The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“BANKRUPTCY REFORM ACT OF 1998--CONFERENCE REPORT” mentioning the U.S. Dept of Agriculture was published in the Senate section on pages S12145-S12148 on Oct. 9, 1998.
The publication is reproduced in full below:
BANKRUPTCY REFORM ACT OF 1998--CONFERENCE REPORT
The Senate continued with the consideration of the conference report.
Mr. HATCH. Mr. President, what this legislation will accomplish is straightforward. If a person is able to repay their debts, they will be required to do so. We must restore personal responsibility to the bankruptcy system. If we do not, every family in America, many of whom struggle to make ends meet, will continue to shoulder the financial burden of those who abuse the system.
It always has been my view that individuals should take personal responsibility for their debts, and repay them to the extent possible. Under the present system, it is too easy for debtors who have the ability to repay some of what they owe to file for chapter 7 bankruptcy. Under chapter 7, debtors can liquidate their assets and discharge all debt, while protecting certain assets from liquidation, irrespective of their income. Mr. President, I believe that the complete extinguishing of debt should be reserved for debtors who truly cannot repay them.
Mr. President, let's think about this problem in fundamental terms. Let's say that somebody owes you money, and is perfectly able to pay you back However, this person finds a clever way under Federal law to avoid paying you. That would be wrong--it would be unfair. Yet, we are allowing this to happen every day in our bankruptcy courts. We have a system woefully in need of reform. The bankruptcy system was never intended to be a means for people who are perfectly able to repay their debts to get out of paying them. It was designed to be a last resort for people who truly need it. What our bill does is allow those who truly need bankruptcy relief to have it, but requires those who can repay their debts to do so. This is not a novel concept. It is basic fairness.
Americans agree that bankruptcy should be based on need. As this chart demonstrates, 87 percent believe that an individual who files for bankruptcy should be required to repay as much of their debt as they are able to and then be allowed to extinguish the rest. Yet, as stated in the Wall Street Journal (Nov. 8, 1996) bankruptcy protection laws give an alarming number of ``obscure, but perfectly legal places for anyone to hide assets.'' For instance, one Virginian multimillionaire incurred massive debt, but under State law was entitled to keep certain household goods, farm equipment, and ``one horse.'' This particular individual opted to keep a $640,000 race horse.
This bill does a number of things to make ti harder for people who can repay their debts to avoid doing so by using loopholes in the present bankruptcy system.
It provides a needs-based means test approach to bankruptcy, under which debtors who can repay some of their debts are required to do so. It contains new measures to protect against fraud in bankruptcy, such as a requirement that debtors supply income tax returns and pay stubs, audits of bankruptcy cases, and limits on repeat bankruptcy filings.
Mr. President, I am amazed to hear critics of this legislation make the argument that his report does not protect consumers. As recently as yesterday, I read that an opponent of this legislation said, ``The Republican conferees stripped out every significant consumer protection in the Senate bill, and to add insult to injury, repealed existing consumer protections in the law.'' How, Mr. President, does this bill
``repeal existing consumer protections?'' Further, I challenge anyone who would make such an unfounded claim to compare the House bill, which passed with an overwhelming bipartisan vote of 306 to 118, with this balanced conference legislation, and tell me there are no new significant consumer protections.
Let's get beyond the politics. Let's stop with the unfounded criticisms of this legislation, and look at what it really gives to consumers:
A debtor's bill of rights with disclosure requirements for debtor lawyers who advertise. This provision is designed to protect consumers from ``bankruptcy mills'' that are out to make money without regard to consumers. This provision will protect unwary consumers from being lured into bankruptcy without knowing what they are getting into and without knowing their alternatives.
Credit counseling for debtors before they file for bankruptcy, so that they may be able to avoid bankruptcy altogether.
New consumers protections with regard to reaffirmations. Every debtor who reaffirms unsecured debt will have the opportunity to appear before a judge. And, a new heightened standard is required in the review of each of these agreements to make sure debtors are not coerced into making them.
New reaffirmation disclosure requirements. Even it a debtor is represented by counsel, the creditor must give new disclosures to the debtor with regard to the debtor's rights.
New penalties for pressuring debtors after discharge. A $1,000 penalty plus actual damages and attorneys fees if a creditor violates the post-discharge injunction.
New penalties for abusive reaffirmation practices: Another $1,000 penalty on top of actual damages and attorneys fees if a debtor is injured by a creditor's failure to follow the procedures for a reaffirmation agreement.
New penalties for refusal to credit the payment plan properly--again,
$1,000 plus actual damages and attorneys fees when the creditor refuses to credit payments under a plan.
New protection for debtors from unjustified motions for dismissal in the form of liability for the debtor's attorneys fees and costs.
New penalties for creditors who fail to negotiate. If a creditor unreasonably refuses a good faith offer to settle before bankruptcy for 60 cents on the dollar, the court can decrease the creditor's claim by up to 20 percent.
New penalties for violating the automatic stay--including actual damages and attorneys fees.
New protections from credit card cancellation. A credit card company is prohibited from terminating a customer's account solely because the debtor has not incurred finance charges on the account.
New credit card warnings and disclosures, including new initial disclosures, new periodic statement disclosures and new annual disclosures about the reality of paying off a balance by making only the minimum payment.
A new study on disclosures for closed and open end credit secured by the debtor's house, to be conducted by the Federal Reserve Board, with authority to issue new disclosure regulations.
A new Fed study on the sufficiency of current consumer protections on debit card liability and the authority to issue new disclosure regulations.
A report from the comptroller general within 1 year on whether there are excessive extensions of credit to college students.
And, the bill makes extensive reform to the bankruptcy laws in order to protect our children. The bill ensures that bankruptcy cannot be used by deadbeat dads to avoid paying child support and alimony obligations. The obligation to pay child support and alimony is moved to a first priority status under this legislation, as opposed to its current place at seventh in line, behind bankruptcy lawyers and other special interest. With this new law, debtors who owe child support will have to keep paying it when they file for bankruptcy, and they cannot obtain a discharge until they bring their child support and alimony obligations current. Also, if a debtor pays child support right before filing for bankruptcy, the child support payment can't be taken away from the kids.
The National Association of Attorneys General has told me that they
``applaud the provisions * * * that improve the tr4atment of domestic support obligations by ensuring that the spouse and children will continue to be able to collect support payments they are owed during the bankruptcy case and that debtors will not obtain a discharge until they have met their obligations to their spouse and children.'' The attorneys general go on to say that ``these are much needed additions to current law, and we strongly support these changes.'' the National Child Support Enforcement Association has also written to me in support of these improvements to bankruptcy law because of the need ``to strengthen and clarify the rights of separated families during and following bankruptcy proceedings.''
In addition, this bill protects our children's educations. With this legislation, postsecondary education accounts will be protected in bankruptcy up to $50,000 per child or $100,000 in the aggregate.
This bill also provides new and important protections for retirement savings. The AARP has stated, ``The accumulation and preservation of retirement funds * * * represents an important national goal.'' The AARP believes--and I agree with them--that retirement savings should be more uniformly protected, and that ``Shielding retirement funds would reduce the likelihood that legitimate petitioners will be impoverished later in life.'' Under this bill, retirement plan assets are categorically untouchable by creditors, even if State exemptions are otherwise claimed.
Furthermore, this legislation keeps drunk drivers from using bankruptcy to get out of paying their victims the judgments they owe them.
I simply can't believe that opponents of this legislation can say with a straight face that this legislation doesn't help the American people.
About $40 billion in consumer debt will be erased this year in personal bankruptcies.
Let me put this figure in perspective. $40 billion is enough to fund the entire U.S. Department of Transportation for a year, or to provide Pell grants to 13 million needy college students.
It has been estimated that bankruptcies cost every American family about $400 per year. Apparently, critics of this legislation are content to throw this money away. But where I come from, $400 a family means something. It buys 5 weeks worth of groceries, 20 tanks of gas, 10 pairs of shoes for a grade school child, or more than a year's supply of diapers.
Are opponents of this bill really comfortable with the status quo? Are they willing to throw away all of the important new consumer protections we have worked for in this bill? Are they willing to have retirement savings and educational savings exposed to the claims of creditors in bankruptcy? Are they willing to continue to let deadbeat dads use the U.S. bankruptcy system to get off the hook for child support? Are they willing to let drunk drivers use bankruptcy to get out of paying their victims?
The only conclusion we can reach is that opponents of this legislation simply never wanted to see bankruptcy reform at all. Apparently, they are content to do nothing to curb the record increases in bankruptcy filings. They are willing to allow people to continue to
``game'' the bankruptcy system at the expense of honest, hardworking Americans. And, they are happy to sit idly by and do nothing when they see a $400 hidden bankruptcy tax imposed on every American family year after year.
It is my sincere hope my colleagues will not derail this bill just to make a political statement, and instead vote their conscience on the substance, and support this bill. I am also hopeful that the President and his advisors will recognize the importance of this bill to the economy and to all consumers.
In conclusion, Mr. President, I have heard these arguments from my colleagues on the other side that this process has not been a good process and all of their consumer protection items have been taken out of this bill.
Look, I negotiated with the House on this, and we had to do it in a very intensive, tight framework. It was a very difficult thing to do. Let me go down through some of the new consumer protections that are in this bill, because nothing could be farther from the truth than for them to come out here and indicate there are no consumer protections.
No. 1, we have a Debtor Bill of Rights in this bill, credit counseling; we have judicial review of reaffirmation; we have reaffirmation of disclosure requirements; we have penalties for pressuring debtors after discharge; we have penalties for abusive reaffirmation; we have penalties for refusal to credit payments; we have protections from unjustified motions; and penalties for failure to negotiate.
This is all for the protection of consumers. Penalties for violating automatic stays, protection from credit card cancellations, credit card warnings and disclosures that we require, rules and study on disclosures, over 100 percent mortgage credit study; we have a study on debit card liability; we have a college student and credit card study. All of this is important, meaning we are going to continue to revisit this and do all of the things we can to do what is right here.
We have child support protected, education savings protected, retirement savings protected; we have drunk-driving judgments are going to get paid.
Now, there are a lot of consumer protections here. Look at this:
``Americans agree bankruptcy should be based on need.''
An individual who files for bankruptcy should be able to wipe out all their debt regardless of their ability to repay that debt.
That is 10 percent of the people.
The ``DK refused,'' 4 percent.
An individual who files for bankruptcy should be required to pay as much of their debt as they are able to and then be able to wipe out the rest.
Eighty-seven percent fit in that category. What does that mean to the American taxpayers and the real consumers in this country and everybody else who is paying for this ungodly process? About $40 billion in consumer debt will be erased this year in personal bankruptcy. First,
$40 billion would fund the entire U.S. Department of Transportation for 1 year; second, provide Pell grants to 13 million needy college-bound students; third, ``The Flawed System Costs Every American Household
$400.'' Just think about that. Last but not least, ``Bankruptcies Cost American Families $400 a Year.''
That $400 could buy a family of four 5 weeks of groceries, 20 tanks of unleaded gasoline 10 pairs of shoes for the average grade-school child, and more than 1 year's worth of disposable diapers.
There is a lot we have done here. Is it perfect? No, because we have two bodies here that have to get together.
I would also like to express any disappointment that despite hours and hours and numerous meetings between Democrats and Republicans, some say that the process was not fair or somehow excluded Democrat participation.
I lived through years and years of Democrat control of this body, and the other body, and I have to tell you, they were not nearly as fair in most conferences as we have been here in trying to accommodate Democrats--when many did not want to. So we have tried to do it. I think it is just really very phony to go otherwise.
I yield the floor.
Mr. BROWNBACK. Mr. President, I rise in support of the Senate-House Conference Report on the Consumer Bankruptcy Reform Act. I applaud the hard work of both the Senate and House conferencees, especially the leadership that Senator Grassley has shown on reforming our bankruptcy laws.
I believe that this conference report is a balance between preventing the fraud and abuse of our bankruptcy system and protecting those who are in considerable economic pain. The increase in bankruptcies has put a strain on our economy and families. These losses associated with bankruptcies have been passed onto consumers, costing every household that pays its bills $400 in hidden taxes. That is not fair to the millions of families who pay their bills every month. This report will prohibit fraud, abuse, and the casual use of our bankruptcy laws while ensuring the payment of child support and alimony.
I am disheartened by some of my Democratic colleagues and the Administration's opposition to this conference report. This bill not only reforms our current bankruptcy laws, but places Chapter 12 into our bankruptcy code permanently in order to protect family farms and farmers.
Farmers in Kansas and across the country are experiencing cash flow problems associated with low commodity prices. U.S. Dept. of Agriculture estimated that net farm income would be down by 15.8 percent this year. Some economists have indicated that America's farmers could soon see a recession similar to the one which occurred in the mid-1980's.
Chapter 12 of the bankruptcy code was created by Congress in 1986 in response to the farm crisis of the mid-1980's, which caused many family farmers to lose their farms and homes. This chapter was specifically designed to protect family farmers by enabling them to reorganize their debts and keep their land. However, this chapter has not yet been reauthorized and expired on October 1.
While I realize both sides of the aisle have differences on how to provide relief to our family farmers during this difficult time, we are all unanimous in protecting their farms and homes. Just last year, the Senate passed the Family Farmer Protection Act by unanimous consent that would permanently place Chapter 12 in our bankruptcy code. If we want to protect our family farms and farmers during this crisis, we must pass the bankruptcy conference report and place Chapter 12 permanently into our bankruptcy code.
Mr. KERREY. Mr. President, I want to express my disappointment with H.R. 3150, the Bankruptcy Reform Conference Report, and the decision of the Conference members to drop important provisions that would have helped our farmers.
I voted for the Senate version of the bankruptcy bill because I believe it properly toughened provisions to keep bad seeds from filing for bankruptcy, while maintaining protections for consumers. I voted for the Senate bill because I worked hard to get important protections for farmers added to the bill.
The Senate passed a bipartisan piece of legislation that not only was crafted in the best spirit of bipartisanship, but included valuable provisions to help our farmers, who are facing the worst economic crisis in a decade.
I, along with my friend from Wisconsin, Mr. Feingold, worked hard to add provisions to the Senate bill to specifically help family farmers by increasing debt limits so that inflation levels are factored into their debt calculations; ease regulations related to income acquired off of the farm by families trying to make ends meet; and help farmers better structure their debt in order to continue to prepare for next season's crops and livestock.
All of these provisions were removed in the Conference Report.
I come to the floor today to make something clear. I will not let the Conference Committee's decision to exclude these important protections for farmers be the final word. I plan on doing everything I can during these remaining days to get these much needed farming provisions included in the Omnibus Appropriations bill.
Mr. KOHL. Mr. President, I rise to express my strong concern about the conference report on bankruptcy reform. We do need to stop abuse of the bankruptcy system, and there is some good in this measure. But regrettably this is not an adequate solution. I do want to ``proceed,'' but to a better bankruptcy bill.
Two weeks ago, the Senate overwhelmingly passed a reform bill which I was proud to support. It targeted the worst abuses by debtors and creditors, without overburdening the vast majority of debtors who truly need--and deserve--relief. Senator Grassley and Senator Durbin deserve much of the credit for putting together such a balanced and effective measure.
But this bill is not that bill. Let me tell you why.
Mr. President, we can't truly ``reform'' the bankruptcy system unless we eliminate the most egregious abuse. That is, debtors who shield their assets in luxury homes in states like Florida and Texas, while their legitimate creditors--children, ex-spouses owed alimony, governments, retailers and banks--get left out in the cold. If we really want to restore the stigma to bankruptcy, all of us know this is the best place to start. By capping the homestead exemption at
$100,000, the Senate bill would have stopped this abuse.
But the Conference Report won't put an end to this practice. Indeed, it only addresses part of the problem--by making it harder to move to Florida or Texas solely to take advantage of their liberal homestead laws. Now that is a step forward. But it is just a small step; it does nothing to stop debtors who already own lavish homes--or second homes--
in those states from continuing to live like kings. That's an injustice to legitimate creditors and an outrage to anyone who believes--like I do--that deadbeats who go into bankruptcy shouldn't be able to shield their assets in luxurious homes.
Just take a look at what Burt Reynolds did earlier this week. The measure wouldn't apply to him, because he lives in Florida and that state has no homestead cap. As part of his bankruptcy settlement, he managed to hold onto his $2.5 million estate called ``Valhalla.'' Now, I like Burt Reynolds' movies. I liked ``Deliverance,'' ``Daisy Miller,'' and ``The Longest Yard''--though I didn't see ``Boogie Nights.'' Burt Reynolds is a fine actor. But it seems like he's making out much like his title role in ``Smokey and the Bandit.'' While he lives in luxury, his legitimate creditors lose millions. The Conference Report allows this to happen; the Senate bill would have put an end to this travesty.
Of course, the dramatic rise in bankruptcies is very troubling, regardless of whether the blame lies with credit card companies, a culture that disparages personal responsibility, the bankruptcy code or, most probably, with all of the above. While none of us wants to return to the era of ``debtors' prison,'' we need to do something to reverse this trend, reduce the number of bankruptcy filings and make sure bankruptcy remains a tool of last resort. This bill does some of that. For example, it discourages repeat filings and it encourages debtors who can repay some of their debts to do so. But Mr. President, ultimately this Conference Report falls short. Instead of proceeding to this measure, we should proceed to a better bill. And hopefully next Congress we will. Thank you.
The PRESIDING OFFICER. The hour of 6 o'clock having arrived, the question is on the motion to proceed to the conference report on H.R. 3150.
The yeas and nays have been ordered.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Missouri (Mr. Bond) is necessarily absent.
Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn), the Senator from South Carolina (Mr. Hollings), and the Senator from Minnesota (Mr. Wellstone) are necessarily absent.
I further announce that, if present and voting, the Senator from Minnesota (Mr. Wellstone) would vote ``aye.''
The result was announced--yeas 94, nays 2, as follows:
YEAS--94
AbrahamAkakaAllardAshcroftBaucusBennettBidenBingamanBoxerBreauxBrownbackBryanBumpersBurnsByrdCampbellChafeeClelandCoatsCochranCollinsConradCoverdellCraigD'AmatoDaschleDeWineDoddDomeniciDorganDurbinEnziFairclothFeingoldFeinsteinFordFristGortonGrahamGrammGramsGrassleyGreggHagelHatchHelmsHutchinsonHutchisonInhofeInouyeJeffordsJohnsonKempthorneKennedyKerreyKerryKylLandrieuLautenbergLeahyLevinLiebermanLottLugarMackMcCainMcConnellMikulskiMoseley-BraunMoynihanMurkowskiMurrayNicklesReedReidRobbRobertsRockefellerRothSantorumSarbanesSessionsShelbySmith (NH)Smith (OR)SnoweSpecterStevensThomasThompsonThurmondTorricelliWarnerWyden
NAYS--2
HarkinKohl
NOT VOTING--4
BondGlennHollingsWellstone
The motion was agreed to.
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