From the New York Times
October 19, 2001, Friday
BUSINESS/FINANCIAL DESK
Bill to Alter Bankruptcy Seems
to Stall
By Riva D. Atlas (NYT)
A bill that would have made it more
difficult for consumers to dismiss their debts by filing for bankruptcy
has effectively been pushed aside in Congress, unlikely to re-emerge this
year, lawyers and analysts say.
The Senate and House passed versions
of the legislation in March, and a conference was scheduled for this fall
to reconcile the differences. But with consumer confidence considerably
weaker since the terrorist attacks on Sept. 11, lawmakers' enthusiasm for
the legislation may have dimmed.
''This bankruptcy legislation
is more protective of the lenders than the consumer,'' said Meredith Whitney,
an analyst at Wachovia Securities who follows credit card companies. ''Given
that so much of the economy hinges on the consumer, no one in Washington
wants to be perceived as anticonsumer.''
Bankruptcy filings have been on
the rise this year as consumers and corporations have found it hard to
pay their bills. The number of consumers filing for bankruptcy has also
risen in anticipation of passage of the bankruptcy bill, which would make
it more difficult for individuals to file under Chapter 7 of the United
States Bankruptcy Code.
Chapter 7 permits consumers and
businesses to shed most of their unsecured debts. Under the bill, more
individuals would be forced to file under Chapter 13, which requires debtors
to come up with a plan to pay off at least a portion of their debts, usually
over three to five years.
With little talk about reviving
the legislation, Visa International told its network of bank credit card
issuers earlier this week that it was lowering its projections for bankruptcy
filings by individuals this year to an increase of 21.1 percent from a
previous estimate of a 23 percent increase, Ms. Whitney said. A spokeswoman
for Visa declined to confirm the projections, saying the numbers were confidential.
Ms. Whitney said she had access to the data because Wachovia is a credit
card issuer.
Congressional staff members said
the legislation had not officially been tabled, but there were no signs
it was a priority, either. A conference to reconcile the two versions of
the bill was scheduled for the day after the terrorist attacks, but it
was canceled, said Jeff Lungren, a spokesman for the House Judiciary Committee.
Bankruptcy lawyers said the weakness
in the economy meant that more consumers would remain in dire straits in
the near future.
''The economy was bad before Sept.
11, but things have really deteriorated since,'' said Max Gardner III,
a bankruptcy lawyer in Shelby, N.C. ''I have never before seen the sense
of personal desperation and fear that I've seen. Filing for bankruptcy
provides some certainty in a sea of uncertainty.'' |
