Legislation to Reform Bankruptcy Laws Goes Belly-Up in Senate

Article excerpt

The Senate has officially pulled the plug on a plan designed to make it more difficult for Americans to evade debt by declaring bankruptcy.

"It's good that it died," Mary Rouleau, a lobbyist for the Consumer Federation of America, said of the Consumer Bankruptcy Reform Act. "It was a proposal that was unbalanced, not well thought-through, and was opposed by virtually everyone except the credit industry."

But credit-card companies haven't lost all faith, saying they have "commitments from leadership" to resurrect the bill early next year.

"We just ran out of time," said William Binzel, a lobbyist for MasterCard International, referring to the scheduled end this week of the 105th Congress. "I don't view it as a defeat. I view it as a delay."

Sen. Charles E. Grassley, Iowa Republican and one of the bill's original sponsors, declared the legislation dead yesterday morning. Members of Congress tried and failed to attach the bill as an amendment to the omnibus spending bill, which was introduced yesterday.

"Are you writing the obituary?" asked bank lobbyist Philip Corwin, a partner at the D.C. lobbying firm Federal Legislative Associates.

The bill was designed to curb record-high filings of consumer bankruptcies, which many say is an easier process to get through than actually paying off the debt.

Bankruptcies hit an all-time high last year at 1.42 million, erasing some $50 billion in consumer debt and indirectly costing all consumers an estimated $400 each in higher interest rates and higher costs for goods, according to debt counselors.

Bankruptcy-reform legislation overwhelmingly passed both houses of Congress this year. But the House legislation, viewed as a Republican bill that catered to creditors, failed to garner much support in the Senate and was threatened with a veto by the Clinton administration. …