Capital Briefs: Hatch Predicts Passage for Bankruptcy Bills

Congress will adopt consumer bankruptcy reform bills by the end of July, Senate Judiciary Committee Chairman Orrin G. Hatch said Tuesday. Speaking to the National Retail Federation, the Utah Republican said bankruptcy rates will continue to skyrocket unless the law makes it tougher for high-income consumers to eliminate all their debts under Chapter 7.

"We need to restore personal responsibility to the bankruptcy system," he said.

Sen. Hatch's committee adopted a bill last month that would let creditors ask judges to force bankrupt borrowers to repay some debts under Chapter 13 rather than eliminate them under Chapter 7. The creditors must prove the debtors are abusing the system, which means they could afford to repay at least 20% of their unsecured debts. A bill adopted by the House Judiciary Committee would use a formula based on income and living expenses to determine whether debtors file for Chapter 13 or Chapter 7. That bill could go to the House floor next week.

The senator warned that although his bill enjoys bipartisan support, some lawmakers want to kill it. "We have formidable opponents in the Senate, but I think we can win," he said. "We have to prevent the opponents of reform from politicizing the issue."

Earlier at the conference, Senate Minority Leader Thomas A. Daschle said he supported the Senate reform bill. "Bankruptcy should be means-tested," he said. "If you have the means, you fail the test."