss of a job, the high cost of health 
care or a divorce. This bill does nothing to address the problems these 
individuals are having, the problems that have driven them to 
bankruptcy and it provides virtually no discretion for courts dealing 
with these bankruptcy claims.
  I have supported bankruptcy reform legislation in the past--but it 
was not this bill and it was not this process. This bill was rushed 
through Committee with the promise that amendments would be considered 
on the floor, that there would be debate and an opportunity to improve 
the bill. Yet, none of the amendments were truly considered, most were 
opposed by Republicans marching in lock step to defeat every amendment 
to the existing bill. In short, there was no real opportunity to 
improve the bill. What came to the floor leaves the floor virtually 
unchanged and truly unfair to many of our citizens who are forced to 
file bankruptcy because of unforeseen circumstances like job loss, 
divorce or medical costs.
  Half of all families filing for bankruptcy have faced illness or high 
medical costs. Medical costs, especially for seniors, are one of the 
fastest growing causes of bankruptcy. These are not folks who use their 
credit cards to buy fancy suits, designer wares or other luxury goods. 
They are paying for the basic necessities of their lives with their 
credit cards. They are putting their food, clothing and medical bills 
on the credit cards. Nearly 9 out of 10 people file bankruptcy because 
of health care problems, job loss or divorce. These individuals don't 
want to file bankruptcy--in fact, they have tried to avoid bankruptcy. 
That's why they pay those medical bills with credit cards when they 
simply can't afford any other way. Or they skip going to the doctor all 
together because they know have no means to pay. And what happens--they 
get sicker, incur greater costs for catastrophic care and that sends 
them spiraling further into debt and forcing many into bankruptcy.
  We ought to be doing something to help those individuals--not 
creating a law that will make matters worse. The Senate should be on 
the side of those Americans who are facing hard times and hard 
decisions. We should be addressing the lack of health care and working 
to ensure that we are creating good, high paying jobs.
  I am opposing this version of the Bankruptcy Reform Bill because it 
creates needless and unfair hoops for these individuals to jump through 
and the rigid means test puts those in real need of relief at a 
disadvantage. It imposes new burdens on families already overburdened 
by the debt they must shoulder. Certainly we all agree that those who 
can afford to should pay their creditors back--that they should be 
responsible for their debt. Those debtors who charge thousands of 
dollars on luxury goods, new cars and the like, only to then declare 
bankruptcy, should be held accountable. Many of us can remember a 
mother or father who taught us about debt, taught us the dangers of 
getting into debt and to be responsible for paying all our debts back. 
But we need to be fair in how we calculate who can pay. And we need to 
make sure that the provisions are not so rigid that they allow courts 
no discretion to take into account the circumstances that lead to the 
bankruptcy.
  The legislation that the Senate considers today is different from 
past versions that I have supported. There is obviously the removal of 
the Schumer amendment which held those who block access to abortion 
clinics accountable for the court judgments that they have incurred. 
But it also gives women, single parents, families and those living in 
poverty less opportunity to overcome their hardships and get a fresh 
start. This bill punishes people, assumes that all those filing for 
bankruptcy have purposefully created their debt problems, imposes a 
strict standard that does not take into account the circumstances 
surrounding the bankruptcy and the real means of individuals to pay 
their debt back. That's not fair, it's not right, and it makes life 
tougher on working families. I urge my colleagues to join me in 
standing up for women, children and working families by opposing this 
bill.
  Mr. REED. Mr. President, today I share my concern over S. 256, the 
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, and 
urge my colleagues to vote against this flawed legislation. This 
legislation provides a misguided and uneven approach to combating 
bankruptcy abuse, especially because it leaves so many causes of 
bankruptcy unaddressed.
  Most provisions in this bill were written years ago and do not target 
abuses which have recently gained public attention. When this bill was 
originally drafted, corporate fraud at Enron and elsewhere had not yet 
come to light. The executives at these corporations had not yet been 
caught enjoying huge personal gains at the expense of shareholders and 
employees only to later file for bankruptcy. This bill does not fully 
address these types of bankruptcy abuses, and unfortunately efforts to 
close these loopholes failed.
  At the time this bill was drafted, companies were less likely to file 
for bankruptcy to shed health care and pension obligations to their 
retirees. In fact, the number of senior citizens in bankruptcy tripled 
from 1992 to 2001,

[[Page S2467]]

representing the largest increase of any group. Today, nearly a million 
Americans have had their pension plans taken over by the Pension 
Benefit Guarantee Corporation and their benefits reduced; this is a 
substantial increase from when the bill was drafted. I am disappointed 
that this body not only voted against the Feingold amendment that would 
have helped elderly Americans protect their houses, but also against 
the Rockefeller amendment to improve employees' claim for owed wages 
and benefits. The Rockefeller amendment would have also required 
companies that dropped retiree health benefits to reimburse each 
affected retiree for 18 months of COBRA coverage upon reemerging from 
bankruptcy.
  The bill adds a means test, which supporters of the bill say will 
significantly reduce abuse. The nonpartisan American Bankruptcy 
Institute found that over 96 percent of families seeking to go into 
chapter 7 bankruptcy would be judged as unable to pay under the new 
means test. However, the means test would likely deter qualifying 
families from filing for bankruptcy due to the addition of regulatory 
requirements and legal costs.
  I am not opposed to sensible bankruptcy law reform, but this is a 
reverse Robin Hood--squeeze the down-on-their-luck middle class and 
impoverished Americans and give the proceeds to the financial services 
industry. Contrary to the claims of creditors, many of these families 
simply cannot pay. About half of families going into bankruptcy have 
had their utilities or phone shut off, and 60 percent went without 
medical care. One in five families that are bankrupt because of medical 
bills went without food. Surveys have shown that many of them want to 
repay their bills but are unable to, and they must ultimately file for 
bankruptcy to stop the harassment of collection agents.
  This bill does nothing to prevent bankruptcy by targeting its causes. 
We should work to ensure adequate worker compensation, lower the high 
cost of health care, improve financial education, and stem predatory 
lending.
  Our middle class is increasingly squeezed. Median family income has 
been relatively stagnant, rising by only 12 percent in constant dollars 
from 1978 to 2003. This increase has not kept up with families' sharply 
increasing costs. Health care costs have risen by 327 percent in 
constant dollars from 1988 to 2004. The real cost of tuition at a four 
year public university increased by 646 percent from 1978 to 2003. 
Child care costs have risen by 35 percent more than inflation from 1986 
to 2003.
  With less disposable income, families are less able to make it 
through difficult financial times and can be devastated by a single 
unexpected event. It saddens me that many of my colleagues in the 
majority voted against Senator Kennedy's amendment to raise the minimum 
wage for the first time in eight years. This measure could have meant 
the difference to countless Americans between being able to pay their 
bills and having to file for bankruptcy.
  Indeed, according to a new Harvard Law School study, illness or high 
medical costs cause half of personal bankruptcies. Certainly this is 
sure to affect the 45 million uninsured Americans, up from 30 million 
in 1978. It also has a traumatic effect on those who do have health 
insurance, one-third of whom lost it while they were sick. Yet again, I 
believe it was a mistake for this body to have killed an amendment to 
offer protections to patients with high medical bills.
  We also continue to see some banks cross the line into predatory 
lending practices. We must continue to find a balance between providing 
access to credit and capital and protecting individuals from predatory 
lending. Unfortunately, as many of my colleagues have pointed out, 
members of our Armed Forces have become a top target of these unsavory 
practices. Senator Durbin's G.I. protection amendment would have 
extended protections to military members who have been forced into 
bankruptcy because of income loss connected to their service. It would 
also have protected them from predatory ``pay day'' loans. 
Unfortunately, this amendment was voted down.
  For all of these reasons, I intend to vote against this flawed 
legislation, and I urge my colleagues to do the same.
  Mr. LAUTENBERG. Mr. President, we are now into our second week of 
debate on this bill, but in fact, we have been talking about it for 8 
years, since it was originally introduced.
  During that time, personal bankruptcies in our Nation have surged, 
while the profits of credit card companies have soared.
  We had an opportunity to pass a good bill that would have curbed real 
abuses of bankruptcy, while protecting consumers who fall on hard times 
because of a medical catastrophe, divorce or the loss of a job. 
Instead, the majority rejected dozens of amendments that would have 
protected the homes of senior citizens, and required credit card 
companies to level with consumers about how much they would really pay 
in interest and penalties.
  Now we are left with a bill that punishes consumers and lines the 
pockets of the credit card companies, a bill that protects the mansions 
of multimillionaires who file for bankruptcy protection but makes it 
easier for landlords to evict tenants from their homes if they are 
forced into bankruptcy, and, a bill that makes no distinction between a 
family struck by catastrophic illness, and a spendthrift who maxes out 
his credit cards on a shopping spree.
  I mentioned catastrophic illness because half of all bankruptcies 
today are the result of medical debts. Most families who are driven 
into bankruptcy by a medical problem probably think it can never happen 
to them because they have health insurance. But it can happen to 
anyone, and it does.
  Three-fourths of the people who file for bankruptcy because of 
medical debts have health insurance when the medical problem begins.
  But eventually their insurance runs out or certain treatments are not 
covered. And the next thing they know, they are facing financial ruin.
  Bankruptcy also hits families that have been torn apart by divorce. 
On Sunday, the Washington Post published a front-page article about 
this bill.
  The article described how a woman who was left alone by her husband 
to raise three children had fallen behind on her credit card payments. 
Even though she worked a second job and paid $2,000 a month to the 
credit card companies, her debt continued to pile up because of 
exorbitant late fees and interest rates. This woman was almost an 
indentured servant to her credit card companies, struggling to pay off 
a debt that could never be satisfied.
  This is not an isolated incident. The trend in the credit card 
industry today was described by one expert as a ``fee feeding frenzy.''
  Credit card companies collected almost $15 billion in penalty fees 
last year--nearly 10 times the $1.7 billion they collected in 1996.
  Penalty fees have become so important to the bottom line that some 
banks refer to customers who pay their bills on time as ``deadbeats,'' 
because they cannot be hit with exorbitant penalties.
  It has become commonplace for credit card companies to jack up the 
interest rates of customers who are slightly late with their payments--
in some cases, by no more than one day.
  Credit companies already charge late fees of up to $39 for every late 
payment. Piling a higher interest rate on top of that late fee is like 
double jeopardy, and that is not fair to consumers.
  There are many reasons why a consumer might be a day or two late in 
making a credit card payment. Maybe a child got sick and had to see a 
doctor, and his mom was too busy taking him to the hospital to worry 
about a credit card payment. Maybe a car broke down, and it had to be 
fixed so a worker could get to their job. Maybe the mail was a little 
slow that week.
  Whatever the reason, a consumer should not be unfairly and harshly 
punished for one late payment.
  At the very least, credit card companies should give consumers fair 
warning before hiking their interest rates. If there is a problem, the 
consumer should have a chance to correct it before their rate can be 
increased.
  But the credit card companies are not interested in fairness. In 
fact, they actually hope customers will be late with a payment so they 
can be hit with penalty fees.

[[Page S2468]]

  To that end, they engage in ``bait and switch'' tactics to lure 
consumers with low rates, then automatically jack those rates up the 
first time a payment is a day late.
  One example of this is the Capital One Platinum MasterCard.
  Customers going to the Capital One Web site to apply for a credit 
card will find the following ad, which touts ``a great low rate''--an 
``8.9 percent fixed APR.''
  This ad is pretty prominent. As you can see, the type is large and 
easy to read, and there is a nice picture.
  On an entirely separate Web page, buried in pages of fine print, 
Capital One discloses that:

       All your APRs may increase to a default rate of up to 25.9% 
     ANNUAL PERCENTAGE RATE if you default under this Card 
     Agreement because you fail to make a payment to us when due, 
     you exceed your credit line or your payment is returned for 
     any reason. Default APRs will be effective . . . immediately.

  In other words, despite advertising a ``fixed'' rate of 8.9 percent, 
Capital One can almost triple a customer's rate to a whopping 25.9 
percent--just for sending one payment one day late.
  The cost of this rate hike to a customer with a balance of $5,000 
would be as much as $880 in interest payments over the following year. 
That is simply too harsh of a penalty for sending one payment one day 
late.
  This is the dire situation in which many consumers find themselves. 
Even though they make payments every month, and don't charge any new 
purchases to their credit card, they fall deeper and deeper into debt. 
Eventually, seeing no other way out, some of these people declare 
bankruptcy.
  Many States have passed laws to protect consumers from unscrupulous 
penalties and rate increases. Unfortunately, these laws cannot be 
enforced, as courts have ruled that the banks are bound by the laws of 
the States where they are located, not where their customers reside.
  As a result, credit card companies have flocked to States with weak 
consumer protections, creating a ``race to the bottom.''
  With this bill, we had an opportunity to put a stop to that, and end 
the unscrupulous gouging of consumers. By giving consumers a chance to 
correct problems before they were hit with higher interest rates, we 
could have prevented many bankruptcies. Unfortunately, we have 
squandered that opportunity.
  This bill does nothing to address the roots of the bankruptcy problem 
in our country today. And it does nothing to help consumers. For that 
reason, I must vote against S. 256.
  Mrs. MURRAY. Mr. President, today I voted against a bankruptcy bill 
that puts credit card companies and politics ahead of ordinary 
Americans. Rather than providing balanced reform, this bill punishes 
those who have fallen on hard times--particularly our military families 
and those who are struggling under the weight of soaring medical bills.
  I have heard from residents across Washington State that the cost of 
medical care is forcing them into bankruptcy. In fact, a report last 
summer by the Working for Health Coalition found that half of 
Washington State bankruptcies were due to rising health care costs. 
Most of these families are working and more than half have health 
insurance, but the growing cost of health care is so overwhelming it 
pushes them into bankruptcy. A national study last month found that 61 
percent of bankruptcy filers did not seek the medical care they needed. 
These families deserve help, but instead this bill punishes them for 
circumstances beyond their control.
  This bill also fails to adequately protect our military families, 
particularly our Guard and Reserve members. These patriotic families 
have had to struggle with half their normal income during long--and 
often extended--deployments. Many have seen their businesses collapse 
at home while they have served overseas. I have met with Washington 
State Guard and Reserve families and have seen how they are struggling 
to meet the financial burdens of long deployments. They deserve a 
lifeline, not more paperwork, legal fees, and threats from collection 
agencies. The Senate had an opportunity to protect our soldiers through 
Senator Durbin's amendment, but that was rejected for a Republican 
amendment that falls far short. Our military families deserve better.
  If Republicans had been willing to make the bill less punitive toward 
ordinary Americans, they would have adopted a number of reasonable 
amendments in committee and on the Senate floor, but they refused. For 
example, Republicans blocked an amendment that would have protected 
workers and retirees if their company files for bankruptcy. Republicans 
also voted down amendments to ensure the elderly don't lose their homes 
and to discourage predatory lending. And they even failed to protect 
people who have had their identities stolen by criminals who then run 
up huge credit card bills. These are all examples of how Republicans 
are protecting corporate interests at the expense of vulnerable 
individuals.
  This bankruptcy bill also stacks the deck against women and children. 
For example, this bill will make it harder for single mothers to 
collect the past-due child support they and their children are owed.
  I am also disappointed that the Senate rejected the Schumer 
amendment, which would have assured that those who commit violent 
crimes at reproductive-health facilities against women and doctors do 
not escape paying their debts and fines by declaring bankruptcy.
  Looking at the big picture, this bill fits a pattern of Republican 
proposals that turn the tide against average Americans. Last month, 
Republicans tipped the scales of justice against working families by 
limiting their ability to seek compensation for a death or injury 
caused by a company's negligence. On Monday, Republicans rejected a 
proposal to raise the minimum wage. Taken together, these actions will 
make life harder for working families and represent a dangerous trend 
that threatens average Americans.
  In the past, I have voted for bankruptcy reform legislation, but 
today families find themselves in a much different place financially 
because of the costs of healthcare and military service. Congress 
should not punish them for things beyond their control with this 
unbalanced, unfair bill. American families deserve reform, not 
retribution.
  Mr. LEVIN. Mr. President, I cannot vote for this legislation, 
although I support bankruptcy reform. It is clear that some people 
abuse the bankruptcy system. However, this bill would make it more 
difficult for individuals and families who have suffered genuine 
medical and financial misfortune to get a fresh start. Nearly half of 
all of those studied in a recent research effort by Harvard Law School 
said that illness or medical bills drove them to bankruptcy and nine 
out of ten have faced health problems, job loss, divorce or separation. 
A letter to the Chairman and ranking member of the Judiciary Committee, 
signed by nearly a hundred bipartisan bankruptcy law professors from 
law schools across the country, said, ``The bill is deeply flawed, and 
will harm small business, the elderly, and families with children.''
  I have in the past supported reasonable bankruptcy legislation. The 
legislation which is before the Senate today could have been greatly 
improved by a number of reasonable Democratic amendments which have 
been offered over the last several days. However, the Republican 
majority has largely, on a party-line basis, rejected all amendments 
out of hand.
  I am disappointed that we did not add some reasonable flexibility 
measures to the ``means test.'' The purpose of the means test is to 
prevent consumers who can afford to repay some of their debts, from 
abusing the system by filing for chapter 7 bankruptcy. It makes sense 
to require those who are able to repay their debts to do so. However, 
there are some situations that warrant an exception to the means test. 
For example, the Senate defeated an amendment that would have exempted 
members of the armed services, veterans, and spouses of service members 
who die while in military service from application of the ``means 
test'' provisions of the bill. This would have helped them if their 
family or their business goes into bankruptcy. That amendment was 
defeated. Further, an amendment offered by Senator Kennedy that would 
have exempted from the means test debtors whose severe

[[Page S2469]]

medical expenses have caused the financial hardship was also defeated. 
Senator Corzine also offered an amendment that would have exempted 
economically distressed caregivers from the means test, but that 
amendment was also defeated by a largely party line vote. The 
Republican majority even rejected Senator Nelson's common sense 
amendment that would have exempted victims of identity theft from the 
means test.
  Further, the Senate defeated amendments that would have protected the 
homes of our elderly and people forced into bankruptcy after a medical 
crisis.
  I am also disappointed that the Senate defeated several amendments 
that would have closed loopholes used by wealthy individuals seeking 
bankruptcy protection.
  The Senate had an opportunity to close an increasingly popular 
loophole where the very wealthy shield millions of dollars before 
declaring bankruptcy by setting up so-called asset protection trusts. 
Senator Schumer proposed an amendment to put an end to this abuse of 
the tax system by limiting the use of these trusts to shield assets 
only up to $125,000. The amendment was defeated 39 to 56.
  The Republicans also rejected an amendment offered by Senator Durbin 
to curtail the abusive practices of executives at companies like Enron 
and WorldCom who received millions of dollars in compensation shortly 
before the companies filed for bankruptcy protection. The chamber also 
defeated an amendment proposed by Senator Akaka that would have 
provided credit card users with information to assist them in making 
more informed choices about their credit card use and repayment. This 
amendment would have helped consumers understand the consequences of 
their financial decisions, such as making only minimum payments, so 
that they can avoid the kind of financial pitfalls that lead to 
bankruptcy. Sadly, this amendment was also rejected.
  The Schumer amendment, which in the past has been strongly supported 
on a bipartisan basis by the Senate, was stripped from the bill this 
year. The amendment, which provides that debts arising from violence 
and threats of violence could not be discharged in bankruptcy 
proceedings, should have been adopted by the Senate.
  We do need bankruptcy reform, and I wish that the Senate had taken 
this opportunity to pass equitable reform. This bill does not achieve 
that goal and therefore I cannot support it.
  Mr. GRASSLEY. Mr. President, I rise to urge my colleagues to vote for 
final passage of the bankruptcy reform bill. I have been working on 
this piece of legislation for a long time, and I am pleased to see that 
we are nearing the end. This bipartisan bill has been maligned by many, 
and I want to set the record straight. What we are trying to do is fix 
a bankruptcy system that has gone awry, where individuals who have the 
ability to repay their debts don't do so, and the rest of us are left 
holding the bag.
  What we have tried to do with this bill is inject some fairness into 
the system, whereby people who have assets and the ability to repay 
back their debts go into a chapter 13 repayment plan, and people who do 
not have any means and no ability to repay go into chapter 7. We've 
kept the safety net of full chapter 7 bankruptcy discharge for those 
who truly need it, and channeled others that can pay their creditors 
into a repayment plan.
  This is done through a means test, which is fair and flexible enough 
to take into account all the unique circumstances a debtor and his 
family face. The means test takes into account all reasonable and 
necessary expenses for a debtor and his family. We provide for a court 
to consider ``special circumstances'', so that a debtor can show that 
he doesn't have the ability to repay, and should stay in chapter 7. The 
bill excludes from the means test poor people, those individuals who 
are below the median income. So if individuals can pay and they really 
don't have the ability to pay, they will continue to have their debts 
fully discharged in chapter 7 bankruptcy, while those who do have 
assets cannot hide them from their creditors and escape repayment.
  Let me mention a couple of things this bill does not do. This bill 
doesn't put the credit card companies first or leaves hard working 
families out to dry, as some of the bill's detractors have claimed. In 
fact, the bill helps women and children and improves their situation 
when someone files for bankruptcy because it provides new priorities 
and tools so that child support and alimony will be collected before 
other creditors. We move child support up in priority, up to number one 
from number seven in line, and that means that they will be paid before 
a lot of other creditors, including the credit card companies. The bill 
makes staying current on child support a condition of discharge. We 
provide that debt discharge in bankruptcy is made conditional upon full 
payment of past due child support and alimony.
  Domestic support obligations are automatically non-dischargeable, 
without the costs of litigation. The bill also makes payment of child 
support arrears a condition of plan confirmation. The bill provides 
better notice and more information to facilitate child support 
collection, and tracking down deadbeat parents. Further, the bill 
protects the name of a debtor's minor children from public disclosure 
in a bankruptcy case.
  This bill also doesn't help credit card companies and other lenders 
take advantage of honest consumers, as some have alleged. In fact, the 
bankruptcy bill contains some new real and significant consumer 
protections. The bill requires credit card companies to make new 
disclosures that benefit customers and prohibits deceptive advertising 
of low introductory rates. It requires credit card companies to provide 
key information about how much money people owe and how long it will 
take to payoff their credit card debt by only making a minimum payment. 
The bill requires lenders to prominently disclose when late fees will 
be imposed, the date on which introductory or teaser rates will expire, 
and what the permanent rate will be after that time. The bill also 
prohibits lenders from canceling an account because the consumer pays 
the balance in full each month to avoid finance charges.
  The bill also provides that consumers will be given a toll-free 
number to call where they can get information about how long it will 
take to payoff their own credit card balances if they only make minimum 
payments on their balance. This will educate consumers about their 
financial situations. In addition, the bill allows for more judicial 
oversight of reaffirmation agreements, to protect consumers from being 
pressured into onerous agreements.

  The bankruptcy bill also includes a debtor's bill of rights to 
prevent bankruptcy mills from preying upon those who are uninformed of 
their rights. The bill provides for penalties on creditors who refuse 
to renegotiate reasonable payment schedules outside of bankruptcy. The 
bill provides for penalties on creditors who fail to properly credit 
plan payments in bankruptcy. The bill strengthens enforcement and 
penalties against abusive creditors for predatory debt collection 
practices. Finally, the bill contains credit counseling programs to 
help consumers avoid the cycle of indebtedness.
  So with the bankruptcy bill, we've tried to close loopholes in the 
system and eliminate abuses. We've created new consumer protections. 
We've made chapter 12 permanent. We've made sure that financial markets 
are not subject to risk. Although the bill doesn't contain everything I 
would have liked to include, it is a good start to putting an end to 
the abuses.
  It has been a long haul, but I think we are finally seeing this bill 
through to the end. And there are many people that I'd like to thank 
because they've been instrumental in getting us to this point. I've 
been quite busy lately as chairman of the Finance Committee, working on 
social security, medicare and tax reform. I take that responsibility 
very seriously. Because of Finance Committee markup and hearing 
conflicts, I have had to rely on my colleagues to manage this bill on 
the floor. But the job has been in very good hands.
  In' particular, I appreciate Senator Hatch and the diligence that he 
has shown towards this bill. On more than one occasion, he made sure 
that the bankruptcy bill made it through the committee process so that 
we could have it considered on the floor. He has stepped up to the 
plate many a time to manage the bill, work on compromises, and keep the 
engines running. Senator

[[Page S2470]]

Hatch is a good friend and colleague, and I respect his perseverance as 
well as his legal expertise. I'm glad to see that all his hard work 
during the years has finally come to fruition. Senator Hatch has been a 
true stalwart through the years, and I thank him for his dedication to 
bankruptcy reform. I also want to thank his able staff, Perry Barber, 
Kevin O'Scanlin and Bruce Artim for all their help on this bill.
  I especially want to thank Senator Sessions for being a tireless 
champion of bankruptcy reform here in the Senate. I have relied on his 
intellect and legal prowess for the last eight years that we've been 
working on this bill. I believe that Senator Sessions has brought a 
unique perspective to the bankruptcy bill with his dedication to 
eliminating abuses in the bankruptcy process. He is a firm believer 
that if you borrow money, you have to pay it back. So I truly am 
thankful for all the work that Senator Sessions has done, especially in 
managing this bill on the floor. He is one sharp lawyer, and I am 
honored to have him as my friend. I also want to thank his staff for 
their excellent work, in particular his talented Chief Counsel William 
Smith, Cindy Hayden, Amy Blankenship and Wendy Fleming.
  I want to thank Chairman Specter for placing this bill at the top of 
the agenda in the Judiciary Committee, and for moving it so quickly and 
ably in this Congress. His staff, Harold Kim, Mike O'Neill, Ivy 
Johnson, Hannibal Kemmerer, Tim Strachan, Brendan Dunn and Ryan 
Triplette have been extremely helpful in getting the job done. I want 
to thank Majority Leader Frist and his staff, Allen Hicks, Eric Ueland, 
Sharon Soderstrom and Dave Schiappa, as well as Senator McConnell and 
his staff, John Abegg, Kyle Simmons, Malloy McDaniel and Brian Lewis.
  I would be remiss if I didn't thank our friends on the House side, 
and in particular Chairman Sensenbrenner and his staff, Phil Kiko, 
Susan Jensen and Ray Smietanka. Chairman Sensenbrenner has really been 
a leader on bankruptcy reform, and a true driving force behind this 
legislation. I look forward to additional collaborations with him.
  In addition, I want to thank Senator Carper, Senator Nelson, Senator 
Biden and Senator Johnson. This is truly a bipartisan bill, and it 
couldn't have gotten done without their help.
  Finally, I thank my own staff, my Finance Committee Chief of Staff 
and Legislative Director Kolan Davis and my Judiciary Committee Chief 
Counsel Rita Lari Jochum, for their hard work on the bill. I also want 
to thank my former staffer John McMickle, for his expertise and advice 
on this important piece of legislation. Good staff is hard to find, and 
I am proud to say that my staff is probably the best in town.
  Mr. NELSON of Nebraska. Mr. President, today, I am pleased to see the 
passage of S. 256, the Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2005. This bill has been under consideration in 
Congress since before I was elected to the Senate. Since my arrival, I 
have been a proponent of the goals it strives to attain to ensure that 
abuse of America's bankruptcy laws is curtailed and that Americans who 
find themselves in unanticipated financial duress and have legitimate 
reasons to seek bankruptcy protections will have the opportunity to do 
so.
  The goal of the bill is to prevent certain abuses of the bankruptcy 
system. It includes more than five hundred pages of new and reformed 
law, but key provisions include the following.
  First and foremost, the bill will curb abuse of the bankruptcy system 
by implementing a means test to ensure that those who can afford to 
repay some portion of their unsecured debts are required to do so. 
Bankruptcy petitioners with relatively high incomes could be required 
to file under chapter 13 instead of chapter 7, and repay some of their 
debt out of future income. The means test takes into account the 
petitioner's income, debt burden, and allowable living expenses, which 
can vary significantly according to the debtor's place of residence and 
particular circumstances. Filers who cannot afford to repay at least 
$6,000 will be given unfettered access to chapter 7 liquidation 
proceedings.
  The bill has a safeguard that will allow judges to consider 
extenuating circumstances in each bankruptcy case. After determining 
this means test calculation, the judge can then take any ``special 
circumstances'' into consideration before making a decision to shift 
the debtor into chapter 13. This will allow judges to consider cases 
where catastrophic illnesses or other unexpected financial calamities 
that have impacted a family or individual to the point where their 
debts are too heavy a load to carry. This provision made many of the 
amendments considered on this bill redundant.
  The bill implements an important safeguard for family farmers by 
making permanent the extension of chapter 12 bankruptcy rules. Chapter 
12 has expired every year, necessitating the need for an extension. 
Last year, Senator Grassley and I worked in a bipartisan fashion to 
secure the chapter 12 extension. The bill also bumps the exemption 
level for family farmers from $1.5 million to nearly $3.24 million, 
which will be adjusted periodically for inflation.
  The bill includes an important provision to safeguard our children. 
It contains provisions that strengthen the ability of women and 
children to collect child support and marital dissolution obligations. 
This provision will enable some families to continue to provide for the 
needs of their children.
  Consumers also benefit from protection measures in this bill. By 
requiring new minimum payment and introductory rate disclosures for 
credit cards, consumers will be protected from surprise fees and 
unexpected rate fluctuation. It also contains a `debtor's bill of 
rights' requiring that bankruptcy attorneys and petition preparers 
disclose their services and fees for those services to consumers.
  It is important to note that no American will be denied access to the 
bankruptcy system under these reforms. However, those trying to shield 
their assets while abandoning their financial responsibilities will 
find it much more difficult to abuse the system and leave their debts 
for other Americans to cover through higher interest rates and fees.
  As I mentioned earlier, there were many amendments to this bill 
offered for consideration. As I considered each of these amendments, I 
measured the intended impact of each amendment on the bill. In voting 
against many of the amendments I did so knowing that the groups of 
individuals singled out by the amendments, such as veterans, 
individuals with chronic health problems, or military personnel, were 
already adequately protected in the underlying bill.
  I carefully considered each amendment offered to the bill on a case 
by case basis to determine if the amendment improved the bill. Because 
I believe the bill already covered most of the issues presented in the 
amendments, it was my determination than many of the amendments did not 
improve the bill and thus, I voted against them.
  Again, this bill includes a safeguard for judges to consider 
``special circumstances'' like medical bills, deployment to war and 
other circumstances. In addition to this safeguard, I supported an 
amendment to the bill that clarified the circumstances that might be 
considered by a judge. That language provided specific examples a judge 
might consider including ``a serious medical condition or a call to 
order to active duty in the armed forces.'' I voted for this amendment 
because it provided an improvement, in the form of clarity on special 
circumstances.
  It is important that creditors, retailers, and small businesses who 
in good faith provide people with credit do not bare the brunt of the 
cost when debtors find themselves unable to pay. It is also critical 
that we protect consumers who have found themselves in unanticipated 
situations where their inability to meet their debts is beyond their 
control. And it is important to safeguard consumers against predatory 
lending practices.
  I worked hard to find the correct balance among these competing goals 
on this bill and feel that the Senate did a good job in accomplishing 
that overriding principal. I am pleased to support this bill because I 
believe it provides needed improvements to our bankruptcy protection 
laws that will benefit every American.
  Mr. AKAKA. Mr. President, I am in opposition to the bankruptcy 
legislation.

[[Page S2471]]

  The financial services industry has become increasingly complex with 
new technology, products, and services. However, this dated legislation 
has not had significant changes made to it since the 107th Congress.
  Predatory lending has surged since the initial development of this 
bankruptcy legislation. In the early 1990s, there were fewer than 200 
payday lenders nationwide. Now, there are more than 20,000. Payday 
lenders made 100 million loans in 2003. These loans represent more than 
$40 billion. Most alarmingly, according to the Consumer Federation of 
America, interest rates on these loans begin at 390 percent.
  Yet, Congress has failed to act to prevent the exploitation of 
working families that are short on cash due to unexpected medical 
expenses or other needs. I am afraid that the passage of this 
legislation will further reduce the risk for predatory lenders, and as 
a result, they will aggressively market their products even more. We 
must act to protect consumers from these unscrupulous lenders. I remain 
committed to restricting all forms of predatory lending, including 
payday loans, and to providing consumers with alternative affordable 
short-term loans.
  Access to credit has increased significantly and household debt has 
skyrocketed as a result. Revolving debt, mostly compromised of credit 
card debt, has risen from $54 billion in January 1980 to more than $780 
billion in November 2004. A U.S. Public Interest Research Group and 
Consumer Federation of America analysis of Federal Reserve data 
indicates that the average household with debt carries approximately 
$10,000 to $12,000 in total revolving debt. This legislation tightens 
the grip that creditors have on consumers, but it fails to restrict the 
aggressive marketing practices of credit card companies.
  In addition, this bankruptcy bill fails to provide adequate, timely, 
and meaningful disclosures for consumers. As we make it more difficult 
for consumers to discharge their debts in bankruptcy, we have a 
responsibility to provide additional information so that consumers can 
make better informed decisions. S. 256 includes a requirement that 
credit card issuers provide a generic warning about the consequences of 
only making the minimum payment. This provision fails to provide the 
detailed information for consumers on their billing statements that my 
amendment would have provided. My amendment would have given consumers 
the detailed personalized information necessary for them to make better 
informed choices about their credit card use and repayment. It would 
have required companies to inform consumers of how many years and 
months it would take to repay their entire balance and the total cost 
in interest and principal, if the consumer makes only the minimum 
payment. The amendment would also have required consumers to be 
provided with the amount they need to pay to eliminate their 
outstanding balance within 36 months. Finally, my amendment would have 
required that creditors establish a toll-free number so that consumers 
can access trustworthy credit counselors. Unfortunately, this amendment 
was defeated.
  I appreciate the willingness of the Chairman of the Banking 
Committee, Senator Shelby, to continue to work with me on this very 
important consumer awareness issue.
  I also proposed an amendment that would have required credit card 
companies to make concessions to individuals in debt management plans 
so that credit counseling could be a viable alternative to bankruptcy. 
Unfortunately, that amendment was also defeated.
  I fear that this bill will end up significantly harming families that 
have suffered financially due to illnesses, the loss of a job, or the 
death of a loved one. I supported other reasonable amendments intended 
to protect low-income families, the elderly, and other vulnerable 
populations from this overly restrictive legislation. However, these 
amendments also failed.
  Instead of making improvements to the legislation, an old, outdated 
bill has been approved by the Senate. It is low-income working families 
that will be hardest hit by this anti-consumer legislation. After 
passage of this legislation, we will need to take additional steps to 
prevent further exploitation of consumers by unscrupulous lenders and 
to improve relevant and useful information about credit to consumers. I 
will continue to fight to protect working families from predatory 
lenders and overly aggressive creditors.
  Mr. KERRY. Mr. President, I strongly believe that reform of our 
bankruptcy laws is necessary. Too often, bankruptcy is used as an 
economic tool to avoid responsibility for unsound decisions and 
reckless spending.
  Last year Americans paid interest on about $690 billion in revolving 
debt. Most of that debt is credit card debt. According to a Consumer 
Federation of America study, the average household carries between 
$10,000 and $12,000 in credit card debt and has nine credit cards. 
Consumers pay an average interest rate of 12.4 percent or approximately 
$85 billion annually in credit card debt interest.
  Let me point out that during both the 105th and 106th Congress, I 
supported legislation to reform bankruptcy laws and end the abuse of 
the system.
  However, I am unable to support the Bankruptcy Reform Act before us 
today because I believe it is unfair and unbalanced, does far too 
little to help consumers and curb creditor abuses, and includes an 
inflexible ``means test'' that will harm many debtors who are genuinely 
in need of the protections and the ``fresh start'' that bankruptcy is 
intended to provide.
  The Bankruptcy Code currently offers two alternatives for 
individuals: chapter 7, under which a debtor's assets are sold and the 
proceeds are divided among creditors, and chapter 13, under which 
debtors who have a regular income develop a repayment plan for a 
portion of the debt. In many cases, debtors filing under chapter 13 
repay a greater proportion of their debt than those filing under 
chapter 7.
  The Bankruptcy Reform bill creates a ``means test'' that will make it 
more difficult for individuals earning above the median income level to 
erase debts under chapter 7, forcing them to file under chapter 13, 
which would require them to repay a greater portion of their debt. I 
believe that those who can afford to repay a greater portion of their 
debts during the bankruptcy process should be required to do so.
  A narrowly targeted reform bill designed to reduce abuse of the 
system would provide bankruptcy judges with the discretion to dismiss 
or convert a case to chapter 7, but would not mandate it. It would have 
provided creditors the opportunity to ask for a dismissal or conversion 
without putting the burden on every filer to prove that he or she 
deserves the protections of chapter 7.
  However, the ``means test'' included in the bill is inflexible, and 
it provides no room for a bankruptcy judge to determine whether the 
circumstances that led to the debtor's financial situation warrant 
treatment under chapter 7. A parent with a sick child bankrupted by 
medical bills is treated the same way as a reckless spender who ran up 
debt on luxury items. That's simply not right.
  Again and again, Senators offered amendments that sought to increase 
the flexibility of the ``means test'' and offered other changes to 
improve many aspects of this legislation. Unfortunately, in almost 
every case, these amendments were defeated.
  The Senate voted against giving any relief to families forced into 
bankruptcy by devastating health care costs. One million men and women 
each year turn to bankruptcy protections in the aftermath of a serious 
medical problem--and three-quarters of them have health insurance. 
Senator Kennedy offered amendments to exempt from the means test 
debtors who have incurred large medical expenses and other reasonable 
considerations. Both his amendments were defeated.
  The Senate voted against relief for children caught up in their 
parents' bankruptcy. And it voted against relief to help military 
families who are struggling with the burdens in Iraq and around the 
world.
  The Senate defeated critical consumer protections that would simply 
give consumers more information and might help end some of the abusive 
and deceptive practices of some credit card companies. The industry 
pushes out an incredible 5 billion solicitations every year. Under 
current regulations companies can change interest rates at almost any 
time. They market aggressively and, I believe for some, deceptively. 
Only last year, the Office of the

[[Page S2472]]

Comptroller of the Currency issued an advisory letter warning national 
banks that engaged in deceptive credit card marketing and account 
management practices that they would face compliance and reputation 
risks.
  Remarkably the bill does protect the wealthiest Americans by allowing 
them to continue hiding their assets from creditors during bankruptcy 
and never making good on their debt. Senator Schumer offered an 
amendment to eliminate and end this abuse, and it was defeated. And it 
does not stop corporate executives from looting their companies and 
leaving workers, stockholders, and creditors holding the bag. How can 
we target middle-class families and ignore the wealthiest Americans as 
they hide their assets?
  This bill is needlessly punitive to families. It is as if we have 
gone out of our way to harm and not help them. For example, when a 
debtor receives a bankruptcy discharge, the legislation sets up new 
classes of nondischargeable debt that will compete for payment along 
with child and family support. Senator Dodd offered an amendment to 
enable parents to better meet the needs of their children during 
bankruptcy. Unfortunately, it was defeated. The credit card companies 
beat the kids on that vote.
  This bill is not only detrimental to consumers, but it also hurts our 
small businesses. This effort to reform our bankruptcy laws will make 
it more difficult for entrepreneurs to start a small business and 
imposes additional regulations and reporting requirements on small 
businesses who file for bankruptcy.
  I believe we must do everything possible to ensure the viability of 
small businesses and to assist in fostering entrepreneurship in our 
economy. Regulatory and procedural burdens should be lowered for small 
business wherever possible. However, the bill fails to meet this 
challenge. Instead, this legislation promotes additional red tape and a 
government bureaucracy. It imposes new technical and burdensome 
reporting requirements that are more stringent on small businesses that 
file for bankruptcy than they are on big business. Further, the bill 
will provide creditors with greatly enhanced powers to force small 
businesses to liquidate their assets.
  Any big business would have difficulty complying with these new 
burdensome reporting requirements. But think of the difficulties an 
entrepreneur or a mom-and-pop grocery store will have in complying with 
this dizzying array of new and complex requirements. These small 
businesses are the most likely to need, but least likely to be able to 
afford, the assistance of a lawyer or an accountant to comply with 
these new requirements. I cosponsored an amendment offered by Senator 
Feingold to strike many of the small business provisions in the bill 
because they would increase reporting requirements on small businesses 
and make it easier for creditors to force liquidations of small 
business during the bankruptcy process. Unfortunately, that amendment 
was not adopted.
  I am pleased that an amendment sponsored by Senator Collins and 
myself which will extend chapter 12 bankruptcy protections to our 
family fishermen, has been included in the bill. The small, family-
owned fishing businesses are in serious trouble. We are making progress 
in rebuilding stocks; however, the cost of this progress has been 
carried by fishermen working Georges Bank and the Gulf of Maine. The 
Collins-Kerry amendment will help ensure that fishermen have the 
flexibility under chapter 12 of the Bankruptcy Code to wait out the 
rebuilding of our commercial fish stocks without back tracking on our 
conservation gains to date. It will help preserve the rich New England 
fishing heritage in Massachusetts.
  Despite some provisions, which I do believe improve the system, 
overall this bill does not provide bankruptcy reform. Inexcusably, this 
bill helps creditors without helping consumers. It will let the very 
rich continue to hide money in homes and trusts. It gives no relief to 
families hit by medical bills or other financial hardship. It even puts 
credit card companies ahead of children when debt is allocated to 
creditors. I will vote no.
  Mr. SESSIONS. Mr. President, today, for me, marks the culmination of 
8 long years of hard work, and I am glad we have finally reached this 
point, where we will not only pass this bill, but the House will do so 
as well and the President will sign it into law. I believe that we have 
eliminated some abuses with this bill. I wish we could have 
accomplished more, but we could not let the perfect be the enemy of the 
good. Let me say to my colleagues, that there are some issues like 
homestead and asset trusts that will come back, and I look forward to 
working on those, but make not mistake about it, this is a good bill 
and I am excited to see it pass.
  The policy questions we have been addressing are these:
  (1) whether bankruptcy is a necessary and permitted way to recover 
from overburdening debt; and
  (2) when is bankruptcy being abused and used as an escape valve for 
individuals capable of repaying some, if not all, of their debt.
  The goal of this bill has never been to create additional burdens for 
those who have over-extended themselves for one reason or another, but 
to help them achieve financial responsibility after bankruptcy, so that 
they can avoid similar setbacks in the future.
  It is clear to me that when you have statements from debtors that 
they are using bankruptcy to ``[take] advantage of one of the 
opportunities the Government offers,'' that the responsibility for 
slowing down the 1.6 millions consumer bankruptcy filings per year lies 
with Congress.

  As we approached this bill, our goal was not to punish those who 
legitimately need the fresh start that bankruptcy offers. However, our 
goal was to disallow people from filing bankruptcy simply for the sake 
of taking advantage of a financial opportunity provided by the 
government. People who can afford to pay all or a part of their debts 
over a limited period of time should not get off Scot free.
  Let me just for a moment, talk about the concept of bankruptcy. The 
term derived from the medieval Italian phrase ``broken bench.'' 
Merchants would sell their wares in the marketplace from benches. If 
the merchant ever reached a point where he could not pay his debts, his 
creditors would seize all of his wares and divide it among themselves. 
They did not stop with the seizing of wares, however. The creditors 
would break the merchants' bench, to bankrupt the merchant from 
reopening.
  Our goal under this legislation was not and we did not ``break the 
bench.'' Instead of trying to prevent merchants or individuals from 
having a second opportunity, we accomplished just the opposite. People 
who need a fresh start under this bill will get one. The people who can 
pay some of their debts back will have to do that. Let me just 
highlight a few of the benefits in this bill.

  First, S. 256 requires that individuals receive credit counseling 
prior to filing for bankruptcy. This counseling will help an individual 
decide if bankruptcy is the appropriate mechanism to remove debt and 
will help the individual understand what filing bankruptcy actually 
means. In many instances, the deceptive and fraudulent advertising 
practices of bankruptcy mills lure consumers into bankruptcy 
unnecessarily. Debtors should know that there are many ways to get back 
on their feet financially--such as entering into voluntary repayment 
arrangements.
  To curb the practice of preying upon debtors, S. 256 establishes the 
Debtor's Bill of Rights. The Bill of Rights requires that debt relief 
organizations disclose the nature of the services they offer, explain 
the alternatives to filing bankruptcy, disclose the rights and 
obligations of debtors who file for bankruptcy, and explain the 
consequences of filing for bankruptcy.
  Second, S. 256 establishes a means test to help determine whether 
people are capable of paying back a meaningful portion of their debts. 
This test might help the debtor avoid a Chapter 7 filing, where 
creditors will liquidate the individuals assets and where the debtor 
will have a very hard time getting creditors to extend credit to them 
in the future. If a debtor files under Chapter 13 and learns how to 
manage money under a structured repayment plan that requires some 
discipline, the debtor learns financial responsibility and should be 
able to avoid future financial turmoil. Chapter 13 bankruptcies allow 
debtors to keep their assets and pay back a portion of their

[[Page S2473]]

debts over a 5 year period. In exchange, the remaining portions of 
their debt are discharged and the debtor gets a fresh start.

  Third, S. 256 creates new protections for consumers, especially in 
the area of credit cards. We require credit card companies to disclose 
the dangers of making only a minimum payment and we prohibit deceptive 
practices like advertising low introductory rates--rates used to bait 
and switch the credit card holder. We also require that a toll-free 
number be provided to consumers, where they can obtain information on 
how long it will take to payoff their credit card balances.
  The consumer benefits of this bill are enormous. Instead of breaking 
the bench, this bill promotes financial responsibility. The bill vastly 
improves the current situation in bankruptcy for certain categories of 
individuals. For example, it provides special benefits to women and 
children, through child support and alimony, and provides parents the 
ability to deduct expenses such as school tuition. Make no mistake 
about it, while the bill provides some increased protection for 
unsecured creditors, it provides more protection for 
consumers. Logically, there is absolutely no reason to oppose it.

  Mr. President, over time, many people have worked on this bill, and I 
would just like to take a moment to express my appreciation for their 
work.
  First, it has been an honor to work closely with Senators Grassley 
and Hatch to make this legislation a reality. I appreciate both of them 
so much and I believe they both have done yeomen's work on this bill. I 
thank Senator Frist for making this bill one of his top priorities and 
I appreciate the leadership of Senator McConnell.
  I think it is appropriate that we take just a moment to express 
appreciation to some people who gave extraordinary effort to make this 
successful conclusion.
  First, I note that in my office it has taken three chief counsels to 
get through this bill. I appreciate the hard work of Kristi Lee, my 
first Chief Counsel and currently a magistrate judge in the Southern 
District of Alabama. She did an outstanding job on this bill during the 
first years that this legislation was in the Senate. I also appreciate 
the work of my former Chief Counsel Ed Haden, who is currently doing 
appellate litigation at one of Alabama's outstanding law firms, Balch 
and Bingham. While I also appreciate the work of my current Chief 
Counsel, William Smith, and legislative counsels Amy Blankenship and 
Wendy Fleming for their efforts in this endeavor, my Deputy Chief 
Counsel Cindy Hayden has really given an extraordinary effort on this 
bill.

  These fine staffers have worked night and day for two weeks to guide 
this bill to passage. William Smith has given every ounce of his 
strength to successful passage. He deserves particular praise.
  Additionally, I appreciate the work of Lloyd Peeples, a former 
counsel of mine who has clerked for a bankruptcy judge and now serves 
as an AUSA in the Northern District of Alabama. He provided invaluable 
assistance on this bill.
  Sean Costello, a former counsel of mine who now works for the Office 
of Justice Programs at the Department of Justice, provided outstanding 
work to help make this bill a reality.
  Brad Harris, a former counsel of mine who now works for the Burr and 
Forman firm in Birmingham, never failed in working long hours and 
providing key assistance in seeing this bill through.
  And finally, Brent Herrin, my former counsel who worked hard on cram 
down and other issues, did outstanding work. Brent practices tax law 
for the Deloitte Touche firm in Atlanta.
  For eight years, these lawyers have all worked on this legislation. I 
know they are happy to see it come to a conclusion. I am too.
  In the past I have thanked the former staffers from other offices 
that have worked on this bill, I will not name them individually today, 
save John McMickle who served Senator Grassley and played a major role 
in helping to craft this bill. John believes in the underlying 
principles in this bill and I appreciate his work.

  I also want to thank Rita Lari Jochum, Senator Grassley's current 
Chief Counsel. I have seen very few staffers with her drive and 
dedication and she is to be commended for her efforts on this bill. Her 
good demeanor has been a source of calm in the storm.
  I appreciate the work Perry Barber, Brendan Dunn, Kevin O'Scannlain, 
and Bruce Artim of Senator Hatch's staff, and the work of Harold Kim, 
Ivy Johnson, Tim Strachman, Mike O'Neill, Hannibal Kemmerer and Ryan 
Triplette of Senator Specter's staff.
  I must also thank Dave Schiappa, Allen Hicks, Eric Ueland, Sharon 
Soderstrom, John Abegg, Kyle Simmons, Malloy McDaniel and Brian Lewis 
from the Leadership staffs of Senators Frist and McConnell, all who 
have provided tremendous assistance along the way in shaping this bill 
into its final form.
  Mr. President, I also want to thank Chairman Sensenbrenner and his 
staff for their remarkable work in getting this bill done. Phil Kilko 
and Susan Jensen did outstanding work on this bill.
  I thank the senior Senator from Alabama, Senator Shelby, for his work 
on this bill. He guarded his banking jurisdiction like a roaring lion.
  This is a great day, Mr. President. I thank the Chair and yield the 
floor.
  Mr. FRIST. Mr. President, the Senate will soon vote on final passage 
of the bankruptcy reform bill. This bill constitutes the most sweeping 
overhaul of bankruptcy law in 25 years. Like class action, bankruptcy 
reform curbs abuse of the legal system. I am hopeful that it will pass 
with a strong bipartisan vote.
  Bankruptcy reform has long been in the works. Similar bills have 
passed the Senate in the 105th, the 106th, and 107th Congresses. Today, 
in the 109th we will finally deliver a package that restores fairness 
and personal responsibility to the bankruptcy system.
  The House has agreed to take up the legislation, pass it quickly, and 
send it to the President for his signature.
  I thank my colleagues for their hard work and leadership. In 
particular, I would like to thank: Senator McConnell, a good friend and 
counselor, who has made sure that we have the votes on every amendment 
and who has helped secure final passage; Senator Grassley, the bill's 
lead sponsor, who has been a tireless advocate for bankruptcy reform 
for nearly a decade; Chairman Specter, who skillfully led the bill 
through Committee; Senator Hatch, who, as a floor manager, has led on 
the substance of each and every amendment; and Senator Sessions, who 
has led debate on the floor again and again, and who lent his expertise 
to explain the finer points of the law.
  Like class action, the bankruptcy reform bill is another example of 
bipartisan cooperation. Nearly every vote on every amendment has been 
bipartisan. Our work has been a great example of how thoughtful, 
bipartisan negotiation can deliver meaningful solutions for the 
American people.
  America has always been a place for second chances. As Americans, we 
value innovation, reinvention and risk taking. It's part of our 
national DNA, part of why we are so spectacularly successful. It's also 
why America has long supported generous bankruptcy law. We recognize 
that sometimes people get in over their head, or are hit with an 
unexpected set back, and they need a fresh start, a second chance.
  Congress has passed, and courts have upheld, Federal bankruptcy laws 
for over 100 years. The Constitution gives Congress the express power 
to ``establish uniform laws on the subject of bankruptcies throughout 
the United States.''
  As the Supreme Court has stated, ``One of the primary purposes of the 
Bankruptcy Act is to give debtors a new opportunity in life and a clear 
field for future effort, unhampered by the pressure and discouragement 
of preexisting debt.''
  Unfortunately, however, the system has veered away from its original 
positive intent. In the past two decades, bankruptcies have 
skyrocketed--actually accelerating during the economic boom years of 
the 80's and 90's.
  Last year, we reached an historic high of over 1.6 million filings 
per year. The total number of bankruptcies more than doubled during the 
1980's and then doubled again from 1990 to 2003. Personal bankruptcies 
outnumber business bankruptcies by a multiple of more than 45.
  We all pay the price for these bankruptcy filings. Every bill you and 
I pay

[[Page S2474]]

includes a hidden ``bankruptcy tax'' of $400 per year per household. 
That tax is figured into in every phone bill, electrical bill, mortgage 
payment, furniture purchase, or car loan we pay.
  For many people, bankruptcy has become a first step rather than a 
last resort. Opportunistic debtors who have the means to repay use the 
law to evade personal responsibility. In some cases, they even plan 
their bankruptcy, buying a mortgage and running up credit cards and 
then declaring they're broke.
  With this bill, we are putting an end to the abuse. Wealthy debtors 
who have the means to pay some, or all, of their debt will be required 
to do so.
  The bankruptcy bill establishes a means test based on a simple, fair 
principle: those who have the means should repay their debts. The 
legislation specifically exempts from consideration anyone who earns 
less than the median income in their state. It allows every filer to 
show ``special circumstances'' if they cannot handle a repayment plan.
  And it makes clear that active duty military, low income Veterans, 
and debtors with serious medical conditions are protected by these safe 
harbor provisions.
  But for those individuals who are abusing the system, they will no 
longer be able to hide behind the law. Nor will they be able to duck 
their family responsibilities. These new reforms make child support a 
high priority.
  Most people who get into financial trouble want to do the right 
thing. They want to make good on their obligations and pay what they 
owe. But they are in over their head and need a fresh start. This 
legislation will not affect the vast majority of these filers. What it 
will do is close loopholes that have let unscrupulous debtors slip 
through.
  Today's impending vote is a victory for fairness, compassion and 
common sense. It took eight years, but we are finally here.
  I applaud my colleagues for their leadership. Together with class 
action reform, we are returning fairness and common sense to the legal 
system.
  When the legal system gets off track, it affects us all, consumers, 
creators, and innovators alike. Jobs are lost. Prices go up. We pay in 
big and small ways. By reforming the system, we strengthen our ability 
to grow. We keep America moving forward.
  I look forward to tackling other lawsuit abuse issues including gun 
manufacturer liability, medical liability, and asbestos reform. I am 
hopeful that we will continue to work together delivering meaningful 
solutions to the American people.
  The PRESIDING OFFICER. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed for a third reading and was read 
the third time.
  The PRESIDING OFFICER. The bill having been read the third time, the 
question is, Shall it pass?
  Mr. CRAIG. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from New York (Mrs. Clinton) 
is necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 74, nays 25, as follows:

                      [Rollcall Vote No. 44 Leg.]

                                YEAS--74

     Alexander
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Brownback
     Bunning
     Burns
     Burr
     Byrd
     Carper
     Chafee
     Chambliss
     Coburn
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Craig
     Crapo
     DeMint
     DeWine
     Dole
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Hatch
     Hutchison
     Inhofe
     Inouye
     Isakson
     Jeffords
     Johnson
     Kohl
     Kyl
     Landrieu
     Lincoln
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Murkowski
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reid
     Roberts
     Salazar
     Santorum
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stabenow
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner

                                NAYS--25

     Akaka
     Boxer
     Cantwell
     Corzine
     Dayton
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Harkin
     Kennedy
     Kerry
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Murray
     Obama
     Reed
     Rockefeller
     Sarbanes
     Schumer
     Wyden

                             NOT VOTING--1

       
     Clinton
       
  The bill (S. 256), as amended, was passed.
  (The bill will be printed in a future edition of the Record.)
  Mr. HATCH. I move to reconsider the vote, and I move to lay that 
motion on the table.
  The motion to lay on the table was agreed to.
  Mr. HATCH. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________