WASHINGTON — Retailers scored a victory Wednesday when the House passed bankruptcy reform legislation that would make it harder to entirely wipe out debt in bankruptcy court, but the industry will have to hold off celebrating.
This story first appeared in the March 20, 2003 issue of WWD. Subscribe Today.
This is the fourth attempt to push bankruptcy reform legislation through Congress since 1997. Although bills have passed both chambers three times, last-minute negotiations reconciling House and Senate versions have stalled. Last year’s hang up was an unrelated amendment targeting anti-abortion protesters seeking to dissolve debt stemming from clinic violence.
“The real victory isn’t getting bankruptcy reform passage by the House or even by the House and Senate. We’ve done that three times in the last six years,” said Tracy Mullin, president and chief executive of the National Retail Federation, in a statement. “The real victory will be getting this bill onto the President’s desk and signed into law. That’s been the challenge, and there are still more steps before we get to that point this year.”
The bankruptcy bill would require debtors to undergo a means test to see if they can repay a portion of what they owe. Backers of the bill argue the measure would curb filings by people who use bankruptcy as a financial planning tool. They argue such abuse costs American families $400 a year in higher prices.
But opponents say the bill would penalize people who’ve fallen on hard times or low-income workers saddled with debt created by easy access to high-interest credit card deals.
“There is no bankruptcy crisis,” declared Rep. Jerrold Nadler (D., N.Y.), who led House opposition while his party was divided on the issue.
The bill passed on a 315-113 vote.
While Senate Republicans, like their House colleagues, are big backers of bankruptcy reform, as are a contingent of Democrats, its fate in the chamber is uncertain. Democratic opponents, including Sen. Edward Kennedy (Mass.) have vowed to filibuster, which might be difficult to end, given the narrow GOP majority in the chamber.