Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005

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AMENDMENT NO. 67

Mr. DODD. Mr. President, I urge my colleagues to support the amendment I offered yesterday. It is an amendment designed principally to protect children and families caught in the bankruptcy situation.

Let me state again at the outset, clearly there is a need to reform the bankruptcy laws--none of us disagree with that--but it must require a sense of balance. People are moving through the bankruptcy courts, but we also need to keep in mind that families, particularly children, the innocents in this, are not going to be so disadvantaged by the process that we create a more serious problem than the bankruptcy issue suggests.

Under this bill as presently crafted, there are several areas where we could do a far better job of seeing to it that children and families are going to be protected to the extent possible, while creditors are also going to have an ability to reach assets. This bill provides too strong a straitjacket for families.

I offer four different parts in this amendment. The first modifies the means test to require greater flexibility and reasonableness in calculating a debtor's ability to pay. Under the bill you have $1,500 a year as the total amount allowed for educational expenses for children. The reality of the 21st century, putting aside parochial school education, even for a public school, $1,500 is too low a figure for the children to get the proper education they need. Our amendment raises that ceiling from $1,500 to $5,000.

Second, the amendment ensures that support payments, child support payments, alimony, if there are any resources coming from the earned income tax credit or the child tax credit, specifically money intended to support children and their needs, should not go to creditors. Those moneys ought to be kept out of the estate. Again, child support, alimony, EITC, child tax credits. The bill does not presently allow that. We specifically passed that legislation to assist poor families and families with children.

Third, the amendment enables debtors going through bankruptcy to keep personal property normally found in and around the home. The bill does list some new items that were not in the earlier versions of the bill. That is a simple reasonableness test. Rather than having a finite list, if these goods have no resale value at all, and they are used for children and used for providing for the needs of the household, they ought to be excluded. That is the third part of this amendment.

Fourth, the amendment ensures that debtors are not forced into bankruptcy court to seek to prove that food, diapers, school uniforms, and other items are luxury items. Under the present law, the bankruptcy current law allows $1,225 to be charged within 60 days of filing bankruptcy. This bill drops that number to $500 within 90 days. That is a totally unrealistic number. Anyone who has young children will tell you $500 over 90 days to provide for your children is far too low. We tried to offer a compromise, saying any charges amounting to $1,000 within 70 days. As I say, existing law is $1,225 within 60 days. The bill says $500 within 90 days. Our amendment says $1,000 within 70 days.

Lastly, as part of this amendment, if the creditors think these are luxury items, let them make the allegation in court. This bill requires these dependent women, most of them single women raising children, have to prove these are not luxury items. The burden ought to be on the opposite side of the equation.

That is what the amendment is designed to do. There are four pieces to it. It is specifically designed to offer some relief to the innocents, the children and the families who are going through this process--not to blame them or put them in an untenable situation.

This amendment is supported by a long list of organizations across the country dealing with women and children. I ask unanimous consent that list be printed in the RECORD.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

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Mr. DODD. This bill deserves to make some changes. I hope our colleagues look closely at what is in the bill and support this amendment and see we can provide a sense of balance and relief for children and families who need some protection when they go through the bankruptcy process.

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Mr. DODD. Mr. President, this amendment was going to be voted on, actually, earlier this morning, but there was a reason to delay it until this afternoon. I ask unanimous consent to have 1 minute to explain the amendment.

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Mr. DODD. Mr. President, this amendment is simple and straightforward. More than 1 million women in the coming year will file bankruptcy. The overwhelming majority of these women are mothers of young children. This amendment is designed to see to it that the needs of children will be met as persons go through the bankruptcy act. The credit card companies certainly have a right to receive what resources are due them, but they should not be able to trump the needs of children.

Too often in this bill, in a variety of places, that is exactly what happens. My colleague from Utah said this bill has been 8 years in the making. It would only take a couple of minutes here to try to redress some of the inequities that exist when it comes to questions of providing for the basic needs of children--educational needs, utilizing child support, the earned-income tax credit, the child tax credit, and alimony to support the needs of children.

For over 100 years, since 1903, women and children have come first in our Nation's bankruptcy laws. This will be the very first time, without this amendment being adopted, that children and families will take a backseat to the credit card industry. That is a wrong priority for our Nation.

Every major child advocacy group in this country supports this amendment. I urge my colleagues to support it. This is one exception we ought to make to get right the balance in this bill of the needs of the credit card companies with the needs of America's children and families. I urge adoption of the amendment.

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