[Congressional Record Volume 151, Number 51 (Monday, April 25, 2005)]
[Extensions of Remarks]
[Pages E754-E755]
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. BETTY McCOLLUM

                              of minnesota

                    in the house of representatives

                        Thursday, April 14, 2005

  Ms. McCOLLUM of Minnesota. Mr. Speaker, I rise in opposition to S. 
256, a bill to modify our Nation's bankruptcy system. I strongly 
support holding individuals responsible for paying debts they can 
reasonably afford. Our banks, credit unions, and other responsible 
financial institutions should not have to foot the bill for the 
individuals who take advantage of the system to intentionally avoid 
their debts. Efforts to curb the number of bankruptcies filed each 
year, which strain our responsible financial institutions and their 
ability to provide low-cost services to consumers should be pursued and 
supported.
  But the fact is that millions of Americans face difficult and real 
financial circumstances that are caused by a personal or family 
healthcare crisis, unemployment, drastic changes in life situations, 
such as divorce and family death, and even military service. This 
legislation makes life much more difficult for hard working families 
who are already in crisis.
  Bankruptcy attorneys from Minnesota whom I have spoken with share my 
concerns. They believe this bill will be particularly harmful to 
working families, especially those headed by single parents. Custodial 
parents will have a more difficult time collecting child support by 
diverting more of a debtor's money to creditors and allowing other non-
child support debts to survive bankruptcy. This bill will also make it 
easier for landlords to evict families who are in bankruptcy from their 
homes sending parents and their children on to the streets. This bill 
strips the authority of bankruptcy judges to consider the special 
circumstances of working families who have found themselves in 
overwhelming debt.
  While there has been much rhetoric regarding personal responsibility 
heard on the floor of the House, the bill completely fails to address 
consumer abuses by the credit card industry. Instead, this bill rewards 
irresponsible credit card companies who deceive consumers and target 
vulnerable families with questionable business practices and reckless 
lending. College students and individuals with already heavy debt loads 
are especially vulnerable to questionable marketing practices that 
offer easy credit at low rates that later increase to as much as 20 or 
30 percent. Individuals must be responsible, but credit card companies 
must be held accountable for irresponsible business practices as well.
  While credit card companies reap the benefits of this bill, about 50 
percent of all families who are forced to file for bankruptcy do so 
because of expensive medical bills. In another 40 percent of 
circumstances, a person has suffered a death in the family, lost their 
job, or have recently divorced their spouse. Almost all who file for 
bankruptcy do so as a last resort and have other compounding financial 
challenges. Over 60 percent of bankruptcy filers have gone without 
medical care. Fifty percent have been unable to fill needed 
prescriptions. One-third have had their utilities turned off. Twenty-
one percent have gone without food.

[[Page E755]]

  Numerous amendments that would have made this bill more balanced were 
rejected by the House Judiciary Committee. These include amendments 
that would have closed loopholes for millionaires, protected service 
members and veterans from means testing in bankruptcy, discouraged 
predatory lending practices, exempted debtors from means testing if 
their financial situations were caused by identity theft, limited the 
amount of interest that can be charged on any extension of credit to 30 
percent, and, among several others, exempted debtors whose financial 
problems were caused by serious medical problems from means testing.
  We must do something to curb the number of personal bankruptcies that 
strain our banks, credit unions, and responsible financial 
institutions. But we must not do so at the expense of children 
receiving court-ordered child support, our veterans, and college 
students and others lured by easy, high-interest credit.

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