U.S. Chamber Calls for Bankruptcy Reform

WASHINGTON, D.C.—The United States Chamber of Commerce urged Congress to take up new bankruptcy reform legislation that would require wealthy debtors to repay their debts.

"We need to inject a sense of personal responsibility into the nation's bankruptcy system for the health of the U.S. economy," said Thomas Donohue, Chamber president and CEO. "This legislation protects Americans who find themselves in the difficult position of having to file for bankruptcy, while at the same time protecting businesses from having to foot the bill for filing abuses."

The Bankruptcy Reform Act of 2001, introduced in the House by Rep. George Gekas (R-PA-17) and in the Senate by Sen. Charles Grassley (R-IA), is identical to legislation that Congress overwhelmingly passed in December but President Clinton vetoed. The legislation would end the present practice of wealthy debtors shielding assets to escape their bills, while preserving access to bankruptcy for legitimate filers.

"This legislation is good for the American consumer. Every American in need can still count on bankruptcy relief, but those with the highest incomes will be required to repay what they can afford," said Donohue. "Without congressional action, losses from bankruptcy abuses will continue to break the banks, and backs, of the nation's small businesses and retailers, which work with slim profit margins and an even smaller margin for error."

Bankruptcy reform is critical because the number of bankruptcies has skyrocketed to more than 1.4 million in 1999, from 348,000 in 1984, as businesses continue to swallow nearly $40 billion in bankruptcy losses each year.

The legislation would require people with the ability to pay to file under "Chapter 13," where courts establish timely repayment plans, instead of "Chapter 7," which erases all debts. Current law encourages debtors to take advantage of numerous loopholes and avoid paying their debts.

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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