U.S. Chamber Tells Congress To Curb Bankruptcy Abuses

WASHINGTON, D.C.—The United States Chamber of Commerce urged swift congressional action to prevent rampant bankruptcy abuses by wealthy debtors that hurt U.S. consumers, during testimony before the House Judiciary Committee.

"U.S. businesses lose billions of dollars every year from abuse of the bankruptcy system," said Bruce Josten, Chamber executive vice president. "The high cost from these abuses is passed onto consumers and businesses, especially small businesses and retailers that operate with slim profit margins."

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2001 (H.R. 333) is identical to legislation that Congress overwhelmingly passed in December but President Clinton vetoed. The bill closes numerous loopholes that encourage wealthy debtors to shield assets to escape their bills and institutes a means test for establishing timely repayment plans.

"The needs-based formula relies upon objective, easy-to-apply criteria, giving debtors the ability to quickly and easily determine their eligibility for Chapter 7," said Josten. "If the means test shows that they are able to repay a significant portion of their debt, then they must file under Chapter 13.

"However, even in this instance, debtors have unrestricted access to bankruptcy protections such as the stay from creditors and the opportunity to receive a fresh start," Josten noted. Bankruptcy reform is critical because the number of bankruptcies has skyrocketed to nearly 1.4 million in 1999, from 348,000 in 1984.

The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region.

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