Senate passes new bankruptcy bill

updated 7:12 p.m. ET March 10, 2005

WASHINGTON - The Senate passed legislation Thursday that will make it harder for Americans to rid themselves of debt by filing for bankruptcy.

The House is expected to pass the measure next month, delivering to President Bush a second victory this year on pro-business legislation he had sought.

The vote was 74-25 to approve the most thorough overhaul of bankruptcy laws in a quarter-century.

“The short answer is fairness,” declared Sen. Orrin Hatch, R-Utah. “Those who can pay their bills should pay their bills. That’s the American way.”

Congressional and industry backers of the legislation have been pushing for it for eight years but it repeatedly got stalled. This year, with Republican majorities increased in both the House and Senate in last November’s elections, the bill’s fortunes reversed.

Deliberations
Before the vote and in Senate deliberations over much of the last 10 days, majority Republicans knocked down Democratic attempts to ease the impact of the legislation on people facing huge debts they cannot pay down, including single parents, the unemployed and the ill.

The Senate instead handed Wall Street investment firms a bonus, defeating a Democratic amendment that would have restricted their ability to work for companies both before and after those companies file for bankruptcy.

Senators acted against the advice of Securities and Exchange Commission Chairman William Donaldson, who said such a restriction was needed to build up investor confidence shaken by Enron, WorldCom and other corporate scandals.

For two straight days, Democratic opponents tried to soften the bill’s impact on single parents and other groups, and to restrict credit industry practices that lawmakers said especially hurt the poor.

Critics said the bill would remove a safety net for those who have lost their jobs or face big medical bills.

“It will have a real impact on real people all over this country,” said Sen. Russ Feingold, D-Wis.

Supporters of the bill said bankruptcy often was the last refuge of gamblers, impulsive shoppers, divorced or separated fathers avoiding child support, and multimillionaires — often celebrities — who buy mansions in states with liberal homestead exemptions to shelter assets from creditors.

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