WASHINGTON- While the delay in the passage of a bankruptcy reform bill (H.R. 333) is not welcomed by credit unions, CUNA still has full confidence that lawmakers will be able to work out their differences and pass a bill this congressional session "because the issues involved are too compelling not to act on." Some consumer advocacy groups and several others have stated that the issues involved are exactly why bankruptcy needs to simmer on the back burner. Mica wrote in a Viewpoint in a recent American Banker, "We expect the disagreement over the language of the bill to be resolved fairly quickly when the House returns in September, and expect votes in the House and Senate before the end of the month. "We are bolstered in that belief because of what it will mean if the bankruptcy abuse prevention bill is not passed. Bankruptcy filings, led by nonbusiness, or consumer filings, will continue to balloon as they have for the past 17 years." He pointed out that last year, consumer bankruptcy filings hit a record 1.4 million and last quarter alone there were 390,064 filings. Credit unions experienced a 19.1% increase in filings among their members and losses jumped 16%. "In short, without the bankruptcy bill, nothing will stem the rising number of personal bankruptcies in this country, which could continue to mean mounting losses for credit unions and other financials," Mica explained. "The conference report on bankruptcy reform sent to the Senate and House in late July is consistent with the view that credit unions have always held: Take responsibility for your debts," the CEO wrote. He noted that even though credit unions try to work with their borrowers, the bankruptcy reform bill is still necessary to stem abuse of the current system. Citing a shaky economy and the flare up in corporate scandals, on the other hand, several consumer advocacy, civil rights, and other groups have written a letter to Congress, asking leaders to abandon the current bankruptcy reform legislation unless substantial changes are made. "At a time when the recent wave of corporate scandals has shaken the economy, led to massive layoffs and ravaged pension and 401(k) plans, passage of this conference report would make it harder for families hit by financial misfortune to get back on track," the letter signed by 28 separate groups read. "It would benefit the very profitable credit card industry-which includes some companies now under investigation for helping corporate wrongdoers break the law-at the expense of the modest income families who represent the great majority of those who declare bankruptcy." The August 23 letter was addressed to Senate Majority Leader Thomas Daschle (D-S.D.), Senate Minority Leader Trent Lott (R-Miss.), Speaker of the House Dennis Hastert (R-Ill.) and House Minority Leader Dick Gephardt (D-Mo.). Bankruptcy judges could not waive the means test's rigid requirements under the new law, according to the many groups represented, and allow a debtor to declare bankruptcy even if the person is blameless for his or her financial problems, for instance, because of a medical emergency or terrorist attack. The groups also claim that the bill gives preferential treatment to the wealthy and does nothing to curb abusive lending. Single parents would be in competition with commercial creditors in trying to collect child support, the groups pointed out. Additionally, the timing could not be worse with the economic decline and corporate scandals, the bill's opponents advocated. Included among the signatories of the letter were the Consumer Federation of America; Consumers Union; American Association of University Women; American Federation of State, County and Municipal Employees; NAACP; Ralph Nader; Association of Community Organizations for Reform Now (ACORN); Center for Community Change; the Feminist Majority; International Union, UAW; International Association of Machinists and Aerospace Workers; International Brotherhood of Boilermakers; International Brotherhood of Teamsters; National Organization for Women; Leadership Conference on Civil Rights; Lutheran Office For Governmental Affairs, ELCA; National Consumer Law Center; NOW Legal Defense and Education Fund; National Partnership for Women And Families; National Women's Law Center; Neighborhood Assistance Corporation of America; Public Citizen; OWL, the Voice Of Midlife and Older Women; Religious Action Center of Reform Judaism; Self-Help Credit Union; Transport Workers Union; United Steelworkers of America; and U.S Public Interest Research Group. "This unbalanced conference report would have a particularly destructive effect on working Americans who most need the bankruptcy safety net when misfortune strikes." the groups said. "Our organizations do not oppose legislation targeted at bankruptcy abuse, whether by individuals or corporations, but this conference report would harm families who are responsibly using the bankruptcy system." Credit unions, often allied with the consumer advocacy groups, have been staunch supporters of the bankruptcy reform legislation, particularly the sections regarding means testing, financial education, and voluntary reaffirmations. Proponents were unable to move the bill prior to the August recess because of about a couple dozen Republicans who were unhappy with the clinic violence compromise language and threatened to vote against the bill. [email protected]

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