Bankruptcy Bill Headed To President'sDesk
WASHINGTON - (04/15/05) -- A decade-long odyssey ended Thursdaywhen the House overwhelmingly voted passage of the bankruptcyreform bill. This is the second time the credit union-backed billhas been passed by Congress but it died in 2000 when then-PresidentClinton refused to sign it into law. This time, President Bush haspromised to sign the bill. "To say that this is long overdue wouldbe an understatement," John McKechnie, chief lobbyist for CUNA,told The Credit Union Journal, of the 302-126 vote. The bill willenact a means-based bankruptcy system, preventing those debtors whohave some financial means to repay debts form filing a Chapter 7 toerase all debts, and relegating them instead to a Chapter 13financial reorganization. Those with insufficient assets or incomecould still file a Chapter 7. Those with income above the state'smedian income who can pay at least $6,000 over five years - $100 amonth - would be forced into Chapter 13. Credit unionrepresentatives say the mean-based system will help credit unionscollect as much as much as 15% on debts owed by bankruptcy filers,an estimated $65 million a year in increased collections for creditunions. "This means that somewhere between ten-andfifteen-percentof the money credit unions discharge could go back into the creditunion system. You're talking about a lot of dollars," said MurrayChanow, a lobbyist for NAFCU. The bill also includes two other maincredit union priorities, mandatory financial education for allbankruptcy filers, and the continued ability of credit unions andtheir members to enter into reaffirmation, or voluntary repayment,agreements during bankruptcy. The new law is scheduled to takeeffect six months after the President signs it.