Massive Effort Launched to Undermine Bankruptcy Reform Bill in House

By Patrick Lunsford, CollectionIndustry.com

The bankruptcy reform bill that sailed through the U.S. Senate last month by a vote of 74-25 was expected to meet little resistance in the House. And so far, those expectations have been met with the bill clearing the House Judiciary Committee and clearing a path to the floor of the House with relative ease. House Republicans have also been diligent about striking down proposed amendments to the bill brought by opponents, a strategy that worked well in the Senate.

But now there is an organized effort on the part of some House Democrats and supporting groups to undermine the bill. A vote on the Senate version of the bill (S. 256) was scheduled for today. But the vote was postponed until next week, supposedly to allow House members to attend the funeral of the Pope in Rome. This gave opponents of the bankruptcy reform legislation enough time to mobilize an effort to draw attention to what they believe are the more insidious elements of the bill.

A coalition of lobbying groups including Progressive Democrats of America, the AFL-CIO and the National Organization for Women, have been pressuring House members to vote against the bankruptcy reform legislation and have been encouraging their members to write, fax, email and phone their Representatives. Additionally, an activism group called DebtSlavery.org ? formed specifically to combat this bill ? has organized rallies across the country in protest of S. 256. They currently have five events planned today at the home offices of House Reps.

But the largest push came yesterday from dissenting Democrats on the House Judiciary Committee. They leaked a scathing 54-page dissent opinion to liberal news organization RawStory.com detailing encouraging their colleagues to vote against the bill. In it, they concede that the Bankruptcy Code needs to be reworked, but that this bill is not the proper way to fix the system.

After all of this, however, S. 256 still has Democratic supporters in the House. Rep. Richard Boucher (D-VA) told Raw Story, the same news organization that leaked the Judiciary Committee dissent, ?I think the opponents of this bill are in some cases deliberately trying to mislead people, and to lead them to think that someone who is affected by a financial catastrophe is going to be hindered by this bill. That simply isn?t true.?

Due to a fairly substantial Republican majority in the House and the ease with which the bill passed through the Senate, S. 256 stands a good chance of passing. If passed, President Bush is widely expected to sign it into law with the new rules taking affect in October of this year.

But in the very near term, some organizations believe that bankruptcy filings may rise dramatically. The American Bankruptcy Institute announced in January that they felt bankruptcy numbers would see a significant surge once the law is passed. Nolo, a provider of do-it-yourself legal and business solutions for consumers and small businesses, said in a release today that the state Michigan saw a 32% increase in bankruptcy filings from January to February of this year, signaling the beginning of a run on consumer bankruptcy filings.