Lawmakers break yearlong deadlock over bill making it harder to dissolve debts through bankruptcy
Friday, July 26th 2002, 12:00 am
By: News On 6
WASHINGTON (AP) _ Breaking a yearlong deadlock, key lawmakers reached agreement Thursday night on legislation making it harder to dissolve debts through bankruptcy court.
The legislation has been hung up over a Democratic demand for a provision ensuring that abortion protesters who are sued successfully may not use bankruptcy laws to avoid payment.
Final details of the abortion-protester provision were not immediately available.
The bankruptcy breakthrough came on the same day Congress overwhelmingly passed legislation aimed at restoring Americans' confidence in business and stemming the erosion of people's retirement savings with stiff new penalties against corporate fraud.
Lawmakers in both parties cheered the completion of the bankruptcy bill. ``We have worked hard for a year to make this a better and more balanced bill, and we have succeeded,'' said Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee.
The legislation applies a new standard for determining whether people filing for bankruptcy should be forced to repay debts under court-approved reorganization plans rather than having them dissolved. If a debtor is found to have sufficient income to repay at least 25 percent of the debt over five years or has at least the median income for his or her state, a reorganization plan generally would be required.
Lawmakers have been working on the bankruptcy language for five years, GOP Sen. Charles Grassley of Iowa said. ``At long last, we'll be able to close loopholes exploited by big spenders who have the ability to repay their debts and better protect consumers who have been left to pay higher prices for goods and services as a result,'' Grassley said.
Grassley and GOP Sen. Orrin Hatch of Utah told reporters they expected the measure to clear Congress within a matter of days.
President Bush indicated earlier that he would sign a bankruptcy bill, but there was no immediate reaction from the White House Thursday night.
The provision holding up the bill was targeted at violent abortion protesters. It would prohibit people who attack or block access to abortion clinics from declaring bankruptcy to avoid paying court-ordered fines.
``This is a victory for women,'' said Sen. Charles Schumer, D-N.Y., who had been negotiating for the abortion provision. ``The agreement we reached today ensures those who use violence to close clinics can't use bankruptcy as a shield to escape liability.''
GOP Rep. Henry Hyde of Illinois, who had been trying to limit the language because he thought it was too broad, did not immediately comment.
But a GOP aide, speaking on condition of anonymity, said Republicans succeeded in limiting the provision to only people who intentionally or knowingly violate the law.
``It doesn't include everything that the Democratic conferees wanted,'' the aide said. ``It doesn't include everything the Republican conferees wanted. It's a compromise.''
The credit card industry, which claims millions of dollars in losses a year from bankrupt consumers, has long lobbied for changes in the bankruptcy laws.
``In these hard economic times, while we're dealing with corporate responsibility, we should also address personal responsibility,'' Hatch spokeswoman Margarita Tapia said. ``This bill does not allow anyone to defraud creditors or get out of debts when they have the ability to pay.''
Opponents charge that, particularly in a sagging economy, the measure would remove a crucial safety net for people who have lost their jobs or face huge medical bills, as well as for single mothers seeking child support from bankrupt fathers.
Thousands of people have lost their retirement savings and jobs since the Enron and WorldCom accounting scandals became public.
Houston-based Enron, which filed for bankruptcy in December, took more than 4,000 jobs and the investments of millions of people with it after questionable accounting fueled its stunningly quick downfall.
Telecom giant WorldCom Inc., which disclosed last month that it disguised nearly $4 billion in expenses, also has laid off 17,000 of its 80,000 workers _ and has not ruled out additional layoffs.
Sen. Paul Wellstone, D-Minn., is one of the leading opponents of the legislation and will attempt to stop it on the Senate floor. ``This bill is a dastardly one for consumers, especially in these economic times,'' spokeswoman Allison Dobson said. ``It should be embarrassing for people to vote for this.''