Bankruptcy filings down, consumer group says

Thursday, March 1st 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ Personal bankruptcies have declined sharply in recent years, lessening the need for legislation up for a House vote this week that would make it harder for people to erase debts in court, a consumer group said Tuesday.

The legislation rewriting the bankruptcy laws would force many people ``into a virtual debtors' prison,'' Stephen Brobeck, executive director of the Consumer Federation of America, said at a news conference.

The opposition came two days before a scheduled vote by the House on the bipartisan bill, which is being pushed by the banking and credit card industries and is likely to be signed by President Bush if it gets through Congress. It was passed overwhelmingly last year, then was vetoed in December by President Clinton, who felt it hurt ordinary people and working families who fall on hard times.

Brobeck cited new data by the Administrative Office of the U.S. Courts showing 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.

Supporters of the legislation, which would bring the biggest overhaul of the bankruptcy laws in 20 years, have contended that it is needed to stem a tide of bankruptcy filings and abuse of the court system.

Brobeck and Travis Plunkett, the group's legislative director, said credit card solicitations through the mail reached 2.51 billion by the end of last year's third quarter, compared with 2.87 billion in all of 1999, while total credit extended on card accounts jumped 13 percent to $2.9 trillion in the third quarter of 2000 from a year earlier. The figures were based on industry data.

Total credit-card debt was $531 billion in the third quarter, compared with $509 billion at the end of 1999.

Banks that issue credit cards ``are brazenly lobbying for new bankruptcy restrictions at the same time their aggressive marketing and lending practices are pushing many families closer to the financial brink,'' Plunkett said.

With the economy slowing and job layoffs becoming frequent, it would be unfair for Congress to enact legislation now that punishes financially strapped families seeking a fresh start in bankruptcy court, Brobeck and Plunkett said.

Catherine Pulley, a spokeswoman for the American Bankers Association, said the bankruptcy overhaul legislation was needed ``because the system is broken and needs to be fixed'' and many wealthy people continue to walk away from their debts.

On Feb. 14, the House Judiciary Committee voted 19-8, with the majority Republicans prevailing, to approve the bill and send it to the full House.

Democratic lawmakers tried unsuccessfully to attach amendments that would, for example, exempt people with very low incomes from the bill's requirements and add protection for single women with children seeking support payments from bankrupt fathers.

The Senate Judiciary Committee was working on parallel legislation.

Bankruptcy filings down, consumer group says

MARCY GORDON

AP Business Writer

WASHINGTON (AP) _ Personal bankruptcies have declined sharply in recent years, lessening the need for legislation up for a House vote this week that would make it harder for people to erase debts in court, a consumer group said Tuesday.

The legislation rewriting the bankruptcy laws would force many people ``into a virtual debtors' prison,'' Stephen Brobeck, executive director of the Consumer Federation of America, said at a news conference.

The opposition came two days before a scheduled vote by the House on the bipartisan bill, which is being pushed by the banking and credit card industries and is likely to be signed by President Bush if it gets through Congress. It was passed overwhelmingly last year, then was vetoed in December by President Clinton, who felt it hurt ordinary people and working families who fall on hard times.

Brobeck cited new data by the Administrative Office of the U.S. Courts showing 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.

Supporters of the legislation, which would bring the biggest overhaul of the bankruptcy laws in 20 years, have contended that it is needed to stem a tide of bankruptcy filings and abuse of the court system.

Brobeck and Travis Plunkett, the group's legislative director, said credit card solicitations through the mail reached 2.51 billion by the end of last year's third quarter, compared with 2.87 billion in all of 1999, while total credit extended on card accounts jumped 13 percent to $2.9 trillion in the third quarter of 2000 from a year earlier. The figures were based on industry data.

Total credit-card debt was $531 billion in the third quarter, compared with $509 billion at the end of 1999.

Banks that issue credit cards ``are brazenly lobbying for new bankruptcy restrictions at the same time their aggressive marketing and lending practices are pushing many families closer to the financial brink,'' Plunkett said.

With the economy slowing and job layoffs becoming frequent, it would be unfair for Congress to enact legislation now that punishes financially strapped families seeking a fresh start in bankruptcy court, Brobeck and Plunkett said.

Catherine Pulley, a spokeswoman for the American Bankers Association, said the bankruptcy overhaul legislation was needed ``because the system is broken and needs to be fixed'' and many wealthy people continue to walk away from their debts.

On Feb. 14, the House Judiciary Committee voted 19-8, with the majority Republicans prevailing, to approve the bill and send it to the full House.

Democratic lawmakers tried unsuccessfully to attach amendments that would, for example, exempt people with very low incomes from the bill's requirements and add protection for single women with children seeking support payments from bankrupt fathers.

The Senate Judiciary Committee was working on parallel legislation.