Tighter Bankruptcy Law Favored - Bills Making It Harder to Erase Debt Set to Clear Congress
Republican leaders in Congress began clearing the way yesterday for swift passage of legislation backed by the credit card industry and opposed by consumer groups that would make it harder for consumers to wipe out debt through bankruptcy. Congress has tried repeatedly in recent years to pass similar legislation in what would be the most significant change in bankruptcy law in more than a quarter of a century. Twice in the last seven years, bankruptcy bills have passed both the House and Senate, only to face ultimate defeat. In one case, President Bill Clinton refused to sign the legislation, saying it was unfair to consumers. In 2002, House Republicans initially backed the bill but then voted it down after an amendment was attached that sought to prevent individuals from using bankruptcy to shield them from fines imposed for illegal antiabortion protests. Now two nearly identical bills have been introduced in Congress in the last week that are essentially the same as what House and Senate negotiators worked out in the last Congress, but lacking the controversial abortion amendment. The absence of the amendment, plus the Republican leadership's decision to begin deliberation now, early in the legislative cycle, has industry officials and lawmakers hoping a bill can become law within weeks. "The timing of bringing it up now, that's a critical difference," said Edward L. Yingling of the American Bankers Association. The Republican majority in Congress has had the votes to overcome opposition but until now lacked time to combat the procedural delays opponents have used to stall the legislation, he said. Consumer advocates say it would allow some rich debtors to continue to hide wealth through homeownership while bankruptcy relief would be denied to many people with low or moderate incomes who have fallen on hard times because of illness, job loss or divorce. [more]