Congress May Not Pass Bankruptcy Bill, Again

Sharp partisan differences over abortion have doomed prospects that the lame-duck Congress will pass a bill making it harder for Americans to shed their debts.

In a marathon session until early Friday, House Republicans rejected a House-Senate compromise on bankruptcy and instead sent the Democratic-controlled Senate a stripped-down bankruptcy bill without a controversial abortion provision that was crafted only minutes before the House left for the year.

The Senate, still grappling with homeland security legislation and poised to leave for the year, will not pass the new legislation, said Senate Majority Leader Tom Daschle, D-S.D. The only bill that had a chance was the "compromise that was the product of virtually years of work and months of intense work over the course of the last five or six months," he said.

"House Republicans killed bankruptcy for this year," Daschle said. "It's as simple as that."

In the House, Republicans revolted against language that would have prohibited anti-abortion protesters from seeking shelter through bankruptcy laws to avoid paying court-imposed fines.

House Democrats have for the most part resisted the legislation as unfair to ordinary citizens, and protested early Friday that the newest version was only an attempt to please the banking and credit card industries which aggressively pushed the bill.

GOP leaders originally tried to get approval of a House-Senate compromise agreement that the White House, the Senate and several House leaders already had verbally agreed to, but conservative anti-abortion Republicans joined with House Democrats to block consideration of the bill.

Banking and credit card companies have been pushing the legislation since 1997, but it has stalled each year in Congress. The House-Senate compromise reached this year represented the closest the measure has ever come to passage.

Democrats balked at the bill because they said it would hurt poor working people. A small group of House Republicans killed the compromise by joining with those Democrats because they feared it would curtail abortion protesting.

Senate Democrats had inserted language into the compromise that would ban abortion protesters from using bankruptcy to avoid paying court fines for blocking clinics if they knowingly violated the law.

The anti-abortion Republicans blocked the bill in July because of that provision. They did so again Thursday, saying the law would be used against even legal abortion protests.

"We're condemning peaceful innocent people who have a conscience to protest just to try to save the life of an unborn to a life of financial ruin," said Rep. Joseph Pitts, R-Pa.

Together, the anti-abortion Republicans and House Democrats defeated an attempt to consider the compromise by a vote of 243-172. Eighty-seven Republicans and 155 Democrats voted against the measure.

But about seven hours later, House Republicans brought up a new bill. The only changes were the removal of some new bankruptcy judgeships and the deletion of the "odious language that caused such a bitter debate earlier in the day," said Rep. George Gekas, R-Pa., one of the original sponsors of the legislation.

The House by a vote of 244-116 passed the new bill, with no Republicans voting against it.

Democrats accused Republicans of trying to shift the blame to the Democratic-controlled Senate if bankruptcy legislation fails in Congress by passing a bill they know the Senate won't approve.

Rep. Barney Frank, D-Mass., called the revised measure a GOP move "to get back in the graces of some of their financial supporters, who they had to alienate."

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 legislation that died Thursday 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.

Personal bankruptcy accounted for about 97 percent of the 1.5 million bankruptcy filings between March 2001 and March 2002.

The bill number is H.R. 333.