SENATE TO GET VOTE ON BANKRUPCTY BILL
Byline: Joanna Ramey
WASHINGTON — Bankruptcy reform legislation appears to be on a fast track in Congress, but like a lot of bills this year, its fate seems to rest with the Senate.
The House Judiciary Committee today is scheduled to complete its second day of hearings on a bankruptcy bill identical to one vetoed last year by President Clinton. The committee plans to vote next week on the measure and send it to the floor.
The same process is happening in the Senate, with its Judiciary Committee today holding a hearing at which an executive with Boscov’s Department Store of Reading, Pa., is scheduled to testify. The bill could be on the Senate floor as early as next week.
With President Bush saying he’s ready to sign the measure, it might seem like a bankruptcy reform measure finally will become law after two attempts over four years.
However, Steve Pfister, senior vice president for government relations at the National Retail Federation, said bankruptcy reform this year isn’t a sure thing. He holds out the possibility that the measure could be subject to further tinkering.
“We can’t lose sight of the fact there’s a 50-50 split in the Senate,” referring to power-sharing in the chamber between Republicans and Democrats.
Even though a reform bill passed the House and Senate last year by wide margins, opposition remains, including from freshman Sen. Hillary Rodham Clinton (D., N.Y.), who as First Lady pushed for her husband to veto last year’s bill, Pfister said.
The legislation is designed to curb the number of bankruptcies by people who are able to repay only a portion of their debts. The measure sets out a means test by which a debtor’s ability to repay would be judged.
As safeguards — and as part of a compromise to garner Democrat support for last year’s effort — the bill has several consumer provisions. They include detailed steps as to how a creditor — like a retailer — can seek reaffirmation agreements with debtors in bankruptcy without seeming to harass them. Reaffirmation agreements set out repayment plans for debtors and keeps their merchandise from being repossessed.
Despite such consumer provisions, Clinton last year vetoed the bill saying the measure needed more protections. There are many Democrats in Congress who carry that rally cry.
“I hope that you would join me in looking at this bill anew and consider our concerns before we rush to judgment,” said Rep. John Conyers (D., Mich.), the top Democrat on the committee, at Wednesday’s hearing.
Conyers finds fault with the bill’s means test for not carving out more exceptions and questions whether single and divorced women with children in bankruptcy have enough protections.
However, businesses affected by personal bankruptcies claim legislation is long overdue and want reform this year.
Dean Sheaffer, vice president and director of credit and Boscov’s, is set to tell the Senate Finance Committee today about how the proliferation of bad debt forces companies to restrict the number of credit accounts available in order to protect against generating more bad debt.
“Many of those people would have been good customers, but we had to restrict their access to credit because that is the only tool at our disposal,” said Sheaffer, according to an advanced copy of his testimony.
Sheaffer also underscores the cost to all households of the estimated $40 billion in annual bankruptcy losses.
“When an individual declares bankruptcy rather than pay the $300 they may owe to Boscov’s or the $1,000 they may owe in state taxes or other bills, they force the rest of us to pick up the expenses,” Sheaffer said. “Everyone else’s taxes are higher, everyone else’s credit is tighter and everyone else pays more for merchandise as a result of those who choose to walk away.”