Orrin Hatch

Mr. HATCH

Mr. HATCH. I know you are trying to work that out. We have tried to work on modifications for your side as well. I hope that can be worked out.

Mr. HATCH. Mr. President, one of the most difficult aspects of this bankruptcy bill we have had is trying to resolve the problems with regard to home ownership and homestead exemption. It has been a very difficult problem and we have worked on both sides of Capitol Hill to try to come up with a solution that will work. Frankly, the solution we have come up with is in this bill, basically recognizing the States have the right to set the homestead cap rather than the Federal Government. My distinguished friend, Senator Kohl, is trying to change that with this amendment. This amendment jeopardizes bankruptcy reform by stripping out the bipartisan compromise homestead provision that we have worked out over a long period of time, over many years. This bipartisan compromise homestead exemption is in the bill, and the distinguished Senator from Wisconsin would require home equity, wherever acquired, that exceeds $125,000, will be subject to collection under the bankruptcy code. The bipartisan compromise homestead provision now in the bill substantially improves current law by requiring home equity acquired within 2 years before bankruptcy, not to exceed $100,000, to be subject to crediting in a bankruptcy estate. What the code does is prohibits individuals from shielding more than $100,000 in new equity in their home--paying down the mortgage, building an addition--if that new equity was obtained within 2 years of filing. Finally, the compromise would disallow any acquisition of homestead property within 7 years of filing if done to ``delay, hinder, or defraud'' a creditor. The amendments proposed by Senators Kohl and Feinstein would add no additional antifraud protection and would, instead, threaten final passage of the bankruptcy bill. The Bush administration supports the existing homestead language contained in the underlying bill, the compromise that we have all worked out, and the Kohl-Feinstein amendment is opposed by the National Governors' Association and the National Conference of State Legislators. I think we would be very wrong to go against allowing the States to set their own standards in this area. Some States will have different standards than others, but it is up to the States. If they set the standards too high or too low, they are going to suffer as a result of it. They will gradually get it right. But for us to arbitrarily set a homestead exemption standard here in the Senate, in this bankruptcy bill, is the wrong thing to do. I prefer to leave it up to the States. I hope our colleagues will vote against this homestead exemption language of the distinguished Senator from Wisconsin. With that, I yield the floor.

Mr. HATCH. Mr. President, I suggest the absence of a quorum.

Mr. HATCH. I agree with the distinguished Senator. I think we should move ahead. I understand there is one other person, the distinguished Senator from Texas, who would like to speak on the Kohl amendment. After she gets here and gives her remarks, we intend to proceed to a vote on the Kohl amendment. Then we will try to stack votes on the two Leahy amendments, I think with a minute on each side to explain them, if I have that right. So we are hopeful we can move this.

Mr. HATCH. I ask unanimous consent after the 10 minutes of the distinguished Senator from Florida, all time be yielded back in relation to the pending Kohl amendment; that further, the Senate proceed to a vote in relation to the amendment at that time, which would be approximately 11:41, to be immediately followed by a vote in relation to the Leahy amendment numbered 41. Finally, I ask consent that the second vote in the series, that is, the Leahy amendment, be limited to 10 minutes.

Mr. HATCH. Mr. President, I move to vitiate the yeas and nays.

Mr. HATCH. I move to lay that motion on the table. The motion to reconsider was laid on the table. Vote on Amendment No. 41, As Modified

Mr. HATCH. Mr. President, this is a good amendment. It protects the privacy of minors. It is just one of the steps the distinguished Senator from Vermont and I are taking to try to protect privacy rights. I recommend everybody vote for this amendment. I yield back the remainder of my time.

Mr. HATCH. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. HATCH. I ask for the yeas and nays on the Kohl amendment.

Mr. HATCH. Mr. President, I am here in opposition to the Wellstone amendment to permit a debtor to repeatedly use chapter 13. The effect of his amendment is that it strikes the provisions of the reform act which require a debtor to wait 5 years between chapter 13 bankruptcies. Present law allows the debtor to file repeated chapter 13s, one right after another. The amendment is unnecessary. Senator Leahy and myself have already worked out an adjustment to be included in the managers' amendment, which permits a debtor to refile a chapter 13 within 2 years after a previous bankruptcy and provides a hardship exception if the debtor absolutely has to have chapter 13 relief more frequently. The amendment encourages debtors to repeatedly use chapter 13 regardless of whether they need it. It undercuts personal responsibility. Repeated use of chapter 13 should only be rarely necessary. It should never be allowed, unless a judge determines the debtor is really experiencing hardship. The amendment encourages bankruptcy mills to abuse the system by repeatedly putting their clients into chapter 13. This is a documented abuse that has been noted by many observers. It is difficult for me to see what merit the distinguished Senator from Minnesota finds in this particular amendment. I oppose this amendment that would undercut personal responsibility and encourage abuse of the bankruptcy system. I hope our colleagues will vote this amendment down. Now, with regard to the other amendments the Senator from Minnesota has called up this morning, I oppose the Wellstone amendment to allow the debtor to defraud the court and shield income. With regard to this legislation, the legislation calculates a debtor's ``current monthly income'' for purposes of the means test by averaging the debtor's monthly income from all sources over a 6-month period. The amendment of the distinguished Senator from Minnesota would change the time period to a 2-month period instead of 6 months. This amendment would allow the debtor to defraud the system more easily. By limiting the scope of current monthly income, the amendment allows the debtor to hide earnings from the court more easily. For example, it may be worthwhile for the debtor to quit a job for 2 months in order to have no income for purposes of the means test than to take the income into account and risk being converted to chapter 13. The point of the legislation is to cut down on loopholes, not create them. This amendment of the distinguished Senator from Minnesota creates an obvious loophole, which would allow debtors to game the system prior to filing. A 2-month period does not give an accurate picture of an individual's income. Wealthier debtors may receive quarterly or semiannual investment distributions which may not be picked up under the Wellstone definition if the debtor is lucky, or extremely clever. Supporters of the amendment may claim a 6-month period is too long, taking into account income or circumstances that are no longer relevant at the time of filing; that is, the debtor may have recently lost his job. This is the exact reason the legislation includes provisions to allow the judge to take such ``special circumstances'' into account. It is more appropriate to deter fraud in all cases and allow the judge to allow special circumstances in some cases than to presume such circumstances in all cases while making fraud easier. So I hope our colleagues will oppose that Wellstone amendment as well. I also oppose the Wellstone amendment excepting those who lose their jobs on account of imports from all provisions of the reform legislation. The effect of his amendment is, if a debtor can demonstrate ``the reason for filing is due to the debtor having become unemployed'' on account of imports, the debtor is exempt from every provision of S. 420 except those he or she elects to cover them. The amendment unwisely creates two classes of debtors: One class must use the bankruptcy bill as 420 would amend it, and another class can use bankruptcy law as it exists today, or pick and choose what provisions of this new law apply. To allow some group of our citizens, no matter how unfortunate, to pick and choose what parts of the law will apply to them is absolutely unprecedented. The amendment would allow debtors to evade child support, alimony, and marital property settlement provisions of this bill that help women and children. That is one thing this bill is doing--moving women and children, or spouses and children, to the front of the line. The debtor who owes child support could evade his basic responsibilities to pay child support by fitting under the loophole created by the Wellstone amendment. This particular amendment would allow debtors to evade the homestead exemption caps imposed by this bill. The amendment is unworkable. For example, creditors would not know if they had to make the truth-in-lending disclosures this bill imposes on them until after the debtor files for bankruptcy; yet the disclosures must be given in credit card solicitations and on the monthly statement. The amendment would have the strange effect of apparently exempting creditors from complying with consumer protections in this bill, such as the reaffirmation reforms, the restrictions on creditors that fail to credit plan payments, the privacy protections, and so forth. The amendment ignores the basic reality that the bill's primary effect is to require debtors who have the means to repay a meaningful portion of their debts. In most cases, people who lose their jobs will likely not be affected by the means test. For those who still have the ability to repay a meaningful portion of their debts--because they are independently wealthy, regardless of employment--the fact that the person lost a job has nothing to do with whether the debtor can repay a meaningful portion of his or her debt. We cannot allow this loophole in this legislation. Although I am sure the efforts of the distinguished Senator from Minnesota are well intentioned and made in good faith, the fact is these amendments would do a great deal of harm rather than good and would undermine the purposes of this bill and what we are trying to do, which is bring honesty and justice to the bankruptcy code. I surely hope our colleagues will vote down all three of the amendments of the distinguished Senator from Minnesota and that we can go forward and, of course, get this bill completed today. I hope we can keep all amendments from being on this bill, except perhaps the managers' package, which we hope we can work out before final passage. I suggest the absence of a quorum.

Mr. HATCH. Mr. President, I ask unanimous consent Senator Boxer be recognized in order to call up amendment No. 42, and further, following the debate, the amendment be temporarily set aside. Further, I ask that at 2:30 today the Senate proceed to a vote in relation to the Boxer amendment No. 42 and, following that vote, the Senate proceed to votes in relation to the Wellstone amendments Nos. 70, No. 71, No. 73, and Leahy No. 19. Further, I ask consent there be 2 minutes equally divided in the usual form between each vote and there be no second-degree amendments in order to the amendments prior to the votes. Finally, I ask that following the first vote, the remaining votes in the series be limited to 10 minutes in length.

Mr. HATCH. It is my understanding that on the Sessions amendment we have asked for a modification.

Mr. HATCH. Reserving the right to object.

Mr. HATCH. That is appropriate and fine with me.

Mr. HATCH. I appreciate that.

Mr. HATCH. I request the Senator have 1 minute.

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet to conduct a markup on Thursday, March 15, 2001, after the first rollcall vote in the President's Room.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Finance be authorized to meet during the session of the Senate on Thursday, March 15, 2001, to hear testimony on Preserving and Protecting Family Business Legacies. Mr. President, I ask unanimous consent that the Committee on Finance be authorized to meet during the session of the Senate on Thursday, March 15, 2001, to hear testimony on Living Without Health Insurance: Solution to the Problem.

Mr. HATCH

Mr. HATCH. How much time do we have?

Mr. HATCH. That is fine with me.

Mr. HATCH

Mr. HATCH. Could I give the Senator 5 minutes, and I will take 4?

Mr. HATCH

Mr. HATCH. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on Wednesday, March 14, 2001, at 2 p.m., to hold a closed hearing on intelligence matters.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Veterans' Affairs be authorized to meet to hold a joint hearing with the House Committee on Veterans' Affairs to receive the legislative presentations of the Disabled American Veterans. The hearing will be held on Wednesday, March 14, 2001, at 10 a.m., in room 345 of the Cannon House Office Building.

Mr. HATCH. Mr. President, I ask unanimous consent that the Committee on Rules and Administration be authorized to meet during the session of the Senate on Wednesday, March 14, 2001, at 9:30 a.m., to receive testimony on election reform.