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S. 625 Set for Full Senate Action in Fall

Feature Article

Web posted and Copyright © August 1, 1999, American Bankruptcy Institute.

he U.S. Senate is expected to consider, and likely pass, major bankruptcy reform legislation upon its return to action after Labor Day. S. 625 is sponsored by Sens. Charles E. Grassley (R-IA) and Robert Torricelli (D-NJ) and was approved 14-4 by the Senate Judiciary Committee in April. Since then, negotiations have continued among Senators, staff and the Clinton administration to smooth the path for the bill in the full Senate.

While similar to the House-passed version (H.R. 833), the Senate bill contains a number of differences that would have to be worked out in a conference committee later this year. The first session of the current Congress is expected to adjourn at the end of October, though the session could go as late as December if needed.

A number of amendments are expected before the Senate takes final action. Sens. Jeff Sessions (R-AL) and Jack Reed (D-RI) have been working on a compromise to deal with unsecured or minimally secured reaffirmations that would still permit this practice, but would build in presumptions against approval where the debtor is not represented by counsel and lacks the apparent ability to cover the payments. Other amendments are expected to increase the disclosures that credit card lenders will have to provide to those consumers making only minimum monthly payments.

One non-germane amendment could be offered to raise the minimum wage. Sen. Edward Kennedy (D-MA), an opponent of S. 625, may offer his legislation to raise the wage by 50 cents in each of the next two years. A Republican proposal would increase the wage standard by $1 over the next three years, then provide annual adjustments for inflation. Business groups, which have traditionally opposed a wage hike, may agree to a compromise this year in exchange for some tax breaks such as increased deductions for business entertainment expenses. An agreed minimum wage hike would make S. 625 more attractive to the Clinton administration as well.

Opponents have also sought to cast the debate in terms of women's issues. A group of 30 women's and children's organizations wrote to all Senators in July, opposing the bill, citing an adverse effect on the collection of domestic support. Profs. Elizabeth Warren and Teresa Sullivan pointed to data showing single filing women to be the largest and fastest growing group in bankruptcy (40 percent of filers in 1999), a fact disputed by Ernst & Young LLP. Its nationwide sample of chapter 7 filings shows no gender difference and single women filing at the same rate (26 percent) as their share of the U.S. population.


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