Senate to Debate Bankruptcy Bill

The Senate is to begin debates today on legislation that would significantly change the bankruptcy code. 

The bankruptcy bill, sponsored by Sen. Charles Grassley, R-Iowa, would make it more difficult for consumers to file Chapter 7.  The bill would set up a means test to determine whether the individual earned more than their state's median income and could repay some of their debts. If the individual’s income was above a set level they would fall under Chapter 13 and would have to repay some of their debt.

The bill is supported by credit card companies, retailers, and other lenders who feel that consumers abuse the current system by discharging their debt under Chapter 7 when they have the means to pay some of it back.  Opponents of the bill, including consumer advocate groups, feel that the bill would harm low-income families and reward businesses that aggressively market consumer loans.

This bill is much like the one that came up last session. However, it does not currently include a provision aimed at preventing anti-abortion protestors from filing bankruptcy to get out of court-ordered fines.  This provision, included in last session’s bill, was cited as the cause of the bill failing.  Sen. Charles Schumer, D-N.Y., plans to reintroduce the amendment.  Republicans in both houses feel that the bill will easily pass if the amendment is not added.