Floor Statement- Bankruptcy Reform Act
Mr. HATCH. Mr. President, I am pleased to express my commitment again this year to reforming the bankruptcy laws in order to adequately protect children and ex-spouses that are owed domestic support. I am grateful that S. 625 includes the language I offered last year along with Senators Grassley and Kyl, providing extensive reforms to the bankruptcy laws in the area of child support. Also, I introduced additional enhancements to the bill's protection of domestic support obligations at the Judiciary Committee markup, and I accepted further changes by Senator Torricelli, with the agreement that we would continue working on the development of even further enhancements to the bill in this important area. I would like to express my gratitude to Senator Torricelli for working with me on these important provisions.
I have continued to work with domestic support enforcement groups and Senator Torricelli to improve the bankruptcy laws, and I offer this amendment, along with Senator Torricelli, to make a series of additional enhancements to the bill so that we can be certain that this important legislation enables women and children to collect the support and alimony payments they are owed.
Current bankruptcy law simply is not adequate to protect women and children. I have been outraged to learn of the many ways deadbeat parents are manipulating and abusing the current bankruptcy system in order to get out of paying their domestic support obligations. I have in front of me a how-to book called `Discharging Marital Obligations In Bankruptcy.' This is why we need to reform our bankruptcy laws.
I am proud of the improvements we are making over current law in terms of ensuring that parents meet their child support and other domestic support obligations in bankruptcy.
This chart indicates:
The Support Provisions Of This Bill Certainly Justify The Praise Given Them By The Most Significant National Public Support Collection Organizations In This Country.
That is a statement made by Phillip Strauss, Legal Division of the Family Support Bureau, the Office of the District Attorney of San Francisco on March 18, 1999, in testimony before the House of Representatives.
The bill's improvements over current law have the support of the country's premiere child support collection organizations. As you can see, the bill's child support provisions are endorsed by the National Association of Attorneys General, the National Child Support Enforcement Association, and all of them, and many others, support what we are trying to do today. I would also like to point out that literally dozens of ex-spouses who are owed domestic support obligations have expressed to me their support for these improvements to bankruptcy law.
We have all heard complaints by those who would attempt to politicize this issue that the bankruptcy bill is somehow harmful to families. I have worked tirelessly, provision by provision, both last year and this year to make this a bill that dramatically improves the position of children and ex-spouses who are entitled to domestic support. No one who actually looks at what the bill says can, in good conscience, say that this bill is not a tremendous improvement for families over current law. There may be those who do not want to see bankruptcy reform, but they cannot, with a straight face, argue that this bill is anything other than a huge positive step for our children. I believe that criticizing this bill without regard for what is in it, and using our children as pawns in the process, is shameful.
I challenge critics of the bill to stop with the vague allegations and take a look at what the bill itself actually does.
First, here is what S. 625 does apart from the additional improvements I have offered in the manager's amendment:
The bill prevents the use of the automatic stay from being used to avoid family support obligations: S. 625 stops deadbeat parents from using bankruptcy to avoid family support obligations.
For example, the bill prevents the automatic stay from being used to put a hold on the interception of tax refunds to be used to pay a domestic support obligation.
The bill enables revocation of driver's licenses and other privileges from deadbeats: The bill prevents the automatic stay from being used to prevent the withholding of driver's licenses when debtors default on domestic support obligations. This is a particularly important provision, given recent news reports about the effectiveness of suspending driver's licenses of people who aren't paying their child support. A Maryland initiative has resulted in $103 million in child support collections just since 1996. We do not want our bankruptcy laws to work as an impediment to effective programs like the one in Maryland.
Without these changes, a person could use current bankruptcy law to stave off a driver's license suspension by using the automatic stay, and undermine the effectiveness of these programs at getting child support to the kids who need it.
The bill gives child support first priority status: Domestic support obligations are moved from seventh in line to first priority status in bankruptcy, meaning they will be paid ahead of lawyers and other special interests.
The bill makes debt discharge in bankruptcy conditional upon full payment of past due child support and alimony.
It requires payment of domestic support obligations for plan confirmation:
And, S. 625 makes domestic support obligations automatically nondischargeable. This lets ex-spouses seeking to enforce domestic support obligations avoid the legal expenses of litigation that they incur under present law.
The bill provides single parents with new tools to help them collect from an ex-partner in the bankruptcy system.
The bill provides better notice and more information for easier child support collection.
The bill provides help in tracking deadbeats. For example, If there is non-payment of child support in a post-discharge situation, other creditors with non-dischargeable debt are required to provide the last known address of the debtor on request, a significant help in locating people who have skipped out on their child support obligations.
And, the bill allows for claims against a deadbeat parent's property.
In addition to these improvements over current law that have been part of the bankruptcy reform bill for months, I have worked with Senator Torricelli, the National Women's Law Center, and the National Association of Attorneys General to further enhance the domestic support provisions of the bill. I thank each of them for their commitment to further improving the bill, and I am proud of what we have accomplished.
Our amendment has many enhancements over current law.
For example, the amendment allows for the payment of child support with interest by those with means. The debtor can pay interest under the plan if he has sufficient income after paying all other allowed claims.
The amendment prevents bankruptcy from holding up child custody, visitation, and domestic violence cases. Essentially, the amendment exempts proceedings not involving money from being subject to bankruptcy's automatic stay provisions. These include civil cases regarding child custody or visitation, divorce--unless it involves a division of property--and domestic violence.
The amendment facilitates wage withholding to collect child support from deadbeat parents. It accomplishes this by adding a requirement that the trustee provide to the person owed support and the State child support collection agency the debtor's employer's last known name and address. Also, the amendment simplifies the ability of the person owed support to get information on the debtor's whereabouts from other creditors. These measures will assist greatly in the imposition of wage withholding orders if they are not already in effect.
The amendment helps avoid administrative roadblocks to get kids the support they need. The amendment provides an expanded definition of `domestic support obligation' to cover those who have not been officially designated as a legal guardian, but who nonetheless are entitled to collect child support on a child's behalf.
Also, the amendment gives priority to parents over government. It divided the new `first priority' status into two sub-parts, giving parents who are not receiving benefits the top priority--whether or not the benefits have been formalistically `assigned' to the government for collection purposes--and giving next priority to obligations assigned to and owed directly to the government in exchange for the payment of benefits--such as where parents are liable for the costs of treating a child in a mental facility.
A key provision makes staying current on child support a condition of discharge. The amendment allows for conversion or dismissal of chapter 1, 12, and 13 cases where the debtor is not current on presently accruing domestic support obligations. Two checkpoints are imposed in the case at which the debtor must be current with payments: confirmation and prior to obtaining a discharge. This provides a new way of preventing debtors from not paying their domestic support obligations during the gap period between filing and confirmation.
Moreover, the amendment makes payment of child support arrears a condition of plan confirmation. It provides that the Chapter 13 plan must pay all 507(3) arrears claims (those owed to families not receiving benefits) in full, unless the creditor--that is, spouse or child--agrees otherwise.
The amendment puts responsible debtors over government. It permits the cram down of arrears claims over the objection of a 507(a)(4) government arrears claimant--that is, the government collecting in exchange for paying benefits, in Chapter 12 and 13 cases so long as the debtor agrees to commit all disposable income for a five-year period.
This level of detail would ordinarily not be necessary in discussing provisions in a bill on the Senate floor, but I have done so to put the issue to rest once and for all. Let me be clear: With my provisions in the bill, bankruptcy will no longer be used by deadbeat parents to avoid paying child support and alimony obligations.
If we take the time to look at the actual provisions in the bill, it is clear that the bankruptcy reform bill of 1999 provides enormous improvements over current law. I have had a long history of advocating for children and families in Congress, and I support a bill that moves the obligation to pay child support and alimony to a first priority status under S. 625, as opposed to its current place at seventh in line, behind bankruptcy lawyers and other special interests. I support a bill that requires debtors who owe child support to keep paying it when they file for bankruptcy. I support a bill that prevents debtors from obtaining a discharge from the court until they bring their child support and alimony obligations current. And, I support a bill that provides that if a debtor pays child support right before filing for bankruptcy, the child support payment can't be taken away from the kids. Let's take a stand for our nation's kids and pass the Bankruptcy Reform Act of 1999 out of the Senate.
Again I thank my colleagues for the work they have done, especially Senator Torricelli, who has done a remarkable job working with Senator Grassley on this bill as a whole, but in particular working with me on this amendment.
I yield the floor.