Lawmakers break deadlock over bill concerning bankruptcy court

Friday, July 26, 2002

WASHINGTON -- Breaking a yearlong deadlock, key lawmakers reached agreement Thursday night on legislation making it harder to dissolve debts through bankruptcy court.

The legislation has been hung up over a Democratic demand for a provision ensuring that abortion protesters who are sued successfully may not use bankruptcy laws to avoid payment.

Final details of the abortion-protester provision were not immediately available.

"We have worked hard for a year to make this a better and more balanced bill, and we have succeeded," said Sen. Patrick Leahy, D-Vermont, chairman of the Senate Judiciary Committee.

The legislation applies a new standard for determining whether people filing for bankruptcy should be forced to repay debts under court-approved reorganization plans rather than having them dissolved. If a debtor is found to have sufficient income to repay at least 25 percent of the debt over five years or has at least the median income for his or her state, a reorganization plan generally would be required.

Ready to clear Congress

Two Republican lawmakers, Sen. Charles Grassley of Iowa and Orrin Hatch of Utah, told reporters they expected the measure to clear Congress within a matter of days.

"This is a victory for women," said Sen. Charles Schumer, D-N.Y., who had been negotiating for the abortion provision.

"The agreement we reached today ensures those who use violence to close clinics can't use bankruptcy as a shield to escape liability."

GOP Rep. Henry Hyde of Illinois, who was negotiating for the Republicans, did not immediately comment.

The credit card industry, which claims millions of dollars in losses a year from bankrupt consumers, has long lobbied for changes in the bankruptcy laws.

"In these hard economic times, while we're dealing with corporate responsibility, we should also address personal responsibility," Hatch spokeswoman Margarita Tapia said. "This bill does not allow anyone to defraud creditors or get out of debts when they have the ability to pay."

Opponents charge that, particularly in a sagging economy, the measure would remove a crucial safety net for people who have lost their jobs or face huge medical bills, as well as for single mothers seeking child support from bankrupt fathers.

Sen. Paul Wellstone, D-Minn., is one of the leading opponents of the legislation and will attempt to stop it on the Senate floor. "This bill is a dastardly one for consumers, especially in these economic times," spokeswoman Allison Dobson said. "It should be embarrassing for people to vote for this."

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