Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas (Mr. FROST), my colleague and my friend; pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only.
Mr. Speaker, the legislation before us today is a fair and structured rule, providing for the consideration of H.R. 333, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001. The rule waives points of order against consideration of the bill and provides for 1 hour of general debate equally divided and controlled by the chairman and ranking minority member of the Committee on Judiciary.
The rule also provides that the amendments recommended by the Committee on Judiciary now printed in the bill shall be considered as adopted in the House and in the Committee of the Whole and that the bill, as amended, shall be considered as the original bill for the purpose of further amendment and shall be considered as read.
The rule waives all points of order against provisions in the bill as amended and makes in order only those amendments printed in the Committee on Rules report accompanying the resolution. It provides that amendments made in order may be offered only in the order printed in the report and may be offered only by a Member designated in the report, shall be considered as read, shall be debatable for the time specified in the report divided equally and controlled by the proponent and opponent, shall
not be subject to amendment, and shall not be subject to a demand for the division of the question in the House or in the Committee of the Whole.
The rule also waives all points of order against the amendments printed in the Committee on Rules report.
Finally, the rule provides one motion to recommit with or without instructions and provides authorization for a motion in the House to go to conference with the Senate on the bill, H.R. 333.
Mr. Speaker, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001 will fundamentally reform the existing bankruptcy system into a needs-based system. I am proud of the tireless efforts of the House Committee on the Judiciary under the leadership of the gentleman from Wisconsin (Mr. SENSENBRENNER) to address this issue and to ensure that our bankruptcy laws operate fairly, efficiently, and free from abuse. [Page: H513]
We must end the days when debtors who are able to repay some portion of their debt are allowed to game the system to take advantage of those laws. Instead, this bill is crafted to ensure the debtor's rights to a fresh start while protecting the system from flagrant abuses from those who can pay their bills.
This should not be a controversial issue because Congress has spoken many times on this issue before today. Two Congresses ago, in the 105th Congress, the House and the Senate passed different versions of bankruptcy reform legislation. The House agreed to the conference report that was negotiated on October 9, 1998, by a vote of 300 to 125.
During the 106th Congress, both the House and the Senate overwhelmingly approved bankruptcy reform legislation, also on a bipartisan basis. The House passed H.R. 833 by a vote of 313 to 108 in May of 1999 and later passed the conference report by voice vote on October 12, 2000. Each time the bankruptcy reform legislation has received overwhelming support from both sides of the aisle. The Senate also voiced its strong support and passed the conference report by a vote of 70 to 28. Unfortunately,
President Clinton chose to pocket veto this bill.
That is why we are here again today, Mr. Speaker. The legislation that we consider today is virtually identical to the conference report that passed the House in the 106th Congress.
There is a great need for this bill now. According to statistics released by the Administrative Office of the United States Courts, bankruptcy filings reached an all-time high of more than 1.4 million in 1998. The debts that remain unpaid as a result of those bankruptcies cost each American family that did pay their bills on time $400 a year in the form of higher cost for credit, goods and services. Unfortunately, much of the debt that was eventually passed on to consumers last year was debt
that bankruptcy filers could have afforded to pay. They simply did not because of the current opportunities under the law. That is why it is so important for us today to pass real bankruptcy reform.
Without serious reform of our bankruptcy laws, these trends promise to continue growing, as they have every year, costing business and consumers even more in the form of losses and higher costs of credit. As we debate and vote today, we should keep in mind two important tenets of the bankruptcy reform: number one, the bankruptcy system should provide the amount of debt relief that an individual needs, no more and no less; and, number two, bankruptcy should be the last resort and not a first resort
to financial crisis. It should not become a way of life.
Opponents of this bill have tried to divert the discussion away from the merits of the bill and claim it would make it more difficult for divorced women to obtain child support and alimony payments. However, nothing could be further from the truth. This bankruptcy reform bill protects the financial security of women and children by giving them higher priority than today's law. The legislation closes loopholes that allow some debtors to use the current system to delay, or even evade, child support
and alimony payments. The bill recognizes that no obligation is more important than that of a parent to his or her children.
Currently, child support payments under today's law are the seventh priority behind such things as attorney's fees. Make no mistake about this, H.R. 333 puts women and children first at the top of the list. We should provide greater protection to families who are owed child support, and this bill will do just that.
One important part of this legislation is known as the ``homestead provision.'' Protection of one's home is something that is very important to myself, the gentleman from Texas (Mr. FROST), who will be speaking in just a minute on behalf of the minority, and also our constituents in Texas. The homestead provision maintains the long-held standard that allows the States to decide if homestead should be protected, yet stops those who purchase a home before filing bankruptcy as a means to
The bill also addresses other problems, including needs-based bankruptcy. The heart of this legislation is a needs-based formula that separates filers into chapter 7 or chapter 13 based upon their ability to pay. While many families may face job loss, divorce, or medical bills and, therefore, legitimately need protection provided by the bankruptcy code, research has shown that
some chapter 7 filers actually have the capacity to repay some of what they owe. Needs-based reform says that if someone can reasonably repay some of their debts, they should. This does not mean that the debtor cannot declare bankruptcy, but merely that the debtor needs to use chapter 13 rather than chapter 7 to repay some of the debt if he or she is able to do so.
This bill also recognizes the need for consumer education and protection. It includes education provisions that will ensure that debtors are made aware of their options before they file for bankruptcy, including alternatives to bankruptcy, such as credit counseling. And the bill cracks down on bankruptcy mills, law firms, and other entities that push debtors into bankruptcy without fully explaining the consequences.
Finally, the bill also imposes new restrictions and responsibilities upon creditors with the goal of preventing borrowers from getting in over their heads. For example, the bill requires creditors to disclose more about the effect of paying only the minimum payment and establishes new creditor penalties designed to encourage good-faith bankruptcy settlements with debtors.
Mr. Speaker, I am proud of this bill. This resolution will bring bankruptcy reform to the House of Representatives. The rule allows for full and fair debate on the underlying measure, as well as adequate opportunity for those who oppose the legislation to offer amendments. I urge my colleagues to support this rule and H.R. 333.
Mr. Speaker, I reserve the balance of my time.
Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I have long been a supporter of bankruptcy reform, and I support the bill before us today. I am, however, concerned that the Committee on Rules majority has started the year by denying Democratic Members the opportunity to offer amendments to this significant legislative proposal. Granted, the bill before us is identical to the bill vetoed by the President last year; but at the same time, we do have a deliberate process in this body that is being stifled by the majority. Just as
the majority is intent on considering massive tax cuts before we even have received a real budget from the President, much less before we have a budget debate on the Hill, the majority has once again subverted the process.
Mr. Speaker, as I said, I am a supporter of this bill, but there are issues that deserve to be heard and debated. This rule makes in order six amendments. Democrats are grateful the Republican majority has at least seen fit to give us a substitute, but other significant amendments offered in the Committee on Rules yesterday are not included in this list of six.
For example, the gentleman from Michigan (Mr. CONYERS), the ranking member of the committee, offered an amendment, along with the gentlewoman from New York (Ms. SLAUGHTER), who is a member of the Committee on Rules. This amendment relates to the issue of payment of child support and alimony by debtors, which has long been an issue that has given many Members pause when considering whether or not to support reform of the bankruptcy system. Mr. Speaker, many believe the provisions
in the bill adequately address these concerns. However, it is an issue that deserves to be heard and the Conyers-Slaughter amendment should have been made in order.
Mr. Speaker, it is not as if we have been extraordinarily busy in the weeks since the 107th Congress convened. Perhaps giving us an extra hour or two of debate time might be too taxing, considering the schedule we have kept so far this year, and that is the reason we will not be able to debate the Conyers- Slaughter amendment or other amendments submitted by Democratic Members; but if we are to have the change of tone in Washington the President is seeking, it seems to me that there should be
a little more collegiality on the part of the Republican leadership when it comes time to parcel out amendments to bills the House is to debate.
Mr. Speaker, Democrats are not here to subvert the process. We have constituencies to represent and real problems to address. We can only hope in the coming months that we will be allowed to do that as we consider legislation that is vital to our country and to the people we represent.
Mr. Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I rise in strong support of this resolution, an order of business resolution, providing for the consideration of H.R. 333, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001.
I want to commend the gentleman from Texas (Mr. SESSIONS); the gentleman from California (Mr. DREIER), the chairman of the Committee on Rules; and all the members of the Committee on Rules for reporting a fair, balanced, and appropriate rule for consideration of this important bankruptcy reform bill.
Mr. Speaker, this rule is not unlike rules passed in the 105th and 106th Congress providing for the consideration of bankruptcy reform bills. This structured rule provides ample time for debate and consideration of opposing views. It makes in order one minority substitute and provides one hour of debate on that substitute. It also makes in order a technical amendment which I will be offering which will make some minor technical corrections in the bill.
Mr. Speaker, this is a good rule and I urge the Members to support this resolution.
Mr. DELAHUNT. Mr. Speaker, I thank the gentleman for yielding me this time.
Mr. Speaker, this bill represents an ill-considered change in public policy that totally advantages some creditors, particularly large credit card issuers, over families that seek bankruptcy relief because of financial catastrophes caused by major medical expenses, divorce, job loss, death of the family bread winner and the like. In fact, it was the former chairman of the Committee on the Judiciary, the gentleman from Illinois (Mr. HYDE), that pointed out last year during the course of
this debate that there were 75 consumer creditor enhancements in this bill. It also advantages the sophisticated debtor who has accumulated so-called ``exempt assets,'' to the detriment of the unsophisticated debtor who has no assets and is earning $40,000, $45,000, or $50,000 a year trying to put bread on the family table.
The American people should know that a debtor can live in a mansion in Florida worth millions, have an individual retirement account of up to $1 million, have annuities worth additional millions of dollars, receive a nice big fat pension and not worry, because these assets are exempt and creditors cannot touch them.
But if you do not have any so-called exempt assets and are barely making it and genuinely need bankruptcy relief, woe is you. Those credit card companies will be able to chase you forever. Just imagine how this different treatment of debtors will appear to the American people. You can properly call this not a tax break for the wealthy but bankruptcy protection for the rich. Every fair-minded American should find this offensive and unconscionable. We are in the process of establishing different
classes of debtors.
Now, proponents are concerned, justifiably, about the dramatic increase in the number of personal bankruptcy filings that peaked in 1998, as my friend from Texas indicated. I share his concern and their concerns. It is just that this bill is not the answer. It is not the panacea they claim. They predicted that unless we adopted an earlier version of this bill, those filings would continue to escalate. The original bill was introduced in 1997. Well, they were dead wrong. The bankruptcy rate declined
by more than 9 percent in 1999 and further declined 6 percent in the year 2000. That represents 170,000 fewer filings in the year 2000 than in 1998. That is what they are not telling you, Mr. Speaker. That is a 2-year decline of greater than 15 percent in the bankruptcy rate. No doubt if the bill had passed when introduced in 1997, the sponsors would be taking bows for this positive trend. But it would have been undeserved. I have no doubt that they sincerely believe that the spike in the number of personal bankruptcies was caused by debtors, as I have heard the term,
gaming the system, that bankruptcy was becoming a financial planning tool and that there was no longer a social stigma associated with bankruptcy and that the current Bankruptcy Code encouraged debtors to file for bankruptcy. Again in large measure they were wrong. Maybe they never carefully
examined the evidence, because every independent analysis concluded that there was no data, no empirical research, no hard evidence that supported that theory. Let me add when I say independent analysis, I mean studies that were not bought and paid for by the credit card industry.
Government agencies agreed with those independent experts. To note a few, a CRS report issued in 1998 states, ``There is a dearth of empirical data to support or refute the hypothesis.'' The CBO issued a report last year. One sentence sums it all up, and I am quoting: ``The available research casts a dim light on the causes of personal bankruptcy and its consequences for the cost and availability of credit.''
Myself and others proposed amendments, Mr. Speaker, that would have added some balance to the bill, that would have equaled the relationship between creditors and debtors. But unfortunately they were not made in order.
Mr. Speaker, I hope that the rule is rejected and that the underlying bill is defeated.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Our previous speaker, who is a very good friend of mine, was speaking about credit card debts, was speaking about who would and would not get relief under this bill. I would like to just state that the purpose of this bill is to allow all Americans the opportunity to file bankruptcy. The gentleman indicated that credit card companies would stay after that little guy for forever. But, in fact, that is not true. Because if the little guy that was in reference to, unless they had a nondischargeable
debt, meaning that they took on this credit card debt fraudulently, immediately upon filing for bankruptcy they would get the relief, just like anyone else in this country.
We are not after the little guy. We are trying to do the right things for everybody. And so whether you did have a pension or whether you were a little guy, we would offer that same protection.
Mr. DELAHUNT. Mr. Speaker, again let me be very, very clear. The priority that is now given to credit card debt under this proposal is vastly different and much of that debt will become nondischargeable and we will be chasing people for $80 a month while others are living, with these exempt assets, the life of luxury. That is totally wrong and unconscionable.
Mr. SESSIONS. I appreciate the gentleman's help. In fact, I believe that a nondischargeable debt, as most of them are, would simply be given relief, and so it would not be cost effective to chase after $80 for forever, nor would it be appropriate and right. Nor would it be allowed under this law.
Mr. Speaker, I yield 2 1/2 minutes to the gentleman from Palm Bay, Florida (Mr. WELDON).
Mr. WELDON of Florida. Mr. Speaker, I thank the gentleman for yielding me this time.
Mr. Speaker, I rise in support of H.R. 333, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001. In recent years despite the trends downward, bankruptcies remain too high. I remain deeply troubled by this. I am very concerned that filing for bankruptcy continues to be much higher than it should be, and I believe that today many Americans are filing for bankruptcy again as a financial planning tool.
Filing for bankruptcy should be reserved for Americans who have been generally responsible but have gotten in over their heads primarily for circumstances that they could not control, such as the loss of a job, high [Page: H515]
medical bills, a disability in the family that puts a tremendous strain on the family budget, and other such circumstances.
Earlier this week, I had the members of the credit unions in the State of Florida come into my office. As we all know, credit unions are membership-owned financial institutions, owned by working people. They support this bill. Why is that the case? Because they are increasingly seeing bankruptcies of convenience, bankruptcies used as a financial planning tool. These are people who have been often irresponsible in their spending habits.
And who picks up the tab for these bankruptcies of convenience? All of the other members of the credit union, through higher interest rates and reduced benefits. Just to cite as an example what the credit unions are telling me that they are seeing more and more often is people who run up large credit card bills at places like Disney World, on trips to theme parks and trips to very, very nice hotels in the days and weeks prior to them filing for bankruptcy. Meanwhile, thousands of other hardworking
Americans in those credit unions do not go to those kinds of places simply because they cannot afford it. But nonetheless they are paying for those trips by those people.
I realize that this is a very difficult issue, but I believe that the bill that we have on the floor today strikes the proper balance. It is a good bill. It protects consumers. That is what we should be primarily concerned about. It protects all Americans fairly. I encourage all my colleagues to support this rule, which is a very, very fair and good rule, and support the underlying bill.
Mr. SCHIFF. Mr. Speaker, I rise in opposition to this rule. During committee consideration, I offered several amendments to correct oversights in the bill. These amendments were of a relatively minor character. The first would provide that when someone, for example, is legally separated from their spouse and files individually for bankruptcy, that we would not consider the separated spouse's income in determining whether the person filing for bankruptcy met the means test. As a practical matter,
if someone is legally separated and has no access to the assets of the other spouse and yet that other spouse's assets are considered in the means test, they will not qualify for chapter 7. That is not appropriate. I am really astounded that this provision was taken out of the manager's amendment. During the committee hearing, the sponsor of the bill indicated that he thought that there was likely merit to this amendment.
The second that I offered would provide for a GAO study to determine the impact on child support, whether this will make it more difficult for people to collect child support. That was also rejected, a mere study of the issue. I do not know what we are afraid of. If we have a study of the issue and it finds, as the proponents of the bill say, that this has no net adverse impact on women trying to collect child support, then great, we know that. But if a year goes by and the study is conducted
and it finds there are problems, we can then address them. What are we afraid of? Why are we afraid to find out the answer to those questions?
I am hoping this bill comes back from conference with the Senate in a different form. Many of us would like to support this bill. This bill has many important bankruptcy reforms in it. Many of us believe bankruptcy reform is vital. There are some positive things on child support in this bill, like relief from the automatic stay. But if even these minor issues that could ultimately be very important are rejected out of hand as they are in this rule, then the House is essentially delegating to
the Senate to do the meaningful work on the bill. We are delegating to the Senate to decide what amendments should be taken and what not, what the form of the bill ought to be. I hope that this pattern would not persist with other legislation as well or we will really be delegating our responsibility to the other House.
In conclusion, Mr. Speaker, I would urge opposition to this rule and in the future would hope that where there are amendments that are acknowledged in committee as probably having merit, where suggestions such as a study are made, that they would be considered in order. I thank the Members for their consideration.
Ms. PRYCE of Ohio. Mr. Speaker, I thank my good friend from Texas and my colleague on the Committee on Rules for yielding me this time.
I rise in strong support of this balanced rule and for the underlying legislation.
Mr. Speaker, we have before us a fair and evenhanded rule that will allow us to consider important legislation to reform our Nation's bankruptcy system. This bankruptcy reform legislation will remedy weaknesses in existing law that allow higher income taxpayers to escape their responsibilities even when they are able to repay a portion of what they owe. This bill will take steps to eliminate what we call the bankruptcy of convenience. At the same time, the legislation will protect those who are
truly needy and in need of a second chance to maintain their ability and obtain a fresh start.
Further, the legislation contains important protections for children and spouses who are owed child support and alimony. By equipping State child support collection agencies with the necessary tools and codifying the importance of child support and alimony obligations, this legislation will increase our commitment to children and families and will hold parents, husbands and wives to their responsibilities.
Mr. Speaker, the American public has indicated their desire for bankruptcy reform and, in fact, the Congress just last year demonstrated its strong support in passing very similar bankruptcy legislation reform, with 313 bipartisan votes. Today, we build upon our past success and take an important step forward toward finally enacting these needed reforms into law.
The administration has already stated its support for this overall package and recognizes the need to curb many of the abuses of the current bankruptcy protections. I urge my colleagues to support this fair and balanced rule as well as passage of this important legislation.