[Congressional Record Volume 151, Number 50 (Friday, April 22, 2005)]
[Extensions of Remarks]
[Page E737]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005

                                 ______
                                 

                               speech of

                            HON. TODD TIAHRT

                               of kansas

                    in the house of representatives

                        Thursday, April 14, 2005

  Mr. TIAHRT. Mr. Speaker, I rise today in strong support of S. 256, 
the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. I 
believe passage of this important bill is long overdue, and I 
congratulate Chairman Sensenbrenner and Chairman Oxley for their 
leadership over the past several years in crafting meaningful 
bankruptcy reform.
  The bill we are voting on today will help foster greater personal 
responsibility and make it more difficult for those who use bankruptcy 
as a tool for fraud to cheat their way out of debt.
  Bankruptcy filings have escalated in recent years, which have had 
negative consequences on our economy. Yet, numerous studies have shown 
many bankruptcy debtors are able to repay a significant portion of 
their debts. If this alarming trend continues, all Americans will pay 
the price in the form of higher costs for goods, services and credit. 
These higher costs not only harm consumers, it also stymies growth for 
businesses.
  By addressing bankruptcy abuses, S. 256 will play a role in creating 
a better environment to conduct business in America, which means more 
jobs for those who need them.
  Some have expressed concerns S. 256 will limit people from filing 
under Chapter 7. However, estimates show only a small percent of 
Chapter 7 bankruptcy filers would have their petitions dismissed or 
forced into Chapter 13 or Chapter 11 bankruptcy. One study cited by the 
Committee on the Judiciary suggests as few as 3.6 percent of Chapter 7 
filers would be moved into repayment plans under the new means test.
  I recognize there are cases where families and individuals need to 
file for Chapter 7 bankruptcy for very legitimate reasons. Sometimes 
hardships and unforeseen circumstances happen in life, and bankruptcy 
is a needed last option to help families survive.
  However, the United States cannot afford to continue down the path 
where high consumer debt is routinely directed toward bankruptcy as a 
first stop rather than a last resort. I am pleased S. 256 addresses 
common bankruptcy abuses while continuing to offer Americans who need 
to file for bankruptcy the means to do so.
  The consumer bankruptcy provisions of S. 256 address the needs of 
both creditors and debtors. With respect to the interests of creditors, 
this legislation responds to many factors that have contributed to the 
increase in consumer bankruptcy filings, such as lack of personal 
financial accountability.
  The bill provides many debtor protections such as provisions allowing 
debtors to exempt certain education IRA plans, fortifying exemptions 
for certain retirement pension funds, and enhancing the professionalism 
standards for attorneys and others who assist consumer debtors with 
their bankruptcy cases.
  S. 256 ensures debtors receive notice of alternatives to bankruptcy 
relief, requires debtors to participate in debt repayment programs, and 
institutes a pilot program to study the effectiveness of consumer 
financial management programs.
  I am also pleased S. 256 contains several provisions that will help 
make American businesses more competitive. By cracking down on 
bankruptcy abuse, we eliminate another obstacle small businesses face 
as they compete in the global marketplace.
  Currently, a business can be sued by a bankruptcy trustee and forced 
to pay back money previously paid to it by a firm that later filed for 
bankruptcy protection. Under the reforms of S. 256, small businesses 
will have an easier time successfully defending against these suits.
  The reforms will promote greater certainty in the financial market 
place as well. S. 256 reduces systemic risk in the banking system and 
financial marketplace by minimizing the risk of disruption when parties 
to certain financial transactions become bankrupt or insolvent.
  S. 256 addresses the special problems presented by small business 
debtors by instituting firm deadlines and enforcement mechanisms to 
weed out those debtors who are not likely to reorganize. It also 
requires the court and other designated entities to monitor these cases 
more actively.
  Under the current law, nearly every item of information supplied by a 
debtor in connection with his or her bankruptcy case is made available 
to the public. S. 256 prohibits the disclosure of the names of the 
debtor's minor children and requires such information to be kept in a 
nonpublic record, which can be made available for inspection only by 
the court and certain other designated entities. In addition, if a 
business debtor had a policy prohibiting it from selling ``personally 
identifiable information'' about its customers and the policy was in 
effect at the time of the bankruptcy filing, then the sale of such 
information is prohibited unless certain conditions are satisfied.
  These are just a few of the several provisions that make this bill 
good for American consumers and businesses. I urge my colleagues to 
join me today in voting for S. 256 so we can limit abuses within our 
bankruptcy system and promote a stronger America.

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