September 9, 1998 - Issue: Vol. 144, No. 118 — Daily Edition105th Congress (1997 - 1998) - 2nd Session
CONSUMER BANKRUPTCY REFORM ACT
(Senate - September 09, 1998)
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[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. ____________________