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Bankruptcy Bill Approved by House Committee

Bankruptcy reform legislation (H.R. 333) was approved, 19-8, by the House Judiciary Committee following a contentious mark-up held on February 14. The committee held a February 7 hearing on the measure (see The Source, 2/9/01, p. 1).

Sponsored by Rep. George Gekas (R-PA), H.R. 333 reflects a bankruptcy reform conference report (H.R. 2415) approved last year by both chambers. The measure was pocket-vetoed by President Clinton in December (see The Source, 12/8/00, p. 1).

During the mark-up, the committee rejected a series of Democratic amendments. When Democrats employed tactics designed to delay the committee’s progress, Chair James Sensenbrenner (R-WI) ordered the previous question, a procedural move that has the effect of ending debate and requiring an immediate final vote.

One of the amendments defeated by the committee was offered by ranking member John Conyers (D-MI). It focused on provisions in H.R. 333 that would expand the category of nondischargeable debts for bankruptcy filers.

Under current law, those who file for bankruptcy are not required to repay credit card debt because it is dischargeable. In contrast, alimony and child support—along with several other debts—are nondischargeable and must be scheduled for repayment. However, under the bankruptcy reform legislation, credit card debt would join other debts in the nondischargeable category.

Several advocates for women and children have voiced concern that those who rely on alimony and child support would be placed in competition with more powerful entities—such as credit card companies—for a bankruptcy filer’s limited funds. Although H.R. 333 would designate support payments as the top debt to be repaid by bankruptcy filers, opponents of the bill have continued to express reservations.

Seeking to address those concerns, Rep. Conyers’ amendment would have categorized certain debts as dischargeable if repaying them appeared likely to interfere with full payment of alimony and child support. The change would have pertained to $250 worth of luxury goods and up to $750 in cash advances drawn from ATM machines with credit cards; repayment of those debts is required under H.R. 333. The amendment was defeated 10-14.

Another amendment, offered by Rep. Sheila Jackson Lee (D-TX), would have barred those convicted under the Freedom of Access to Clinic Entrances (FACE) Act (P.L. 103-159) from declaring bankruptcy to avoid paying the penalties resulting from such a conviction.

Rep. Gekas described the amendment as a controversial addition that could hinder the passage of his legislation. Rep. Jerrold Nadler (D-NY) stated, “This isn’t about abortion; it’s about the rule of law. When the court finds that you have violated the law, then you shouldn’t be able to engage in frivolous and excessive litigation to get out of it.” The amendment was defeated, 9-20.

Originally, the Senate Judiciary Committee planned to mark up its version of bankruptcy reform legislation (S. 220) on February 15. The mark-up, which was postponed due to objections raised by Democratic committee members, is now scheduled for February 27. Several amendments similar to those offered in the House mark-up are expected.

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