Bankruptcy reform legislation (H.R. 975) was approved, 18-11, by the House Judiciary Committee following a contentious mark-up session on March 12.
Opening the debate, Committee Chair James Sensenbrenner (R-WI), sponsor of the bill, noted that “H.R. 975 is virtually identical to bankruptcy reform legislation that the House passed less than four months ago.”
The bill mirrors last year’s bankruptcy reform conference report (H.R. 333) without a provision sponsored by Sen. Charles Schumer (D-NY) that would have barred anti-abortion protesters from declaring bankruptcy to avoid paying court-ordered fines (see The Source, 11/15/02).
During the long mark-up, Rep. Jerrold Nadler (D-NY) offered an amendment designed to prevent protesters, including anti-abortion protesters, from filing for bankruptcy to avoid paying court-ordered fines. He called the amendment a “new, updated and improved” version of the earlier provision by Sen. Schumer. “Without this language, the bankruptcy law will be used, as it has been in the past, perhaps nonviolently but nonetheless effectively, to keep people from paying fines incurred in the deliberate violation of the FACE [Freedom of Access to Clinic Entrances] Act,” he argued.
“I oppose this amendment,” responded Rep. Chris Cannon (R-UT). “The bankruptcy code already prevents the discharge of most types of debts from violent or destructive activities, such as those that may occur at an abortion clinic,” he contended.
The amendment was defeated, 8-19.
The committee also rejected, 8-16, an amendment by Rep. Zoe Lofgren (D-CA) that would have provided assistance for people who get alimony and child support. The committee rejected, by voice vote, a series of three amendments by Rep. Sheila Jackson-Lee (D-TX) that would have helped women who receive child support and alimony.
In all, the committee rejected 14 Democratic amendments and one Republican amendment.
Designed to prevent bankruptcy abuse, the legislation aims to make it more difficult for debtors to declare insolvency in order to avoid paying their creditors. The measure would require debtors to file more bankruptcies under Chapter 13, which requires debtors to repay a significant portion of their debt, rather than under Chapter 7, which would excuse their indebtedness. The bill would designate child support payments as the top debt to be repaid by bankruptcy filers and would expand the definition of domestic support obligations to include debts owed or recoverable to a government agency. The measure also would allow a debtor to legitimately claim as necessary expenses those expenses incurred to maintain the safety of the debtor and the debtor’s family from domestic violence and expenses up to $1,500 per child per year for public or private elementary and secondary school.
Additionally, the bill would protect most tax-exempt retirement savings accounts from creditor claims and would protect most education savings account deposits made one year prior to filing for bankruptcy.
The House is expected to consider the bill on March 20.
