Vote Due On Bankruptcy Law
The Senate is moving toward passage of legislation that would make it harder for people to wipe out debts in bankruptcy court after quashing Democratic attempts to restrain banks in handing out credit cards.
Senators voted 80-19 Wednesday to cut off debate on the most sweeping overhaul of bankruptcy laws in 20 years. A final vote was expected late Thursday or Friday.
The legislation overwhelmingly passed the House on March 1, and President Bush has signaled he will sign it.
Secretary of State Colin Powell said Wednesday, however, that the administration opposed a provision in the legislation that could block insurer Lloyd's of London from collecting debts from some U.S. investors.
"We strongly oppose it," Powell said in testimony before the Senate Budget Committee. "It will cause us international difficulties, and it opens up other opportunities for others to try to seek similar relief."
The bankruptcy legislation was vetoed in December by then-President Clinton, who contended it would hurt ordinary people and working families. It has been pushed by the banking, credit card and retail credit industries, which have paid millions of lobbying dollars in recent years. Consumer groups and unions have opposed it.
The measure applies a new standard for determining whether people filing for bankruptcy should be forced to repay their debts under a court-approved reorganization plan rather than having them dissolved. If a debtor is found to have sufficient income to repay at least 25 percent of the debt over five years, a reorganization plan generally would be required.
On a 58-41 vote, the Senate rejected an amendment Wednesday by Sen. Paul Wellstone, D-Minn., that would have prevented those lenders who charge more than 100 percent annual interest — businesses that offer "payday" loans and car title pawns, for example — from staking claims against the borrowers in bankruptcy proceedings.
In recent days, Senate Democrats have proposed a series of such amendments aimed at tempering the legislation but have been rebuffed almost every time.
On Tuesday, the Senate rejected two proposals that would have imposed restrictions on the opening of new credit-card accounts for people under 21.
After days of debate in the Senate, the House and Senate versions of the legislation were similar. Negotiators from the two chambers would have to meld the versions into one after Senate passage.
Personal bankruptcies in this country reached a record 1.4 million in 1998, up more than 300 percent since 1980. The rate declined to about 1.3 million in 1999 and 1.2 million last year.