House combines bankruptcy bill with protections for farmers
House Republicans decided Wednesday to try to force Senate Democrats to accept their version of a bankruptcy bill by combining that legislation with a bipartisan bill offering bankruptcy help for farmers.
“While the other body is often described as the ’saucer in which the coffee cools,’ (the GOP bankruptcy bill) has become nearly frozen in that proverbial senatorial saucer,” House Judiciary Chairman James Sensenbrenner said. “Wednesday, I seek to reignite congressional consideration of bankruptcy reform.”
The House voted 265-99 to combine the farm bankruptcy bill with the GOP bankruptcy legislation, and voted down Democratic legislation to pass the farm bankruptcy legislation as a stand-alone bill.
The GOP bankruptcy legislation would make it harder for Americans to erase their debts. The House bill failed previously because Senate Democrats would not consider the bill without a provision to ban abortion protesters from using bankruptcy to avoid paying court fines for blocking clinics if they knowingly violated the law.
A House-Senate committee previously agreed to include that proviso, but House members refused to accept it. Now, however, House Republicans are threatening the usually routine extension of bankruptcy help for farmers if Democrats don’t accept the bankruptcy legislation without the abortion provision.
“Sometimes giving the other body a choice speeds things along, and that’s what this bill purports to do,” Sensenbrenner, R-Wis., said Tuesday.
House and Senate Democrats say combining the overall bankruptcy legislation with the help for farmers won’t work. “This is an effort to find someone to blame for the failure to pass the bankruptcy legislation,” said Rep. Melvin Watt, D-N.C.
“We’re doing this little exercise to expedite going to conference with the Senate, and I don’t think it’s going to work,” said Rep. James McGovern, D-Mass.
Senate Democratic Leader Tom Daschle of South Dakota, who supports both the farm bankruptcy bill and the bankruptcy legislation with the Democratic abortion provision, would not commit to the House GOP bill Tuesday. He has enough votes to filibuster the bill.
Other senators, including Senate Judiciary Chairman Orrin Hatch, R-Utah, said they didn’t think the House tactic would work, even though many senators want both bills to pass.
Banking and credit card companies have been pushing the legislation – meant to force more Americans to pay back their debts to businesses – but it has stalled each year in Congress. Many House Democrats oppose the bill because they say it would hurt working people. House Republicans opposed the compromise because it included the Senate abortion provision.
Under current law, Chapter 7 of the U.S. Bankruptcy Code allows people to escape paying any of their credit-card and other debts. Filings under Chapter 13 force people to repay debts over time in accordance with a court-approved plan.
A bankruptcy judge or a private attorney appointed by the Justice Department usually decides whether someone qualifies for dissolution of debts or should be forced to repay under a reorganization plan.
The bankruptcy legislation would have applied a new standard in which, if a debtor had sufficient income to repay at least 25 percent of the debt over five years or earned at least the median income for his state, he or she would be forced into a Chapter 13 repayment plan.
Democrats condemned Republicans for trying to use the farm bill as leverage.
“It’s outrageous we’re going to hold family farmers hostage in order to move controversial legislation,” McGovern said.
The farm bankruptcy law, also known as Chapter 12 of the U.S. Bankruptcy Code, would become permanent under the new House legislation.
Chapter 12, the only temporary chapter in the federal bankruptcy code, allows farmers to reorganize their debts without having to sell their farms and equipment. It was originally enacted in 1986, but has been extended every time it has expired.
Under other bankruptcy laws, debtors can be forced to sell off assets before they can reorganize their debts. But if farmers have to liquidate their equipment, they have no way to earn a living and pull out of debt, sponsors said.
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