Jeff Sessions

Mr. SESSIONS

Mr. SESSIONS. Mr. President, I ask unanimous consent that the Senate now proceed to the immediate consideration of S. Res. 20, which was reported by the Judiciary Committee.

Mr. SESSIONS. Mr. President, I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid upon the table, and, finally, that any statements relating to the resolution be printed in the Record.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, we are now proceeding on the bankruptcy bill in the regular order. I want to say a few general remarks about this process of bankruptcy. It is provided for in the U.S. Constitution. It was not written out in the early days of our founding precisely how bankruptcy law should apply, but it did provide for uniform Federal laws of bankruptcy. So our bankruptcy court system is a Federal court system presided over by Federal bankruptcy judges, and all the clerks are Federal civil servants. England developed some procedures to deal with persons who owed debts. Basically, they would turn over everything to the Crown, and sometimes they would get thrown in jail. But their assets would be distributed equally to whoever was claiming money from that person in sort of a realistic-priority way. Over the years, we have provided tremendous protections for the person filing bankruptcy. It does aid them in a lot of different ways. How does it actually work? Let's say you are in debt and telephone calls start coming from the creditors. You promised to pay certain debts and you are not paying them. I do not know how we can complain too much about somebody calling to ask what your intentions are about paying them. They become burdensome on the family after a while, though--very burdensome. Then people threaten lawsuits. Then they file lawsuits. And lawsuits get carried on to judgment. The person is being sued. They are being called. Their lives are really being disrupted because they are unable to pay the debts they owe. So under this circumstance, a person is allowed to file bankruptcy. When bankruptcy is filed, that stops everything. You cannot be harassed by phone calls or other claims for debts because all the creditors--people who are claiming money--have to be sent a notice; and when they get the notice that you filed bankruptcy, all they can do is file a claim at the bankruptcy court. They cannot keep bugging the individual American citizen. They have to leave him or her alone or the bankruptcy judge will slap them with a fine if they do that, because bankruptcy does stay those kinds of activities. It stops the lawsuits. All lawsuits are stopped under the bankruptcy. It is called a stay. A stay is issued, and the legal proceedings stop, so a debtor can take a breather. Basically, they go into court, if it is an individual. And the individual has two choices. He can file, under current law, under chapter 7. He can say: I am exempting my homestead. You can't take that. And certain of my personal property, you can't take that. This is all the money I have otherwise. This is all the assets I have. You take that and divide it up among all those people I can't pay. It may be 5 cents on the dollar, 10 cents on the dollar, 50 cents on the dollar-- usually less than 10 cents on the dollar, or less than 30 cents on the dollar, anyway--when they do that. Then they wipe out those debts. They are forever gone. They signed a contract. They signed agreements. They got sued. And they got judgments against them. It is all wiped out; a person does not have to pay. That goes on in America regularly. And it is a healthy thing for people who are in debt so deep that it is not possible for them to get out. And we affirm that. So over the years bankruptcy law has been amended and improved. We had a Bankruptcy Reform Act in 1978, the last real reform of bankruptcy law in the United States. At that time, there were fewer than 300,000--I think 270,000--bankruptcies a year. Since 1978, bankruptcies have increased at a steady pace. Now the filings exceed--well, in 1998 or 1999 it was 1.4 million. It dropped a little last year, but it is projected to go up again significantly this year. So we are talking about nearly 1.5 million filings this year. You may say: That is not too many. We have 250, 260 million people in America. A lot of them are children, and a lot of them are in jail, and so on. You take those numbers down--who is really eligible--and that is getting to be a significant number. We do not think about the fact that it is happening every year. When you add up 5 years, that is 5, 6, 7 million people who have filed bankruptcy in a period of 5 years. That becomes a significant portion of the American population. If they all qualify, then I do not have a problem with it. But what has occurred in recent years is the proliferation--and I think virtually every city in America has it--of some sort of promotional bankruptcy mill. For years, lawyers could not advertise. Some people can still remember that day. But now they can. So you turn on the TV at 11:30 at night or Saturday afternoon, or pick up the dime store, corner market shopping guide, and there are these advertisements: Wipe out your debts. Don't pay anybody you owe. Call old Joe, your friendly lawyer. He will tell you how to do the deal. So people call. They are in debt and having trouble managing their money. Some of them are in debt because they could not help it--maybe there were serious injuries, maybe medical causes, maybe bad business deals, bad judgment. Some of them just cannot manage their money. Some of them have drug problems. Some have alcohol problems. Some are just unable to manage and just will not stop spending. So they go to the lawyer. And this is fundamentally what the lawyer tells them. He says: Now, when you get your paycheck, you save that money, and you bring it straight to me--all that money--and maybe your second check. As soon as I have $1,500 or $1,000, I will file your bankruptcy. Don't pay any of your other debts. Don't pay any more debts. He will say: Use your credit card. Run up everything you want to on your credit card. Live off your credit card. Come down here, and we will file bankruptcy as soon as you get your money together to pay me. That is what has happened. That is the kind of message. They are told this is the right thing to do. These people in debt are in trouble. They are hurting. They are tired of people calling them. It is embarrassing their children and their families. They want it to end. This seems to be the best way out, so they do so. The numbers through this promotional activity have been going through the roof. A lot of people are troubled by it. People who are regularly involved in bankruptcy and see what is happening are rightly concerned that quite a number of people are filing who don't qualify, who really don't meet our traditional standards of someone who cannot pay all or a part of their debts. The discussion went on for a number of years about how to deal with it. A Federal bankruptcy commission dealt with it, others have dealt with it, lawyers groups, experts, and so forth. We have had, in the Senate and in the House of Representatives, hearings that have gone on for over 4 years now. As a result of those hearings and refinements, bankruptcy bills have come forward. One passed this body 2 years ago with about 88 votes. The last one passed with 70 votes. It has passed the House every year with a veto-proof margin, strong bipartisan Republican and Democratic support. We are dealing with this incredible surge in bankruptcies and trying to do it in a way that allows everybody who previously legitimately wanted to file bankruptcy, that they could file bankruptcy, by trying to identify those who don't qualify and should be contained in their filing. So this is a fundamental change in bankruptcy. We adopted what has come to be called a means test. It says if you have the means to pay some or all of your debt, we ought to set up a plan for you to do so. In law today, we have two sections. I mentioned chapter 7, where you go in and wipe out all your debts. Basically, the debtor can choose that. He can choose in which chapter he wants to go. There is a another chapter called chapter 13. In that case, if you file in chapter 13, all of the lawsuits stop; all of the phone calls stop. The court sits down with the debtor and works out a payment arrangement. They prioritize the debts to be paid. Some of them are secured; some are not secured. The right priorities are all set. Then that person basically takes his paycheck in every month. He or she gives it to the court. He or she keeps enough money to live on. They give the money to the court, and they pay out to the debtors every dime. Under chapter 13, many people work through their debts, people with low incomes and higher incomes. They pay off all their debts. In my State of Alabama, I am proud to say that in the southern district of Alabama, where I practiced, 50 percent of the people who filed filed under chapter 13. They wanted to pay their debts back. In fact, there are some good incentives to filing under chapter 13, a lot of good things for a creditor that I won't go into here. They are doing it in Birmingham. In the northern district of Alabama, I understand 60 percent file there. I also understand there are some districts in New York and other places where less than 10 percent, maybe even less than 5 percent use chapter 13. Just routinely, the debtors come in and wipe out all their debts. How should we deal with that? After much thought, it was decided that we ought to focus this legislation on a relatively small number of people filing for bankruptcy who have income sufficient to pay back some or all of their debts. We thought that was a good approach, and it has been widely received and voted on by most of the Members of this body. Basically, we drew a bright line. We said: Based on the size of your family and the income of your family, if you make below median income, which in America for a family of four is $50,000, you will be able to file bankruptcy any way you want, 7 or 13, just like today. There is no change for them in that regard. We believe probably 70, 80, 85 percent of the people who file bankruptcy are below median income, but for that 20, that 10, that 15 percent who make above median income--some make $70, $80, $90, $200,000, $250,000, some are doctors, some are lawyers, some have professional incomes, and so forth--to them we say: We are going to look at your income. We are going to look at your earning possibilities. If you are able to pay back at least 25 percent of that debt over 3 to 5 years, we are going to put you in chapter 13, as half the people in my State do anyway, and we are going to ask you to try to pay those debts over that period of time. You will be monitored by the court. By the way, this bill says, in a historic step, child support and alimony will be moved up to the top, to the first item that will be paid. For 5 years, you will be under the supervision financially of a Federal bankruptcy judge, and you will pay your alimony. You will pay your child support on time. As a matter of fact, the judge will order a repayment of past due alimony and child support under court supervision. I thought that ought to greatly please most people in America. It deals only with the abusive cases. It confronts the problem we are seeing in bankruptcy. Maybe somewhat fewer people will file if they don't think they can get away with ripping off the average taxpayer, citizen. They say: These credit card companies, these are evil companies. They go out and actually lend people money. They are not citizens, they are corporations. They are evil. They are always trying to cheat you, and we don't need to pay them. They care about this bill. Therefore, the bill is no good. That is silly. That is not right. The first principle of economics, which a lot of people in this body apparently don't know or forgot, is there is no such thing as a free lunch. Somebody is going to pay this debt if you don't pay it. Somebody is going to eat that loss. If it is a bank or a credit card company, they have computers. They figure it out. They start seeing greater losses. What do they do? They have to raise the interest rate on all of us. Experts have studied this; economists have studied it. They have concluded that the average debt-paying American citizen who pays his bills is annually imposed a bankruptcy cost of $450. That is about $40 a month they are having to pay every month because other people in this country don't pay their debts. They say: Well, maybe it was because they had a high medical bill. Therefore, we don't want them to pay their hospital bill. Heaven knows, they should not pay the doctor and the hospital who treated them and helped them get well. This bill is oppressive because it would suggest that people ought to pay their hospital bill if they can. Basically, that is what the argument is. If you are making below median income, lower than median income in America, then you can file, just as you always did, and you can wipe out your bills to the hospital, to any other people that you owe, including your bookie, I guess--wipe that all out. But if you are making above median income, and the judge finds you are able, only if he finds you are able to pay 25 percent of what you owe to the hospital over a period of 3 to 5 years, he can order a payment plan that requires you to pay that 25 percent. And he will allow you every month to have sufficient funds to live on, in the court's judgment. Well, I don't think this is oppressive. This is a reform. This is a piece of legislation that deals with a fundamental question. I was asked by a young reporter yesterday afternoon, while doing a piece for one of the TV shows, ``Do you think this is a moral question?'' I said, ``I absolutely think it is a moral question.'' What we do here when we establish law, as our Founding Fathers always knew, and I think we are forgetting, is that we are setting public policy that guides and shapes American values. What we say you must do and what we say you don't have to do shapes opinions and values. So I think it is a bad suggestion, an unhealthy value to promote, that a person who can pay a substantial portion of his or her debt can just walk away from it--not pay the hospital, for example. I have visited 20 hospitals in my home State this year. They have a bad debt section that they write off regularly. They are not expecting any great, huge surge of benefits from this bill. But why should you not pay the hospital if you can pay a portion of it? What is bad about them? Is that not a good institution that ought to be valued? Who else is going to pay for the hospital if the person who is using it doesn't pay? Well, they say: Maybe you didn't have health care insurance. If you make above the median income, you ought to have health care insurance. Maybe somebody who is struggling to get by every day, who would be below median income, is not able to take out health care insurance. If you are making above median income, you need to have some health insurance. Why should a person who is not responsible, making above median income, who didn't have health insurance--why should they be able to stiff the hospital when the ``honest Joe'' and his family, who are making below median income, takes out his health insurance every month and pays it and makes sure his hospital is paid if he and his family go there? I think it is a moral question. I think we need to set a public policy that says, yes, we validate the great privilege of American law--and that has really been increased in recent years--that allows a person to wipe out their debts and start over again. We validate that. We do not object to that. We have tried to create a bill that does just that. But we also say that if you have a higher than average income and you can pay some of those debts, we want to set up a system where you pay them. I believe this is a fair approach, a balanced approach, a generous approach. And the legislation has quite a number of factors in it that cut down on fraud and abuse. We raise up the protections for women and children, as I said. We have tightened up the language on the bill to reaffirm a debt from a person who maybe wants to keep his car, or a washing machine, and they can come in and negotiate with them. We can put extra protections in before they can reaffirm a debt after bankruptcy and want to keep something, so that the creditors are protected. We put in another amendment that people have asked for. I think, in general, I will challenge people to tell me what it is about this bill that is precisely unfair to anybody. If we want to talk about the means test, we will talk about that. That is the real change, the only thing that really happens here of significance. We have made a number of other improvements to reduce abuses and problems with the bill and the processing of cases in bankruptcy, which I think everybody would support. We have had a lot of amendments. If anybody listens carefully, they will find they are not focusing primarily on the improvement of bankruptcy law and the administration of assets in a bankruptcy court. They are focused on rules for credit cards or bank lending rules, all of which are not in the jurisdiction of the Judiciary Committee. They are in the jurisdiction of the Banking Committee. Periodically, that kind of legislation comes forward. We will have amendments that touch on issues outside the bill, but, for the most part, we are right on. We had a vote on homestead. The homestead law in this bill eliminated quite a number of abuses. The homestead law basically said that States could set their own standard for how much you could protect in your home. If you file bankruptcy, each State has a homestead limit--some as low as $5,000; some are unlimited. So in certain States you can buy a home and put $2 million into your home, and when you file bankruptcy, you get to keep your home. I never thought that was a good idea. I voted to eliminate that. Some State laws have unlimited assets, and some Senators wanted to keep that. They fought us and fought us and fought us. Frankly, after being a cosponsor with Senator Kohl on a limit of $100,000, which we passed, we went along with a compromise that we reached that restricted homesteads, but not as much as I would like. We just voted this morning to go back to the $100,000 limit. The vote was here. I voted, as I agreed to last time, for the compromise. But I certainly am happy with that public policy. I hope the Senators who lost on that vote will see just how strong this body cares about it and will realize they are not really benefiting, and the citizens of their States are not benefiting by allowing a millionaire to keep a million dollars in his home and not pay the gas station or local hospital or bank. So those are the kinds of things that have occurred. The complaints here are either about issues outside of the reform of bankruptcy court law or it is a matter in which we have it go. I think we have done well. I salute Senator Hatch, the chairman of the Judiciary Committee, for his steadfast leadership, and Senator Grassley, who formerly chaired the Courts and Administration Subcommittee, which I am honored now to chair, when this bill came out of his subcommittee. He battled steadfastly to bring this bill up for a vote. I believe we will be able to do that today. I am quite confident we will have an overwhelming vote for one of the most historic reforms that we can imagine. It will improve the operation of bankruptcy courts, I am confident. If we made any errors in it, I am willing to listen to that and make further amendments, if needed. I thank the Chair and yield the floor.

Mr. SESSIONS. Reserving the right to object, I want to be sure that the modified language Senator Feingold cared about and that he wanted in there--we have agreed on that language?

Mr. SESSIONS. Mr. President, I offer my amendment No. 59, as modified.

Mr. SESSIONS. Mr. President, Senator Feingold and I have worked on this for some time. He cares very deeply about this. I did, too, as a matter of legal principle and what I thought was correct. I think we have language with which both of us can live. The perfect being the enemy of the good, we might as well just take the good and bring this matter to a conclusion. I yield the floor.

Mr. SESSIONS. I believe the Senator from Delaware has a request.

Mr. SESSIONS. I was going to make a change in the order according to the agreement that has been reached.

Mr. SESSIONS. Mr. President, on the Leahy amendment, I will make a few comments. It includes the spouse's income in a bankruptcy.

Mr. SESSIONS

Mr. SESSIONS. Mr. President, I will take one moment to express my appreciation to the people who worked extremely hard to make this bankruptcy bill a success. The 83-15 vote is a strong testament to the wisdom and the balance that this bill maintains. Some said it is not balanced and is unfair but when we had the final full debate and people voted, there was an overwhelming vote. As the Presiding Officer knows, seldom on legislation of this kind does that large a vote result. I am pleased with that. I am honored to have worked with Senator Hatch and Senator Grassley in making this a reality. I think it is appropriate that we take just a moment to express appreciation to some people who gave extraordinary effort to make this successful conclusion a reality. First, I note that in my office Ed Haden, who is with me today, is one of the finest legal minds in this Senate, an exceedingly hard worker, a man of integrity and ability who dedicated himself to reaching the just result of today. I could not have been successful without Ed's leadership and assistance. Also, Brad Harris on our staff, and Sean Costello, who used to be there; Lloyd Peeples, on our staff previously, now in private practice; Kristi Lee, who preceded Ed, is now a U.S. magistrate judge. They all worked in previous years on this legislation. I know they are happy to see it come to a conclusion. I am, too. I must note that Makan Delrahim on Senator Hatch's staff has provided tremendous leadership, as did Rene Augustine; Senator Grassley's Rita Lari Jochum and Kolan Davis provided tremendous effort. Senator Grassley was the original sponsor of this legislation. I must also thank Dave Hoppe and John Mashburn of Senator Lott's office, who also worked on it significantly. Mr. President, one more thing about this. Senator Biden has been a strong leader in this legislation, and he is here to speak. I have thought, from day one, there was a good concept of this bill. I have expressed my overall view of what it is about, what it attempted to do, and why I thought it was important. I have been somewhat disappointed to see certain people in consumer groups I admire take positions that I thought were unconnected to the reality of this legislation. I am glad that after full and open hearings, now three different times have we voted here, all those issues were aired and people had the chance to have their say. I am very confident that it is good legislation that will improve the administration of justice in the Federal bankruptcy courts of America.

Mr. SESSIONS

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

Mr. SESSIONS

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

Mr. SESSIONS

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

Mr. SESSIONS. I understand that pending is the Carnahan amendment. I ask unanimous consent that following the concluding debate, the amendment be agreed to and the motion to reconsider be laid upon the table.

Mr. SESSIONS. Therefore, the next vote will occur in relation to the Wyden-Smith amendment regarding the California utilities matter.

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

Mr. SESSIONS. Mr. President, I yield back the time on the Carnahan amendment.

Mr. SESSIONS. Mr. President, I suggest the absence of a quorum, and I ask unanimous consent that the time not be counted against either side.

Mr. SESSIONS. Mr. President, I say to the Senator from Alaska that we are waiting on a 5-minute debate before we vote, and the debaters have not arrived. That could delay our vote. Will the Senator speak long?

Mr. SESSIONS. Reserving the right to object, is that a modification of the earlier amendment?

Mr. SESSIONS. How would it be, again?

Mr. SESSIONS

Mr. SESSIONS. I think Senator Kennedy is here. He would wish to speak on his amendment. I yield the floor. Mr. KENNEDY addressed the Chair.

Mr. SESSIONS. I see Senator Feinstein is here. I will be glad to conclude. Fundamentally, this bill is not unfair. I would be willing to look at any particular part of it. It has been pounded on for 4 years now. Every jot and tittle of it has been looked at. We have tried to make sure it is fair in every way. But we do say you ought to seek credit counseling. Maybe there is an alternative to bankruptcy. We say, if you make above the median income, you can pay back some of your debts. But if your debts are so big, even if you make above median income, you do not have to pay them; you can wipe them out, and that is OK. And remember the great protection of bankruptcy for people in debt is they cannot be subject to harassing phone calls and letters, demands for payment and lawsuits. When you file bankruptcy, all lawsuits and demands for payment have to stop, whether you are in chapter 7 or chapter 13. A family can put their lives in order under the bankruptcy laws now and in this new bill in the same way that will allow them to have some stability in their lives, to bring a conclusion to their credit difficulties, to not be fighting lawsuits and credit demands that disrupt their lives. I thank the Chair and yield the floor. Mrs. FEINSTEIN addressed the Chair.

Mr. SESSIONS. Mr. President, I move to table the pending amendment and ask for the yeas and nays.

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