Bankruptcy Bill Closer To Passage
The House Judiciary Committee last week approved the bankruptcy reform bill, just days after the Senate approved the package, moving the nine-year-old legislative effort another step closer to the finish line.
The bill passed by the Judiciary panel was identical to the one approved by the Senate, as congressional leaders seek to avoid a contentious House-Senate conference where different versions of a bill would have to be reconciled. That's where the bill died in each of the last two congresses.
Mindful of this, Judiciary Committee Chairman James Sensenbrenner (R-WI), insisted that members pass a "clean" bill without any changes. "I strongly encourage members of this committee to reject all amendments to this legislation," said Sensenbrenner at the start of last week's session.
So the committee turned away as many as two-dozen amendments proposed by Democratic members seeking to stall or defeat the bill, including several aimed at wealthy debtors. Among them was a proposal to prevent wealthy individuals from shielding assets under bankruptcy through so-called asset protection trusts, a growing practice where people can set up trusts in seven states that are off limits to creditors in bankruptcy.
The bankruptcy bill now moves to a vote by the full House, which is expected to easily pass it in the first week of April.
"I think this bears out the strategy agreed to by the leadership between (congressional) sessions" after it died in the last two congresses, said John McKechnie, chief lobbyist for CUNA. That strategy called for the Senate to vote on the bill first this time-the reverse order of the last four tries-with the House voting on the exact same bill.
Despite resistance among some Democrats, the bill continues to have broad bipartisan support and is expected to easily pass the full house, McKechnie's CUNA colleague, Gary Kohn pointed out. In addition, President Bush has vowed to sign it into law, something President Clinton refused to do after its passage in 2000, he noted.
The bill retains the three main credit union priorities: a means test to determine which debtors have enough financial means to repay some of their debts, barring them from Chapter 7 to erase all debts, and relegating them to Chapter 13 financial reorganization; mandatory financial education sessions for bankruptcy filers; and the retention of credit unions and debtors' ability to enter into reaffirmation, or voluntary repayment, agreements on selected debts.