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Lucas Votes to Prevent Bankruptcy Abuse

Date: April 14, 2005
Location: Washington, DC
Issues: Finance and Banking


LUCAS VOTES TO PREVENT BANKRUPTCY ABUSE
April 14, 2005

Legislation Will Restore Fairness to Bankruptcy System, Lucas Says

Washington, D.C. - U.S. Third District Congressman Frank Lucas voted today for legislation to prevent abuse of the U.S. bankruptcy system.

"Filing bankruptcy should be reserved for those individuals who are truly at the end of their financial rope, not for people looking to game the system by making purchases they never intend to take responsibility for," Lucas said. "The staggering increase in bankruptcies over the last 20 years points to the need for this reform."

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 will foster personal responsibility and make it more difficult for those who use bankruptcy as a tool for fraud to cheat their way out of debt. The number of bankruptcy filings per capita in the U.S. has increased fourfold over the last 20 years, and today, about $110 million in debt is forgiven every day.

"The number of bankruptcy filings has increased dramatically, and it's obvious that not all of these cases are justified," Lucas said. "Some debtors are skirting their financial responsibilities, and the rest of us are left holding the bill, in the form of higher costs for goods and services, and higher interest rates."

The bill will ensure that only those who truly need to declare bankruptcy can do so. If the debtor can repay at least part of their unsecured debt, the debtor will be required to do so. A formula will determine whether a debtor can pay, using recent income amounts and subtracting allowable expenses.

The bill will also help prevent abuse of the system. Bankruptcy claims will be dismissed if a judge finds the debtor has demonstrated abuse of the system.

"We need a financial marketplace that promotes responsible borrowing, and allows for those in the most serious financial straights to receive an opportunity to regain financial stability," Lucas said. "This long-overdue legislation will restore fairness to the bankruptcy system."

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http://www.house.gov/apps/list/press/ok03_lucas/bankruptreform.html

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