Bankruptcy Reform
Signed into law on April 20, 2005
NAFCU is working for changes in the bankruptcy system that would strike an equitable balance between the interests of debtors and lenders in connection with debt relief. NAFCU supports meaningful reform of the bankruptcy code that preserves voluntary reaffirmation authority for credit union members; provides a "means" test so those debtors who can repay some part of their debt do so; and establishes mandatory debtor education programs. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S. 256) introduced by Sen. Chuck Grassley would accomplish all three of these goals. Rep. James Sensenbrenner (R-WI), the Chairman of the House Judiciary Committee, introduced the corresponding House bill (H.R. 685), which also contains the three NAFCU-backed provisions.
On March 10th, the Senate passed S. 256 by a vote of 75-24, after a lengthy floor debate that included dozens of proposed amendments. Sen. Chuck Schumer (D-NY) again offered his amendment that would place restrictions on discharging certain debt incurred as a result of violent protest activity. The amendment, which caused House Republicans to voted down the Bankruptcy Conference Agreement in 2002, was voted down by the Senate. The amendment was controversial with conservatives and its inclusion would have threatened the prospects for the bill being signed into law.
On March 16th, the House Judiciary Committee took up the version of the bill already passed by the Senate. Although a number of Democratic amendments were offered, none were added to the bill and the committee voted to forward the legislation to the full House by a 22-13 vote. By adopting the Senate version of the bill, without amendment, House leaders avoided the necessity of House-Senate conference report, which would have likely delayed the bill by giving opponents another avenue for placing procedural hurdles before the legislation. The House voted to approve the legislation on April 14th by a vote of 302-126.
On April 20th, President Bush signed the bill into law. The law went into effect on October 20, 2005.
Related documents:
Related Files
NAFCU Testimony to the Senate Banking Committee (Adobe PDF File)
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