WASHINGTON - A Senate bankruptcy reform act, S. 625, that largely has the support of the credit union lobby, passed in a landslide 83-14-1 vote February 2 as lawmakers rallied to a once-harried bill that-through the amendment process and some high-powered advocacy-ultimately presented itself in a form that most could support.
The bill, which now must be reconciled in conference with a more CU-friendly House version, H.R. 833, incorporates most of what the CU trade associations have insisted on-"means testing" and mandatory financial education for filers-but is deficient in an aspect of the reaffirmation provision (voluntary repayment of debt) that concerns judicial review of agreements when filers have no lawyers.
The House version of the bill maintains the CU exemption from mandatory judicial review, but its Senate counterpart dispenses with this check only when reaffirmation agreements are drafted by lawyers and there is no unsecured debt involved. It did, however, also eliminate language on coercive communication with members over reaffirmation that CU lobbyists supported vigorously.
CU lobbyists, however, are optimistic that further concessions along reaffirmation lines can be obtained when the bill goes to conference-an event, however, that undoubtedly also will elicit debate over other sensitive provisions of the bill, including its minimum wage and abortion clinic violence amendments.
"It's a significant vote," reacted CUNA Senior Legislative Counsel Gary Kohn, "combined with a significant vote from the House side when they passed it. I think this bodes well for the conference committee where we're hopeful that we'll be able to get a bill out that can be signed into law by the president."
Kohn thought the bill could be sent to the president before Congress recesses for its spring break.
"It was a very strong message by the Senate," Kohn continued. "It was a higher vote than many originally anticipated, and I think it shows that, even though the Senate often works in circuitous and lengthy ways, it got the job done...."
"Our interest as we go into conference," Kohn added, "is to maintain a strong means test provision; to hold onto the educational provisions....and probably most importantly...to assure that credit union members retain their ability to voluntarily reaffirm their debt. We think that between the House version and the Senate version we seem to be in pretty good shape on that."
Amplifying Kohn's point, CUNA Vice President for Legislative Affairs John McKechnie, said, "The people on the House side, who are going to be in the center of the conference, are well aware of how important the House language is to us. My sense...is that they're going to be very protective of that language."
Amendment action on February 2, however, managed to tack onto the bill a controversial provision barring discharge of debt in bankruptcy proceedings when claims are incurred through convictions for abortion clinic violence.
Other amendments also provided for an 800 number at credit card companies for customers to call to find out the details of their balance and payback specifics, and one that gives pawnbrokers title to pawned goods left after redemption periods.
"Today's vote takes us one step closer toward ending the current abuse of our bankruptcy system," Sen. Jeff Sessions (R-Ala.) said upon passage. "Credit unions have been hit hard by these abuses. When one member declares bankruptcy it puts an additional burden on all the other members. It's only fair that people that can pay some or all of their debts be required to do so." -
gmcorrigan@cutimes.com
