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Bankruptcy Reform Bill Approved by Senate

Bankruptcy reform legislation (S. 420) received Senate approval, 83-15, on March 15. The vote followed several days of debate that began the previous week (see The Source, 3/9/01, p. 3). The only Republicans voting against the measure were Sens. Kay Bailey Hutchison (R-TX) and Sam Brownback (R-KS).

The Senate voted, 80-19, on March 14 to invoke cloture and bring the bill to a final vote. A conference will be necessary, as the Senate and House bankruptcy bills differ in several respects.

The House approved its version of the measure (H.R. 333) on March 1. Although both chambers approved a bankruptcy reform conference report (H.R. 2415) during the 106th Congress, that measure was pocket-vetoed by President Clinton last December (see The Source, 12/8/01, p. 1). Efforts to complete bankruptcy reform legislation in the 105th Congress also were unsuccessful (see The Source, 11/19/99, p. 4).

Both S. 420 and H.R. 333 were drafted to reflect last year’s pocket-vetoed conference report. Although the House approved its version with few amendments, the Senate considered a number of amendments and S. 420 carries several provisions not included in H.R. 333.

Floor Debate
On March 13, the Senate rejected two amendments designed to create a “lock box” for the Social Security and Medicare trust funds (see The Source, 3/9/01, p. 3). Consideration of either measure would have required at least 60 votes to waive a point of order on the grounds that such a measure would fall under the jurisdiction of the Budget Committee, which did not review S. 420. A Democratic version of the lock box proposal, sponsored by Sen. Kent Conrad (D-ND), failed when a point of order was sustained 53-47; a point of order was sustained, 52-48, on a Republican version offered by Sen. Jeff Sessions (R-AL).

Other amendments debated by the Senate during the week of March 12 included:

  • an amendment by Sen. Patrick Leahy (D-VT) to protect the identities of minors in bankruptcy proceedings, which was approved, 99-0, on March 15;
  • an amendment by Sen. Barbara Boxer (D-CA) to allow the discharge of up to $750, rather than $500, in credit card charges in the 90 days preceeding a bankruptcy filing, which was approved, by voice vote, on March 15;
  • an amendment by Sen. Herb Kohl (D-WI) to place a cap of $125,000 on the value of a home protected under a bankruptcy filing, which was approved, by voice vote, on March 15;
  • an amendment by Sen. Hillary Rodham Clinton (D-NY) to provide for notification of custodial parents with support claims when non-custodial parents file for bankruptcy, which was approved, by voice vote, on March 15;
  • an amendment by Sen. Leahy to exclude an ex-spouse’s income from means testing for a bankruptcy filer, which was approved, 56-43, on March 15;
  • an amendment by Sen. Leahy to prohibit dischargeability for fines and penalties related to violation of federal election laws, which was approved, by voice vote, on March 15;
  • an amendment by Sen. Leahy to prohibit bankruptcy protection for political action committees, which was approved, by voice vote, on March 15; a Democratic substitute amendment by Sen. Richard Durbin (D-IL), which was tabled, 64-35, on March 14;
  • an amendment by Sen. Paul Wellstone (D-MN) to prohibit collection on short-term loans with interest rates exceeding 100 percent if the lending company declares bankruptcy, which was tabled, 58-41, on March 14;
  • an amendment by Sen. Charles Schumer (D-NY) to allow consumers to pursue complaints against high-interest mortgage companies that declare bankruptcy, which was approved by voice vote on March 13 following a failed effort, 44-55, to table the amendment;
  • an amendment by Sen. Dianne Feinstein (D-CA) to require parental permission for minors to make credit card charges exceeding $2,500, which was tabled, 55-42, on March 13;
  • an amendment by Sen. Christopher Dodd (D-CT) to prohibit minors from holding credit cards without parental permission, which was tabled, 58-41, on March 13; and
  • an amendment by Sen. Edward Kennedy (D-MA) to allow bankruptcy filers to retain more than $1 million in Individual Retirement Accounts (IRAs), which was tabled, 61-37, on March 13.

Some amendments were withdrawn before consideration, including one by Sen. John Breaux (D-LA), which sought to preserve a set of new ergonomics rules for workplaces. A resolution (S. J. Res. 6) to rescind the new regulations, recently put forth by the Occupational Health and Safety Administration (OSHA), was approved by the Senate on March 6 and the House on March 7 (see The Source, 3/9/01, p. 1). Senate Majority Whip Don Nickles (R-OK) announced plans to work toward a compromise, and Sen. Breaux agreed to withdraw the amendment.

Committee Changes
Before reporting the bill for floor consideration, the Senate Judiciary Committee backed several changes not contained in the House bill. Among those changes, the committee approved a compromise amendment to bar those found guilty of threats, violence, harassment or property damage aimed at “anyone who provides or obtains legal services” from filing for bankruptcy to discharge any fines resulting from those convictions.

Originally, Sen. Charles Schumer (D-NY) sought to create the restriction for those convicted under the Freedom of Access to Clinic Entrances Act (P.L. 103-159). However, following negotiations with Committee Chair Orrin Hatch (R-UT), the amendment’s language was broadened. The House bill does not contain a related provision.

By unanimous consent, the Senate committee also approved an amendment by Sen. Patrick Leahy (D-VT) to allow bankruptcy filers to include as reasonable and necessary expenses any funds spent on chronically ill or disabled children and grandchildren who are not their own dependents, as well as an amendment by Sen. Russ Feingold (D-WI) to forestall eviction for single mothers who file for bankruptcy.

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