CONSUMER BANKRUPTCY REFORM ACT
(Senate - September 09, 1998)

Text available as:

Formatting necessary for an accurate reading of this text may be shown by tags (e.g., <DELETED> or <BOLD>) or may be missing from this TXT display. For complete and accurate display of this text, see the PDF.

[Page S10059]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     CONSUMER BANKRUPTCY REFORM ACT

  Mr. THURMOND. Mr. President, I rise today in support of cloture on 
the motion to proceed to S.1301, the Consumer Bankruptcy Reform Act, 
which will be voted on later today. This legislation is urgently needed 
to address abuses of our bankruptcy laws and help make sure bankruptcy 
is reserved for those who truly need it.
  We have had Federal bankruptcy laws for 100 years, and no one 
disputes that some people must file for bankruptcy. Some people fall on 
hard times and have financial problems that dwarf their financial 
means. They need to have the debts that they cannot pay forgiven under 
chapter 7.
  However, other people who file for bankruptcy have assets or have the 
ability to repay their debts over time. These people should reorganize 
their debts under chapter 13. Bankruptcy should not be an avenue for 
someone to avoid paying their debts when they have the ability to do 
so. People should pay what they can.
  Unfortunately, too many people today who file for bankruptcy choose 
to discharge their debts rather than reorganize them and pay what they 
can. The reason may be because filing for bankruptcy does not have the 
moral stigma it once had. It may be because the person needs to be 
educated on how to better manage their money. Maybe attorneys do not 
encourage enough people to reorganize their debts. Whatever the reason, 
it is a big problem today.
  The problem is becoming more serious because more and more people are 
filing for bankruptcy every year. In fact, more Americans filed for 
bankruptcy last year than ever before, about 1.35 million people.
  S.1301 addresses the issue by making it easier for judges to transfer 
cases from chapter 7 discharge to chapter 13 reorganization, based on 
the income of the debtor and other factors. The bill permits creditors 
to be involved if they believe the debtor has the ability to repay. 
However, if a creditor abuses that power and brings such motions 
without substantial justification, the creditor is penalized. Also, the 
legislation places more responsibility on attorneys to steer 
individuals toward paying what they can.
  The bill makes reforms without jeopardizing the truly needy. For 
example, the bill has special provisions to protect mothers who depend 
on child support by making these payments the top priority for payment 
in bankruptcy.
  Mr. President, it is too easy to file for bankruptcy. It is too easy 
to get the slate wiped clean. We recognize that some people need a 
fresh start. But a fresh start should not mean a free ride. We must 
stop this type of abuse.
  It is important to note that we are only attempting to proceed to the 
bill. It is only appropriate that we consider this legislation on the 
merits this year.
  Under the outstanding leadership of Senator Grassley, we held 
numerous hearings during this Congress in the Judiciary Committee on 
bankruptcy and on this bill in particular. We have considered and 
debated this legislation at the subcommittee and full committee, where 
it was reported out on a bipartisan vote of 16 to 2. Much work has been 
invested in this complex issue, and it would be a mistake not to act on 
this important reform proposal this year. It deserves our consideration 
and our support.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Hawaii is recognized.
  Mr. AKAKA. Mr. President, I rise to speak during morning business for 
5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________