Legislative Update

Journal Issue

Jun 2002

Column Name

Journal HTML Content

As this issue goes to press, House and Senate conferees on the bankruptcy bill
(H.R. 333) are scheduled to meet to attempt to resolve the final major point
of contention—whether to include a Senate-passed provision that makes certain debts
arising from conduct found to limit access to abortion clinics non-dischargeable. There
is no such provision in the House bill. Agreement on a compromise is required for
the conference report to proceed. Should the issue be resolved, the conference report
would have to be re-passed in both chambers and enacted by President Bush. The
administration has signaled that the president would sign the bill. The principals in
the abortion debate are Sen. Charles Schumer (D-N.Y.) and Rep. Henry Hyde
(R-Ill.). Excerpts from a public exchange between them, and other commentary on
the bill, are reprinted below.

<h3>A Quiet Attack on Women</h3>

by Prof. Elizabeth Warren, Harvard Law School 
New York Times Op Ed, May 20, 2002

Women's rights are suddenly at the center of the Congressional debate over the nation's
bankruptcy laws—but only in the most cynical and opportunistic way. After five years
of enormous contributions and lobbying from the financial industry, Congress now stands
ready to dismantle protection for families under the nation's Bankruptcy Code.

Banking and credit lobbyists have been trying to change the bankruptcy laws for
years. The current bill was stuck in conference between the Senate and House until
Senator Joseph Biden of Delaware—where many banks and credit-card issuers are
incorporated&3151;agreed to vote with Republicans on almost all the issues that were holding
up the bill. But Mr. Biden also told his Democratic colleagues that he would
support an amendment to stop abortion protesters from using bankruptcy protection to avoid
damages they might otherwise have to pay for violating federal law in violent clinic
protests.

Regardless of one's views of the amendment, the bill itself is unconscionable. If
it becomes law, the economic effects on more than 1.2 million women each year will
be devastating.

In the past 20 years, bankruptcy filings for female-headed households have
increased at more than double the rate of bankruptcies for comparable households with
an adult male present. (Families with children are more economically vulnerable than
those without, and since women keep the children more often in the case of divorce,
more women are filing for bankruptcy.) Women—married, divorced, widowed and single—now
outnumber men seeking bankruptcy protection by more than 300,000 a year. The more
than one million women filing for bankruptcy protection this year will bring nearly two
million children into bankruptcy court with them.

Most of these women will be in bankruptcy court for reasons beyond their control.
More than 90 percent of women who file for bankruptcy have been hit by some
combination of unemployment, medical bills and divorce. Women are more likely than men
to seek bankruptcy in the aftermath of a divorce or a medical problem, though both
men and women cite job problems as the biggest difficulty.

At the same time, 200,000 women will find themselves in bankruptcy court not
as debtors but as creditors—trying to collect alimony or child support from their
ex-husbands. Traditionally, alimony and child support are nondischargeable, which means
these debts must be repaid even if the ex-husband files for bankruptcy, because women
and children, unlike commercial creditors who can choose their debtors, cannot charge
their husbands or fathers a premium for being bad credit risks.

Yet in the pending legislation, credit-card companies and car lenders have devised
a number of ways to ensure that more of their debt, including interest and penalties,
is made similarly sacrosanct and payable forever. This puts divorced women in direct
competition with credit-card companies for some of an ex-husband's limited income.

Some 30 women's groups, from the National Organization for Women to Hadassah to
the Y.W.C.A., have announced their opposition to this bill. Do politicians like
Mr. Biden who support the bankruptcy bill believe they can give credit-card companies
the right to elbow out women and children so long as they rally behind an issue like
abortion? The message is unmistakable: On an economic issue that attracts millions of
dollars of industry support, women have no real political importance.

Will the credit industry's bankruptcy bill pass the conference? Or will it stall over
the issue of abortion? If Senator Charles Schumer, who wrote the abortion provision
in the Senate bill, holds his ground, he will do a great service to the women who
have fought hard for their rights to access to abortion clinics. But if the amendment
prevents the bill's passage, he will do an even greater service to hundreds of thousands
of women trying to collect child support and to millions more who are trying to survive
after financial disaster.

<h3>Bankruptcy and Abortion</h3>

Wall Street Journal Editorial, May 2, 2002

We refer to the bankruptcy reform bill, versions of which both the House and
Senate passed last year and which is now ready to emerge from conference. All ready,
that is, except for the little extraneous matter of abortion. For some Democrats,
it seems, their abortion-rights constituency trumps their financial-services contributors.

The specific Senator to ask about this is New York Democrat Charles Schumer; he's
attached a rider to the bankruptcy bill saying people who obstruct abortion clinics
could not escape from paying their fines or out-of-court settlements by declaring
bankruptcy. This is billed as a move to curtail violence at abortion clinics.

Sounds good, right? In fact, Mr. Schumer's rider would do no such thing. We
can find no reported case of anyone who has committed a willful and malicious act of
violence at an abortion clinic ever using bankruptcy to this end. According to the
Congressional Research Service such debts are not dischargeable under current bankruptcy
law—nor would they be dischargeable under the new law.

House conferees, led by Illinois's Henry Hyde, are concerned that the broad
language of the abortion rider would also apply to non-violent protests and would
penalize peaceful opponents of abortion. But they've nonetheless offered compromise
language.

Mr. Schumer has refused all such entreaties. Abortion-rights lobbyists' clout is
such that they're even holding sway over Democratic conferee Joe Biden, who represents
a state (Delaware) with a slew of financial-services companies.

The casualty of all this could be a bankruptcy reform well worth passing. The bill
addresses the issue of personal bankruptcies, which increased sharply in the
mid-1990s. In essence, the legislation would make it harder for most debtors to
wipe out their debt completely under chapter 7 of the U.S. Bankruptcy Code.
Instead, it would require more debtors to file under chapter 13, requiring them
to repay some portion of their debt over five years under a court-supervised plan.

Despite protests from some self-proclaimed consumer advocates, the bankruptcy reform
won't revive Victorian-style debtors' prisons. There are many consumer protections written
into the bill, including safeguards for retirement savings, child-support payments and
education savings accounts. Most Democrats must agree, because it passed both the
House and Senate comfortably.

<h3>Pro-Life Protesters' Misuse of Bankruptcy Laws</h3>

by Sen. Charles Schumer (D-N.Y.) 
Wall Street Journal Letter, May 10, 2002

To portray Rep. Henry Hyde as moderate on abortion and the FACE provision in
the bankruptcy bill as extreme is to turn black into white and white into black.

The FACE amendment is a compromise I forged with pro-life Sen. Orrin Hatch
that would keep people who impede access to family planning facilities from avoiding
fines or out-of-court settlements by declaring bankruptcy. It has passed the Senate
twice by overwhelming, bipartisan margins.

Your editorial also misses the mark when it says that there is no case history of
pro-life protesters using the Bankruptcy Code to get out of paying clinic violence
debts. Operation Rescue's founder Randall Terry has openly acknowledged using the
Bankruptcy Code to avoid paying debts arising from clinic violence, setting a
dangerous precedent that others have followed. Six defendants in the "Nuremberg Files"
web site case filed for bankruptcy, five of whom filed immediately preceding depositions
in which they would have had to reveal information regarding their assets. The other
filed just before garnishment could be executed. Finally, anti-choice activists Rev.
Robert Behn and Bonnie Behn filed for bankruptcy in March 1999, citing a
$35,000 debt they incurred as a result of Mrs. Behn's violation of a temporary
restraining order from Buffalo GYN Womenservices.

While I am wholly committed to passing a bankruptcy bill, having voted for it
twice, I'm not willing to do so at the expense of this amendment.

<h3>Letter to the Editor</h3>

by Rep. Henry J. Hyde (R-Ill.)

Wall Street Journal Letter, May 14, 2002

In a letter defending his abortion-clinic amendment to the bankruptcy reform bill,
Sen. Charles Schumer accuses me of wanting to help pro-life protestors "to get out
of paying clinic violence debts." But our disagreement is not about debts arising
from "violence." On the contrary, it is about whether to impose the extreme penalty
of non-dischargeability on peaceful protestors who may have committed nonviolent
misdemeanors, violations of local ordinances or similar infractions. Nobody denies that
nonviolent offenders should be held accountable for their offenses; the dispute is about
whether the punishment should include losing their family homes should they ever have
to file bankruptcy.

Let's be clear about this. The Schumer Amendment applies to all forms of protest
including peaceful, nonviolent activities such as sit-ins, boycotts or blockades.
Additionally, there is not a single reported instance where an abortion protester has
filed bankruptcy and been able to discharge debts based on violent acts. Therefore,
Sen. Schumer's example of Operation Rescue founder Randall Terry is nothing more than
a smokescreen.

I'm beginning to wonder if Sen. Schumer wants the bankruptcy reform bill at all.
House conferees have offered to make debts arising from violent acts—whether committed
against abortion providers or against anyone else—non-dischargeable in bankruptcy.

Sen. Schumer has rejected these offers.ïHe has made clear that no compromise is
acceptable unless it imposes the extreme penalty of non-dischargeability on persons who
have committed nonviolent offenses against abortion clinics and other "providers of lawful
goods and services." Meanwhile, a reckless driver who is ordered to pay damages for
wrongful death would be able to discharge this debt. Therefore, Sen. Schumer's
provision is not only disproportionate and harsh, but also grossly inequitable.

Journal Date

Saturday, June 1, 2002 - 12:00

Bankruptcy Rule

2002