ORT News Alert
Senate Passes Bankruptcy Bill
By a vote of 70 to 28 Senators passed a veto-proof version of the new Bankruptcy Overhaul Bill ï¿½ H.R. 2415. This new bankruptcy bill would make it harder for people to erase credit card and other debts through court action. President Clinton favors a general overhaul of the bankruptcy laws but believes the current bill is unfair to working families who fall upon hard times. This bill caused banks and credit card companies to spend millions during the recent elections supporting various candidates depending upon their position on this bill.
The new bill establishes a complex mathematical formula for determining whether debtors can repay part of their debts under a court supervised plan, rather than be allowed to have them dissolved as is the current situation. Consumer groups, unions and other opponents contend the legislation would hurt families hit by job losses, catastrophic medical expenses or other unforeseeable financial hardships. They also point to problems for single mothers and their children who need alimony and support payments from bankrupt fathers.
The banking and retail credit industries are jubilant over the passage of this bill. Proponents of the bill cite a rapid rise in personal bankruptcy filings in recent years, reaching 1.4 million in 1998. They cite these figures as evidence of rampant abuse of the bankruptcy system. One of the bills leading sponsors, Senator Charles Grassley, says the bill strikes a balance needed to strengthen the safety net for people who need a fresh start after a financial hardship while closing loop holes exploited by big spenders who walk away from debts they could in reality pay. Republicans say bankruptcy abuse creates a hidden tax of at least $400 a year for each American family in the form of higher interest rates passed on by consumer credit businesses.
President Clintonï¿½s resistance to the bill may result in a wait until the lame duck congressional session adjourns before he effectively vetoes the legislation by not signing it, thereby depriving law makers of the chance to override his veto with a new vote. By law, the President has 10 days from the passage from passage of the legislation to use his veto or refuse to sign it if Congress is out of session. Stay tuned.