John Conyers

Mr. CONYERS

Mr. CONYERS. Mr. Chairman, I demand a recorded vote.

Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, as usual, there is a good deal of talk about preserving jobs and creating jobs in the House of Representatives. Accordingly, if we really want to protect jobs, there should be little problem in supporting my amendment which waives the harsh new small business and single asset real estate provisions of the bill where they could result in the loss of five jobs or more. We are now talking about small business and protecting the jobs therein under the bankruptcy bill. Now, the measure before us would completely alter the manner in which small business and real estate concerns may reorganize under the bankruptcy laws. For small businesses, H.R. 833 would mandate the operation of a whole host of burdensome new requirements, requiring them to provide balance sheets, for example, statements of operation, cash flow statements, income tax returns, within 3 days after filing a bankruptcy petition. The bill also shortens the time period the debtor has to file a plan of reorganization to a mere 90 days, making liquidations far more likely than they might have otherwise been. Now I have no problem with these new requirements, as long as the principal parties involved are the business owner and his creditor, but where the new deadlines will result in a loss of jobs, there I have a major concern. These provisions have drawn the strong opposition of organized labor and the Small Business Administration's Office of Advocacy. I think my amendment is a way out of this dilemma. The American Federation of Labor has warned that the small business provisions will threaten jobs by placing substantial procedural and substantive barriers in the way of small businesses and their ability to access the provisions of Chapter 11, threatening their overall ability to successfully reorganize and go on to succeed. Similarly, the Small Business Administration has written that under the bill H.R. 833, small business owners who are legitimately using Chapter 11 proceedings to reorganize their businesses may be forced into a premature dismissal or conversion or may have to expend vital resources to fend off challenges by any creditor for relatively minor procedural infractions. So we urge that this amendment be accepted and crafted into this bill. It would help at least in a small way those small businesses who might be in a position to lose five or more jobs as a result of bankruptcy proceedings. Mr. Chairman, I reserve the balance of my time.

Mr. CONYERS. Absolutely. Mr. Chairman, I claim time in opposition to the amendment.

Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.

Mr. CONYERS. Mr. Chairman I yield myself such time as I may consume. Mr. Chairman, I want to thank the gentlewoman from New York (Ms. Velazquez) for bringing forward the provision before us now that would allow the expansion of the credit committee membership and also ensure better access to information for the small businesses not included on the committee by allowing them to be open for comment and subject to additional reports or disclosures. And so we have no problem with this amendment. I would also point out to the gentlewoman from New York that there is another amendment of mine coming up shortly dealing with small business, she serves with great distinction on the Committee on Small Business, in which we would allow small business debtors in cases where application of these provisions could result in the loss of five or more jobs to waive the provisions of chapter 11 that relate to other business debtors, and I hope that that will gain her attention and other members that serve on that committee. So we have no objection to this amendment whatsoever, Mr. Chairman.

Mr. CONYERS. Mr. Chairman, I yield myself 5 minutes. May I make it clear to my colleagues that there is no other amendment that I support stronger than this one with the gentleman from Illinois (Mr. Hyde), deleting provisions in the bill that would impose the sort of one-size-fits-all standard for the income and expense test based on IRS standards to determine who is eligible for bankruptcy relief and how much they are required to pay their creditors. I am appalled with the thought of using IRS expense standards. First, the IRS standards do not protect a debtor's ability to pay for health care, for elderly, care for the elderly, taxes, accounting or legal fees. Now, an IRS standard like this has the effect of requiring the payment of unsecured credit card debt before allowing for payment of these important family-friendly items. In the second place, where the IRS does allow specific expense items, the permitted amounts are often inhumanely inadequate. For example, the permitted automobile expense in the San Francisco Bay area for two cars is $373 per month, even though most families could barely cover the cost of automobile insurance, let alone car payments, gasoline, tolls and other items of expense. Question: How can we expect people to keep their jobs if we do not provide them with enough money for transportation to get to work? Number three, the IRS standards have a severe bias against renters and other debtors without secured debts. This is because the bill allows all secured debt payments to be deducted from monthly income but limits rental and lease payments to the amount permitted by the IRS standards. This means that the person renting apartments or leasing cars may not be able to deduct the full amount of their housing and transportation cost in bankruptcy, while persons with mortgages and automobile debt would be able to do so. There is no legitimate policy rationale for this discrepancy which punishes persons who try to live within their means. I have just a few letters that I will shortly put in the Record. From the American Federation of State, County and Municipal Employees we have a strong letter arguing against the means test. From the American Federation of Labor, we have a legislative alert that says imposing an unworkable and unfair means test on families seeking to obtain a fresh start under Chapter 7 is to be avoided. We also have a letter from the United Automobile Workers of America, who are particularly disturbed by the up-front arbitrary means test that would unfairly bar many working families from being able to obtain a fresh start under Chapter 7. Mr. Chairman, this is probably the touchstone of this whole bill. If we could move to this agreement to accept this joint amendment, we may be able to save this bill from being turned down in the administration. I am urging the Members to give this their consideration and ultimately their support. Mr. Chairman, I include the following material for the Record: American Federation of State, County and Municipal Employees, AFL-CIO, Washington, DC, April 19, 1999. Dear Representative: On behalf of 1.3 million members of the American Federation of State, County and Municipal Employees (AFSCME), I am writing concerning the scheduled mark up of the Bankruptcy Reform Act of 1999 (H.R. 833). We urge you to oppose H.R. 833 because it represents one-sided legislation that elevates the interests of banks and credit card companies above the interests of working men and women. Many hard-working American families find themselves in unfortunate financial positions due to circumstances beyond their control. These families typically struggle with their debts for substantial periods of time. They work extra hours at multiple jobs, or borrow money from their relatives and friends. They try to avoid bankruptcy to protect their homes and save their credit ratings. But these efforts often fail, especially when the creditors refuse to give them a second chance that they desperately need. H.R. 833 contains numerous provisions that will allow creditors, particularly the credit card industry, to unfairly burden or harass working families. Of particular concern is the ``means test'' that would unfairly bar many working families from being able to obtain a fresh start under Chapter 7. There is no economic evidence to suggest that the profiles of families in Chapter 7 have improved since last year's Conference Report was published. During the debate over the bankruptcy legislation last year, much evidence was presented to the contrary; families in Chapter 7, on average, are worse off today than in the past. There is also no evidence that these families are abusing the system. AFSCME supports balanced bankruptcy reform, but this bill departs from the bipartisan version of reform which cleared the Senate floor last fall. We again urge you to vote against

Mr. CONYERS. For purposes of getting the floor I oppose the amendment, and I ask to be recognized.

Mr. CONYERS. Mr. Chairman, I yield myself the balance of my time. Mr. Chairman, the distinguished minority leader, the gentleman from Missouri (Mr. Richard Gephardt) has said that, ``While I support a balanced approach to bankruptcy reform that places equal responsibility on both debtors and creditors, I must oppose H.R. 833 because it fails to strike such a balance.'' In addition, the administration has said repeatedly that they will veto this bill in its current form. The legislation is opposed by the National Bankruptcy Conference, the Commercial Law League, the National Association of Consumer Bankruptcy Attorneys, the National Association of Bankruptcy Trustees, and the National Association of Chapter 13 Trustees, the AFL, the UAW, AFCSME, UNITE, the Leadership Conference on Civil Rights, the National Partnership for Women and Families. Please, let us make certain that we do not move bankruptcy into the dark ages. Let us reject this bill, send it back to the committee, and I hope that Members will consider favorably some amendments that could hopefully improve the bill.

Mr. CONYERS. Mr. Chairman, I yield 5 minutes to the gentleman from New York (Mr. Nadler).

Mr. CONYERS. Mr. Chairman, I yield 30 seconds to the gentleman from Massachusetts (Mr. Delahunt).

Mr. CONYERS. Mr. Chairman, I yield myself 45 seconds. I want to address the gentlewoman from New Jersey, whose concern about bankruptcy is well-known and remembered from the last Congress. I read to her the first paragraph of the National Women's Law Center letter sent to me only 2 weeks ago which says that ``The bankruptcy bill, H.R. 833, puts economically vulnerable women and children at greater risk. By increasing the rights of certain debtors, including credit card companies and secured creditors, the bill would set up a competition for scarce resources between parents and children owed child support and commercial creditors both during and after bankruptcy. And single parents facing financial crises--often caused by divorce, nonpayment of support, loss of job, uninsured medical expenses or domestic violence--would find it harder to access the bankruptcy process and harder, if they got there, to save their homes, cars and essential household items.'' This is a nonpartisan organization. I urge the Members to carefully consider what we are doing to our women and children. Mr. Chairman, I yield such time as he may consume to the distinguished gentleman from Massachusetts (Mr. Delahunt).

Mr. CONYERS. Mr. Chairman, I am delighted to begin immediately by talking about the means test and other consumer provisions that will harm middle-income and low-income people. Because contrary to the assertion of my friend, the gentleman from Pennsylvania (Mr. Gekas), that this is going to make it better, the means test is going to make it worse. It is incorrect to assume that the effect of this bill's harmful provisions would be limited to individuals seeking bankruptcy relief who earned more than the regional median income. First, there are numerous significant flaws in the manner in which the median income is calculated. For example, the median income figure required under this bill will be outdated and understated. This is because the bill states that the household income is to be based on the most recent census figures available as of January 1. But as of January 1, the census has information available for only the second year prior to the date. Accordingly, during this year, 1999, census figures will be available only for 1997. At times of inflation, this 2-year lag could result, obviously, in a significant increase in the number of individuals who are subject to the motions to dismiss or convert and who may earn more than the outdated median-income figure. Another flaw in the median-income formula is that the test measures a debtor's income based on how much the debtor earned 6 months prior to bankruptcy. If the debtor lost a good job in month three and has been working at a low-wage job ever since, the income from that good job and the help from family members would be counted as if that is what his future income would be. In addition, this bill, unlike current law, will permit creditors and other parties and interests to bring motions to dismiss more aggressively; and well-funded creditors will have extremely wide latitude to use such motions as a tool for making bankruptcy an expensive, protracted, contentious process for honest debtors, their families and other creditors. Now, the bill is opposed by a growing number of Members of the House of Representatives for the simple reason this bill is worse than the bill we voted on in the last Congress; and it is bad for women, children, working Americans. But the good news, if this is good news for them in the credit card industry, it is good for the credit card industry. This means test is fatally flawed. The legislation attempts to impose a one-size-fits-all income and expense test based on IRS standards to determine who is eligible for bankruptcy relief and how much they may be required to pay their creditors. The problem is that the formula fails to take into account such important items as child care payments, health care costs, and the costs of taking care of ill parents, to name but a few of the glaring loopholes. The IRS standards are so extreme that they have been rejected by the Congress and abandoned by the IRS; and, yet, the credit card companies would have them apply them in bankruptcy. Now, the denials have been pouring in pretty fast here so far; and there is going to be a lot of discussion about how the bill is devastating to children and women reliant on child care and alimony payments. Repeat: The bill is devastating to children and women reliant on child care and alimony payments. On the debtor's side, the legislation makes it far more difficult for single mothers to access the bankruptcy similar. On the creditor's side, the bill pits sophisticated credit card creditors in direct competition with alimony and child support. The attempts to fix this incorporated into the legislation are not effective and are largely redundant. And, third, but not finally, but I am going to stop here, the bill will also lead to a loss of jobs and collective bargaining rights. The business provisions of the bill will impose harsh new time deadlines and massive new legal and paperwork requirements on small businesses and real estate concerns and, by design, will lead to premature liquidation of job loss. This is why the largest collective bargaining organization in America has asserted that the legislation will restrict the workings of bankruptcy cases for small businesses and place numerous jobs at risk. Now, the bill conveniently ignores the real problem of what has caused more bankruptcies, namely, the problem of credit card abuse. And is there any colleague here that does not get credit card applications monthly, weekly, occasionally daily? And, at the same time, the legislation responds to every conceivable debtor excess, real or imagined. It gives a complete pass to the transgressions of the credit card industry. My colleagues should be on the alert. This Bankruptcy Reform Act legislation of the 106th Congress will worsen the conditions of those few people in their district, working people, honest people, who may need to access this important court. Please remember, this bill is worse than the bill we had last year. Mr. Chairman, I reserve the balance of my time.

Mr. CONYERS. Mr. Chairman, I yield the balance of my time to the gentleman from New York (Mr. Nadler), the ranking member of the subcommittee.

Mr. CONYERS. Mr. Chairman, I yield such time as he may consume to the gentleman from New York (Mr. Ackerman). (Mr. ACKERMAN asked and was given permission to revise and extend his remarks.)

Mr. CONYERS. Mr. Chairman, I yield 30 seconds to the gentleman from Texas (Mr. Bentsen). (Mr. BENTSEN asked and was given permission to revise and extend his remarks.)

Mr. CONYERS. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from North Carolina (Mr. Watt).

Mr. CONYERS. Mr. Chairman, I rise in opposition to the amendment.

Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I rise in support of the amendment. This is a technical amendment, the manager's amendment. It contains 11 changes. We have examined them carefully and have absolutely no objection to them.

Mr. CONYERS. Mr. Chairman, I yield myself 1\1/4\ minutes. I think it is very important that we begin to deal with the alimony and child support measure head-on. It has been suggested that this is not a problem or that it has been improved upon. But actually for women whose average income was at the median during the last 100 days before the support checks stopped or women whose child care expenses exceeded IRS standards, they may be denied access to Chapter 7 and forced into a restrictive Chapter 13 repayment plan. Secondly, the bill does not exempt child support or foster care payments from the means test definition of disposable income, and does not exclude alimony and child support payments received within 6 months after filing for bankruptcy from the property of the estate. How can we talk about women and children are okay? This bill is presently a disaster for single mothers and their children, which number in the alimony and child support area an estimated 243,000 to 325,000 bankruptcy cases each year. The National Partnership for Women and Families have told us that the child support enforcement provision in the bill would not adequately protect parents and children. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from Virginia (Mr. Scott) a distinguished member of the Committee on the Judiciary.

Mr. CONYERS. Mr. Speaker, I offer a motion to recommit the bill, H.R. 833, with instructions.

Mr. CONYERS. Yes, I am, in its present form, Mr. Speaker.

Mr. CONYERS. Mr. Speaker, on that I demand the yeas and nays.

Mr. CONYERS. Mr. Speaker, I thank the subcommittee chair. Mr. Speaker, I yield to the gentlewoman from Texas (Ms. Jackson-Lee).

Mr. CONYERS. I yield to the gentleman from Pennsylvania.

Mr. CONYERS. Mr. Speaker, my motion to recommit is simple. It excludes Social Security and Medicare benefits from the definition of ``income'' for purposes of the bill's means test. As the law currently stands, any senior is eligible for bankruptcy relief. The bill, however, would force millions of seniors living on fixed incomes into mandatory repayment plans. This is because there is no exclusion from the definition of ``income'' for payments received for Social Security, retirement, for disability insurance, for supplemental security income, or for unemployment insurance. As a matter of fact, there is no exclusion for third-party medical payments made on behalf of seniors. What does it mean? That anytime a senior becomes ill and receives substantial Medicare benefits, they could be denied basic bankruptcy relief. This amendment has strong support among senior citizens. It is supported by the National Committee to Preserve Social Security and Medicare and the National Council of Senior Citizens. I have letters I would like to introduce into the Record. This amendment by no means cures the worst problems in the bill, the use of IRS standards and its impact on child care and jobs, to name a few. But it does help fix a problem for seniors. I urge its adoption. Mr. Speaker, I include the following material for the Record: National Committee to Preserve Social Security and Medicare, Washington, DC, May 3, 1999. On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I strongly urge you to oppose H.R. 833, the bankruptcy reform legislation, when it comes up for a vote this week. We, too, are concerned about the increase in bankruptcy filings since 1980 and the rise in consumer debt per household. However, in its current form H.R. 833 would seriously weaken bankruptcy protections for vulnerable older and disabled Americans, while doing nothing to prevent credit card companies from targeting people with low incomes. Debtors would be subject to an income-based means test intended to steer people away from Chapter 7, which allows consumers to liquidate their assets and divide them among their creditors in exchange for being discharged from the majority of their debts. Instead, debtors who are projected to have $5,000 in disposable income over the next five years will have to file for Chapter 13 bankruptcy, which requires a repayment plan. A debtor's disposable income would be determined by subtracting allowable expenses such as housing costs and taxes from an individual's overall income. As reported by the Judiciary Committee, Social Security, disability and veteran's benefits are not exempted from overall income. At the same time an amendment to include medical expenses and the costs of caring for an elderly parent in the list of allowable expenses also failed, although private school tuition was allowed. In 1997, an estimated 280,000 older Americans filed for bankruptcy. Since 1993, more than a million people aged 50 and older have turned to the bankruptcy courts to receive help in dealing with financial catastrophes. Our nation's senior have worked hard and played by the rules. Most older American's filing for bankruptcy are not profligate spenders. Instead, the two major reasons why people over 50 are in financial difficulty are lost jobs and medical problems. Many people in their late 50s and early 60s have serious medical conditions and no health insurance. Even among those eligible for Medicare, skyrocketing drug costs and other out- of-pocket medical expenses can spell economic disaster. Among bankruptcy filers age 65 and older, 37 percent are pushed into financial collapse by medical debts. Another 33 percent of those over 65 explain that losing a job has made this difference between getting by and bankruptcy. If H.R. 833 is enacted, a senior who has just $100/per month in ``disposable income'' would meet the means test and be unable to file under Chapter 7. Since out-of-pocket medical costs would not generally be considered allowable expenses, this person could easily be placed in a situation of having to pay a credit card company instead of purchasing his blood-pressure medicine. We believe that most Americans, particularly most seniors, want to pay their debts. Bankruptcy reform should not punish vulnerable older Americans who face financial catastrophe because of a job loss or medical crisis. I hope that you will oppose H.R. 833 when it is brought to the House floor this week. Sincerely, Martha A. McSteen, President. National Council of Senior Citizens, Silver Spring, MD, May 5, 1999. Hon. John Conyers, Jr., U.S. House of Representatives, Washington, DC. Dear Representative Conyers: The National Council of Senior Citizens supports your motion to recommit H.R. 833. This legislation is pernicious and destructive of the core economic rights of seniors and working families. It would force millions of seniors to make mandatory payments based on a definition of income that would include payments for social security, disability, unemployment compensation, supplemental security income and other income security and welfare needs. We believe that such payments or resources should be excluded from a reasonable definition of income for Federal bankruptcy purposes. For million of seniors, these payments are the difference between depravation and survival. They do not fit the definition of disposable income. In recent years, fewer than a quarter of a million seniors have annually filed for bankruptcy protection. They are not noted as abusers of bankruptcy systems nor as profligate spenders using credit cards or other forms of credit purchasing. However, persons between the ages of 55 and 65 represent the most rapidly growing group of Americans without health insurance. Medical crisis is the most important single cause of credit problems after job loss. H.R. 833 would force seniors to put credit card debts ahead of housing needs, family needs, and costs associated with chronic or disabling illness or disease. No provision citing ``extraordinary circumstances'' claims or potential court relief will take away the sense of panic which will strike seniors if current reasonable protections are stripped away for the convenience of predatory financial organizations. We urge the recommitment and defeat of H.R. 833. Sincerely, Steve Protulis, Executive Director.