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Bankruptcy Reform Bill Moves to Conference

Despite repeated objections by Sen. Paul Wellstone (D-MN), the Senate on July 17 approved, 82-16, the House-passed bankruptcy reform bill (H.R. 333) and replaced its language with the text of the Senate-passed legislation (S. 420), a move necessary in order to appoint conferees. Prior to passage, the Senate adopted, 52-46, an amendment by Sen. Wellstone that would require the Government Accounting Office to conduct a study of the impact of the legislation on low- and moderate-income consumers, including children and single-parent families. With the adoption of the amendment, Sen. Wellstone withdrew his objection to the bill’s consideration.

During floor debate this week, Sen. Wellstone expressed concern about the impact of the legislation on women and children, pointing out that “the fastest growing number of citizens who file for bankruptcy are women,” and that “since 1981, the number of women filing increased by 700 percent.” He also noted that, “A woman single parent has a 500 percent greater likelihood of filing for bankruptcy than the population generally.”

Although the legislation would designate support payments as the top debt to be repaid by bankruptcy filers, Sen. Wellstone complained that, “under this bill, the ex-spouse will emerge with much more debt,” and “women and children whose spouses file for bankruptcy under this bill would have to compete more than ever with auto dealers, with big retailers, and with credit card companies for the paycheck of their ex-husbands.” He added, “That is part of the reason that 31 groups that are devoted to women’s and children’s issues oppose this bill.”

Sen. Robert Torricelli (D-NJ) countered, “The most unfair criticism and the one to which I am most sensitive is the issue of whether this adds a new burden to women and children. The bill contains language that Senator Hatch and I offered in an amendment to protect exactly this element of our society: single parents and children in need of protection.” He continued, “Under current law, child support is seventh in bankruptcy court in terms of prioritizing which debts must be paid off first,” adding, “Under this bill, child support is moved to where it belongs: First, ahead of government, other businesses, or financial institutions.”

The legislation is designed to prevent bankruptcy abuse by requiring more filings under Chapter 13, rather than Chapter 7. Under Chapter 13, debtors are required to repay a significant portion of debt, while most debt is excused for Chapter 7 filers. H.R. 333 was approved, 309-108, by the House on March 1 (See The Source, 3/2/01, p. 3), and S. 420 was approved, 83-15, by the Senate on March 15 (See The Source, 3/16/01, p. 1).

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