S. 1301 would undermine the effective
and efficient operation of the existing consumer bankruptcy system. The bill
would raise the cost of bankruptcy for debtors and require that taxpayers fund
an expanded bureaucracy to collect small amounts of money from families facing
overwhelming financial problems. If it is passed, a significant American judicial
system would be undermined in order to provide a marginal enhancement to the
already record-breaking profits of banks and other lenders.
Raising the costs and burdens of
filing bankruptcy ultimately hurts the poorest debtors -- those that can't afford
to pay a lawyer to navigate complicated new legal hurdles. Just as in the tax
system, the high-income individuals who some believe commit abuses will be able
to pay legal counsel for extensive additional advice. More narrowly targeted
provisions should be drafted to get at abuses without undermining families seeking
to avoid financial catastrophe.
S. 1301 was voted out of the Judiciary
Committee on May 21, 1998 in haste. The Committee added numerous amendments
which had never been addressed at a hearing. Several of these amendments would
cause the bankruptcy system to grind to a virtual halt. Further study is needed
before such radical new provisions are adopted in a large-scale judicial system
affecting millions of American families.
and NCLC