[Congressional Record (Bound Edition), Volume 148 (2002), Part 11]
[Extensions of Remarks]
[Page 15278]
[From the U.S. Government Publishing Office, www.gpo.gov]




        OPPOSITION TO CONFERENCE AGREEMENT ON BANKRUPTCY REFORM

                                 ______
                                 

                       HON. JANICE D. SCHAKOWSKY

                              of illinois

                    in the house of representatives

                         Friday, July 26, 2002

  Ms. SCHAKOWSKY. Mr. Speaker, I rise in opposition to the conference 
report on H.R. 333 ``The Bankruptcy Abuse Prevention and Consumer 
Protection Act.'' This legislation puts the interests of politically 
powerful credit card companies ahead of the interests of seniors and 
working families. That is why this conference report is opposed by 
every major consumer rights organization, over twenty women's right 
organizations, and the AFL-CIO. This is flawed legislation that could 
not come at a worse time. I urge my colleagues to reject this 
conference report.
  Last year, a record 1.45 million people filed bankruptcy. Experts 
attribute this to deteriorating economic conditions and rising consumer 
debts. Research shows that nine in ten bankruptcies are triggered by 
the loss of a job, high medical bills or divorce. Yet this legislation 
would not allow a bankruptcy judge to take into account whether a 
debtor is blameless for his or her financial problem when deciding 
whether the person can declare chapter 7 bankruptcy unless the debtor 
is a victim of terrorism. This will make it very difficult for 
consumers to escape debt.
  This legislation will have especially harsh impact on senior citizens 
and women. According to research by the Consumer Bankruptcy Project at 
Harvard University, seniors are the fastest growing group in 
bankruptcy. About 82,000 Americans over 65 years-of-age filed for 
bankruptcy in 2001, up 244 percent since 1991. We will put seniors at 
the mercy of price-gouging card companies.
  Women represent the single largest group in bankruptcy, with 
households headed by women accounting for about 40 percent of all 
bankruptcies today. This legislation will make it harder for them to 
escape debt and poverty by creating new types of ``nondischargeable'' 
credit card debts. The legislation puts banks in competition with women 
trying to collect child support from a former spouse after bankruptcy. 
Debtors will have to pay back more money in credit card debts after 
clearing bankruptcy, leaving less money for child support and alimony. 
Proponents of the conference report claim that this legislation gives 
top priority to women trying to collect child support when distributing 
assets in chapter 7 cases. However, more than 90 percent of all chapter 
7 debtors have no assets to distribute. They have no protection at all.
  Amazingly, this conference report expands the most egregious abuse of 
the bankruptcy system by expanding the scope of the luxury home 
loophole to all fifty States. In five States, a debtor can hide all 
their resources in their home. Unless a debtor is guilty of a very 
narrow range of fraud or felonies, is declaring bankruptcy within 40 
months of buying a home or has moved in from another State in the last 
two years, the loophole remains. This legislation will allow debtors to 
export the unlimited homestead exemptions for two years. This means 
that corporate thieves like former Enron CEO Ken Lay can move to my 
district and escape paying investors and workers. Ken Lay comes from 
Texas. Texas is one of the five States that does not have a cap on 
their homestead exemption. At the same time a laid-off worker from a 
State like Delaware that does not have a homestead exemption will lose 
a home that has as little equity as $30,000. This is an outrageous 
double standard.
  This legislation is also noticeably silent when it comes to the role 
of credit card companies in increasing consumer debt and filed 
bankruptcies over the past decade. Credit card companies sent out five 
billion solicitations last year. Credit card companies target college 
students. College students lack independent means and have a high 
credit risk. Yet this legislation does not curb these practices in any 
significant way. Language to require responsible lending to college 
students has been severely weakened.
  Also this bill does nothing to curb the practices of predatory 
lenders, who will be able to collect debts regardless of how they 
deceived consumers. This bill allows most lenders to provide only a 
general statement on the credit card bill about the risks of paying at 
the minimum rate and a toll-free number. Most consumers will not 
receive information that details the long-term risk of accumulating 
credit card debt.
  This legislation lets wealthy debtors and credit card companies off 
the hook while it makes it more difficult for working families and laid 
off workers to make ends meet and avoid debt. Please join me in 
rejecting this anti-consumer conference report. This conference report 
is bad for consumers and it should be opposed.

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