American Bankruptcy Institute Update

March 8, 2005

In This Issue


Legislation Update

Bankruptcy Bill on Verge of Final Passage; Schumer “Abortion” Amendment Narrowly Defeated; Cloture Invoked

The Senate today moved into the final stages of passage of S. 256, the bankruptcy overhaul bill.

In an much-anticipated vote, the Senate rejected 46-53 an amendment by Sen. Charles Schumer (D-N.Y.) to prohibit the discharge of debts arising from the unlawful interference with “the provision of lawful goods or services or damage to property used to provide” such services. The amendment, whose inclusion doomed the legislation in the House of Representatives in the last Congress, was defeated largely on a party line vote. Four Republicans supported the amendment and two Democrats opposed it (Sen. Jon Corzine, D-N.J., did not vote). Defeating the amendment is a key victory for the proponents of the bill, who portrayed the language as a killer amendment. Amendment supporters urged the Senate to maintain the chamber’s prior support for the language.

This afternoon, the Senate voted to invoke cloture on the bill by a vote of 69-31. Sixty votes were required. Fourteen Democrats joined all 55 Republicans in voting to limit debate. This vote has the effect of requiring all further amendments to be germane to the bill and limits the total time for such amendments to 30 hours. Normally, all 30 hours are not used post-cloture and the legislation moves rather quickly to final reading and passage. This could mean the final vote on
S. 256 would occur sometime on Wednesday.

Late this afternoon, the Senate rejected an amendment by Sen. Russ Feingold (D-Wis.) to strike the small business provisions of the bill.

After Senate passage, the bill would proceed to the House. While the House leadership is eager to pass the bill “promptly”, they have stated the bill will proceed in the regular order, meaning a referral to the House Judiciary Committee before full House action. The House is in session during the week of March 14 and adjourns on Friday, March 18 for two weeks. It is possible the House might try to process the bill during this window before adjournment. However, full House action is more likely upon return during the week of April 4.

President Bush is expected to sign the bill. Most of the bill’s provisions are effective 180 days after that date of enactment.

Credit Card Debt Up in January

Buyers increased their borrowing on credit cards, auto loans and other types of consumer debt at an annual rate of 6.6 percent in January, the fastest pace in three months, the Federal Reserve reported yesterday, the Associated Press reported. That represented an increase of $11.5 billion in borrowing from December, double what many economists had expected. It came after an increase of $8.7 billion in borrowing in December, which was revised significantly from an estimate of a $3.1 billion increase in December. The 6.6 percent rate of increase in January compared with a 5 percent rise in December and was the fastest advance since consumer debt rose 8.2 percent in October.

An article in the Sunday edition of the Washington Post, “ Credit Card Penalties, Fees Bury Debtors ” addresses the growing consumer debt and focuses on the current debate over the bankruptcy bill. Read the full article.

What’s New at

The Standard
Beijing to draft financial house bankruptcy rules

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