Senate Turns Back Amendments, Passes Bankruptcy

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The Senate turned away amendment after amendment last week to the bankruptcy reform bill-including a so-called poison pill amendment that killed the bill in each of the last two congresses-and voted to pass the credit union-backed measure for a fourth straight time.

"I've been around here long enough to know a poison pill when I see one, and make no mistake about it, this is a poison pill," said Utah Republican Orin Hatch, just before the Senate voted down a bid by New York Democrat Charles Schumer to bar abortion clinic protesters from shielding their assets under bankruptcy, the same provision that killed the bill in 2002 and 2004.

This is the fifth straight Congress to debate the bill. It was introduced in 1996 but failed to pass.

Then it passed both the Senate and House but died in a so-called pocket veto when President Clinton refused to sign it into law.

Schumer's was among dozens of amendments proposed by Democratic opponents of the bill that were shot down by the Republican majority in its efforts to send a bill similar to the one that passed the last two congresses over to the House, where leaders have vowed swift passage. Among those were proposals aimed at bringing greater responsibility to credit card companies for the soaring bankruptcy numbers, such as caps on predatory loan rates of 30% APR or greater disclosures on the cost of running a balance on credit card bills.

The Republican-controlled Senate also turned away Democratic proposals easing the bankruptcy bill's means-test provisions for active-duty military and debtors crushed by emergency medical emergencies; and finally a bid to raise the minimum wage for workers for the first time in eight years, which Massachusetts Democrat Ted Kennedy said would help those individuals who would be hurt the most by the bankruptcy bill.

May Be No Need For Conference

But all of those measures were successfully kept out of the bill by Republican leaders in an effort to pass a package the House is most likely to approve, as is, eliminating the need for a conference between Senate and House leaders to reconcile divergent versions of the bill.

It was in the reconciliation process where the bill got hung up in each of the last two congresses.

This year's version of the bill is almost identical to the one passed in each of the last three congresses and includes the three main priorities for credit unions. It includes a means test to determine which bankruptcy filers have some means to repay their debts and, as such, should be barred from Chapter 7 to erase all debts and instead relegated to Chapter 13, requiring a rescheduling of repayments. It also requires mandatory financial counseling for all bankruptcy filers, along with the continued ability of bankruptcy filers to reaffirm, or voluntarily repay, selected debts, a favored practice of credit unions.

The bill would also set a uniform homestead exemption of $125,000 for all but six states, allowing debtors in the 44 other states to exempt $125,000 of home equity during bankruptcy if they have lived in the home for at least 40 months. The other states would be allowed to maintain their unlimited homestead exemptions, which critics say have been used by wealthy debtors to shield large debts during bankruptcy.

'Still Very Cautious'

CUNA lobbyist Gary Kohn said last week the Senate version of the bill appeared to be "relatively clean" so that House leaders could live with the version. He said some House leaders have expressed a desire to move on the bill as soon as the next few weeks for fear that the longer they wait "who knows what kind of mischief could occur."

"Having been through this now for eight, now nine years, I'm still very cautious," said Kohn.

NAFCU lobbyist Murray Chanow was confident the bill will move quickly through the House. "I think we're going to get a good clean bill and avoid a conference and send the bill on to the president, probably in April," he said.

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