Consumer Payment Card News

No Party

When it comes to bankruptcy reform, the Republicans have become the “No Party,” turning down every amendment offered by Democrats. The eight-year old legislation is sailing through Congress and may be on the President’s desk before the end of this month, likely taking effect by October. The U.S. Senate may take a final vote today or tomorrow on the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.” Yesterday, the Senate voted 53-46 to kill Sen. Charles Schumer’s amendment that makes bankruptcy difficult for abortion protesters who seek to discharge their fines. The Schumer amendment has historically tied up the legislation. The Senate also voted yesterday by 69-31 to limit debate on the legislation to 30 hours. It is expected that a flurry of amendments will be introduced today during the debate period by Democrats.
Last week, the U.S. Senate rejected five amendments by Democrats. Senator Charles Schumer was defeated in an amendment to limit the use of asset protection trusts to assets up to $125,000. Senator Mark Dayton’s amendment to limit credit card interest rates to 30% was voted down. The Senate also rejected an amendment by Senator John Rockefeller to permit employees of Chapter 11 companies to collect up to $15,000 in back pay. Senator Richard Durbin’s proposal to reign in abusive practices of executives who cash out before their company files for bankruptcy protection was also defeated. Senator Bill Nelson amendment to exempt debtors from the “means test” if their problem was caused by identity theft was voted down too.

The likely passage of legislation comes at a time when bankruptcies are declining. According to the Administrative Office of the U.S. Courts, personal bankruptcy filings dropped 4.3% last year to 1.56 million and declined 5.5% in the fourth quarter. The January data show that consumer bankruptcy filings declined to their lowest level in four years, falling 13% compared to January 2004.

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|_2. PERSONAL BANKRUPTCY FILINGS |
|_. 2004:| 1,563,145 |
|_. 2003:| 1,625,208 |
|_. 2002:| 1,539,111 |
|_. 2001:| 1,452,030 |
|_. 2000:| 1,217,972 |
|_2. Source: Administrative Office of the U.S. Courts |

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