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The Honolulu Advertiser
Posted on: Friday, November 15, 2002

House rejects legislation on debts

By Jesse J. Holland
Associated Press

WASHINGTON — Legislation intended to make it harder for people to erase their debts in bankruptcy court was rejected in the House yesterday, scuttled by a dispute on how the law would apply to fines against abortion protesters.

Conservative Republicans turned against the House leadership, President Bush and their business and banking contributors in rejecting the legislation, which they feared would curtail abortion protesting.

Many Democrats also opposed the bill on grounds that it would hurt poor working people.

Anti-abortion Republicans blamed Senate Democrats for forcing them to vote against the bankruptcy legislation that came out of the House-Senate conference committee. Senate Demo-crats had inserted language into the compromise that would ban abortion protesters from using bankruptcy to avoid paying court fines for blocking clinics if they knowingly violated the law.

The anti-abortion Republicans blocked the bill in July because of that provision, and did so again yesterday, saying that the law would be used against even legal abortion protests.

Banking and credit-card companies have been pushing the legislation for five years, but it has stalled each year in Congress. The House-Senate compromise reached this year represented the closest the measure has ever come to passage.

The House refused to consider the compromise by a vote of 243-172. Eighty-seven Republicans, 155 Democrats and an independent voted against the measure.

Without House approval before the end of the session, the compromise dies and lawmakers will have to start from scratch next year.

Under current law, Chapter 7 of the U.S. Bankruptcy Code allows people to escape paying any of their credit-card and other debts. Filings under Chapter 13 force people to repay debts over time in accordance with a court-approved plan.

Right now, a bankruptcy judge or a private attorney appointed by the Justice Department usually decides whether someone qualifies for dissolution of debts or should be forced to repay under a reorganization plan.

The legislation that died yesterday would have applied a new standard in which, if a debtor had sufficient income to repay at least 25 percent of the debt over five years or earned at least the median income for his or her state, he or she would be forced into a Chapter 13 repayment plan.

Personal bankruptcy accounted for about 97 percent of the 1.5 million bankruptcy filings between March 2001 and March 2002.

Democratic foes of the bill said it would hurt working Americans who are teetering on the edge of poverty in the middle of a slumping economy.

"This is like pouring gasoline on a fire of economic uncertainty and layoffs," said Rep. John Conyers, D-Mich., ranking Democrat on the House Judiciary Committee.

Rep. Jerrold Nadler, D-N.Y., said: "It is supported and being pressed forward by a coalition of banks and credit-card companies and other business interests who want to profit exorbitantly at the expense of families and small businesses at a time of crisis."