Posted on 03/09/2005 1:45:09 PM PST by DannyTN
FRIST COMMENTS ON BANKRUPTCY DEBATE Floor Statement -- Remarks As Prepared For Delivery
Senator Bill Frist, M.D. March 8th, 2005 - Mr. President, we have made tremendous progress on the bankruptcy bill. Republicans and Democrats have stood together to support a bankruptcy reform package that the House will pass and the President will sign into law. The Senate has resisted attempts to renegotiate hard-fought compromises and legislate on unrelated issues. I commend my colleagues for staying focused.
There have been many attempts to sidetrack the Senate on this bill. Let me begin by reiterating why we need bankruptcy reform and what this bill really does.
The bill before us establishes a means test based on a simple, fair principle: those who have the means should repay their debts. Personal bankruptcies are skyrocketing and wealthy debtors are walking away from debts they have the ability to repay. Opportunistic debtors who have the means to repay use the law to evade personal responsibility.
This abuse doesn’t just hurt the creditor they owe, it hurts all of us who pay higher fees and prices as a result.
Every bill you and I pay includes a hidden “bankruptcy tax” of $400 a year per household. That tax is figured into in every phone bill, electrical bill, mortgage payment, furniture purchase, or car loan we pay.
Interest rates are higher, down payment requirements are larger, grace periods are shorter, and late payment penalties are astronomical – all because some people are shirking their debt obligations.
This legislation is targeted to ensure that wealthy debtors who can pay their debts do so.
It specifically exempts anyone who earns less than the median income in their state. And it also allows every consumer to show “special circumstances” if they cannot handle a repayment plan.
We know that one reason people file for bankruptcy is because of an unexpected medical emergency. Consequently, this legislation allows every filer to deduct 100% of their medical costs.
We also know that education is a big outlay for many families. Under bankruptcy reform, parents can deduct private school tuition to protect their children’s educational opportunities.
In addition:
The bankruptcy bill strengthens protections for child support and alimony payments.
It protects patient privacy and care during bankruptcy proceedings that involve health care facilities.
It protects consumers from deceptive credit practices that can lead to financial distress.
And it protects the system that allows America to be one of the most generous countries when it comes to bankruptcy.
There remain, however, some misconceptions about this bill that should be dispelled. The first regards our protections for active duty military personnel and veterans.
Some opponents of the bill charge that we do not adequately address the needs of our men and women in combat who may suffer financially.
Mr. President, it should go without saying that the United States Senate and the American people deeply honor our men and women in uniform. Everyday, these young soldiers sacrifice to protect us and defend our freedom. We are indebted to them for the dangers they face on the field and the families they leave in order to fight.
That is why last Tuesday, we passed the Sessions amendment to help clarify protections for our military and others under a safe harbor in the bill. This provision, which passed with 63 votes, makes explicitly clear that active duty military and low income veterans are protected by the safe harbor. In addition, it also protects debtors with serious medical conditions.
On this issue, the other side has created a red herring designed to score political points and shift the debate away from bankruptcy abuse.
Another red herring is the charge that the bankruptcy bill sacrifices consumers to benefit credit card companies. The truth is that the bill before us includes several carefully negotiated amendments that expressly protect credit card holders.
Among its beefed up consumer protections are:
Increased disclosure requirements for credit card statements and mandates that credit card companies assist borrowers in determining how long it will take to pay off their credit card balances;
Additional disclosures to borrowers buying and refinancing their homes;
And additional disclosures regarding credit card “introductory rates” and new disclosures related to credit card late fees.
These protections are the result of lengthy and careful negotiation. Additional measures should be properly addressed in the Banking Committee. As Senator Sessions has pointed out, we are debating a bankruptcy bill designed to create a fair and common sense process in the federal courts.
Moreover, the bill before us has passed this body three times with overwhelming bipartisan support. In the 105th Congress, it passed by a vote of 97 to 1. Again in the 106th 83 to 14. And again in the 107th by a vote of 82 to 16.
It is time to take action on a much needed reform that is supported by both sides of the aisle.
I am confident that by working together we can get this done in this Congress, this week, and see bankruptcy reform signed into law.
It is long past time to stop abuses of the bankruptcy code. The legislation before us is thoughtful and well considered. It offers the opportunity to give the system, and the people it is designed to help, a fresh start. In short, it promises to deliver meaningful solutions that keep America moving forward.
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How can you characterize this statement of fact as merely an assertion? Let's break it down. Over the past 11 years CC lenders and Debtors have entered into loan agreements right? That's a fact. This represents billions of dollars of debt that is out there right now and that preexists the current proposed bk law. Those loan agreements incorporated the terms of the then controlling bankruptcy code and state exemptions laws right? That's a fact. These laws have pros and cons for both CC lenders and debtors right? That's a fact. The CC lenders knew what these terms were when they entered into these loan agreements right? That's a fact. Now the CC lenders are rewriting, through the new bk law, these terms dramatically in their favor, terms that were in place and relied on by the parties when all this debt was incurred in the first place, right? That's a fact. These new terms will apply to all that previously incurred debt, debt that was incurred under the the different terms of the existing bk code right? That's a fact.
Now is it fair for the CC lenders to use the state to rewrite these loan terms on all this outstanding debt after the fact ex post facto. I say no. You may like it, that's your perogative.
But you don't have to worry about it anymore. The Senate passed the bill today and its basically a done deal. I am no longer devoting any energy to opposing it. Instead I am now developing a series of tactics and strategies to exploit the awful aspects of this bill for my benefit and extract a substantially larger amount of money out of debtors and creditors than I am able to now under current law. Good luck with your prudent ways and, if you are like most Americans and living paycheck to paycheck, pray to God you are never stuck down by illness, injury, or a job layoff because if you ever are, us lawyers and MBNA et al will be there waiting for you and what little blood is left in you.
I will start out saying that I am a democrat. I will also state that I generally do not agree with your group on issues important to our country. That said, we find ourselves in agreement over the Bankruptcy Bill.
We may not care for each other, and will probably disagree on almost everything in the next few years, but this is our chance to actually work in a bi-partisan manner. We, on our side of the fence, do not want this bill passed, and it seems that neither do you. I propose that we ALL contact our representatives in the House and prevent them from passing this bill.
The choice is yours, and please in your responses, remember that I am making an effort at working with you on something we both agree on. I have not attacked you, nor do I wish to. I love OUR country and I know you do as well, we just look at the world from different prespectives. This bill is bad in so many ways and does nothing to help the people of this country, but helps the businesses that prey on people.
I call on you to help, to put our differences aside and work together on an issue we mostly agree upon.
Thank you for your time, and keep freeping, you certainly make my life more interesting.
Robert
Ever heard of a demand loan???
At least the credit card companies give you an option.
There are a great many people who commit to debt without guaranteed means of repayment. If they default, the creditor gets stiffed. It's like when you lend money to your kids!
COMPANIES don't eat anything. Clients eat it throigh higher costs. Why do you think the rates are high in the first place. Secured loans (Mortgage etc) have default protection therefore historically low rates. Would you lend your own money to a deadbeat relative?
I am done working against the bill (I did my patriotic duty to tell my Senators about the merits and why its bad for America). I am moving on to exploiting the bill for my benefit.
Additionally, if this could serve as some kind of consolation to you, I believe I have figured out a way to siphon off a significant portion of the five year payment stream by the debtor that would go to MBNA et al under the new bill to me. No matter what under the new law the debtor will have to make that payment stream to someone, it might as well be me.
Is there any data on how many consumers (percentage or actual numbers, either one) will actually be forced to file chapter 13 rather than chapter 7 because of this new bill?
I've seen some but I don't know if I trust it or not. It said 20% of cases would be forced into chapter 13. But it affects everyone who has above the state's median income and median income is usually lower than average income.
I did a search on bankruptcy and the internet looks dramatically different than it did a couple of years ago. The credit card companies appear to have set up several sites that rewrite the country's history. And make it sound like bankruptcy didn't hardly ever occur before 1970.
But I had researched this before, and knew the country put strong laws in place. Thomas Jefferson filed bankruptcy twice before being elected president.
For example, here in Tennesee, the median household income is $36,329. So unless you are already really poor, and have no prospects, you are affected.
I heard an unverified statistic that over 90% of chapter 7's are "no asset" cases. If that number is accurate, I wonder how many "No Asset" cases are making higher than median income at the time?
He's probably as good as anyone else that hasn't accomplished anything of significance ;-)
Just found an article on the DOJ website that says 96% of Chapter 7's are No Asset Cases, but still can't identify the source of those numbers.
Frankly, if they really want bankruptcy reform, go forward and as able let people pay back, but also pierce the corporate shield when it's clear that company leaders have lived high off the hog until the last minute and make those people liquidate and repay the debts caused by their mismanagement and malfeasance.
BTW, I just got my credit report since my area is now under the free program. I've had credit for over 33 years and the report went back several and reported that there were no late payments. So I'm not a deadbeat. I pay my bills.
but let's put some accountability back into the boardroom on these businesses that get a hiccup in income or suddenly have an unexpected debt.
I took a class several years ago when I became president of the small credit union that my company had. One of the laws back then was that the lender took some of the liability if they gave credit when credit wasn't deserved. There was accountablilty. That changed at the urging of lending companies and banks.
We used the 3 C's of credit. Character (past history of payments) Capacity (the ratios of debt to credit) and Collateral (if the loan was big enoough, what was being given that would compensate if they loan went sour). Those are no longer used.
In addition, there are severe predatory lending practices going on that lure people with sweet credit only to have it turn against them with a late payment or some other ability to change the rules as the months go by. That needs stopped.
Granted, too many people who don't deserve credit are getting it and if they don't then it's not their fault but a mean old nasty lender. But then business people should be making business decisions.
One other thing. A friend ran a company. They tried to get loans for legitimate purposes. The loans were small, but had the ability to meet all payback obligations. A banker told them they needed to do bigger loans in order to get funds as small loans, while sound in ability to repay were not rewarding enough to do business on. The friend went out and arranged a purchase that made no sense at all, would never work out could never be repaid, yet he had leanders begging to do business. We he got the loan, failed and in the workout got to keep the assets that were profitable and gave the bank the dogs. HE then sold the profitable properties and made out like a bandit.
If you figure out how to expoit it for gain, let me know. I want to be in on it.
Interest rates are high enough to cover defaults for the ones who choose to pay high rates. Fact is profits are the highest ever for the CC companies somewhere around 300 BILLION!
KMART is a prime example how big business abuses the system. After 6 months of BK and shafting stockholders, bonds and most creditors they buy SEARS! The new law is silent on corporations only to force the "little" guy to pay up or else.
Come on anyone can see this is special interest law. The current system works just fine.
I already have but I am not going to go into details because 1) I don't want them passing any more amendments to f up the exposure points I see, and 2)hell its my competitive advantage. I'm not one of those seminar guys.
You're assuming that all credit users are stupid. I think that's a fallacy. Some are, and some are scam artists. You admit that the lenders and the borrowers enter into agreements. What makes you think that the borrowers are too stupid to know what they agreed to?
It's true that some people are willing to gamble that luck will strike and that they will have a "windfall", either by lottery or law change, or something else. But life doesn't usually work that way. Planning is a better alternative.
BTW, I hope you're wrong that "most" Americans live paycheck-to-paycheck. None of has to do that. I know some do (in all income classes), but that's not really a very good idea. If you're doing that, try budgeting. It's a lot less stressful, and you don't have to worry about minor setbacks like loss of a job or a health problem.
You're right that almost all of us can get more credit than we can ever repay. Some of us (like your friend) take it. That's one of the reasons that credit is so expensive.
We really need to start thinking about credit as a purchase. It's not a right. It's something we buy when we think we need it. We pay for credit when we want to buy a house, and many do for a car as well. The total amount we spend for those things is astronomical compared to the purchase price. Most of the cost is credit. But it mostly makes sense.
There are people who don't think about it at all, and those are the ones who will be paying for their Starbuck's coffee for the next 70 years. And those are the ones that everyone is getting so teary eyed over. Not me.
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