Jeff Sessions

Mr. SESSIONS

Mr. SESSIONS. So the income can be determined, and we did step that requirement up to require more in connection with income tax return filings and things of that nature. I know the Senator is a member of the Judiciary Committee and has worked hard on this bill, so I respect his concern over this issue. I am not one who believes we have a problem, but I will be willing to look at it.

Mr. SESSIONS. I would be glad to review the amendment. It would appear clear to me that one does need to meet certain basic filing requirements.

Mr. SESSIONS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. SESSIONS. Mr. President, I am proud of the bipartisan bankruptcy bill moving forward. We were excited over the strong vote for cloture to bring this debate to an end, 66 or more votes for cloture. That was a tremendous bipartisan show of support. I know my friend, the Senator from Illinois, opposes the bill. He has offered a lot of amendments. Fundamentally he doesn't like the bankruptcy bill. At one point he did. At one point he was a sponsor of it. For whatever reason he is now not supporting the bill. That is all right. Our goal with regard to the bankruptcy bill was to continue the historic privilege that Americans can wipe out debts and have a fresh start. However, since the new bankruptcy bill was passed in 1978--that is the new one we are now under, a big bankruptcy reform--then we had about 200,000 filers in bankruptcy. Now there are 1.6 million filers in bankruptcy. A lot of people are using bankruptcy as a way to avoid paying their just debts. We wrestled with that. There was a lot of concern that something is out of sync, that the classic American moral value that you ought to pay your debts if you can ought to be honored. At the same time we ought to create a circumstance in which people can start over. As many Americans have learned, if they fall behind in payment of debts, creditors call. You can have lawsuits filed against you. Families get embarrassed. Court orders get issued. Those kinds of things can be upsetting to a family. Sometimes you get so far behind there is no way you can get out of it. That is what bankruptcy is for. So we looked at it and tried to figure how we could reach the right balance. How do we crack down on those who want to get off scot-free, not pay their debts, when they have the money to pay them, and do we protect those who need a fresh start? First, let me tell you the power of bankruptcy. A person making $200,000 a year, who owes maybe $150,000 in various debts, can go into bankruptcy court and file bankruptcy today and get all those debts discharged, when he or she could easily have paid back most of them. That is the way the system works. You read one of those ads and call one of those guys or ladies who advertises in the free newspaper at the checkout counter, and they tell you to call your bankruptcy lawyer and wipe out your debts. People do it--sometimes only after talking to that lawyer who only gets paid, frankly, if the client retains him to file a bankruptcy. They may have other alternatives to get out of that financial difficulty and they may not understand that. What I want to emphasize is that we decided to create a bright line, a rule that would apply easily across the country in bankruptcy court, and that is what we are doing--amending the law of bankruptcy court, which is a Federal court, under Federal law. All bankruptcies are done in Federal bankruptcy court, so it is our responsibility to deal with the problems in that court. So we created a bright line rule. If you make below median income and you owe debts, you can wipe them out, as you always have. You don't have to pay your doctor, your hospital, the automobile mechanic down the street who fixed your car, your brother-in-law back for his loan, the credit card company, or anybody else you owe--the bank, the credit union, wipe them out. So if you make below median income, the law is basically still the same for the debtor; he wipes it out. We had expert testimony in the Judiciary Committee, of which I am a member, that said 80 percent of the people who file bankruptcy make below median income, only 20 percent above. We said what about people who make above median income, but they might have special circumstances? Maybe they have a child who has a high monthly expense. Maybe the debtor himself is disabled, with extraordinary medical expenses, or things of that nature. We said we would make an exception for those people who have extraordinary expenses, and the estimates show that would add another 7 to 10 percent who would be able to automatically file under the median income and, therefore, would not have to pay any of their debts back under this other provision of bankruptcy law, chapter 13. So we agreed on that. That is the bill that passed. That means test philosophy passed this Senate, one time, 97 to 1. It passed three times in this body. The last time we voted on it, it was 83 to 15 to pass the bankruptcy bill. We had the Schumer amendment on it--which we voted down recently--at that time, and the House of Representatives refused to take the bill and pass it. It died because of the Schumer amendment, which was a maddening thing for those of us who had been working on it for 4 years. I thought it was unbelievable that such a small but poison pill could kill the legislation. I have heard a lot of times about how a poison pill can kill a piece of legislation. Since I have been in the Senate, I have never seen a more perfect example of a poison pill. It came back up. Senator Schumer offered it and we voted it down earlier today. This bill will not have the poison pill in it. We sent it over there with bipartisan support every time and, for one reason or another, it didn't become law. The House supports it. I am confident if we pass this legislation, without the Schumer amendment, it will pass the House of Representatives and go to the President for signature. I emphasize all this to say there is nothing wrong with the means test. People who make high incomes--lawyers, doctors and accountants are examples--and file bankruptcy, wiping out all their debts, who don't care who got hurt by their failure to pay and they care only about themselves, this will crack down on those people who are abusing this system. I don't think there is anything wrong with it. I believe it is the right thing to do. As a matter of fact, I hear even those who oppose the bill say they don't oppose the bill, but they have spent all the time trying to confuse this, suggesting that poor people are going to have to pay something back. The chances are, if they are poor and are making below median income in America, they won't have to pay back anything. What if they make above median income? Perhaps they will have to pay back a portion of their debts. The bankruptcy judge, under certain circumstances, may order that they pay back a certain percentage. They can be made to pay a certain percentage of those debts back through the court, and it is distributed on a fair basis to the creditors who have claims against the debtor for a period not to exceed 5 years. That is what is commonly and legally known as chapter 13. A lot of people all over America choose chapter 13 and agree to pay back their debts because they think it is the right thing to do, and it has some personal advantages. A lot of people find it hard to believe, but in my home State of Alabama, about one-half of the filers in bankruptcy court choose to file under chapter 13. What happens when you go into chapter 13? All the phone calls have to stop. You cannot be sued. If a lawyer tries to execute a judgment against your property after you filed in bankruptcy under either chapter 7 or 13, they are in contempt of court immediately. The family gets to calm down. The court helps set up a repayment schedule for a part of the debts the debtor owes, and their paycheck may go to the bankruptcy court and they parcel it out to the various creditors, and the debtor gets to keep a certain amount to live on, whatever he or she needs. That is the way chapter 13 works. It is not oppression to go into chapter 13. Almost half of the people in my State who file bankruptcy choose to file under chapter 13. Well, Senator Durbin quoted me. I was impressed that out of all those out here, he quoted me. I suppose he quoted me correctly, but maybe he was a little bit incorrect in interpreting what I had to say, or perhaps I spoke in a way he did not understand. I thought I was clear. I said in my remarks that if you make below median income, you are not subject to the means test. I guess that technically may be a misspeaking. What I meant was you are not required to pay anything back under chapter 13. He said, well, why fill out the forms? Well, you fill out the forms to see whether your income falls below the median income in America; that is why you fill out the forms. Surely, people would expect you, if you want to ask a U.S. bankruptcy court in whatever State in America you are in and you want to ask them to discharge your debts, and you want them to order that you do not owe anybody you have been owing for the last 10 years, and your debts are built up and you don't want to pay any of them a dime, surely it is not too much to ask somebody to show what their income is, to bring in a payroll stub to see what your paycheck is, and bring in an income tax return to see what you have been showing on your income tax. What is wrong with that? They say, oh, we have all these documents. I am telling you, I don't think we ought to be shocked that before a court wipes out maybe hundreds of thousands or tens of thousands of dollars in debt, they at least find out how much income the guy has and how much property. What if they own 500 acres of land out in the country? Should they not have to declare their assets? Why should they keep property, stocks, bonds, or anything else of value and not pay the people they solemnly committed to pay? If they have assets, let's find out what they are. That is all we are talking about. How are you going to tell whether a person qualifies for a means test if you do not have them produce some information about their income? I do not think that is oppression, and I do not think people are being oppressed if a credit card company lets them have $5,000 and they do not pay a dime of it back. I do not think a person is being oppressed. This is not some sort of anti-capitalist body. People get money all the time. They borrow money. They promise to pay it back. If nobody pays back their debts, everybody who uses a credit card will find their costs going up. Every bank loan will go up; every housing loan will go up. We have to have integrity, but we are going to give people--1.6 million of them a year last I heard--the ability to wipe out their debts. For probably 90 percent of them, they can wipe out all of them if they choose, and for the remaining 10 percent, they may have to pay some back. Some of those people absolutely ought to be paying back some of their debts. We are all just victims here. It is so discouraging to me to hear skilled Members of this body talk about the American people as if they are just victims and pawns. I have seen the polls. Overwhelmingly, the American people believe you ought to pay your credit card debt back rather than pay other things because they know their interest rates are higher there. Frankly, I think everybody ought to reduce their credit card debt. They ought to chop them up and throw them away. I was glad that my children--my two daughters and son--when they were off at college had a credit card. I told them not to use it unless they had to, but if they were out on the road and the car broke down, or something happened, I trusted them to use that credit card. What a wonderful thing. Anywhere in America--actually anywhere in the world-- you can stick that card in a machine and out pops money. And if you pay it on time, you hardly pay any interest. I am not here to condemn the credit card companies, and I reject and am offended by the repeated suggestion that this bill is supposed to do nothing but protect credit card companies. That is false. It demeans the integrity of the Members of this Senate, in my view, who have worked hard on a bipartisan basis, 85 to 15, the last time we passed this legislation. I guess that is all they have to say when they complain about the bill. We talked about the military, and I am concerned about our military. I offered--and I was pleased that the President made part of his supplemental appropriations bill--an amendment to increase the death benefits of our soldiers, raising the basic death benefit from $12,000 to $100,000 and increasing the SGLI, Servicemen's Group Life Insurance, to $400,000 from $250,000, retroactive to the beginning of the war on terrorism. It will help all those families. I, like other Senators, visited soldiers in the hospital at Walter Reed. I visited them in Germany. I have been in Iraq three times. I have talked with all the families from Alabama who have lost soldiers in the war. I served in the Army Reserve for 10 years, missing by several years being activated in the first Gulf War. Some of my best friends are still in the Army Reserve. I understand what they are going through. I talked with them in Iraq in January of this year. Some have suffered financial difficulties as a result. We know that. I offered the amendment that would make clear and explicit that a service man or service woman who has been activated and is not able to pay their debts would, in fact, be a special circumstance that could keep them from having to pay back their debts under chapter 13, and they would be able to wipe out all their debts. No matter what their debts are, if their income is below median income, they get to wipe them out anyway. It is just in that top 20 percent, they may need special circumstances. I defined it, and we passed--at the same time, Senator Durbin's amendment was voted down--to give them that special protection. I think that was the right way to do it. Senator Durbin had an automatic guaranteed set-aside for them in a way that I think was not as appropriate as the route the Senate chose to take. But he got a vote on his amendment and I got a vote on my amendment. I also recall, for those who are listening, that we do have a powerful Soldiers and Sailors Relief Act that has been updated. That is the new title. The old, classical Soldiers and Sailors Relief Act says if you are off on active duty serving your country, you cannot be sued, they cannot take a judgment against you, they cannot foreclose on your home, and there are a host of other protections for them. They have those protections. Plus, when you come back, you can bankrupt against any of the debts you may have. If you make above median income, the judge can consider and should consider military service as a special circumstance. I think that is the right way to do it. I believe we did the right thing on that issue. It really hurts me to hear people suggest, because they are unhappy with this bill and they filed an amendment that was not adopted exactly like they wanted it, that we who adopted the amendment to deal with this issue are insensitive to military men and women serving America. Those are some of my thoughts, Mr. President. I think the bill does a lot of good. There are some things about which we have not talked. We had the critics dominate the debate and point out everything they think is wrong and offer amendments. Senator Feingold has 15 amendments. Remember now, this is the fourth time this bill has been on this floor. The last time, we debated over 2 weeks on the legislation with amendment after amendment. This time we are going to be 2 weeks on it. I think we debated 2 weeks the other two times. There has been extensive debate. We have had debate and amendments offered in the Judiciary Committee likewise on these issues where Senator Feingold, Senator Durbin, and others serve. We have tried to be fair and open. Everybody has had a chance to raise their concerns, but it is time to vote and get this bill in the barn and move on to other issues. I want to mention a couple points that are so important for people in America who are having a hard time. Women and children who are victims of divorce and separation, deadbeat dads--what about that issue? In the course of our deliberations, we made a bipartisan commitment to raise the top debts that arise from alimony or child support to the highest level of a bankruptcy court. In other words, when there is a limited amount of money, the bankruptcy judge decides who gets paid first. In the past, they have always paid the lawyers and the court fees, and then they had some other things, and then women and children came along. We raised women and children to the top of the list. Of course, that is one reason they are unhappy with the bill--trust me. We also put some other provisions in it to reduce some of the litigation that goes on in bankruptcy court. We raised women and children to the top of the list. The National Child Support Group and the National District Attorneys Association that handles child support issues said it is absolutely a fact that women and children have a substantial benefit under this act. One person said it is a veritable wish list for helping women and children who are owed child support and alimony to collect those debts. And they get paid even above so many other people. Also, I note that secured creditors are next, and the unsecured creditors, such as the credit card people, and those with personal notes and bills, such as your local gas station. Those debts come in as unsecured debts, and they are further down the list. We do not raise credit cards above people. We actually raised women and children up to the highest group. So I think there are a lot of good things in it, including a requirement that people who want to pay their debts, cannot handle their money and manage it well, must attend a financial management course before being discharged from bankruptcy. We want to see people manage their money well, get rid of those credit cards, contain their spending and manage their money wisely. That is what we would like to see them do. That is what the bill requires. It also says a person at least ought to talk with a credit counselor. These exist all over America. Many times they can help people manage their money. They get the whole family around the table, they talk honestly about what their financial situation is, what their debts are, and how they would have to be paid back. They have the ability to call the bank, the credit card company, or the mortgage company and say: We believe this client could file bankruptcy, but if you will allow them to reduce their payment to you for the next year and pay down some of these critical debts they owe, we will get back to you in full speed. We will help them achieve that. We will work out a budget with them. Many creditors agree to extend--some even forgive a part of their debts in order to help debtors so they do not have to file bankruptcy, and they learn something in the process. They do not have to go into credit counseling. They can go straight to the lawyers and file bankruptcy in the traditional way. I think some may decide that maybe this is the better alternative for them. If they go in response to one of those late night ads on television, or one of those newspaper ads to the bankruptcy mill, they are not going to get that information in most instances, although some lawyers, I am sure, do give them advice.

Mr. SESSIONS. Yes.

Mr. SESSIONS. I was about to yield the floor, but, please, go ahead.

Mr. SESSIONS. I would just add, one has to list those debts, and if they do not list them they are not discharged and they can still be liable for them. So the debtor has to list his or her debts.

Mr. SESSIONS. Right.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, I now ask for a second reading, and in order to place the bill on the calendar under the provisions of rule 14, I object to my own request.

Mr. SESSIONS. Mr. President, I understand there is a bill at the desk, and I ask for its first reading.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, I ask unanimous consent that when the Senate completes its business today, it adjourn until 9:45 a.m. on Tuesday, March 8. I further ask unanimous consent that following the prayer and pledge, the morning hour be deemed expired, the Journal of proceedings be approved to date, the time for the two leaders be reserved, and the Senate then resume consideration of S. 256, the Bankruptcy Reform Act; provided that at 10:15 the Senate resume consideration of the Schumer amendment as provided under the previous order. I further ask unanimous consent that the Senate recess following the conclusion of the vote on the Schumer amendment until 2:15 p.m.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, tomorrow the Senate will continue its consideration of the bankruptcy bill. Under a previous order, at 10:15, we will resume consideration of the Schumer amendment. There will be 2 hours of debate prior to the 12:15 p.m. vote in relation to the Schumer amendment. That will be the first vote of the day. Immediately following the party luncheons, the Senate will proceed to a vote on the motion to invoke cloture on the bankruptcy reform bill. It is my hope and expectation that cloture will be invoked. Following the vote, we will continue the amending process. There are over 35 amendments still pending, and we will begin working through those amendments tomorrow afternoon. Therefore, additional votes should be expected throughout the afternoon tomorrow.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, if there is no further business to come before the Senate, I ask unanimous consent that the Senate stand in adjournment under the previous order.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, on the unanimous consent request, reserving the right to object, I know the Senator from Wisconsin has worked hard on the bankruptcy bill and has a number of relevant, germane amendments. I know he cares about the bill. I think he would like to see it die, but he wants to make it better. How many amendments did he have?

Mr. SESSIONS. I have great respect for the Senator from Wisconsin, and I will not object if he will use his best judgment and try to avoid as many votes as we can.

Mr. SESSIONS. I will not object.

Mr. SESSIONS. Mr. President, will the Senator from New York yield for a question?

Mr. SESSIONS. Mr. President, we went through a debate last time over the retirement benefits, the savings plans. I thought we capped those at $1 million. My question to the Senator from New York, Mr. President, is, how confident is he under the bankruptcy bill as written that these trusts will be held by bankruptcy judges as not subject to being part of the assets of the debtor's estate? Is this something about which the Senator from New York is concerned? And we are not sure or do we have any law that will give the Senator cause to believe that they would not be captured as part of the estate?

Mr. SESSIONS. I thank the Senator from New York. It is a matter that could be significant, and I am glad we are discussing it.

Mr. SESSIONS. I thank the Senator for that offer and will look forward to taking him up on that.

Mr. SESSIONS. Mr. President, I would just say Senator Durbin is an excellent advocate, but this is the fourth time that this bill in substantially this form has been before this body. It has been marked up in the Judiciary Committee four times. We have had weeks on it each time it has come up for debate here. After several weeks of debate, the last time it came up it passed 83 to 15. The issues that he raises are really covered by the bill. If someone, anyone is disabled and they have a continuing extra medical expense, that would be considered in whether or not they would ever have to pay any of their debts back. If their income is below median income, they would never be required to pay their debts back. All they would have to do is introduce some evidence from their pay stubs or their income tax, what their income is. Certainly we have a right to ask that before we discharge, wipe out, eliminate all debts, as people do when they come into bankruptcy. I really would just say that we have given great consideration to these issues. We could disagree, but these amendments, for the most part, have been up before. I do not believe that most are going to be accepted. But there is every right of my colleague's side to offer them.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, I ask unanimous consent there now be a period of morning business, with Senators permitted to speak for up to 10 minutes each.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, I ask unanimous consent that S. 6 be star printed with the changes that are at the desk.

Mr. SESSIONS

Mr. SESSIONS. Will the Senator yield for a question?

Mr. SESSIONS. I say to the Senator, I think that is a very thoughtful and important change he is proposing. We need to give it the most serious consideration. It would strike me that it does go to the heart of what democracy is. We created a legislative and executive branch elected by the people and empowered to deal with certain of these issues. It should be only for extraordinary things that a court would maintain extended jurisdiction over the elected representatives.