Consumer Opposition to H.R. 833 - "Consumer" Bankruptcy Reform

April 23, 1999

RE: Consumer Opposition to H.R. 833 -- "Consumer" Bankruptcy Reform

Dear Congressman:

Sadly, we are writing, once again, on behalf of NCLC's low-income clients, to point out that there are serious flaws in bankruptcy legislation pending before the House of Representatives (H.R. 833). The bill represents a major departure from prior Congressional efforts to achieve bipartisan, balanced legislation on an issue affecting millions of low and moderate income American families.

It shocks us that some members of Congress have represented this year's bankruptcy legislation to be "consumer-friendly". It most certainly is not. Independent research sponsored by the American Bankruptcy Institute and the Executive Office of the United States Trustees (charged with government oversight of the bankruptcy system) establishes that the 97% of debtors using the bankruptcy system cannot afford to repay their debts and need financial relief.

Large numbers of your financially distressed constituents would be hurt by this bill at the expense of large and profitable credit card lending businesses. Potential savings to some consumers which might result if bankruptcy were less available to other American families are ephemeral or nil. On the other hand, unexpected financial problems can strike any American family at any time. The major result of this bill would be evisceration of an important safety valve for those in need when they face serious hardship, a second chance that has been guaranteed by law since Biblical times.

If H.R. 833 becomes law:

We are the ones that will have to explain to a single parent, after a divorce leading to unmanageable debts and bankruptcy, that new opportunities for creditors to pursue litigation in bankruptcy will increase the standard cost of filing by more than $1,000.

We are the ones who will have to educate consumers about abusive credit card marketing practices in the face of Congressional refusal to mandate that credit card lenders provide adequate information for consumers to understand credit terms.