Will Fifth Time Be The Charm For Bankrtupcy Bill?

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Credit union representatives and their allies hope the fifth time is the charm with the bankruptcy reform bill-which went down to defeat in each of the last four congresses.

A bankruptcy bill almost identical to the one that died in the final days of each of the last two congresses was expected to be introduced in the Senate in the first few days of the 108th Congress, according to representatives of Sen. Charles Grassley, of Iowa, one of the major backers of the reform effort.

The introduction in the Senate, according to observers, is significant because that's where the bill got hung up the last two times on a controversial provision that would bar abortion clinic protesters from discharging their debts under bankruptcy laws. "This is a very encouraging sign that the Senate is getting out in front of the bill so soon in the 108th Congress," said CUNA lobbyist Gary Kohn.

The Senate bill features the main three credit union priorities: a means test to determine which debtors will be allowed to file for chapter 7 to erase their debts; a requirement that all personal bankruptcy filers undergo financial education; and the continued ability for debtors to enter into reaffirmation, or voluntary repayment, agreements with the credit unions and other creditors.

In each of the past four congresses the bill was introduced and passed first in the House, which usually originates important legislation. Both the House and Senate passed the bill the last three times, but in the 105th Congress the bill died when President Clinton refused to sign it into law-a so-called pocket veto; in both the 106th and 107th congresses the bill was approved but got stuck when Sen. Charles Schumer, the New York Democrat, added the abortion protester language because of a case in Buffalo where an abortion protester killed a doctor and filed for bankruptcy when the doctor's family successfully sued him.

The Schumer amendment caused a major outcry among the pro-life movement, which inundated Congress with phone calls and letters, urging lawmakers to let the bill die in each of the last two congresses.

It's not clear whether Senate leaders have agreed to a resolution of the Schumer amendment this time around. Calls to Schumer's officer were not returned. But credit union lobbyist said they expect Senate Republican leaders, who now command a 55-vote majority

NAFCU lobbyist Murray Chanow said he expects the Senate to set a vote on the Schumer amendment to satisfy to the New York senator. "I think at some point they're going to have to," said Chanow.

Chanow added that with a greater majority in the Senate this Congress, Republican leaders who back the bankruptcy bill may have an easier chance overriding the Schumer amendment.

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