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Bankruptcy reform bill stalls while filings skyrocket



Published: Wed, September 25, 2002 @ 12:00 a.m.



It's 2002 and the Bankruptcy Reform Act of 2001 is still slowing working its way through Congress. It's been five years since Congress first tried to tackle the problem of bankruptcy abuse, and action by the nation's lawmakers is long past due.

Agreement was almost reached in July, but pro-choice Democrats attempted to insert language that would make it difficult for anti-abortion protesters who were sued for blocking access to abortion clinics to avoid payment of court judgments by declaring bankruptcy. Pro-life Republicans balked.

It provided an interesting insight into how the abortion issue can insinuate itself into a totally unrelated issue in Washington, and how it can turn politics upside down. In the five-year history of the bankruptcy reform debate, it has generally been Republicans who wanted to make it more difficult for people to avoid paying their debts and Democrats who balked at making it more difficult to file for bankruptcy.

But whatever the reason for the delay, it is time for Congress to get reform back on track.

More reasons every day

We say that after seeing that record numbers of people and corporations filed for bankruptcy protection for the second year in a row, according to the Administrative Office of the U.S. Courts. More than 1.5 million new cases were filed during the year ending June 30, which is an 8.6 percent increase over the record number of cases filed during the year ending June 30, 2001.

As we have said in the past, reform is needed because over the years filing for bankruptcy seems to have lost its stigma. It has become too easy for people to abuse their credit cards, run up unreasonable amounts of debt and then walk away from it by filing bankruptcy.

Reform would make it more difficult for people to be absolved of their debts. It would require some manner or percentage of repayment from many who file for bankruptcy.

Those who oppose reform like to blame the increase in bankruptcy on greedy credit card companies that lure unsuspecting consumers into their web of easy credit. While we would acknowledge that companies should be more selective in handing out cards and setting sky-high credit limits, the individual consumer still bears primary responsibility for how he or she uses the cards.

And, of course, it isn't the credit card company or department store that loses money when a card holder defaults. The companies cover their losses by increasing the cost of merchandise and credit to the responsible consumers who pay their bills.

People who exercise fiscal discipline shouldn't have to pay for those who don't.




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