Bankruptcy Reform Down to the Numbers

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For long-time followers of the bankruptcy reform bill the eight-year journey may now be reduced to a few numbers.

Like 51. And 60. Or 5.

Those are the numbers to watch as the controversial bill goes to the floor of the Senate as early as Monday for what credit unions and other supporters hope is the final time. That's 51, as in the number of Senate votes the bill needs to pass. And 60 votes the Senate needs to break an expected filibuster by Democratic opponents of the bill. Or five Democratic senators needed to join the 55 Republican senators to make 60 senate votes needed to break a filibuster.

"More important than 60 is the number five because that represents the number of Democrats needed to (end a filibuster)," said Murray Chanow, lobbyist for NAFCU.

But now with Pennsylvania Sen. Arlen Specter, a strong supporter of the bill, undergoing treatment for Hodgkin's Disease and probably absent form the Senate vote, the supporters will need another Democrat to overcome a filibuster, making it six.

"It is kind of a numbers game," explained CUNA's chief lobbyist John McKechnie, of the effort to pass a bankruptcy reform bill, now in its fifth Congress and headed towards a ninth year.

The bill would require a means test for all bankruptcy filers so that those individuals with some financial means would be prevented from filing a chapter 7 to erase all of their debts and relegate them, instead, to a chapter 13 to reschedule repayments on their debts. The bill would also require mandatory financial education for all bankruptcy filers and will allow credit unions and other borrowers to continue to enter into reaffirmation, or voluntary repayment, schedules on selected debts.

The bill would also set a uniform homestead exemption, the amount of home equity a debtor could shield under bankruptcy, of $125,000 in all states. Currently, a handful of states allow unlimited homestead exemptions, allowing some wealthy debtors to shield millions of dollars of debts under bankruptcy by simply buying homes in Texas, Florida or a few other states.

A few more numbers to contemplate: 1996. 200. 100.

Nineteen-ninety-six, of course, is when the bill was first introduced in Congress with great prospects. The 200 is the number of amendments the Democrats are expected to propose to stall the bill when its goes for debate before the full Senate. And the 100 is the number of new bankruptcy judges that will be added to the bankruptcy courts if the bill is finally passed.

To CUNA lobbyist Gary Kohn, the 200 number may be the key. Kohn, who has met with Senate leaders and their representatives in recent days, said the Republican leadership will do its best to minimize the number of amendments the Democrats can propose. But some of the amendments which may have Republican backing could doom the bill by discouraging some supporters from voting for the final measure. "There are still some potential dangers ahead for this bill succeeding in the Senate," said Kohn.

The main barrier remains the so-called Schumer amendment, with which New York Sen. Charles Schumer seeks to add wording that would bar abortion clinic protesters form shielding their assets under bankruptcy laws. The Schumer amendment succeeded in killing the bill in each of the last two congresses and Schumer and several Democratic allies have vowed to fight to get it on this year's bill, too.

Senate leaders are reportedly willing to let Schumer have a straight up-or-down vote on the amendment, which would require 51 votes-an almost certainty-to defeat. But Schumer and his allies are expected to press it even further and threaten to hold a filibuster unless they get their way-that would require 60 Senate votes to defeat.

A couple more numbers: 218. 1. And 6.

The 128 votes is what the bill will require to win over the House. Sine it received 306 votes the last time it was voted, in March 2001, it's almost assured the supporters can get the necessary House votes to pass the bill.

The number one represents the signature needed from one person, President Bush, to have the bill become law. The bill reached President Clinton's desk in 2000 but Clinton refused to sign it, letting it die by a so-called pocket veto.

The number six represents how many months it will take before the law becomes effective. During those six months credit unions can expect a new deluge as debtors rush to beat the effects of the new law. According to Chanow, the bill would require as many as 10% of the bankruptcy filers who now file a chapter 7 to erase their debts, to file a chapter 13 to reorganize and continuing payments. "You're going to see a lot of those people filing during those six months," he predicted.

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