Debate on bankruptcy changes moves to Senate

Friday, March 2nd 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ The House has quickly approved legislation making it tougher for people to use bankruptcy to erase credit-card and other debts. The Senate is the next stop on the bill's journey back to the White House.

Vetoed late last year by then-President Clinton, bankruptcy overhaul was the first major bill to come to a vote in the new Congress. The House voted 306-108 for it Thursday, with majority of Republicans solidly in support and Democrats split.

An expectation that President Bush will sign the measure has increased momentum for passage of the most sweeping changes to bankruptcy laws in 20 years. It raced through the House drafting process despite new government data that show personal bankruptcies have declined in recent years.

The legislation's progress has been only slightly slower in the Senate, where the two parties have a 50-50 split, and Democrats recently blocked a GOP effort to rush it through. The Senate Judiciary Committee voted Wednesday, 10-8, to approve a parallel bill and send it to the full Senate, which may vote next week.

``It's good to see the House act so quickly on this unfinished business from last year,'' said Sen. Charles Grassley, R-Iowa, an author of the legislation. He said the bill ``closes the loopholes exploited by big spenders who walk away from debts they could otherwise repay.''

But Sen. Paul Wellstone, D-Minn., a leading opponent of the measure, signaled a possible filibuster by saying, ``I'm not going to give up my opportunity to talk about how harsh this legislation is.''

Last spring, the Senate version of the bill contained a provision, pushed by liberal Democrat Sen. Edward Kennedy of Massachusetts, to raise the $5.15 hourly minimum wage to $6.15 over three years.

Now, to help speed the process, Republican and Democratic leaders in the Senate are working on an agreement to put a minimum wage increase to a separate vote.

In House debate Thursday, some Democratic opponents criticized the chamber's priorities, saying campaign finance reform, prescription drug coverage for seniors or minimum wage increases should be more pressing.

The legislation has been pushed by the banking and retail credit industries, with donations to federal candidates and the political parties from finance and credit card companies totaling $9.2 million during the 2000 election cycle. Consumer groups, unions and groups representing women and children oppose the measure.

MBNA Corp., one of the world's largest credit card companies, gave $237,675 to President Bush's campaign, making it his largest individual contributor, according to the Center for Responsive Politics, a nonpartisan research group that studies campaign finance.

``The House gave the extremely profitable credit card industry a strong victory today,'' said Ed Mierzwinski, consumer program director for Public Interest Research Group.

The bill was passed overwhelmingly last year, then was vetoed in December by Clinton, who contended it would hurt ordinary people and working families who fall on hard times.

Supporters of the legislation say it is needed to stem a tide of bankruptcy filings and abuse of the court system. They say bankruptcy abuse creates a hidden tax of about $400 a year on every American family through higher interest rates passed on by consumer credit businesses and other charges.

The legislation ``strikes the proper balance'' between debtors and creditors, Rep. Dave Weldon, R-Fla., said before the vote. ``It is a good bill and it protects consumers,'' he said.

Democratic opponents said it would hurt families hit by job losses, catastrophic medical expenses or other unforeseeable hardships that push them over the edge financially, especially amid the economic slowdown that has made layoffs frequent.

Some Democrats also said the measure would make thousands of mothers and children owed support by bankrupt fathers take a back seat to credit card companies in collecting the money.

``The bill creates major new categories of ... debt that compete directly against the collection of child support and alimony payments,'' said Rep. John Conyers of Michigan, senior Democrat on the House Judiciary Committee.

New data by the Administrative Office of the U.S. Courts show that personal bankruptcy filings fell from a peak of about 1.4 million in 1998 to 1.3 million in 1999 and to 1.2 million last year.

Opponents of the legislation have cited the decline in filings as lessening the need for a bill.

Foes also criticize what they say are aggressive credit card solicitations through the mail, which reached 2.51 billion by the end of last year's third quarter, according to industry figures. Total credit extended on card accounts jumped 13 percent to $2.9 trillion in the third quarter of 2000 from a year earlier.