In May of this year, the United States House of Representatives passed H.R. 833, the Bankruptcy Reform Act by a vote of 313-108. Meanwhile, the White House announced that while it wouldn’t automatically veto the House bill, it does not intend to support the use of an income test to force some debtors into a Chapter 13 repayment plan (instead of allowing them to clear their debts through a Chapter 7), as the House bill specifies. In the last six months, legislators have introduced two additional bills (S. 130 and H.R. 3150) which would bring dramatic and controversial changes to the nation’s bankruptcy laws. Despite the number of proposed changes, Congress has held very few hearings pertaining to both bills. In contrast, the last time the nation’s bankruptcy law was revised, in 1978, legislators debated a number of options for more than five years, and held more than 60 hearings. House lawmakers did adopt an amendment that requires credit card issuers to clearly disclose fees, teaser rate/go-to interest rates and how long it takes customers to pay off balances by making minimum monthly payments. This amendment further specifies that issuers marketing credit cards on the Internet must also mention terms and conditions regarding their offers. Congress was moving forward with bankruptcy reform rather quickly when legislators decided to slow the pace to avoid a rushed and possibly unbalanced decision. According to consumer advocates, it was in the interest of the general public to have Congress take its time. Although, the House of Representatives passed the bill earlier this year, the Senate has decided to delay the discussions so they can gather more information before they vote on new bankruptcy reform. Other than Social Security and taxes, no other federal law affects more Americans financially than the bankruptcy code. With bankruptcy affecting millions of Americans, there have been a number of consumer advocacy organizations insisting that this issue be weighed carefully over an extended period of time to ensure that the resolution is in the best interest of the general public. In 1997, nearly 1.5 million personal bankruptcy petitions were filed, creating an all-time record. Over 70% of the bankruptcy petitions filed last year were for Chapter 7, granting complete relief. Consumer debt is rising each year and now stands at $1.27 trillion. Recently, the number of consumers filing for bankruptcy has increased. In 1998, 11.5% of the consumers who filed for bankruptcy had filed for bankruptcy multiple times, up slightly from 11.1% the previous year. Congress wants a change in the bankruptcy law that will keep consumers from overextending their credit. Many believe that the current bankruptcy law penalizes the responsible card users because credit grantors are increasing the interest rates to make up for their losses from bankruptcy. However, some consumer advocates oppose the legislation, and argue that the new laws in question favor the credit grantors and card issuers who they believe are responsible for the rapid increase in bankruptcies due to easily obtainable credit. A huge number of women and children are affected each year by the bankruptcy system. Currently, women are the fastest growing group filing for bankruptcy. This year, it’s projected that more than half a million women will file for bankruptcy by themselves—more than both men or married couples. And of these women filing for bankruptcy, about a quarter million of them will be trying to collect child support or alimony. The Bankruptcy Reform bill will put women and children who are lacking economic support at a greater risk. By increasing the rights of creditors, the bill would leave parents and children who are owed child support facing a difficult situation. Single parents who are going through a financial crisis will find it harder to reestablish their economic stability after the bankruptcy process. This bill will make it harder for these parents to meet the filing requirements and harder to save their homes, cars, and essential household items, and harder to meet their children’s needs, because it would leave them with additional unrelieved debts to pay off. Although there are financial provisions included in the bill, they won’t solve these problems. They do nothing to eliminate the additional hardships that the bill would create for the hundreds of thousands of women forced into bankruptcy themselves. And even for those women who are owed child support and who file for bankruptcy, the provisions fail to ensure that child support payments will be the enforced priority, ahead of the commercial creditors. Some improvements were made in the domestic support provisions in the Judiciary Committee. However, even the revised provisions fail to solve the problems created by the rest of the bill, which gives many other creditors greater claims—both during and after bankruptcy—than they have under current law. The bill does not guarantee that the parents and children who are owed support will prevail over the collection departments of businesses involved in the bankruptcy.
		Back to CreditCheck Newsletter Index
		Report Express   |   Order Now   |   Members' Home CreditCheck Monitoring Service   |   3-Agency Credit Report Security & Privacy   |   CreditCheck Tools   |   Credit Basics   |   FAQ   |   Contact Us ConsumerInfo.Com® Home Copyright © 2000 ConsumerInfo.Com®, Inc. All Rights Reserved