A House subcommittee voted along party lines Thursday to advance legislation overhauling the Bankruptcy Code to the Judiciary Committee.
The Senate Judiciary Committee was scheduled to vote on similar legislation Thursday, but postponed action to give members more time to read the bill's three-inch-thick file. The delay means the earliest that committee could vote is April 12, when senators return from the Easter recess.
"This will be our next item," said Judiciary Committee Chairman Orrin G. Hatch, R-Utah.
The House Judiciary Committee is scheduled to start debating the bill after the recess. The committee's commercial and administrative law subcommittee approved the bill, 5 to 3, after two days of debate.
Republicans, led by subcommittee Chairman George W. Gekas, R-Pa., said the bill reflects the failed compromise that attempted to blend different versions passed by the House and Senate last year.
The subcommittee voted 10 to 2 to prevent debtors from protecting more than $250,000 in home equity from creditors, a haven known as a homestead exemption.
This would mark the first time the federal government has limited how much home equity each state may allow its residents to protect in bankruptcy. A similar provision sparked a debate last year about states' rights.
Rep. Gekas said it was unnecessary because the reform bill already requires a debtor to live in a home for two years before qualifying for a state homestead exemption. This means that a debtor could not protect his wealth from creditors by buying a large house on the eve of bankruptcy in states that have unlimited homestead exemptions, such as Florida.
The subcommittee rejected an amendment that would impose a series of reforms on credit card issuers. Without the provisions, "the bill is a one- sided sham," said Rep. Jerrold Nadler, D-N.Y. He noted that President Clinton has threatened a veto if the provisions are not in the final bill.
Meanwhile, at a Senate Banking Committee hearing on bankruptcy, Chairman Phil Gramm said banking issues such as credit card disclosures should be tackled in separate legislation. But Democrats are insisting that new restraints on credit card issuers be included in bankruptcy reform.
Sen. Richard J. Durbin, D-Ill., said credit card companies should be required to show the total cost of borrowing and disclose how long it would take customers to pay off their balances based on the monthly minimum payment.
"They are in for a fight on the Senate floor," Sen. Durbin said. "We are going to have a serious problem getting the President to sign the bill."
