[Congressional Record Volume 151, Number 44 (Thursday, April 14, 2005)]
[House]
[Pages H2063-H2077]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1445

  Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of my 
time.
  Mr. Speaker, one does not need to get a good grade in Economics 101 
to realize that those who pay their bills as agreed end up having to 
pay for the cost of debts that are ripped off in bankruptcy. The number 
of bankruptcy filings has exploded. The number of proven instances of 
people gaming the system and using bankruptcy as a financial planning 
tool has gone up, and this bill stops those types of abuses.
  I would like to quote from page 4 of the committee report from 
testimony that was given by Professor Todd Zywicki, and he said, ``Like 
all other business expenses, when creditors are unable to collect debts 
because of bankruptcy, some of those losses are inevitably passed on to 
responsible Americans who live up to their financial obligations. Every 
phone bill, electric bill, mortgage, furniture purchase, medical bill 
and car loan contains an implicit bankruptcy tax that the rest of us 
pay to subsidize those who do not pay their bills. Exactly how much of 
these bankruptcy losses is passed on from lenders to consumer borrowers 
is unclear, but economics tell us that at least some of it is. We all 
pay for bankruptcy abuse in higher down payments, higher interest rates 
and higher costs for goods and services.''
  The Credit Union National Association, which is a national 
organization of nonprofit credit unions that are owned by their 
members, said that, as of 2002, they lost over $3 billion from 
bankruptcies since Congress started its consideration of bankruptcy 
reform legislation in 1998; and CUNA estimates that over 40 percent of 
all credit union losses in 2004 will be bankruptcy related, and those 
losses will total approximately $900 million.
  Now the credit unions are not the big issuers of credit cards. They 
are owned by their members, and those members have to pay additional 
costs of the services of their own credit unions because of the huge 
write-offs that have been described in this report.
  Now if my friends on the other side of the aisle were so concerned 
about bankruptcy abuse and the fact that this bill does not deal with 
the problem, they could have spent the time drafting an amendment in 
the nature of a substitute. They were offered by the Committee on Rules 
and I requested the Committee on Rules to make such a substitute in 
order, but, no, all they want to do is criticize, attack and come up 
with no positive alternatives.
  If that is their position, then the bankruptcy tax that everybody 
realizes is passed on to people who pay their bills as agreed to is on 
their shoulders, because we are trying to stop the abuse.
  I have heard an awful lot about the homestead exemption. If this bill 
goes down, eight States and the District of Columbia will continue to 
have an unlimited homestead exemption where corporate crooks can hide 
their assets from bankruptcy in a homestead and, once they get their 
discharge, sell that mansion and go off on their merry way. They want 
to keep that. Our bill closes it.
  We have heard an awful lot about asset protection trusts that become 
the law in a number of States. Page 506 of the bill contains a new 
section on fraudulent transfers and obligations that says that anybody 
who creates one of these trusts within 10 years of the date of filing 
can have that transfer voided if such a transfer was made to a self-
settled trust or similar device, such transfer was made by the debtor, 
the debtor is the beneficiary of the trust or similar device, and the 
debtor made the transfer with actual intent to hinder, delay, or 
defraud any entity to which the debtor was or became, on or after the 
date such transfer was made, indebted. Our bill closes those asset 
protection trusts. If the other side votes this bill down, they 
continue on and the blame for that is on their shoulders.
  We have heard an awful lot about medical bills. Well, the people who 
are complaining about medical bills put a tin ear on to the testimony 
that has been submitted in this extensive hearing record.
  The United States trustees program, independent people who administer 
the

[[Page H2064]]

Bankruptcy Code, collected data and made findings on medical debt. They 
drew a random sample and, of 5,203 debtors, 54 percent listed no 
medical debt. Those that did, medical debt accounted for 5.5 percent of 
the total general unsecured debt; 90.1 percent reported medical debts 
of less than $5,000; 1 percent of the cases accounted for 36.5 percent 
of the medical debt; and less than 10 percent of all cases represented 
80 percent of all reported medical debt. This is not the big problem 
that the people on the minority side have said it is. The data from the 
United States trustees proves this.
  Finally, we have heard about debt that has been run up by service 
people who are on active duty, whether it is the permanent active duty 
military service or Guard and Reserve members who have been called up 
to active duty.
  In the last Congress, the Congress enacted the Servicemembers Civil 
Relief Act, Public Law 108-189, which gives protection to people on 
active duty from collection of these debts by those that they have 
become indebted to, and this law puts a cap on interest at an annual 
rate of 6 percent on debts incurred prior to a person's entry into 
active military duty service.
  Mr. Speaker, this is a good bill. It is not a perfect bill. It is a 
good bill, but it plugs a lot of loopholes that abuse has been 
generated under, and it does provide protection for medical debts and 
to our service people.
  Let us not listen to the inaccurate statements that have been made by 
people who have been opposed to bankruptcy reform beginning 8 years 
ago, long before the military actions in Iraq and Afghanistan. Let us 
give some protection to the people who pay their bills that they have 
agreed to from the hidden bankruptcy tax, and the way we do that is by 
passing this legislation.
  Ms. DeLAURO. Mr. Speaker, to listen to this majority, we have a 
crisis in this country--one brought on by spendthrifts defrauding the 
public via our bankruptcy system. Indeed, to look at the statistics, we 
are facing a crisis--but it has nothing to do with ordinary Americans 
acting irresponsibly or even our bankruptcy system.
  Last year, more than a million-and-a-half families resorted to 
declaring bankruptcy--a full half of which occurred not because of any 
irresponsible behavior but because of unexpected medical expenses 
brought on by an illness or death in the family. These families--widows 
and widowers, mothers and fathers, many in the middle-class--are hardly 
``gaming the system''--they are doing the best they can under 
unbelievable circumstances that have left them with no choice but to 
resort to the only recourse they have: filing bankruptcy, wiping their 
debt and trying their best to start anew.
  If there is any ``crisis,'' it is the skyrocketing cost of health 
care, which has left more than 14 million Americans spending more than 
a quarter of their every paycheck on medical costs--that Mr. Speaker, 
is what I call a crisis. A moral crisis.
  We can all agree that individuals should be accountable for living 
beyond their means, but if anyone is ``gaming'' our bankruptcy system, 
it is the credit card companies, who have long been advocating for this 
bill at the same time they prey on unsuspecting customers. And as with 
previous incarnations of this legislation, there is virtually nothing 
in the bill that would require creditors to curb their outrageous 
predatory lending practices that mislead even the most educated 
consumers into debt.
  This bill is especially bad for women, who are the single largest 
group currently in bankruptcy. By making it harder for them to file for 
bankruptcy, we will make it more difficult for them to maintain 
essential items such as the car that gets them to and from their job. 
Women who are owed child support will be forced to compete with credit 
card companies and other lenders for dollars to spend feeding and 
clothing their children. The bill also allows perpetrators of violence 
against women at health centers to escape liability for their actions 
through the bankruptcy courts.
  Mr. Speaker, this bill is yet another product of an Administration 
and majority that taxes work and rewards wealth. It appeals to the 
worst in all of us, painting honest middle-class families who are 
working hard and taking personal responsibility for their actions as 
liars, cheaters and spendthrifts. At the same time it lets off the hook 
those who do act irresponsibly by preserving loopholes which allow 
wealthy bankruptcy filers to hide their true wealth in mansions and 
trust funds. I can hardly imagine a more unfair piece of legislation 
less concerned with promoting the common good, and I urge my colleagues 
to oppose it.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, as I stated with respect to 
the consideration of the rule, today is a sad day for America, its 
elderly, its veterans, its bereaved, and its aspirants for a second 
chance.
  This 512-page legislation before the Committee of the Whole simply 
falls far short of its purported goal of ensuring that every debtor 
repay as much of her debt as she can reasonably afford. Instead, this 
bill appeals to special interest groups--mainly credit card companies. 
The bill's sponsor has said that bankruptcy has become a system ``where 
deadbeats can get out of paying their debt scott-free, while honest 
Americans who play by the rules have to foot the bill.'' Given the 
economic gap as evidenced by the predominance of African American and 
Hispanic bankruptcy filers, it is clear that these minorities are 
viewed as the ``deadbeats'' of society. Given the harmful provisions 
that are contained within the legislation, it is clear that the 
Republican Majority wishes to perpetuate this condition.
  According to the Democratic Platform: ``The heart of the American 
promise has always been the middle class, the greatest engine of 
economic growth the world has ever known. When the middle class grows 
in size and security, our country gets stronger. And when more American 
families save and invest in their children's future, America grows 
stronger still . . . Today, the average American family is earning 
$1,500 less than in 2000. At the same time, health care costs are up by 
nearly one-half, college tuition has increased by more than one-third, 
gas and oil prices have gone through the roof, and housing costs have 
soared. Life literally costs more than ever before--and our families 
have less money to pay for it. Three million more Americans have fallen 
into poverty since 2000''.
  The bankruptcy bill, as it stands, has the potential to crush the 
dreams and futures of the vast majority of Americans. It will shut the 
door to the one avenue that is available to those who are eventually 
overwhelmed by debt.
  The proposed bankruptcy bill will lead to a new feudal system. Let me 
share a few facts with you. Do you know that currently, more that 1 of 
every 100 adults in America files bankruptcy each year? Families with 
children are twice as likely to file. Research shows that approximately 
50 percent of all families are forced to file bankruptcy due to medical 
expenses; and other 40 percent of families file bankruptcy due to 
divorce, job loss or death in the family.
  Hispanic homeowners are nearly three times more likely than White 
homeowners to file, and African American homeowners are nearly six 
times more likely than White homeowners. African Americans are also 
twice as likely to lose their homes due to foreclosures, often falling 
victim to the unscrupulous practices of predatory lenders. Furthermore, 
African Americans consistently have higher levels of debt. In a study 
of African American families, the typical family had debt of 30 percent 
of its assets, while the debt of the typical White family was 11 
percent of its assets.
  The process by which this bankruptcy bill has made its way to the 
Floor of the House frustrates both the notion of democracy and of 
representative government.
  I offered amendments to the bill that included: (1) closing a new 
loophole that threatens to undermine the comprehensive scheme to 
compensate victims of nuclear accidents, which Congress enacted long 
ago in the Price-Anderson Act (PAA); (2) increasing the amount of 
tuition expenses allowed under the Chapter 7 means test; and (3) 
precluding the discharge of debt arising out of suits against sex 
offenses; (4) striking the means test; and (5) supporting an amendment 
by my colleague Mr. Schiff to offer relief to those who are victims of 
identity theft.
  Chairman Mel Watt offered substantive amendments including one that 
would protect consumers from predatory lending tactics, and another 
that would seek to protect the credit of college students. Similarly, 
Representative Bobby Scott offered amendments that included proposals 
to allow debt to be discharged when bankruptcy is caused by unforeseen 
medical expenses or by the death of a spouse.
  However, the Republican Majority did not accept the amendments, and 
therefore ignored the issues advocated by my constituents and those of 
my seventeen Democratic colleagues.
  The Republican leadership of the Judiciary Committee passed this 
measure without consideration of a single amendment that was offered by 
my Democratic colleagues and me. They effectively shut Democrats out of 
the markup process and thereby ignored the voices of the people's 
representatives on this very serious policy matter. When the bill was 
considered in the Senate, the Majority rejected over 25 Democratic 
amendments, including one that would have helped debtors to keep their 
homes if they have been driven into bankruptcy by medical expenses. 
Clearly, the Majority has priorities that do not protect Americans who 
are victims of circumstances that have nothing to do with 
creditworthiness.

[[Page H2065]]

  Of the amendments that my Democratic colleagues and I plan to offer 
(for our upcoming consideration) before the House is one that would 
remove the Chapter 7 `means test'. This would sift out debtors who can 
afford to repay at least a portion of their debts from those who 
cannot. Debtors who have income above a ``state median'' would have to 
plead before a bankruptcy judge.
  The egregious provisions of this bankruptcy bill and its name are not 
unlike many recent bills that have sifted through committee and onto 
the House Floor. Banks, credit card companies, and retailers have 
accounted for more than $24.8 million of campaign and partisan 
contributions since 1999. Commercial banks have given some $76.2 
million, according to a study of campaign finance and lobbying 
disclosure reports and the Center for Responsive Politics. The banking 
industry has spent $22 million on federal lobbying in the past five 
years. In fact, according to the New York Times, ``The main lobbying 
forces for the bill--a coalition that included Visa, MasterCard, the 
American Bankers Association, MBNA America, Capital One, Citicorp, the 
Ford Motor Credit Company and the General Motors Acceptance 
Corporation--spent more than $40 million in political fund-raising 
efforts and many millions more on lobbying efforts since 1989.''
  Clearly, the Republican Majority has shut Democrats out of the 
process in order to appease these special interest groups--to the 
detriment of middle-class and elderly Americans.
  As an African American, I am troubled by the fact that both African 
American and Hispanic families, both of whom are over-represented in 
bankruptcy, would suffer disproportionately if this bill becomes law.
  Proponents of this bankruptcy bill suggest that it will put pressure 
only on the families that have the ability to repay. In fact, the 
weight of the evidence demonstrates that this legislation will increase 
the cost of bankruptcy for every family, and decrease the protection of 
bankruptcy for every family, regardless of income or the cause of 
financial crisis. The bill contains provisions that will force many 
honest debtors unnecessarily out of Chapter 7, make Chapter 13 
impossible for many of the debtors who file today, protect significant 
loopholes for wealthy and well-advised debtors, as well as raise the 
cost of the system for all parties. It will turn the government into a 
private collection agency for large creditors, and force women trying 
to collect child support or alimony to compete with credit card 
companies that will have more of their debts declared non-
dischargeable.
  The ability to file for bankruptcy relief and to receive a fresh 
start is a source of hope for a number of American families that suffer 
the burden of financial problems. What this Administration proposes 
with this bankruptcy reform bill is an attack upon minorities. It will 
make it virtually impossible for many families to extricate themselves 
from a web of high interest debt--and kill the dream of these families 
to become homeowners.
  Mr. Speaker, I reject this legislation not only because it is flawed 
in and of itself but also because the process by which it is being 
considered is severely flawed. Americans deserve and have a right to a 
better process.
  Mr. BLUMENAUER. Mr. Speaker, for as long as I've been in Congress I 
have supported bankruptcy reform on two simple principles; I believe 
people should pay their debts, if they are able, and that we should end 
abuses in the system, whether by people who deliberately run up their 
bills or by businesses who exploit the gullible and the unfortunate.
  My first vote in favor of bankruptcy reform was cast with 
reservations because some of the provisions of the bill seemed unduly 
harsh, but I had hoped that the legislative process would ultimately 
improve the product. Unfortunately, for 8 years we have been unable to 
see the bill move through the legislative process and improve; it 
appears as though the bill, if anything, is actually less adequate due 
to increasing predatory lending by credit card companies and 
skyrocketing medical costs.
  One of my deep concerns has been credit card mills, which send out 
millions of credit cards to people who are not creditworthy. In 2001 
there were 5 billion solicitations by credit card companies. Meanwhile, 
skyrocketing fees have been coupled with reduced minimum payments. 
Bait-and-switch techniques have been employed that change the terms and 
raise the interest rates of cardholders who have never missed a 
payment.
  While S. 256 contains overly harsh punishments for middle class 
Americans that have been preyed upon by the credit card industry, it 
preserves loopholes for the very rich. S. 256 maintains a homestead 
exemption that allows people with lots of money to shield their assets 
by purchasing multimillion dollar homes in certain states. O.J. Simpson 
was able to shield many of his assets by doing this in Florida. There 
are even sophisticated trust arrangements that enable people with 
substantial sums of money to be protected from the provisions of this 
bankruptcy bill.
  There are some simple, common sense changes that could be made to 
this bill that would make it more fair to all parties involved. The 
Senate, however, was unwilling to compromise and approve any of these 
provisions and the House leadership has prevented any of these 
proposals from even being debated on the floor. Perhaps the most 
glaring example of the majority's unwillingness to compromise is the 
rejection of an amendment that would protect soldiers injured in Iraq 
and Afghanistan from the unfair ``means test'' within this bill.
  I have had meetings over the years with individuals who represent all 
sides of this issue: the bankruptcy trustees, judges, and lawyers who 
represent the debtors, and the people who extend credit to businesses 
large and small and to individuals rich and poor. As a result of these 
meetings, it is clear that the loopholes do remain and that the abuses 
of lending practices are not being reigned in. The bill provides a 
mandate for unnecessary and burdensome paperwork and the most extreme 
requirements, including personal certification of the facts by the 
attorneys assisting the debtor that are not found anyplace else under 
any other legal provisions. This is going to shut down programs like 
the legal clinic at Lewis and Clark law school in Portland and will 
make it harder for legitimate creditors to be able to get their money 
back in a timely fashion.
  The sad fact is that most bankruptcies are due to large medical 
bills, family breakup, and job loss. This legislation is going to put 
an unnecessary burden on the vast majority of unfortunate people and 
still allow too many of the unscrupulous to avoid their 
responsibilities. It does not have to be this way. I continue to hope 
that the political process will respond to these problems with sympathy 
and concern for the unfortunate. Until that point, I cannot support S. 
256 in good conscience.
  Mr. KIRK. Mr. Speaker, I am proud to vote in favor of S. 256, The 
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This 
important bill brings needed reforms to our nation's bankruptcy system. 
The legislation reduces the unfair disparity of treatment in the 
bankruptcy system by establishing more uniform and predictable 
standards.
  I am particularly pleased to note the compromise reached on 
healthcare and employee benefits. This legislation takes great strides 
to protect patients' rights, and it encourages debtors and trustees to 
consider patients' interests when administering healthcare bankruptcy 
cases. Patients are given a voice through the appointment of an 
ombudsman, who advocates for the confidentiality of patients' records 
and ensures patients are transferred to appropriate facilities. These 
are critical provisions that protect the rights of those with failing 
health.
  I would like to commend a constituent from my district for his 
contributions to this legislation, Keith J. Shapiro, Esq., of 
Northbrook, Illinois, and his colleague Nancy A. Peterman, Esq. Mr. 
Shapiro testified in support of these patient health provisions before 
the U.S. Senate Committee on the Judiciary Subcommittee on 
Administrative Oversight and the Courts on June 1, 1998. The passing of 
this legislation marks the culmination of Mr. Shapiro and Ms. 
Peterman's tireless efforts to protect patients' interests in 
bankruptcy cases. On behalf of my colleagues in Congress, I offer my 
sincere gratitude for their dedication to fair bankruptcy policy.
  Mr. HOLT. Mr. Speaker, thank you for allowing me the opportunity to 
offer my remarks today regarding S. 256, the so-called ``Bankruptcy 
Abuse Prevention and Consumer Protection Act.'' The issue of bankruptcy 
reform is extremely important and it is critical that we pass a measure 
that will both ensure greater personal responsibility of debtors, as 
well as ensure that credit card companies and other creditors take 
responsibility for their reckless lending. Unfortunately, this bill 
does neither. In fact, the bill before us today overly penalizes 
working families. In fact, the bill before us today takes no action 
against reckless and predatory lending. This bill will do nothing to 
reduce the number of bankruptcy filings or address the problem of 
record-high consumer debt, which now stands at $2 trillion.
  As to the substance of the legislation, it is no secret that the 
number of bankruptcies has risen dramatically over the past few years. 
In 2001, 1,398,864 people filed for bankruptcy in the United States. 
According to the Center for American Progress, in 2003 there were a 
record number of 5.5 personal bankruptcy filings for every 1,000 people 
living in the United States. In 2003, my own state of New Jersey ranked 
slightly below the national average at 4.8 filings per every 1,000 
residents. This past year, the number of personal bankruptcies had 
risen to 1,584,170, an increase of over 13 percent. In my own state of 
New Jersey, citizens have seen a similar increase in bankruptcy filing 
over the past three years. With those facts in mind, I strongly support 
the principle of increased personal responsibility of debt.

[[Page H2066]]

  While there are many problems with S. 256, I'll name just a few of 
the more egregious provisions to which I strongly object. While the 
bill purports to elevate the priority of child support payments, in 
reality credit card companies would receive repayment of debt at the 
same rate as child support obligations. Children and families will now 
compete with credit card companies for payment. The bill's homestead-
exemption cap does little to address the problem of wealthy debtors 
shielding their assets from creditors by purchasing million-dollar 
homes. Sophisticated, wealthy debtors can easily plan ahead and evade 
the cap. The provision in the bill dealing with ``asset protection 
trusts'' also does not adequately address the problem of wealthy 
individuals stashing millions away in trusts that are protected in 
bankruptcy proceedings. The bill puts the onus on creditors and the 
court to prove that the debtor was actively trying to avoid creditors 
by transferring money into the trust. The bill does nothing to protect 
people who have medical liabilities.
  The bill also imposes artificial deadlines and cumbersome new 
paperwork requirements on small businesses trying to reorganize, and it 
unnecessarily limits the discretion of bankruptcy judges in crafting 
the best possible result for small-business debtors and creditors. The 
rigid and unrealistic requirements will force many viable small 
businesses to permanently close their doors.
  Mr. Speaker, I recognize that there have been, and likely continue to 
be, abuses of the bankruptcy law, which was designed to be a safety 
net. As I've said before, I strongly support increased personal 
responsibility for debt accrued. However, this should coincide with 
greater responsibility on the part of the creditors. It is the 
creditors who often shamelessly target college students and low-income 
individuals with their credit card applications. It is the creditors 
who subsequently grant these individuals higher levels of credit at 
high interest rates. It is the creditors who saddle these individuals 
with insurmountable levels of debt. In fact, it is estimated that the 
credit card industry mails out five billion unsolicited credit card 
offers a year.
  I believe we would be better served if we could fully debate the 
merits of this legislation, as well as substantive amendments that were 
disallowed from consideration by the full House. Sadly, once again, we 
cannot, and I urge my colleagues to oppose this legislation.
  Mr. MORAN of Virginia. Mr. Speaker, the ``Bankruptcy Abuse Prevention 
and Consumer Act'' is long overdue and with House passage later today, 
it stands a very real prospect of becoming law. It's been an extremely 
long road to reform.
  I originally supported bankruptcy reform in 1998 with former 
Representative George Gekas. Ironically, the legislation was drawn from 
the recommendations of the bipartisan National Bankruptcy Review 
Commission that was established through legislation passed in 1994 by a 
Democratic-controlled Congress. It enjoyed the same level of bipartisan 
support as when it passed the Senate last month.
  The main component of the commission's recommendations and the 
legislation we have here today is to establish a means-based test to 
determine who should work with creditors on a plan to repay their debts 
and those who cannot afford to do so. Sometimes a market-based 
capitalist economy can be unforgiving, but Americans are fair and 
decent people. We want a system that allows a fresh start to those in 
financial trouble, but also one that promotes personal responsibility 
and is not susceptible to fraud and abuse.
  The means test in this bill carves out a series of exemptions to 
steer those who can afford to repay at least part of their debt toward 
a Chapter 13 repayment plan. This test takes into account exemptions 
for living expenses, health and disability insurance, expenses to care 
for an elderly or disabled family member, secured debts, and home 
energy costs among others. It also recognizes situations where 
individuals face overwhelming medical costs or other debilitating 
situations. Under the bill, if an individual can demonstrate ``special 
circumstances'' that create an overwhelming financial burden, those 
individuals would not be required to file for Chapter 13. As a final 
safeguard, those people earning less than their state's median income 
would automatically be ineligible for Chapter 13.
  It is estimated that only a small minority of those already filing 
for bankruptcy would be affected, perhaps as little as 7 percent. 
Contrary to some reports, families and individuals facing difficult 
economic circumstances, people who may have lost their job or family 
breadwinner or have been devastated by a severe medical condition, will 
be given a chance to clear their debts and receive a fresh start under 
this bankruptcy reform legislation.
  Back in 1998, I encouraged supporters of the bill to improve its 
consumer protection provisions. They responded by making child support 
a priority in a repayment plan, requiring credit counseling prior to 
filing for bankruptcy, and limiting abuses caused by a few unscrupulous 
individuals who hide their wealth behind a state's homestead 
provisions.
  At the onset of the 107th Session, I sought and won the House's 
approval of my pro-consumer amendments that remain a part of today' s 
bill. These provisions:
  Require credit card companies to include a disclosure statement 
highlighting the number of months necessary to repay a balance if the 
card holder were to pay only the minimum amount due;
  Require credit card companies to inform cardholders on when their low 
introductory rates expire and new higher rates take effect; and
  Prevent deceptive and fraudulent advertising practices by debt relief 
agencies by making certain that creditors are informed of their rights 
as debtors.
  Could these provisions be perfected? I suspect so. There were several 
other consumer protections we were unsuccessful in getting included. 
But perfection should not be an enemy of the good.
  Increasingly, bankruptcy has become a tool of first impulse rather 
than a last option after all other avenues have been exhausted. Last 
year, 1.6 million consumers filed for bankruptcy, a figure just short 
of the number of filings in 2003, which represented the most in our 
nation's history. How is it that during periods of sustained economic 
growth and prosperity, such as during the Clinton presidency, when all 
incomes rose, bankruptcies also continued to climb?
  S. 256 has been criticized for advancing the interests of the credit 
card industry on the backs of the poor and the middle class, many of 
whom are in debt because of circumstances beyond their control. I am 
sympathetic to this argument, but the flaw is not with this 
legislation. Those deserving of a fresh start will still be able to do 
so under this legislation.
  The real flaw is with an agenda that the majority continues to 
advance.
  Most families in dire financial straits and filing for bankruptcy 
will be able to discharge their debts under this legislation. But why 
are they facing bankruptcy?
  One reason is that 41 million Americans are uninsured because the 
majority party refuses to address this growing crisis.
  Another is because 7.3 million Americans live on the minimum wage, 
more than one-third of whom rely on the $5.15 cents per hour to support 
their family. They last saw a minimum wage increase in 1997.
  It is because during the height of the last recession, the majority 
party refused to allow any extension of unemployment benefits, because 
they were too busy falling all over themselves to cut taxes for the 
wealthiest Americans.
  We just passed this week a permanent elimination of the estate tax, 
helping the wealthiest among us avoid paying any tax on their untaxed 
earnings, and passed a budget resolution that will cut health care to 
the indigent.
  Mr. Speaker, bankruptcy reform has merit and should become law. It is 
the majority's overall agenda that is bankrupt and in need of reform.
  Mr. CUMMINGS. Mr. Speaker, after eight years of consideration, we are 
now poised to enact bankruptcy legislation that is deeply flawed. Like 
so many of the policy priorities pursued by this Congress and the 
Administration, this bill hurts the most vulnerable among our citizens.
  Many of my colleagues have already discussed the terrible provisions 
that the legislation now before the House would implement. For example, 
this bill would institute a means test for eligibility to file Chapter 
7 bankruptcy that two national commissions have concluded would be 
counter-productive, difficult to administer, and would yield little 
revenue to creditors. It would remove critical automatic stay 
provisions that currently prevent the eviction of those who are seeking 
to clear arrearages in their rent. S. 256 also would reduce the amount 
of personal property that those filing for bankruptcy can retain.
  The Republican-crafted and credit-industry driven bankruptcy reform 
bill is inapposite the goals for which bankruptcy was conceived. 
Bankruptcy is intended to provide a `fresh start' to those who file--
not leave them sinking in financial quicksand.
  However, rather than highlight the numerous other misguided 
provisions of S. 256, I want to look for a moment at the economic 
policies of which this legislation is just one more disappointing part.
  The sponsors of S. 256 claim that the rising number of people filing 
bankruptcies in our nation is evidence that there is widespread abuse 
of our current bankruptcy protections. Actually, the rise in bankruptcy 
filings is a powerful and tragic reminder that our Administration's 
economic policies are not raising living standards but are instead 
contributing to the increases in bankruptcy filings. I note that 
bankruptcy filings actually decreased in 2004.
  In the Economic Report of the President delivered to Congress in 
February of this year,

[[Page H2067]]

the Administration wrote that the ``President's policies are designed 
to foster rising living standards at home, while encouraging other 
nations to follow our lead.'' The President's policies are not worthy 
of emulation in other nations--and they are not worthy of continuation 
in our nation.
  Job creation in our nation is failing to keep pace with the growth in 
the labor force. The Brookings Institution has noted that since the 
year 2000, there has been a 2 percent decrease in workforce 
participation among young people aged 25-34, which is unprecedented 
since World War II.
  Slow job creation has also put little pressure on businesses to raise 
wages. As a result, wages for many low- and middle-income workers are 
now not keeping pace with consumer prices. Perhaps not surprisingly, 
the Congressional Research Service found that in 2001, 27 percent of 
families in the lowest one-fifth of household income distributions had 
debt obligations that exceeded 40 percent of their incomes.
  While workers are not seeing increases in their purchasing power, 
they are also being left without health insurance to cover their 
medical expenses. A recent Harvard Study published earlier this year 
found that nearly half of all bankruptcy filings involve some major 
medical expense. As recently as 1981, medical expenses accounted for 
less than 10 percent of bankruptcy filings.

  Forty-five million Americans are now uninsured--and countless 
millions more regularly experience lapses in coverage. More than 38 
percent of those who filed bankruptcy for medical reasons were found to 
have experienced some type of lapse in their insurance coverage during 
the two years preceding their filing.
  In fact, 90 percent of the bankruptcies filed are by those who have 
been injured, are sick, have been laid off, and/or are going through a 
divorce. Laid-off workers are the fastest growing group of people 
filing bankruptcy.
  All the while, credit card company abuses are mounting in the form of 
deceptive marketing practices, irresponsible accounting practices and 
other predatory practices. Negative amortization by credit card 
companies require minimum payments so low as to allow debt to increase 
rather than be reduced. These practices are designed to give the debtor 
a false sense of financial health while incurring more debt. The result 
is often inevitable. The minute a tragedy strikes and a debtor falls 
behind in one payment, debtors are often swarmed upon by all of their 
credit card companies--who want to collect immediately. This is an 
unfair result for these debtors and a boon for creditors.
  And now, Congress is poised to add insult to uninsured injury by 
destroying the basic protections that our bankruptcy laws have offered 
to those most in need.
  Mr. Speaker, the increase in personal bankruptcy filings in our 
nation is not proof that our bankruptcy laws need reform. It is, 
instead, proof that our economic policies need reform--and need reform 
urgently.
  This bill only serves to disadvantage those honest Americans 
struggling to make ends meet. I urge my colleagues to oppose S. 256.
  Ms. SOLIS. Mr. Speaker, I rise in strong opposition to S. 256, 
legislation that will make it harder for individuals to eliminate their 
debts after liquidating most of their assets by filing bankruptcy. 
Thousands of women and their children are affected by the bankruptcy 
system each year. This bill will only inflict additional hardship on 
over a million economically vulnerable women and their families. In 
fact, women are the fastest growing group to file for bankruptcy. More 
than 1 million women will find themselves in bankruptcy court this 
year, outnumbering men by about 150,000. Women who lose a job, have a 
medical emergency, or go through divorce make up more than 90 percent 
of the women who file for bankruptcy.
  This legislation's means test provision would require even the 
poorest filers--struggling single mothers, elderly women who are 
victims of scam artists--to meet complicated filing requirements to 
access the bankruptcy system. In addition, the bill would make it much 
harder for women to collect child support payments from men who file 
for bankruptcy because the bill gives credit card companies, finance 
companies, auto lenders and other commercial creditors rights to a 
greater share of the debtor's income during and after bankruptcy. This 
bill pulls the rug out from under economically vulnerable women and 
children. It increases the rights of creditors while making it harder 
for single parents and others facing financial crises.
  This harsh bankruptcy reform legislation will not help those families 
that are struggling to get by. This bill will do nothing to reduce the 
number of bankruptcy filings or address the problem of record-high 
consumer debt. It is a gift to the credit card and banking industries; 
but one that will be paid for by those least able to afford it. Instead 
of giving a handout to credit card companies, we should ensure that 
Americans losing their jobs or struggling with medical debt have a 
second chance for economic security. That is what our bankruptcy laws 
are intended to provide. This bill is terrible for consumers, working 
families and women, and I urge my colleagues to vote against it.
  Mr. CARDIN. Mr. Speaker, I support equitable reform of our nation's 
bankruptcy laws.
  I recognize that there has been abuse of our bankruptcy system, and 
that reform is needed. I think we can 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 items prior to declaring bankruptcy, should be held 
accountable. It is contrary to our values as Americans--this idea that 
some people are able to abandon their debts by gaming the system. Their 
actions are not fair to the vast majority of Americans who work hard to 
pay their debts in full, and Congress should act to limit irresponsible 
use of our bankruptcy system.
  I have in the past supported reasonable bankruptcy legislation, and 
although this bill does contain some good provisions, I regret that I 
cannot vote for the bill before the House today.
  S. 256 would make it more difficult for individuals and families who 
have suffered bona fide financial misfortune to get a fresh start. It 
does so by establishing a rigid means test to determine if an 
individual is eligible for Chapter 7 relief. Regardless of the 
circumstances that led the individual to seek bankruptcy, the court is 
not permitted to waive the means test. In other words, ``one strike, 
you're out.''
  I am disappointed that we did not add some reasonable flexibility 
measures to the ``means test.'' The stated purpose of the bill's 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.
  What are the reasons that individuals seek what we call ``bankruptcy 
protection?''
  Harvard Law School recently researched bankruptcies and found that 
nine out of ten persons filing bankruptcy have faced job loss, severe 
health problems, divorce or separation. Illness or medical bills drove 
nearly half of these filings.
  Unfortunately, the bill before us does not offer any relief in these 
or other tragic circumstances. I voted against the rule because it 
provides the House no opportunity to vote on amendments that would 
allow a court to consider extreme circumstances that might have led to 
bankruptcy filings.
  I am disappointed that here in the House, the Judiciary Committee 
failed to close a popular loophole used by the very wealthy to shield 
millions of dollars by setting up asset protection trusts. If the 
majority were truly interested in creating a more fair bankruptcy 
system for all Americans, this would have been included in the bill.
  The Judiciary Committee also failed to rein in some of the practices 
of credit card companies that are in part responsible for the rise in 
bankruptcy filings. They refused to provide credit card users with more 
detailed information to assist them in handling debt. Why not help 
consumers understand the consequences of their financial decisions, 
such as making only the minimum payment each month, so that they can 
avoid some of the missteps that can lead to higher debt?
  We do need bankruptcy reform, and I wish that we had an opportunity 
to address many of these valid concerns.
  I want to address the concerns of elderly Americans. The number of 
senior citizens in bankruptcy tripled from 1992 to 2001, representing 
the largest increase of any group of Americans. According to the 
Baltimore City Department of Aging, bankruptcies among elderly city 
residents have increased by nearly 50 percent over the past year.
  Their costs of living are increasing steadily, including their rent, 
food, and heating costs. Many of them routinely use credit cards to 
cover their daily expenses. They are not spending frivolously--they are 
just getting by.
  During previous Congresses when this bill was considered, employers 
were less likely to file for bankruptcy to shed health care and pension 
obligations to their retirees. More than one million Americans have had 
their pension plans taken over by the Pension Benefit Guarantee 
Corporation. From 2003 to 2004 alone, 192 plans were taken over by the 
PBGC. These retirees have seen their benefits reduced and so they must 
pay more for health care. But they have not had their debts reduced 
accordingly. An amendment in the other body that would have required 
companies that dropped retiree health benefits to reimburse each 
affected retiree for 18 months of COBRA coverage upon reemerging from 
bankruptcy was defeated.
  Many seniors who do not yet qualify for Medicare or who have 
prohibitively high copays also pay medical bills and prescription

[[Page H2068]]

drug costs with credit cards. Often they skip dosages or forgo care 
entirely because they cannot afford it. We know the result, which is 
that many end up with much more severe conditions and many wind up in 
nursing homes. That translates into greater burdens on our federal and 
state budgets, and higher costs for us all.
  I am disappointed that the victims of identity theft cannot seek 
relief under this bill. We have just learned that between ChoicePoint 
and Lexis-Nexis, thousands of individuals have been the victims of 
identity theft. In the last few years, the Ways and Means Committee has 
held fifteen hearings on a bill to reduce Social Security Number theft, 
and last year, we reported out a responsible bipartisan bill, but it 
was not brought to the floor. This year, I am again an original 
cosponsor of this bill, but it is not yet law, and so virtually every 
American remains at great risk for identity theft. Unfortunately, our 
vote on the previous question--to allow bankruptcy judges to take into 
consideration the fact that persons are forced into bankruptcy because 
of identity theft--was defeated.
  Mr. Speaker, I want to vote for an equitable bankruptcy reform bill. 
So many Americans have been driven into bankruptcy not from a desire to 
game the system, but because of circumstances beyond their control. 
This legislation fails to adequately protect their legitimate needs. It 
is because of them that I must vote against this bill.
  Mr. CANTOR. Mr. Speaker, we have before us today a bill that provides 
a safety net for people who have lost a job, had health problems, or 
served in the military and cannot repay their debts. It gives them the 
opportunity for a fresh start while continuing to hold accountable 
those who are able to repay their debts.
  Bankruptcy abuse represents a ``hidden tax'' on the American people. 
When businesses have to raise the cost of their products due to unpaid 
liabilities, that cost is passed unfairly to all of us.
  When people file for bankruptcy and cancel out their debts, small 
businesses suffer major financial setbacks. Bankruptcy to a small 
business triggers a change in its bottom line. A smaller bottom line 
means less money to pay employees, which leads to job cuts--something 
nobody would like to talk about, and certainly nobody would like to 
encourage.
  This legislation will modernize the system and make it more difficult 
to hide behind the protections of filing for bankruptcy. With this bill 
we will lessen the impact of the unpaid debt that is a hindrance to 
thousands of businesses and hurts our ability to create jobs.
  Mr. SHAYS. Mr. Chairman, I rise in support of S. 256, the Bankruptcy 
Abuse Prevention and Consumer Protection Act. It is a basic principle 
of commerce in our country that when a person makes an obligation to 
pay someone for a good or service, they do so. We ought to address the 
fact that our nation had over 1.6 million bankruptcy filings last year, 
and an estimated $44 billion in debts are discharged annually. When 
creditors are unable to collect money owed to them, we all pay the cost 
in the form of higher costs, higher interest rates and higher 
downpayments.
  I want to be very clear that this legislation will not prevent those 
who have incurred oppressive indebtedness from filing. It will apply a 
means test that weighs whether a debtor has enough disposable income to 
repay creditors. If, after applying this test, the debtor has little or 
no disposable income, they will be able to file for straight bankruptcy 
just as they always have. Those who earn wages and have the ability to 
repay, however, will be required to file for Chapter 13 bankruptcy, 
restructure their debt and repay a portion of it.
  I have heard from a number of my constituents concerned about high 
credit card rates, predatory loan practices and identity theft. I share 
their concern and believe that after passing this legislation today, we 
must redouble our efforts to pass legislation curbing predatory 
lending, and we must build on the legislation we passed during the last 
Congress regarding identity theft.
  This is comprehensive legislation and while supporting its passage, 
this body should pledge strong oversight and the willingness to review 
its effect on bankruptcy filers and the economy at large.
  Mr. HONDA. Mr. Speaker, today, the Republican majority continues its 
assault on hardworking Americans by ramming through the House of 
Representatives bankruptcy legislation that harms even the most ethical 
among us. The legislation before us today is an indefensible gift to 
the credit card industry, and I urge my colleagues to join me in voting 
against it.
  S. 256, The Bankruptcy Abuse Prevention and Consumer Protection Act, 
purports to introduce a greater level of personal responsibility into 
the bankruptcy system by eliminating various loopholes and incentives 
that encourage consumer bankruptcy filings and abuse. The bill's 
proponents argue that this kind of abuse is rampant, but expert 
analyses suggest another story. According to a Harvard study, about 50 
percent of all families that file for bankruptcy are forced to do so as 
a result of medical expenses, and three-quarters of those individuals 
actually have health insurance. Another 40 percent have been driven 
into bankruptcy, at least in part, after suffering a job loss, divorce, 
or death in the family. The American Bankruptcy Institute estimates 
that no more than three percent of filers avoid repayment of debts by 
gaming the system. The simple truth is that almost all individuals 
declaring bankruptcy do so as necessity and a last resort!
  Sadly, the mechanisms employed by this bill to crack down on 
bankruptcy abuse will have a disproportionate impact on women, minority 
communities, the elderly and the unemployed. It will impose a rigid 
means test that will make it more difficult for debtors to get a 
``fresh start.'' The bill also will endanger child support payments, 
permit landlords to evict tenants, and frustrate efforts by debtors to 
save homes and cars. It betrays veterans who accumulate debt following 
an injury or disability sustained on active duty. In a final insult, 
the Republican leadership denied the opportunity for Democrats to offer 
amendments that would have protected veterans and other vulnerable 
communities.
  While the Republican majority wishes to hold the average American 
accountable, it seeks to preserve privileges and loopholes for the 
financial industry and the rich. The bill does nothing to reign in 
credit card companies that engage in reckless lending, and it allows 
wealthy debtors in five states to declare bankruptcy and keep their 
multimillion-dollar homes without penalty. Once again, the Republican 
leadership thwarted amendments that would have evened the playing field 
for debtors and creditors. Amendments to close loopholes for 
millionaires, discourage predatory lending, and cap interest on 
extension of credit were flatly rejected by the Republican majority on 
the Rules Committee.
  Reasonable bankruptcy reform may be necessary, but S. 256 is an abuse 
of the legislative process and a threat to the financial security of 
all Americans. I urge my colleagues to oppose S. 256.
  Mr. ALLEN. Mr. Speaker, I rise in opposition to S. 256. This bill 
helps big credit card companies at the expense of working families in 
crisis.
  A Harvard University study reports that more than forty-five percent 
of all bankruptcies are filed because of a health emergency. 
Approximately ninety percent of all bankruptcies are due to a health 
care debt, job loss, or a divorce. When this personal crisis happens, 
families are driven into crushing credit card debt that they ultimately 
cannot manage.
  Working families are being squeezed by skyrocketing health care 
costs, gas prices, and housing costs. At the same time, this Republican 
Congress is reducing the social safety net for working families: 
Medicaid, Social Security, and now, bankruptcy protections.
  Mr. Speaker, I know there are people abusing the bankruptcy code. But 
There are also companies marketing loans to people who cannot afford 
them. Credit unions and community banks make responsible loans and do 
responsible underwriting. But this bill does nothing to make big credit 
card companies curb their abusive marketing strategies or practice 
responsible underwriting.
  Vote ``no'' on S. 256.
  Mr. UDALL of Colorado. Mr. Speaker, I do not support this bill in its 
present form--and, since the Republican leadership has made it 
impossible for the House to even consider any amendment, I have no 
choice but to vote against it.
  In recent years, Colorado has been one of the states with the 
greatest increase in bankruptcy filings. Opinions vary about the 
causes, but this fact does suggest a need to consider whether the 
current bankruptcy laws should be revised. So, I am not opposed to any 
change in the current bankruptcy laws, and in fact I think some of the 
bill's provisions would make reasonable adjustments in those laws.
  But this legislation was first developed years ago and neither its 
supporters nor the leadership have been willing to give any real 
consideration to adjusting it to better reflect current conditions.
  In particular, I think that the bill should have been amended to more 
appropriately address the financial problems being encountered by some 
members of the regular Armed Services as well as by members of the 
National Guard who have been called to active duty in Iraq or 
elsewhere.
  If the motion to recommit had prevailed, the bill would have been 
amended to exempt from the means test at least those National Guard and 
Reservists whose debt resulted from active duty service or was incurred 
2 years of returning home from their service. Unfortunately, the motion 
was not adopted.
  For me, this is a very serious matter and the lack of such an 
amendment is one of the main reasons I cannot support the bill.
  Under these circumstances, I am not persuaded that the bill now 
before us is the right

[[Page H2069]]

prescription for Colorado or our country. I think it still needs work--
and because of both its shortcomings and the refusal of the leadership 
to permit consideration of any changes, I cannot support it.
  Mr. KIND. Mr. Speaker, I rise today in support of this legislation 
because the current system needs reform to protect those people truly 
in need of debt relief, while holding accountable those who can repay 
their debt.
  Bankruptcy filings have risen steadily in recent years, an indication 
that our current system is an ineffective one that discourages 
consumers from saving and planning responsibly and ultimately isn't 
good for consumers, families, or a society that values individual 
responsibility. I believe bankruptcy should be a last resort--one that 
allows people who need protection to receive it and people who can 
repay all or some of their debts to do so. The system in place now 
gives incentives to people in trouble and encourages them to steamroll 
headfirst into Chapter 7 liquidation of all their debts, even when they 
could get back on their feet through a reasonable repayment plan or 
basic credit counseling.
  While S. 256 is not a perfect bill, I do believe it goes great 
lengths in addressing the growing problem of bankruptcy in this 
country. I believe there is great misunderstanding about what this bill 
does and who will be affected. Only those earning above the median 
income and who have the ability to pay will be required to pay back 
their debt. However, millionaires who use bankruptcy law as a method of 
financial planning will no longer be able to buy extravagantly and 
subsequently have all of their debt written off.
  It is also important to note that many families and small businesses 
will benefit because of changes to this law. Bankruptcy costs are 
passed on to other consumers, and the average family pays hundreds of 
dollars each year in higher prices. Additionally, small businesses that 
might otherwise not be paid for their goods or services will have a 
better chance of gaining compensation as a result of this bill. A very 
positive aspect of S. 256 is that it makes permanent Chapter 12 of the 
bankruptcy code. I, along with other members of Congress, have been 
working for years to make permanent this much-needed source of relief 
for our family farmers.
  There have been accusations that this bill will be detrimental to the 
most needy; in fact, there are a great deal of safeguards. S. 256 
includes protections ensuring that alimony and child support payments 
are made. I believe single parents and dependent children need our help 
far more than millionaires who benefit from current bankruptcy laws. 
Additionally, families who have exorbitant medical bills they cannot 
afford can still file for Chapter 7, and judges will still have a great 
deal of discretion when it comes to the issue of means-testing.
  In addition, this legislation will create new disclosure requirements 
for lending institutions to provide better information to consumers 
about credit cards and debt. This is particularly important for young 
adults who are bombarded by credit applications and have limited 
knowledge about the risks that accompany credit card ownership.
  It is important to note that this legislation is only the first step 
in addressing the bigger problems underlying savings in this country. 
With an over-reliance on credit cards and a lack of saving for 
retirement, too many Americans find themselves on shaky financial 
ground. Addressing this problem must be our next goal, and we must 
encourage more personal responsibility in consumers.
  The Bankruptcy Abuse Prevention and Consumer Protection Act will 
benefit consumers and provide all Americans with better access to 
credit. It helps prevent abuse of the system while providing debt 
protection to those who truly need it. I urge my colleagues to support 
this legislation.
  Ms. KILPATRICK of Michigan. Mr. Speaker, I rise in opposition to S. 
256, the Bankruptcy Abuse Prevention and Consumer Protection Action. 
The title of this bill is a misnomer. It should be titled the 
``Corporate Protection and Improved Profitability Act''. If passed, 
this Act will be a boon for credit card and financial lending 
institutions and a nightmare for American families who are struggling 
to stay strong in an economically depressed society. Essentially, the 
House is contemplating legislation that is more punitive to individuals 
seeking bankruptcy protection than corporations that resort to filing 
for bankruptcy.
  I also have concerns about House procedures for S. 256. A closed rule 
was employed, resulting in thirty-five Democratic amendments being 
rejected from consideration. Debate on an amendment to the bill was 
prevented. Thirty-five amendments were submitted before the Rules 
Committee and not one was accepted. Not only were members of the House 
prevented from engaging in debate but also the American people have 
been denied the opportunity to hear legitimate debate regarding this 
Act we are considering today. I am especially distressed about the 
majority's refusal to accept amendments that related to identify theft 
and exemptions for disabled veterans whose indebtedness occurs after 
active duty.
  My review of S. 256 compels me to conclude that the framers of the 
bill failed or refused to recognize that recent economic policies by 
the current administration have directly contributed to the 
proliferation of bankruptcy filings by consumers. Burgeoning deficits, 
perpetual and high unemployment, and the exportation of jobs overseas 
are just a few of the by-products of failed and poorly conceived 
government policies that have contributed and continue to contribute to 
the need for individuals to seek bankruptcy protection.
  I also oppose S. 256 because it does absolutely nothing to stem the 
predatory practices employed by credit card companies, or the abusive 
fees and penalties imposed on individuals who make just one late 
payment. Further, the wealthiest citizens in our country are able to 
insulate their assets by placing them in trusts that are protected in 
bankruptcy proceedings.
  I staunchly oppose S. 256. Democrats were denied the opportunity to 
offer amendments, the American people have been denied a full 
opportunity to determine the full implications of the changes in 
bankruptcy law, and the Act is fundamentally anticonsumer.
  Mr. Speaker, my conscience dictates that I oppose S. 256. I encourage 
my House colleague to vote No on the Bankruptcy Abuse Prevention and 
Consumer Protection Act.
  Mrs. DAVIS California. Mr. Speaker, I rise to voice my opposition to 
the bankruptcy reform legislation before us today.
  Unfortunately, there are individuals who abuse the credit system and 
use it for their own gain.
  This is wrong and we should be working to stop those who take 
advantage of the bankruptcy laws.
  However, I worry S. 256 will hurt the thousands of Americans who have 
absolutely no choice but to file bankruptcy as a last resort.
  Specifically, I am concerned about the impact on our brave service 
members and our military families.
  The numerous activations and extended tours of duty in Iraq and 
Afghanistan are causing our military families to face debt and serious 
financial strain.
  Studies show that the incomes of military, families decrease 
significantly when the service member is deployed.
  Four out of 10 Reservists, for example, take a drop in pay once they 
are deployed overseas.
  I have met with military families in San Diego who are facing the 
realities and the financial strain that come with activation.
  I worry about the military spouse whose husband is activated to serve 
in Iraq for a year and must leave his job or his business.
  Somehow, we expect the spouse to care her children, to make the house 
payment, and to pay the bills on an income that is significantly lower.
  Some military families will have no choice but to file for bankruptcy 
because of the environment we have created for them.
  The bankruptcy reform bill before us today does not address the needs 
of our military families and the realities they are facing.
  S. 256 will make it harder for military families to recover from a 
bankruptcy because of the additional costs and the stricter 
requirements.
  The Senate did include provisions exempting military personnel 
serving in combat from certain provisions of the bill.
  But, unfortunately, the financial impact of an extended deployment 
could remain long after the service member returns home to his family.
  S. 256 does not recognize this reality and does not consider the 
difficult circumstances facing military families today.
  I am against passing legislation only adding to the enormous burden 
we are already placing on those defending the United States and the 
families sending a loved one into harm's way.
  I urge my colleagues to vote against the Bankruptcy Abuse Prevention 
and Consumer Protection Act.
  Mr. UDALL of New Mexico. Mr. Speaker, thank you for allowing me the 
opportunity to offer my remarks today regarding S. 256, the so-called 
``Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.'' 
The issue of bankruptcy reform is extremely important and it is 
critical that we pass a measure that will ensure greater personal 
responsibility of debtors, as well as ensure that credit card companies 
and other creditors take responsibility for their irresponsible 
lending. Unfortunately, this bill does neither. In fact, this bill 
overly penalizes working families and takes no action against reckless 
and predatory lending.
  Mr. Speaker, in addition to my reservations about the legislation, I 
also strongly object to the rule under which S. 256 is being debated. 
The majority has, once again, passed a rule that stifles debate and 
blocks serious and substantive amendments. There were more than 30 
thoughtful amendments brought before the

[[Page H2070]]

Rules Committee, yet they did not allow a single one to be brought 
before the full House. These amendments would have addressed the impact 
that this bill would have on groups such as disabled veterans returning 
from Iraq, single parents, families experiencing a catastrophic medical 
event, and people who are victims of identity theft. This continued 
smothering of the democratic process by the majority is shameful and 
must stop.
  As to the substance of the legislation, it is no secret that the 
number of bankruptcies has risen considerably in the past twenty years. 
In 1980, there were 330,000 bankruptcies in the United States. In 2003, 
that number rose to over 1.66 million. The number of filings has 
dropped 3.8 percent in 2004 down to 1.59 million. Though this is headed 
in the right direction, I understand that more has to be done. S. 256, 
however, is not the answer.
  S. 256 is full of provisions that I adamantly oppose. It imposes a 
rigid means test, endangers child support, and allows millionaires to 
continue to shelter their assets in mansions. These provisions result 
in an unbalanced and punitive measure that will have a devastating 
effect on women, the unemployed, and the elderly. Reform in this bill 
is skewed toward restricting the consumer's access to relief from 
overwhelming debt, while making it easier on those creditors who 
encourage additional unwise borrowing.
  S. 256 fails to find a middle ground between lenders and borrowers. 
While it is critical that individuals begin taking greater 
responsibility for their debt, so too must the credit card industry 
take greater responsibility for shamelessly targeting individuals with 
their credit card applications. It is these creditors who subsequently 
grant these individuals higher levels of credit at high interest rates. 
It is the creditors who saddle these individuals with insurmountable 
levels of debt. S. 256 does nothing to help break this vicious cycle.
  I would like to reiterate that I strongly support the principle of 
increased personal responsibility for debt, but I believe this bill 
does more harm than good. I believe we would be better served if we 
could fully debate the merits of this legislation, as well as 
substantive amendments that were disallowed from consideration by the 
full House. Unfortunately, once again, we cannot, and I urge my 
colleagues to oppose this legislation.
  Mr. SMITH of Texas. Mr. Speaker, it's time for Congress to enact 
meaningful bankruptcy reform. Unless we take action, people will 
continue to abuse the system by filing for bankruptcy as an easy out. 
When people avoid their debts, someone still has to pay. Companies 
absorb the cost of unpaid debts by passing along these costs to 
consumers.
  Over a million people file for bankruptcy each year. Many of these 
filings are legitimate attempts by debtors to pay their debts and 
obtain a fresh start. However, bankruptcy is too often used as a way to 
avoid responsibilities.
  Unnecessary bankruptcy filings continue to increase at dramatic 
rates. Often, individuals go on spending sprees for luxury goods and 
services just before filing for bankruptcy, knowing that they can wipe 
the slate clean and avoid paying for what they bought.
  This is bad for consumers and bad for our economy. When individuals 
avoid their debts when they could be paid off, the costs are passed on 
to America's businesses and consumers. We must ensure that debtors 
actually belong in bankruptcy and are not using the system to avoid 
their obligations.
  This bill stops abuse by eliminating incentives in the current 
bankruptcy system that actually encourage consumer bankruptcy filings 
and abuse. It requires those who can repay their debts to do so. It 
also gives courts greater power to dismiss frivolous or abusive 
bankruptcy filings and punish lawyers who encourage these filings.
  This bill also contains provisions I support to address those who 
abuse state homestead laws and attempt to shelter their wealth in 
multi-million dollar mansions. It requires a debtor to own their 
homestead for at least 40 months before he or she can use state 
exemption law. And, if a debtor has committed an intentional tort, a 
criminal act, or violated securities laws, their homestead exemption 
will be capped at $125,000. These provisions will close the loophole 
that currently allows debtors to abuse the homestead provision.
  This legislation will encourage personal responsibility, protect 
consumers, and ensure that bankruptcy is used only as a last resort and 
is not abused by those who can afford to repay their debts.
  Mr. WELDON of Florida. Mr. Speaker, for years, honest but unfortunate 
consumers have had the ability to plead their case to come under 
bankruptcy protection and have their reasonable and valid debts 
discharged. The way the system is supposed to work, the bankruptcy 
court evaluates various factors including income, assets and debt to 
determine what debts can be paid and how consumers can get back on 
their feet. The bill before us preserves that right for those 
individuals who simply get in over their heads and have no other way 
out
  Unfortunately, some dishonest individuals have taken advantage of our 
bankruptcy laws by hiding assets, racking up debt in anticipation of 
filing for bankruptcy, using bankruptcy as a financial planning tool, 
and walking away from that which they owe. This hurts our economy 
because it forces retailers and businesses to simply raise the prices 
of goods and services for honest Americans. All Americans end up paying 
the costs for those who have gamed the bankruptcy laws.
  I support S. 256, the Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2005. I am a cosponsor of the House version of this 
bill. This common sense legislation preserves the right to file 
bankruptcy for those who truly cannot repay their debts while ensuring 
that those who do have the ability to repay a portion of their debts do 
so.
  S. 256 provides the same kinds of bankruptcy reforms the House has 
approved twice before. It restores the principles of fairness and 
personal responsibility to our bankruptcy system and protects the 
rights of consumers. S. 256 also requires creditors to help prevent 
credit card abuse through new disclosures and educational provisions.
  This is a good bill for average American consumers, for American 
businesses, and our economy as a whole.
  Mrs. BIGGERT. Mr. Speaker, it is with great pleasure that I rise 
today to express my strong support for The Bankruptcy Abuse Prevention 
and Consumer Protection Act.
  A Chinese proverb says: ``Give a man a fish and you feed him for a 
day. Teach a man to fish and you feed him for a lifetime.'' And that's 
exactly what this bill before us today will do.
  There are many reasons to support this Bankruptcy Reform Bill, but I 
want to focus on one that is important to many of my colleagues, to me 
and to the American people. We should support the bill because it 
contains important financial literacy provisions. Financial literacy 
goes hand-in-hand with helping our citizens of all ages and walks of 
life to negotiate the complex world of personal finance. Financial 
literacy can help Americans avoid or survive bankruptcy.
  We have passed many laws that require the disclosure of the terms and 
conditions of the rich mix of financial products and services that are 
available to consumers.
  Unfortunately, for too many Americans, knowing the terms and 
conditions of financial products and services is challenging enough. 
However, understanding those terms and conditions is often an even 
greater challenge. Recognizing this fact, Congress included provisions 
in the Fair and Accurate Credit Transactions Act to address the issue 
of financial literacy.
  The Bankruptcy Abuse Prevention and Consumer Protection Act, S. 256, 
also contains important provisions addressing economic education and 
financial literacy. These provisions are designed to ensure that those 
who enter the bankruptcy system will learn the skills to more 
effectively manage their money in an increasingly complicated 
marketplace.
  Before the House considers S. 256, I want to highlight, for my 
colleagues, some of the bill's important financial literacy provisions:
  First: the bill will facilitate educating future generations. It 
expresses the ``Sense of the Congress'' that personal finance curricula 
be developed for elementary and secondary education programs. If we 
teach our children, early-on, how to manage money, credit, and debt, 
they can become responsible workers, and heads of households and keep 
their parents out of bankruptcy court.
  Second: the bill will provide for pre-filing credit counseling. It 
requires debtors, prior to filing for bankruptcy, to receive credit 
counseling from a nonprofit counseling agency. The counseling must 
include a budget analysis and disclosures regarding the possible impact 
of bankruptcy on a debtor's credit report.
  Next: the bill will provide for pre-discharge financial education, 
requiring debtors to complete an approved instructional course on 
personal financial management prior to receiving a discharge under 
Chapter 7 or 13.
  The bill will also include important exceptions. It authorizes phone 
and Internet counseling for both the pre-filing and pre-discharge 
education requirements to assist debtors in rural and remote areas. In 
addition, either or both requirements may be waived if services are not 
available or in exigent circumstances.
  Finally, the bill requires the Director of the Executive Office for 
U.S. Trustees to: (1) develop a financial management training 
curriculum and materials to educate individual debtors on how to better 
manage their finances; and (2) evaluate and report to the Congress on 
the curriculum's efficacy. This will ensure that Congress can evaluate 
the effectiveness of these financial literacy provisions in the long-
term.
  Last week, we passed House Resolution 148, a bill that supports the 
goals and ideals of Financial Literacy Month, which is this

[[Page H2071]]

month, April 2005. H. Res. 148 was co-sponsored by 82 Members of this 
body and 409 Members of this body voted for it.
  Mr. Speaker, the number of bankruptcies remains at a historic high--
over 1.6 million bankruptcy cases were filed in federal courts in 2004. 
With that in mind and in the spirit of Financial Literacy Month, I urge 
my colleagues to pass S. 256, the Bankruptcy Abuse Prevention and 
Consumer Protection Act, which contains important financial literacy 
provisions that will provide Americans with the skills needed to 
successfully navigate the world of personal finance.
  Mr. Speaker, let's help our fellow citizens avoid bankruptcy 
altogether. ``Give a man a fish and you feed him for a day. Teach a man 
to fish and you feed him for a lifetime.'' Vote for S. 256.
  Mr. CASTLE. Mr. Speaker, I am submitting for the Record the following 
remarks from Mr. Arkadi Kuhlmann, CEO of ING DIRECT, in opposition to 
the bankruptcy reform legislation under consideration. I remain a 
strong supporter of S. 256; however, I believe Mr. Kuhlmann's statement 
should be made part of the record.

             Statement of Arkadi Kuhlmann, CEO, ING DIRECT

       Mr. Speaker, I am Arkadi Kuhlmann, CEO of ING DIRECT, a 
     federally chartered thrift headquartered in Wilmington, 
     Delaware. ING DIRECT launched in the U.S. in September 2000 
     to challenge traditional banking by touting the high 
     interest, no fee and no minimum Orange Savings Account as its 
     signature product, with a brand vision to lead Americans back 
     to saving.
       ING DIRECT has since expanded its product line to include 
     the Orange Mortgage, the Orange Home Equity Line of Credit, 
     Orange CDs and the Orange Investment Account. With over 2.5 
     million customers and more than $43 billion in assets, ING 
     DIRECT is the fourth largest thrift in the U.S.
       The House is now considering consumer bankruptcy 
     legislation that would make major changes to how consumers' 
     debts and obligations are treated in the bankruptcy process. 
     Thank you for this opportunity to submit testimony for the 
     record on this legislation.
       Despite the many important and positive changes this bill 
     would make to our bankruptcy laws, this proposal remains 
     seriously flawed. One significant oversight is the bill's 
     failure to consider one of the biggest problems we face in 
     business today: identity theft.
       The Washington Post ran a story recently about a woman 
     whose identity was stolen, yet her credit card company forced 
     the fraudster's debt on her by using the arbitration clause 
     in her card agreement.
       The Bankruptcy Bill must address the possibility that 
     identity theft could lead to financial devastation through no 
     fault of the person's own. In addition to overlooking the 
     problem of identity theft, this proposal had additional 
     shortcomings. It actually encourages further bad lending 
     decisions by removing an important market discipline--the 
     possibility of a clean bankruptcy.
       Without important changes, millions of consumers, who might 
     otherwise be savers, will be encouraged into debt by 
     aggressive credit card and other lending. We believe it is 
     crucial that a serious study of the connection between credit 
     card marketing and personal bankruptcy be completed. The bill 
     as drafted requires such a study. We challenge the Congress 
     to take a very hard look at the results of the study and 
     consider further legislation, if necessary.
       Another important issue is the Bill's creation of a ``means 
     test.'' By giving disparate treatment to secured versus 
     unsecured debt, the law would treat secured creditors even 
     more favorably than under current rules. We believe the means 
     test should be applied across the board or not at all.
       We at ING DIRECT believe this country is still willing to 
     give working Americans--the engine of our economy--a second 
     chance when debt overwhelms them. This bill seriously limits 
     that second chance.
       Thank you for the opportunity to present our views.

  Mr. FARR. Mr. Speaker I rise in strong opposition to the misnamed 
``Bankruptcy Abuse Prevention and Consumer Protection Act,'' (S. 256). 
Current bankruptcy law needs some adjustment, but this bill is not the 
solution. It hurts middle-class consumers in a variety of ways: the 
bill would allow landlords to evict battered women without bankruptcy 
court approval, even if the eviction poses a threat to the women's 
physical well-being; and, it permits credit card companies to reclaim 
common households goods which are of little value to them, but very 
important to the debtor's family.
  It is very important to note that the bill does absolutely nothing to 
discourage abusive underage lending, nothing to discourage reckless 
lending to the developmentally disabled and nothing to crack down on 
unscrupulous pay-day lenders that prey on members of the armed forces.
  Last year nearly one and a half million middle class individuals 
filed for bankruptcy. Their average income was less than $25,000 and 
the principal causes for their filings were layoffs, health problems 
and divorce. In my judgment, it is a grave mistake to punish these 
individuals while rewarding credit card companies and business 
lobbyists at a time when corporate greed has already destroyed the 
lives of millions of American workers. I will support a balanced 
bankruptcy reform bill, but S. 256 is in no way balanced and I believe 
does more harm than good, therefore I strongly oppose this bill.
  Mr. GENE GREEN of Texas. Mr Speaker, I rise today in opposition to 
this bill.
  This bill will weaken homestead protections currently in place under 
state laws, hurting my constituents, the citizens of Texas, and the 
citizens of any other states that have laws protecting individuals' 
homes valued over $125,000, which is the limit this bill sets.
  Texas, which has the longest and oldest history of homestead 
protection laws in our country, has no cap on homestead protection, 
along with Kansas, Iowa, Florida, and South Dakota.
  Minnesota, Rhode Island, and Nevada's laws protect home equity of 
$200,000.
  Property values across the nation vary widely. The median resale 
price of a home in California is $215,000. In Nebraska it's $70,200.
  While I understand there must be a sensible cap on exemptible home 
equity to ensure the law is not protecting million dollar mansions, 
$125,000 is unreasonable given the skyrocketing price of real estate in 
Texas and many other parts of the country.
  This bill will make bankruptcy even more expensive and burdensome 
than it already is, on hardworking Americans who have fallen on hard 
times and seniors on fixed incomes, while doing nothing to address the 
out of control lending practices by credit card companies.
  Mr. Speaker, I cannot support a bill that will hurt hard-working 
Texans, and I oppose this bill.
  Mr. LEVIN. Mr. Speaker, I rise in opposition to the bankruptcy bill 
before the House.
  This legislation has two fundamental flaws. The first problem is that 
the bill does not distinguish between those individuals who abuse their 
credit and then seek to wipe the slate clean through Chapter 7, and 
those who enter bankruptcy as the result of a costly medical emergency 
or after one of the breadwinners in a family loses their job. We need 
to make a distinction between a family who is struggling to pay for a 
medical operation for a child and a person who maxes out their credit 
cards on a shopping spree at the mall. This bill does not do so.
  A recent Harvard University study underscores the fact that the 
bankruptcy bill's impact will extend well beyond cracking down on 
people who abuse credit. The study looked at 1771 bankruptcy filers in 
five states. The results were striking: Half of the people in the study 
said that illness or medical bills drove them into bankruptcy. Most of 
these people actually had some health insurance; but high co-payments, 
deductibles, exclusions from coverages left them liable for thousands 
of dollars in out-of-pocket costs when serious illness struck. Other 
people in the study suddenly lost their jobs and therefore their health 
insurance. In many cases, people were let go from their jobs soon after 
the onset of a debilitating illness, so the medical bills begin to 
arrive just as the insurance and paychecks disappear.
  The second fundamental problem left unaddressed by the bill is the 
credit card industry's role in the surge of bankruptcy filings in 
recent years. The industry hands out credit cards like popcorn, and 
then loads on extraordinary penalty fees and higher interest rates 
after a payment is late. The result is that even if someone wants to 
pay off their credit debts, they are unable to do so because of 
thousands of dollars of punitive fees and penalty interest rates that 
can run as high as 40 percent. The lending policies of the credit card 
companies themselves is a major factor in driving consumers into 
bankruptcy, yet the legislation before the House does nothing to end 
these abuses.
  I include with my statement an article from the March 6 edition of 
the Washington Post entitled, ``Credit Card Penalties, Fees Bury 
Debtors; Senate Nears Action on Bankruptcy Curbs.''

                [From the Washington Post, Mar. 6, 2005]

   Credit Card Penalties, Fees Bury Debtors; Senate Nears Action on 
                            Bankruptcy Curbs

                (By Kathleen Day and Caroline E. Mayer)

       For more than two years, special-education teacher Fatemeh 
     Hosseini worked a second job to keep up with the $2,000 in 
     monthly payments she collectively sent to five banks to try 
     to pay $25,000 in credit card debt.
       Even though she had not used the cards to buy anything 
     more, her debt had nearly doubled to $49,574 by the time the 
     Sunnyvale, Calif., resident filed for bankruptcy last June. 
     That is because Hosseini's payments sometimes were tardy, 
     triggering late fees ranging from $25 to $50 and doubling 
     interest rates to nearly 30 percent. When the additional 
     costs pushed her balance over her credit limit, the credit 
     card companies added more penalties.

[[Page H2072]]

       ``I was really trying hard to make minimum payments,'' said 
     Hosseini, whose financial problems began in the late 1990s 
     when her husband left her and their three children. ``All of 
     my salary was going to the credit card companies, but there 
     was no change in the balances because of that interest and 
     those penalties.''
       Punitive charges--penalty fees and sharply higher interest 
     rates after a payment is late--compound the problems of many 
     financially strapped consumers, sometimes making it 
     impossible for them to dig their way out of debt and pushing 
     them into bankruptcy.
       The Senate is to vote as soon as this week on a bill that 
     would make it harder for individuals to wipe out debt through 
     bankruptcy. The Senate last week voted down several 
     amendments intended to curb excessive fees and other 
     practices that critics of the industry say are abusive. House 
     leaders say they will act soon after that, and President Bush 
     has said he supports the bill.
       Bankruptcy experts say that too often, by the time an 
     individual has filed for bankruptcy or is hauled into court 
     by creditors, he or she has repaid an amount equal to their 
     original credit card debt plus double-digit interest, but 
     still owes hundreds or thousands of dollars because of 
     penalties.
       ``How is it that the person who wants to do right ends up 
     so worse off?'' Cleveland Municipal Judge Robert J. Triozzi 
     said last fall when he ruled against Discover in the 
     company's breach-of-contract suit against another struggling 
     credit cardholder, Ruth M. Owens.
       Owens tried for six years to pay off a $1,900 balance on 
     her Discover card, sending the credit company a total of 
     $3,492 in monthly payments from 1997 to 2003. Yet her balance 
     grew to $5,564.28, even though, like Hosseini, she never used 
     the card to buy anything more. Of that total, over-limit 
     penalty fees alone were $1,158.
       Triozzi denied Discover's claim, calling its attempt to 
     collect more money from Owens ``unconscionable.''
       The bankruptcy measure now being debated in Congress has 
     been sought for nearly eight years by the credit card 
     industry. Twice in that time, versions of it have passed both 
     the House and Senate. Once, President Bill Clinton refused to 
     sign it, saying it was unfair, and once the House reversed 
     its vote after Democrats attached an amendment that would 
     prevent individuals such as anti-abortion protesters from 
     using bankruptcy as a shield against court-imposed fines.
       Credit card companies and most congressional Republicans 
     say current law needs to be changed to prevent abuse and make 
     more people repay at least part of their debt. Consumer-
     advocacy groups and many Democrats say people who seek 
     bankruptcy protection do so mostly because they have fallen 
     on hard times through illness, divorce or job loss. They also 
     argue that current law has strong provisions that judges can 
     use to weed out those who abuse the system.
       Opponents also argue that the legislation is unfair because 
     it ignores loopholes that would allow rich debtors to shield 
     millions of dollars during bankruptcy through expensive homes 
     and complex trusts, while ignoring the need for more 
     disclosure to cardholders about rates and fees and curbs on 
     what they say is irresponsible behavior by the credit card 
     industry. The Republican majority, along with a few 
     Democrats, has voted down dozens of proposed amendments to 
     the bill, including one that would make it easier for the 
     elderly to protect their homes in bankruptcy and another that 
     would require credit card companies to tell customers how 
     much extra interest they would pay over time by making only 
     minimum payments.
       No one knows how many consumers get caught in the spiral of 
     ``negative amortization,'' which is what regulators call it 
     when a consumer makes payments but balances continue to grow 
     because of penalty costs. The problem is widespread enough to 
     worry federal bank regulators, who say nearly all major 
     credit card issuers engage in the practice.
       Two years ago regulators adopted a policy that will require 
     credit card companies to set monthly minimum payments high 
     enough to cover penalties and interest and lower some of the 
     customer's original debt, known as principal, so that if a 
     consumer makes no new charges and makes monthly minimum 
     payments, his or her balance will begin to decline.
       Banks agreed to the new rules after, in the words of one 
     top federal regulator, ``some arm-twisting.'' But bank 
     executives persuaded regulators to allow the higher minimum 
     payments to be phased in over several years, through 2006, 
     arguing that many customers are so much in debt that even 
     slight increases too soon could push many into financial 
     disaster.
       Credit card companies declined to comment on specific cases 
     or customers for this article, but banking industry 
     officials, speaking generally, said there is a good reason 
     for the fees they charge.
       ``It's to encourage people to pay their bills the way they 
     said they would in their contract, to encourage good 
     financial management,'' said Nessa Feddis, senior federal 
     counsel for the American Bankers Association. ``There has to 
     be some onus on the cardholder, some responsibility to manage 
     their finances.''
       High fees ``may be extreme cases, but they are not the 
     trend, not the norm,'' Feddis said.
       ``Banks are pretty flexible,'' she said. ``If you are a 
     good customer and have an occasional mishap, they'll waive 
     the fees, because there's so much competition and it's too 
     easy to go someplace else.'' Banks are also willing to work 
     out settlements with people in financial difficulty, she 
     said, because ``there are still a lot of options even for 
     people who've been in trouble.''
       Many bankruptcy lawyers disagree. James S.K. ``Ike'' 
     Shulman, Hosseini's lawyer, said credit card companies 
     hounded her and did not live up to several promises to work 
     with her to cut mounting fees.
       Regulators say it is appropriate for lenders to charge 
     higher-risk debtors a higher interest rate, but that negative 
     amortization and other practices go too far, posing risks to 
     the banking system by threatening borrowers' ability to repay 
     their debts and by being unfair to individuals.
       U.S. Bankruptcy Judge David H. Adams of Norfolk, who is 
     also the president of the National Conference of Bankruptcy 
     Judges, said many debtors who get in over their heads ``are 
     spending money, buying things they shouldn't be buying.'' 
     Even so, he said, ``once you add all these fees on, the 
     amount of principal being paid is negligible. The fees and 
     interest and other charges are so high, they may never be 
     able to pay it off.''
       Judges say there is little they can do by the time cases 
     get to bankruptcy court. Under the law, ``the credit card 
     company is legally entitled to collect every dollar without a 
     distinction'' whether the balance is from fees, interest or 
     principal, said retired U.S. bankruptcy judge Ronald 
     Barliant, who presided in Chicago. The only question for the 
     courts is whether the debt is accurate, judges and lawyers 
     say.
       John Rao, staff attorney of the National Consumer Law 
     Center, one of many consumer groups fighting the bankruptcy 
     bill, says the plight consumers face was illustrated last 
     year in a bankruptcy case filed in Northern Virginia.
       Manassas resident Josephine McCarthy's Providian Visa bill 
     increased to $5,357 from $4,888 in two years, even though 
     McCarthy has used the card for only $218.16 in purchases and 
     has made monthly payments totaling $3,058. Those payments, 
     noted U.S. Bankruptcy Judge Stephen S. Mitchell in 
     Alexandria, all went to ``pay finance charges (at a whopping 
     29.99%), late charges, over-limit fees, bad check fees and 
     phone payment fees.'' Mitchell allowed the claim ``because 
     the debtor admitted owing it.'' McCarthy, through her lawyer, 
     declined to be interviewed.
       Alan Elias, a Providian Financial Corp. spokesman, said: 
     ``When consumers sign up for a credit card, they should 
     understand that it's a loan, no different than their mortgage 
     payment or their car payment, and it needs to be repaid. And 
     just like a mortgage payment and a car payment, if you are 
     late you are assessed a fee.'' The 29.99 percent interest 
     rate, he said, is the default rate charged to consumers ``who 
     don't meet their obligation to pay their bills on time'' 
     and is clearly disclosed on account applications.
       Feddis, of the banker's association, said the nature of 
     debt means that interest will often end up being more than 
     the original principal. ``Anytime you have a loan that's 
     going to extend for any period of time, the interest is going 
     to accumulate. Look at a 30-year-mortgage. The interest is 
     much, much more than the principal.''
       Samuel J. Gerdano, executive director of the American 
     Bankruptcy Institute, a nonpartisan research group, said that 
     focusing on late fees is ``refusing to look at the elephant 
     in the room, and that's the massive levels of consumer debt 
     which is not being paid. People are living right up to the 
     edge,'' failing to save so when they lose a second job or 
     overtime, face medical expense or their family breaks up, 
     they have no money to cope.
       ``Late fees aren't the cause of debt,'' he said.
       Credit card use continues to grow, with an average of 6.3 
     bank credit cards and 6.3 store credit cards for every 
     household, according to Cardweb.com Inc., which monitors the 
     industry. Fifteen years ago, the averages were 3.4 bank 
     credit cards and 4.1 retail credit cards per household.
       Despite, or perhaps because of, the large increase in 
     cards, there is a ``fee feeding frenzy,'' among credit card 
     issuers, said Robert McKinley, Cardweb's president and chief 
     executive. ``The whole mentality has really changed over the 
     last several years,'' with the industry imposing fees and 
     increasing interest rates if a single payment is late.
       Penalty interest rates usually are about 30 percent, with 
     some as high as 40 percent, while late fees now often are $39 
     a month, and over-limit fees, about $35, McKinley said. ``If 
     you drag that out for a year, it could be very damaging,'' he 
     said. ``Late and over-limit fees alone can easily rack up 
     $900 in fees, and a 30 percent interest rate on a $3,000 
     balance can add another $1,000, so you could go from $2,000 
     to $5,000 in just one year if you fail to make payments.''
       According to R.K. Hammer Investment Bankers, a California 
     credit card consulting firm, banks collected $14.8 billion in 
     penalty fees last year, or 10.9 percent of revenue, up from 
     $10.7 billion, or 9 percent of revenue, in 2002, the first 
     year the firm began to track penalty fees.
       The way the fees are now imposed, ``people would be better 
     off if they stopped paying'' once they get in over their 
     heads, said T. Bentley Leonard, a North Carolina bankruptcy 
     attorney. Once you stop paying, creditors write off the debt 
     and sell it to a

[[Page H2073]]

     debt collector. ``They may harass you, but your balance 
     doesn't keep rising. That's the irony.''

  Mr. LANGEVIN. Today I rise in support of the Pomeroy substitute to 
H.R. 8, the Estate Tax Repeal Permanency act, and in opposition to the 
underlying bill. As the son of a small business owner, I know firsthand 
the tax burden placed on entrepreneurs and working families, and I 
support efforts to responsibly protect small business owners.
  The Pomeroy substitute provides needed relief by eliminating estate 
taxes for assets totaling $3.5 million per individual or $7 million per 
married couple. Increasing the exemption to this level would mean that 
99.7 percent of all estates will not pay a single penny of the estate 
tax. Small businesses and farm owners should not be penalized for their 
success, nor should they need to worry about their ability to pass the 
family business on to future generations, and the substitute addresses 
these concerns.
  H.R. 8 goes far beyond providing fair tax relief to small businesses 
and family farms. While the benefits overwhelmingly go to the 
wealthiest 0.3 percent of estates, Republican leaders fail to mention 
that their proposal actually raises taxes on thousands of estates, 
including those not previously affected by the estate tax. This is 
because their legislation increases capital gain taxes owed on 
inherited property. The Department of Agriculture estimates that this 
change will raise taxes on more farms than would benefit from repealing 
the tax.
  The Republicans' call for repealing the estate tax comes at a time 
when our government is already in fiscal crisis. Ending the estate tax 
will reduce revenues by $290 billion over ten years, and by 2021, this 
legislation will have added a total of more than $1 trillion to our 
debt. With a $400 billion deficit projected this year, now is not the 
time to add trillions in debt to the tab that future generations must 
pay. These added costs also come as the President proposes to privatize 
Social Security at a cost of up to $6 trillion. In addition, the House 
recently passed a budget that cuts $20 billion from Medicare and 
underfunds critical priorities including veterans' health care and 
homeland security. We must work to meet our existing obligations rather 
than cutting taxes for the wealthiest 0.3 percent of families in 
America.
  Based on Internal Revenue Service data for 2004, out of approximately 
10,000 deaths in my home state, only 312 Rhode Island decedents filed 
estate tax returns. This number would be much lower with the $3.5 
million exemption under the Pomeroy substitute. Under our Democratic 
alternative, most small business owners and family farmers would 
receive estate tax relief.
  I urge my colleagues to join me in supporting permanent reform of the 
estate tax, but not irresponsibly repealing it. Our small business 
owners are in need of relief, and we must provide it without leaving 
future generations to pay the bill.
  Mr. ROYCE. Mr. Speaker, today, Congress has the opportunity to finish 
the task of preventing corporate malfeasance by agreeing to pass S. 
256.
  Included in this bill is a sensible provision that sharply limits to 
$125,000 the homestead exemption that many CEOs and corporate officers 
have used to shield their assets from creditors after they plunder 
their shareholders' wealth.
  By empowering the government to go after the ill-gotten gains that 
crooked corporate officers tie up in offshore mansions, shareholders 
and pensioners who have been swindled can have their hard-earned 
savings returned to them.
  In addition, this bill prohibits people convicted of felonies like 
securities fraud from claiming an unlimited exemption when filing for 
bankruptcy, protecting taxpayers from having to bear the cost of 
corporate malfeasance.
  It also guards against fraud and abuse by requiring that high-income 
debtors who have the ability repay a significant portion of their debts 
do so, preventing them from sticking responsible borrowers with their 
tab. It accomplishes all of this while preserving the ability of people 
who truly need to discharge their debts to do so.
  For far too long, Americans who work hard and pay their bills have 
been held accountable for the debts incurred by those who irresponsibly 
file for bankruptcy.
  This long-overdue legislation will reform the critically-flawed 
bankruptcy process, and prevent affluent filers from gaming the system 
and passing on their bad debt to hard-working families while preserving 
the ability of people who truly need to discharge their debt through 
bankruptcy to do so.
  Bankruptcy should be preserved as a last resort for those who truly 
need the protections that the bankruptcy system has to offer--not a 
tool for those who could pay their debts but choose to discharge them 
instead.
  By agreeing to this legislation, Congress will make the existing 
bankruptcy system a needs-based one and correct the flaw in the current 
system that encourages people to file for bankruptcy and walk away from 
debts, regardless of whether they are able to repay any portion of what 
they owe; and it does this while protecting those who truly need 
protection.
  I commend my colleagues for their hard work on this legislation, and 
I strongly urge my colleagues to vote in favor of this report and help 
honest taxpayers by closing the loopholes in the current bankruptcy 
system.
  Mr. MACK. Mr. Speaker, I rise today in support of the Bankruptcy 
Abuse Prevention and Consumer Protection Act of 2005.
  I came to Congress to promote the ideals of freedom, security and 
prosperity. Embodied within these principles is the duty of the 
American people to take responsibility for their actions--including 
control of one's personal finances and investments--without undue 
influence from the federal government.
  Under current law, bankruptcy protection has increasingly become a 
first stop rather than a last resort. Our credit markets have been 
undermined on a daily basis because of the abuse of the existing laws. 
All too often, people run to the shelter of bankruptcy to escape the 
consequences of their actions, all to the detriment of the rest of 
society. That is fundamentally wrong.
  Mr. Speaker, the Bankruptcy Abuse Prevention and Consumer Protection 
Act reforms existing bankruptcy law to stem the rise in bankruptcy 
abuse while maintaining its protections for those who really need them. 
The act places compassionate, coherent, and common-sense reforms on the 
current system. It ensures that frivolous costs are no longer unfairly 
passed on to American families.
  Mr. Speaker, as a supporter of the Bankruptcy Abuse Prevention and 
Consumer Protection Act, I encourage my colleagues to vote for this 
well-balanced measure that will protect those individuals who need a 
fresh start while cracking down on abuse of the system.
  Mr. CASTLE. Mr. Speaker, I rise today in strong support of S. 256, 
the ``Bankruptcy Abuse and Consumer Prevention Act of 2005.''
  It has been seven years since we made our first attempt to reform the 
bankruptcy system in the 105th Congress and thanks to the tireless 
efforts of Chairman Sensenbrenner's Committee, we can see a real chance 
for passing a full and comprehensive bill this year.
  Mr. Speaker, we have seen a sharp increase in bankruptcies over the 
past 25 years. In 2003, consumer filings peaked at over 1.6 million 
filings--a 465 percent increase from 1980. Those who believe credit 
card companies, mortgage lenders and other financial institutions are 
bearing the costs of consumer's filing for bankruptcy don't understand 
how business works. American families are paying the price for this 
debt--some studies reflect $400 per year in every household--by higher 
interest rates on their credit cards, auto loans, school loans and 
mortgages. When the legislation before us passes today it will be the 
American families that are the real winners.
  This legislation balances the consumer's challenge of debt repayment 
with the needs of businesses to collect money rightfully owed to them. 
In an effort to better educate consumers and improve financial 
literacy, the legislation requires many filers of bankruptcy to attend 
financial counseling. This change, coupled with Congressional 
encouragement for schools to incorporate personal finance curricula in 
elementary and secondary education programs, are both useful methods of 
curbing future debt. As Chairman of the Education Reform Subcommittee, 
which has jurisdiction over all K-12 programs, I feel strongly that 
educating future spenders can prevent debts incurred as adults.
  I also support the new requirement for lending institutions, which 
will now have to take additional steps to ensure consumers fully 
understand the ramifications of credit spending. Credit card billing 
statements will now reflect the actual time it would take to repay a 
full balance at a specified interest rate; contain warnings to alert 
consumers that paying only the minimum will increase the amount of 
interest; and list a toll-free number for consumer's to call for an 
estimate of the time it would take to repay the balance if only the 
minimum is paid. With these steps, lending institutions can improve 
their chances of repayment while pro-actively educating consumers of 
true costs associated with borrowing.
  I believe the ``Bankruptcy Abuse and Consumer Protection Act'' 
reflects fair solutions to minimizing spending abuse, while protecting 
those with genuine hardship. Relief is still available for low and 
moderate income families. However, this legislation will end the 
protection for those who make obvious attempts to abuse their credit. 
Those who are able to pay their debts--will now be held to those 
commitments--through means testing. A means test would be used to 
determine a debtor's eligibility for Chapter 7 bankruptcy relief, where 
the majority of debt is excused, or Chapter 13, where a significant 
portion of debt

[[Page H2074]]

must be repaid. Importantly, disabled veterans would be exempt from the 
means test if their debts occurred primarily as a result of being 
called to active duty or for homeland defense operations.

  Lastly, Mr. Speaker, this legislation also includes four additional 
judges for Delaware's bankruptcy court. This increase is long overdue, 
as the bankruptcy caseloads in Delaware continue to exceed other 
districts' caseloads for Chapter 11 businesses cases. Last year alone, 
weighted filings for Delaware judges were 11,789, while the national 
average was 1,763--in other words, the Delaware caseload was 10 times 
the national average. The Delaware District tends to have the largest 
Chapter 11 business cases, often referred to as the ``mega'' Chapter 11 
cases which are ``those involving extremely large assets, unusual 
public interest, a high level of creditor involvement, complex debt, a 
significant amount of related litigation, or a combination of such 
factors.'' These are complex cases in which the judicial system in 
Delaware has built a high level of expertise as well as a sound 
reputation for fair practices. I am pleased the legislation before us 
today takes a solid step towards alleviating Delaware's heavily 
burdened bankruptcy court system.
  Again, Mr. Speaker, I want to thank Chairman Sensenbrenner for his 
years of strong and tenacious support for this legislation and thank 
him for not giving up on these important, common-sense changes to our 
bankruptcy system. I urge my colleagues to support this bipartisan 
legislation.
  Mr. TERRY. Mr. Speaker, in pertinent part, section 202 of S. 256, the 
``Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,'' 
amends section 524 of the Bankruptcy Code by making the discharge 
injunction inapplicable to certain acts by a creditor having a claim 
secured by a lien on real property that is the debtor's principal 
residence, so long as the creditor satisfies certain criteria. First, 
the creditor's act must be in the ordinary course of business between 
the creditor and debtor. Second, such act is limited to seeking 
periodic payments associated with a valid security interest in lieu of 
pursuit of in rem relief to enforce the lien.
  Section 202 was included because Congress recognized that there are 
many consumer debtors who, despite filing bankruptcy, desire to repay 
secured obligations in order to retain their principal residences. 
Under current law, however, some secured creditors stop sending monthly 
billing statements or payment coupons for fear of violating the 
discharge injunction. Section 202 is intended to reassure these secured 
creditors that if consumer debtors want to continue making voluntary 
payments so they can keep their principal residences, then secured 
creditors may take appropriate steps to facilitate such payment 
arrangements, such as continuing to send monthly billing statements or 
payment coupons.
  Moreover, despite the express reference in this provision to liens on 
real property, section 202 should not, by negative inference or 
implication, be construed as limiting any rights that may have 
developed through existing case law, or otherwise, that permit secured 
creditors to send, or consumer debtors to request and receive, monthly 
billing statements or payment coupons for claims secured by real or 
personal property. See, e.g., Ramirez v. GMAC (In re Ramirez), 280 B.R. 
253 (C.D. Cal. 2002); Henry v. Associates Home Equity Services, Inc (In 
re Henry), 266 B.R. 457 (Bankr. C.D. Cal. 2002).
  Mr. KOLBE. Mr. Speaker, after eight years of intense Congressional 
scrutiny and debate, this long-overdue legislation is now close to 
becoming law. I will vote in favor of this legislation, just as I have 
supported similar bills in the past, and I encourage my colleagues to 
pass S. 256 without amendments so it can go directly to the President 
for his signature.
  Without a doubt, bankruptcy reform is needed. Under current law, it 
is far too easy for debtors with significant cash resources to declare 
bankruptcy and walk away from their debts, even when they have the 
ability to pay a substantial portion of those debts. Bankruptcies cost 
the rest of us American taxpayers billions of dollars each year. Why? 
Because commercial institutions have to pass their losses on to 
everyone else in the form of higher prices and higher interest rates. 
The Bankruptcy Abuse Prevention and Consumer Protection Act is a well-
balanced measure that will permit people with real financial need to 
get a fresh start, but lessen the burden placed on other working 
Americans who now must support people who are taking advantage of the 
system.
  This bankruptcy reform bill will force those who have the ability to 
repay their debts to do so. At the same time, it provides safeguards 
such as child and spousal protections, debtor education, and mandatory 
credit counseling before someone files for bankruptcy. The bill also 
makes common-sense revisions to homestead exemptions to reduce the 
ability of a wealthy individual shielding his money in an extravagant 
home just prior to filing bankruptcy.
  Put simply, this legislation helps restore the fundamental concept of 
personal responsibility in the bankruptcy system. I urge my colleagues 
to adopt.
  Mr. SENSENBRENNER. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Putnam). All time for debate has 
expired.
  Pursuant to House Resolution 211, the bill is considered read for 
amendment, and the previous question is ordered.
  The question is on the third reading of the bill.
  The bill was ordered to be read a third time, and was read the third 
time.


              Motion to Recommit Offered by Ms. Schakowsky

  Ms. SCHAKOWSKY. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentlewoman opposed to the bill?
  Ms. SCHAKOWSKY. Yes.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.

  Ms. SCHAKOWSKY moves to recommit the bill (S. 256) to the Committee 
on the Judiciary, with instructions to report the bill back to the 
House forthwith, with the following amendment:

       Page 14, after line 6, insert the following:
       
       ``(E) Subparagraphs (A) through (C) shall not apply, and 
     the court may not dismiss or convert a case filed under this 
     chapter based on any form of means testing--
       ``(i)(I) while the debtor is on, and during the 2-year 
     period beginning immediately after the debtor is released 
     from, active duty (as defined in section 101(d)(1) of title 
     10); or
       ``(II) while the debtor is performing, and during the 2-
     year period beginning immediately after the debtor is no 
     longer performing, a homeland defense activity (as defined in 
     section 901(1) of title 32); and
       ``(ii) if--
       ``(I) after September 11, 2001, the debtor was called to 
     active duty or to perform a homeland defense activity; and
       ``(II) a substantial portion of the debts arose on or after 
     September 11, 2001 and resulted from the debtor's service on 
     active duty or the debtor's performance of a homeland defense 
     activity.
  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
Illinois (Ms. Schakowsky) is recognized for 5 minutes in support of her 
motion.
  Ms. SCHAKOWSKY. Mr. Speaker, I yield myself 3 minutes.
  Mr. Speaker, I rise today with the gentleman from Ohio (Mr. 
Strickland) to offer this motion on behalf of our brave citizen 
soldiers who are risking their lives for us and then, as a thank you, 
risking their homes and their businesses, too. Our motion simply 
shields financially distressed National Guard and Reservists from the 
means test found in S. 256 while they are in service and for the 2 
years after they have transitioned back to civilian life if a 
substantial portion of their debt is due to their service.
  This motion is a narrow protection for those who suffer financial 
hardship, financial disaster, as a direct result of serving our 
country. It builds on Senator Durbin's amendment to the Senate 
bankruptcy bill which exempts from the bill's means test disabled 
veterans if their debts were incurred primarily when they were on 
active duty or performing homeland defense duties.
  Regardless of Members' position on the overall bill, we owe it to 
those who risk their lives and their livelihoods to prevent financial 
catastrophe caused by their service. This motion is the least we can do 
to ease their pain.
  According to the National Guard, 4 out of 10 members of the guard and 
reserve forces lose income when they leave their civilian jobs for 
active duty. Many left for the war thinking they would be deployed for 
6 months and have ended up staying for a year or even longer and may be 
shipped out again. There is no reasonable way they could have 
financially anticipated and prepared for those extensions of their 
service. Their families struggle to pay the bills. Some face the 
reality of losing their homes, as this cartoon depicts: Tie a yellow 
ribbon around the old oak tree, and for some of those returning from 
Iraq, it is a foreclosure sign around their house.
  Many Guard and Reservists are self-employed or run small businesses 
and face the daunting task of reestablishing their businesses after 
their release from active duties. The 2 years after they return from 
service are the

[[Page H2075]]

most difficult, and we owe it to them to provide a safe harbor from the 
means test.
  Since 9/11, approximately 470,000 Guard and Reservists have been 
called to active duty, tens of thousands more than once. Some of these 
patriotic Americans are facing financial crisis not because they are 
exploiting loopholes in the bankruptcy law, they are not scheming to 
avoid paying their debts, they are in a financial hole their country 
dug for them.
  Some will argue we do not need this motion because our solders are 
already covered by the Servicemembers' Civil Relief Act, but that is 
not true. Even with that minimal help, many are forced to file for 
bankruptcy and the relief act provides no assistance once they file. It 
is hard enough under current law for them to pick up the pieces. The 
special circumstances and sacrifices of Guard and Reserve forces 
require that we not make recovery even harder for them. Soldiering is 
not their livelihood, but they take it on. They leave their day-to-day 
lives and jobs behind because their country asks them to do so. 
Exemption from the means test is the least we can do to tell our 
citizen soldiers and their families not only do we appreciate the 
physical and emotional risks they have taken, we recognize their 
financial risk.
  To do any less than this simple, narrow protection would be morally 
bankrupt.

                                   Disabled American Veterans,

                                    Washington, DC, April 1, 2005.
     Hon. John Conyers, Jr.,
     Ranking Minority Member, House Committee on the Judiciary, 
         Rayburn House Office Building, Washington, DC.
       Dear Representative Conyers: The Disabled American Veterans 
     (DAV) is a nonprofit organization of more than one million 
     veterans disabled during time of war or armed conflict. The 
     DAV is the official voice of our nation's service-connected 
     disabled veterans, their families, and survivors.
       On behalf of the DAV, I ask you please keep in mind the 
     sacrifices of the brave men and women of our Armed Forces as 
     you consider S. 256, the Bankruptcy Abuse Prevention and 
     Consumer Protection Act of 2005.
       Returning service members often experience financial 
     difficulties during their transition back to civilian life. 
     They should be afforded protections to ensure that the 
     already significant burdens upon military members and their 
     families are not compounded by unintended consequences from 
     this bill. Specifically, disabled veterans who incur debt 
     during the initial 24 months following completion of active 
     duty should not be subject to the bankruptcy means test. Such 
     heroic citizens deserve the utmost consideration with regard 
     to bankruptcy laws.
       Thank you for your consideration. I look forward to 
     continuing to work with you to ensure better lives for 
     America's service-connected disabled veterans and their 
     families.
           Sincerely,
                                               Joseph A. Violante,
                                    National Legislative Director.

  Mr. Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. 
Strickland), a champion for our service men and women.
  Mr. STRICKLAND. Mr. Speaker, I support this motion to recommit 
because it provides added financial protections for veterans, military 
personnel and their families who are enduring financial hardships as a 
direct result of serving this country.
  Additionally, this motion to recommit offers help to members of the 
Reserves and National Guard who all too often must leave behind their 
family jobs and businesses. It provides protection not just during 
service but also for the 2 years after service when our veterans make 
the transition back to civilian life. This measure will guarantee what 
the Servicemembers Relief Act does not. It will provide exemptions from 
the means test, financial assistance and time, something our 
servicemembers selflessly give to the Nation and something we should 
give to them.
  The Servicemembers Civil Relief Act does not provide substantial 
bankruptcy protections. Rather, it provides a simple, temporary 90-day 
delay in bankruptcy proceedings once a servicemember is released from 
active duty.

                              {time}  1500

  Let us be clear. No bankruptcy safe harbor or exemption exists for 
our citizen soldiers under the Servicemembers Civil Relief Act 
currently. This motion is not an attempt to kill the bill. It is simply 
a reaction to a real problem that has been highlighted in countless 
news stories, by the National Military Families Association, Disabled 
Veterans of America, and individual servicemembers. These are people 
experiencing real and difficult financial situations. I support this 
motion to provide this narrow protection for those men and women who 
have served our country, and I urge my colleagues to do the same.
  I thank my dear colleague for her efforts in this behalf.
  Mr. SENSENBRENNER. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  The SPEAKER pro tempore (Mr. Putnam). The gentleman from Wisconsin 
(Mr. Sensenbrenner) is recognized for 5 minutes.
  Mr. SENSENBRENNER. Mr. Speaker, the motion to recommit creates a 
blanket exemption from the bill's needs-based test, and I do not think 
that that is necessary because it would exempt a wealthy debtor from 
the needs-based test solely based on the debtor's military service. 
People who fall behind the lines of the needs-based test will continue 
to have bankruptcy protection under chapter 7 as is provided in the 
current law. The bill also contains an exception from the needs-based 
test for disabled veterans who incurred indebtedness while on active 
duty.
  CRS and even the New York Times recognized that the Servicemembers 
Civil Relief Act of 2003 provides a broad spectrum of protection to 
servicemembers, their spouses and their dependents; and the revised 
statute, according to the New York Times, is clearer and more 
protective than the old one. The Times also recognized that the news 
was apparently slow in reaching those who would have to interpret and 
enforce the law, which apparently includes the people who are offering 
this motion to recommit.
  Let me summarize. Already there is in law, signed by President Bush 
in 2003, we have responded to the special financial burdens that 
members of the military may encounter. CRS has said the Servicemembers 
Civil Relief Act provides protection for servicemembers in the event 
their military service impedes their ability to meet financial 
obligations incurred before their entry into active military service, 
as well as during that service. There is a cap on the interest rates of 
6 percent. It clarifies that the balance of interest for the period of 
the servicemember's military service is to be forgiven by the lender.
  There are protections against evictions from rental property or 
foreclosures on mortgaged property. There are restrictions on 
cancellation of life insurance and more flexible options to allow 
servicemembers on active duty to terminate residential and automobile 
leases.
  We do not need this motion to recommit. Congress has already passed a 
law that provides those types of protections. The motion to recommit 
should be defeated, and the bill should be passed.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Ms. SCHAKOWSKY. Mr. Speaker, I object to the vote on the ground that 
a quorum is not present and make the point of order that a quorum is 
not present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  Pursuant to clause 9 of rule XX, the Chair will reduce to 5 minutes 
the minimum time for any electronic vote on the question of passage.
  The vote was taken by electronic device, and there were--yeas 200, 
nays 229, not voting 6, as follows:

                             [Roll No. 107]

                               YEAS--200

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Barrow
     Bean
     Becerra
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boren
     Boswell
     Boyd
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Butterfield
     Capps
     Capuano
     Cardin
     Cardoza
     Carnahan
     Carson
     Case
     Chandler
     Clay
     Cleaver
     Clyburn
     Conyers
     Cooper
     Costa
     Costello
     Cramer
     Crowley
     Cuellar
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)

[[Page H2076]]


     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Gonzalez
     Gordon
     Green, Al
     Green, Gene
     Grijalva
     Harman
     Hastings (FL)
     Herseth
     Higgins
     Hinchey
     Hinojosa
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson (IL)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick (MI)
     Kind
     Kucinich
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren, Zoe
     Lowey
     Lynch
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy
     McCollum (MN)
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Melancon
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore (KS)
     Moore (WI)
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Salazar
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Schakowsky
     Schiff
     Schwartz (PA)
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Spratt
     Stark
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NAYS--229

     Aderholt
     Akin
     Alexander
     Bachus
     Baker
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boucher
     Boustany
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole (OK)
     Conaway
     Cox
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis (KY)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Drake
     Dreier
     Duncan
     Ehlers
     Emerson
     English (PA)
     Everett
     Feeney
     Ferguson
     Fitzpatrick (PA)
     Flake
     Foley
     Forbes
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harris
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Hulshof
     Hunter
     Hyde
     Inglis (SC)
     Issa
     Istook
     Jenkins
     Jindal
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kuhl (NY)
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McHugh
     McKeon
     McMorris
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Otter
     Oxley
     Paul
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Poe
     Pombo
     Porter
     Portman
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schwarz (MI)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (NJ)
     Smith (TX)
     Sodrel
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden (OR)
     Walsh
     Wamp
     Weldon (PA)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--6

     Berkley
     Gillmor
     Gutierrez
     LaHood
     Solis
     Weldon (FL)

                              {time}  1529

  Messrs. TURNER, TANCREDO, CRENSHAW, and BRADLEY of New Hampshire 
changed their vote from ``yea'' to ``nay.''
  Ms. EDDIE BERNICE JOHNSON of Texas and Messrs. RUSH, BOREN, and 
JOHNSON of Illinois changed their vote from ``nay'' to ``yea.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  Stated for:
  Ms. SOLIS. Mr. Speaker, during rollcall vote No. 107 on motion to 
recommit with instructions (S. 256) I was unavoidably detained. Had I 
been present, I would have voted ``yea.''
  The SPEAKER pro tempore (Mr. Putnam). The question is on passage of 
the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 302, 
nays 126, not voting 7, as follows:

                             [Roll No. 108]

                               YEAS--302

     Aderholt
     Akin
     Alexander
     Andrews
     Baca
     Bachus
     Baird
     Baker
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Bean
     Beauprez
     Berry
     Biggert
     Bilirakis
     Bishop (GA)
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boren
     Boswell
     Boucher
     Boustany
     Boyd
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Cardoza
     Carter
     Case
     Castle
     Chabot
     Chandler
     Chocola
     Cleaver
     Coble
     Cole (OK)
     Conaway
     Cooper
     Costa
     Cox
     Cramer
     Crenshaw
     Crowley
     Cubin
     Cuellar
     Culberson
     Cunningham
     Davis (AL)
     Davis (FL)
     Davis (KY)
     Davis (TN)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Drake
     Dreier
     Duncan
     Edwards
     Ehlers
     Emerson
     English (PA)
     Etheridge
     Everett
     Feeney
     Ferguson
     Fitzpatrick (PA)
     Flake
     Foley
     Forbes
     Ford
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gingrey
     Gohmert
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Granger
     Graves
     Green (WI)
     Green, Al
     Gutknecht
     Hall
     Harman
     Harris
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Herseth
     Higgins
     Hinojosa
     Hobson
     Hoekstra
     Holden
     Hooley
     Hostettler
     Hoyer
     Hulshof
     Hunter
     Hyde
     Inglis (SC)
     Israel
     Issa
     Istook
     Jefferson
     Jenkins
     Jindal
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kind
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kuhl (NY)
     Larsen (WA)
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     Matheson
     McCarthy
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McHugh
     McIntyre
     McKeon
     McMorris
     Meek (FL)
     Meeks (NY)
     Melancon
     Menendez
     Mica
     Michaud
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Mollohan
     Moore (KS)
     Moran (KS)
     Moran (VA)
     Murphy
     Murtha
     Musgrave
     Myrick
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Ortiz
     Osborne
     Otter
     Oxley
     Pastor
     Paul
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Poe
     Pombo
     Pomeroy
     Porter
     Portman
     Price (GA)
     Price (NC)
     Pryce (OH)
     Putnam
     Radanovich
     Rahall
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reyes
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Rothman
     Royce
     Ruppersberger
     Ryan (WI)
     Ryun (KS)
     Salazar
     Saxton
     Schwartz (PA)
     Schwarz (MI)
     Scott (GA)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skelton
     Smith (NJ)
     Smith (TX)
     Sodrel
     Souder
     Spratt
     Stearns
     Strickland
     Sullivan
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden (OR)
     Walsh
     Wamp
     Weldon (PA)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wu
     Wynn
     Young (AK)
     Young (FL)

                               NAYS--126

     Abercrombie
     Ackerman
     Allen
     Baldwin
     Barrow
     Becerra
     Berman
     Bishop (NY)
     Blumenauer
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Butterfield
     Capps
     Capuano
     Cardin
     Carnahan
     Carson
     Clay
     Clyburn
     Conyers
     Costello
     Cummings
     Davis (CA)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Doyle

[[Page H2077]]


     Emanuel
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Filner
     Frank (MA)
     Green, Gene
     Grijalva
     Hastings (FL)
     Hinchey
     Holt
     Honda
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick (MI)
     Kucinich
     Langevin
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren, Zoe
     Lowey
     Lynch
     Maloney
     Markey
     Marshall
     Matsui
     McCollum (MN)
     McDermott
     McGovern
     McKinney
     McNulty
     Meehan
     Millender-McDonald
     Miller (NC)
     Miller, George
     Moore (WI)
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Owens
     Pallone
     Pascrell
     Payne
     Pelosi
     Rangel
     Roybal-Allard
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Schakowsky
     Schiff
     Scott (VA)
     Serrano
     Sherman
     Slaughter
     Smith (WA)
     Snyder
     Stark
     Stupak
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey

                             NOT VOTING--7

     Berkley
     Gillmor
     Gutierrez
     LaHood
     Lantos
     Solis
     Weldon (FL)

                              {time}  1539

  So the Senate bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Stated against:
  Ms. SOLIS. Mr. Speaker, during rollcall vote No. 108 on final passage 
(S. 256) I was unavoidably detained. Had I been present, I would have 
voted ``nay.''

                          ____________________