Post by RPankn on Feb 17, 2005 18:07:33 GMT -5
Thu Feb 17, 1:45 PM ET
By Kristin Roberts
WASHINGTON (Reuters) - The U.S. Senate Judiciary Committee (news - web sites) on Thursday passed a bankruptcy bill that would make it harder for consumers to wipe away their debts.
The legislation now moves to the full Senate.
The bill, sponsored by Iowa Republican Sen. Charles Grassley (news, bio, voting record), would impose a means test to determine if bankruptcy filers earned more than their state's median income and could repay at least $6,000 of unsecured debt over five years.
People with incomes above a certain level would not qualify for Chapter 7 bankruptcy protection under the bill and would instead fall under Chapter 13 and be forced to repay some debt while retaining some assets. [I'm not an expert on bankruptcy practice being only familiar with one actual case. But as screwed up as the bankrutpcy laws are now, this is already the current scheme in that debtors with little or no income can use Ch. 7; everyone else must use Ch. 13. And if I remember correctly, the U.S. trustee or the presiding judge can convert a Ch. 7 to 13 and vice versa if a debtor files Ch. 7 but belongs on a Ch. 13 plan. There's also something called a "Ch. 20" where the debtor files for Ch. 7 and then subsequently files for Ch. 13 to discharge any debt not eliminated by Ch.7. It looks like the credit card industry is trying to prevent this.]
The legislation is largely similar to a bankruptcy measure considered and widely supported in the last Congress. It does not include, however, a provision aimed at preventing anti-abortion protesters from citing bankruptcy to avoid paying court-ordered fines for protest activities.
That provision previously doomed the bankruptcy overhaul bill in the Senate.
Some Democrats on the committee said they would fight the legislation's passage on the Senate floor if that provision were kept out of the bill this year.
"It's an abuse of the bankruptcy law just like other abuses," said Sen. Charles Schumer (news, bio, voting record), a Democrat from New York.
"I will do everything I can to hold this bill up in any way until this amendment is in the bill," he told the committee.
Under bankruptcy law, Chapter 7 calls for the liquidation of assets but allows filers to keep some property, such as a primary residence. Chapter 12, for family farmers, and Chapter 13, for individuals, call for an adjustment of debts. Those filers are required to enter repayment plans but are allowed to keep their assets.
Credit card companies, retailers and auto lenders argue the legislation is needed to stop consumers from racking up debt and then turning to the courts to avoid repayment. [Ha ha ha ha ha. This is the same argument the student loan mafia used to make student loan debt nondischargeable and its not true. Ch. 7 seriously damages a person's credit for 10 years making it nearly impossible to obtain credit; and if they do, it's at loan shark rates. Bankrutpcy also disqualifies people from certain jobs.]
But consumer advocates say the proposed bankruptcy measure simply rewards businesses that aggressively market consumer loans.
The Judiciary Committee accepted some amendments, but the Republican leadership urged members to hold most of the anticipated 54 amendments until the legislation moves to the Senate floor.
Among accepted amendments, the committee agreed to include a measure that clarifies that any judgment, order or settlement agreement for a violation of securities fraud law after the filing of a bankruptcy case cannot be discharged.
The measure, according to its sponsor, Democratic Sen. Patrick Leahy (news, bio, voting record), of Vermont, would, for example, keep a corporate executive from being able to avoid paying a securities fraud judgment by filing for bankruptcy while securities fraud litigation was pending.
The committee also accepted an amendment from Massachusetts Democrat Sen. Edward Kennedy (news, bio, voting record) to expand the authority of the bankruptcy courts to limit retention bonuses and severance pay to corporate insiders.
story.news.yahoo.com/news?tmpl=story&cid=584&ncid=584&e=6&u=/nm/20050217/pl_nm/financial_bankruptcy_dc#nosmileys
By Kristin Roberts
WASHINGTON (Reuters) - The U.S. Senate Judiciary Committee (news - web sites) on Thursday passed a bankruptcy bill that would make it harder for consumers to wipe away their debts.
The legislation now moves to the full Senate.
The bill, sponsored by Iowa Republican Sen. Charles Grassley (news, bio, voting record), would impose a means test to determine if bankruptcy filers earned more than their state's median income and could repay at least $6,000 of unsecured debt over five years.
People with incomes above a certain level would not qualify for Chapter 7 bankruptcy protection under the bill and would instead fall under Chapter 13 and be forced to repay some debt while retaining some assets. [I'm not an expert on bankruptcy practice being only familiar with one actual case. But as screwed up as the bankrutpcy laws are now, this is already the current scheme in that debtors with little or no income can use Ch. 7; everyone else must use Ch. 13. And if I remember correctly, the U.S. trustee or the presiding judge can convert a Ch. 7 to 13 and vice versa if a debtor files Ch. 7 but belongs on a Ch. 13 plan. There's also something called a "Ch. 20" where the debtor files for Ch. 7 and then subsequently files for Ch. 13 to discharge any debt not eliminated by Ch.7. It looks like the credit card industry is trying to prevent this.]
The legislation is largely similar to a bankruptcy measure considered and widely supported in the last Congress. It does not include, however, a provision aimed at preventing anti-abortion protesters from citing bankruptcy to avoid paying court-ordered fines for protest activities.
That provision previously doomed the bankruptcy overhaul bill in the Senate.
Some Democrats on the committee said they would fight the legislation's passage on the Senate floor if that provision were kept out of the bill this year.
"It's an abuse of the bankruptcy law just like other abuses," said Sen. Charles Schumer (news, bio, voting record), a Democrat from New York.
"I will do everything I can to hold this bill up in any way until this amendment is in the bill," he told the committee.
Under bankruptcy law, Chapter 7 calls for the liquidation of assets but allows filers to keep some property, such as a primary residence. Chapter 12, for family farmers, and Chapter 13, for individuals, call for an adjustment of debts. Those filers are required to enter repayment plans but are allowed to keep their assets.
Credit card companies, retailers and auto lenders argue the legislation is needed to stop consumers from racking up debt and then turning to the courts to avoid repayment. [Ha ha ha ha ha. This is the same argument the student loan mafia used to make student loan debt nondischargeable and its not true. Ch. 7 seriously damages a person's credit for 10 years making it nearly impossible to obtain credit; and if they do, it's at loan shark rates. Bankrutpcy also disqualifies people from certain jobs.]
But consumer advocates say the proposed bankruptcy measure simply rewards businesses that aggressively market consumer loans.
The Judiciary Committee accepted some amendments, but the Republican leadership urged members to hold most of the anticipated 54 amendments until the legislation moves to the Senate floor.
Among accepted amendments, the committee agreed to include a measure that clarifies that any judgment, order or settlement agreement for a violation of securities fraud law after the filing of a bankruptcy case cannot be discharged.
The measure, according to its sponsor, Democratic Sen. Patrick Leahy (news, bio, voting record), of Vermont, would, for example, keep a corporate executive from being able to avoid paying a securities fraud judgment by filing for bankruptcy while securities fraud litigation was pending.
The committee also accepted an amendment from Massachusetts Democrat Sen. Edward Kennedy (news, bio, voting record) to expand the authority of the bankruptcy courts to limit retention bonuses and severance pay to corporate insiders.
story.news.yahoo.com/news?tmpl=story&cid=584&ncid=584&e=6&u=/nm/20050217/pl_nm/financial_bankruptcy_dc#nosmileys