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President Expected to Veto Bankruptcy Measure

The Senate on December 7 approved, 70-28, a bankruptcy reform conference report (H.R. 2415). The President is expected to veto the measure, which received House approval on October 12 (see The Source, 10/12/00, p. 4).

Earlier in the week, on December 5, the Senate approved, 67-31, a cloture motion to limit debate and bring about a final vote on the bill. The move followed defeat of a cloture motion considered on November 1, when the measure fell 7 votes short of the 60 required.

Earlier in the 106th Congress, the House approved a bankruptcy reform measure (H.R. 833) (see The Source, 5/7/99, p. 1). A separate version was approved by the Senate in February (see The Source, 2/4/00, p. 1), containing several new provisions.

Because the appointment of a conference committee was complicated by some of those provisions, congressional leaders moved an informally negotiated agreement under the bill number for another measure. H.R. 2415’s original language, which reauthorized the State Department, received congressional approval last year as part of an omnibus spending package (P.L. 106-113). The original language was removed from H.R. 2415, and the bankruptcy conference report was substituted.

An official conference committee was not appointed because the Senate approved its version of H.R. 833 with a minimum wage increase and a package of tax cuts for businesses. According to the Constitution, revenue-raising measures must originate in the House; if the Senate brings such provisions into a conference, a point of order can be raised by House conferees.

In addition to the minimum wage/tax package, the Senate-passed bill included an amendment by Sen. Charles Schumer (D-NY) to prohibit the discharge of debt resulting from a conviction under the Freedom of Access to Clinic Entrances (FACE) Act (P.L. 103-159). During consideration of the cloture motion on December 5, Sen. Schumer called on Senators to vote against the conference report because it does not include his provision. “Whether you are pro-choice or pro-life, people ought not take the law into their own hands and then hide behind the cloak of bankruptcy,” he said. The President has stated that removal of Sen. Schumer’s language is one of the reasons for his opposition to the bill.

Like the FACE Act provision, the conference agreement does not include the minimum wage or tax provisions. However, it retained language included in the Senate bill by Sen. Orrin Hatch (R-UT), which sought to address concerns expressed by advocates for women and children regarding child support and alimony.

In an effort to discourage abuse of the bankruptcy system, the legislation would expand the category of nondischargeable debts—those that must be paid despite a bankruptcy filing—to include credit card debt incurred within 90 days of a filing. Under current law, child support and alimony payments are nondischargeable, but most credit card debt is not. The move to increase the amount of nondischargeable debt has drawn concern from women’s and children’s advocates, who have argued that custodial parents whose ex-spouses file for bankruptcy would be forced to compete against credit card companies for the limited resources available for paying the credit card debt, as well as alimony and child support.

Seeking to address those concerns, Sen. Hatch negotiated the matter with the National Women’s Law Center (NWLC) and the National Association of Attorneys General. Under this language, custody and divorce proceedings would be allowed to move forward despite the automatic stay that otherwise freezes the legal actions affecting an individual declaring bankruptcy. In an effort to expedite wage withholding, the language also would increase access to information about the employment of deadbeat parents. In addition, the amendment would bar the approval of a bankruptcy plan or the discharge of debt until arrears are paid on outstanding alimony and child support.

During floor debate, Sen. Hatch detailed these provisions, saying, “We have worked very hard to accommodate both sides. For women and children, we give child support first priority status…meaning they will be paid ahead of the lawyers.”

Even with the inclusion of Sen. Hatch’s provisions in the conference report, the overall measure has drawn criticism from the NWLC and other organizations representing women and families. Noting that “more than 95 percent of bankruptcy cases make no distribution to creditors because there are no assets to distribute,” Sen. Richard Durbin (D-IL) said, “While you may put the women and children at the head of the line, the line is a short one with very few dollars.”

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