Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005

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Mr. DURBIN. I am sorry that I just arrived. I am trying to catch up with this debate. Would the amendment reduce the number of workers in America eligible for overtime pay and reduce the number of businesses in America required to pay the minimum wage?

Mr. SANTORUM. I think I was pretty clear about that. The answer is yes. Because we raise the threshold from a half million, small business, to a million. As I said before, the half million threshold was set in 1990. It has not been indexed. I hear a lot of comments about why we should index things here. We should index the minimum wage, we should index a whole host of other things that have the benefit of, in this case, increasing workers' pay. If that is the case, if we thought $500,000 was a legitimate threshold in 1990, I don't know why it should not be indexed to include in real terms that same class of small businesses at this time.

Mr. DURBIN. Will the Senator yield for a further question?

Mr. SANTORUM. I am happy to.

Mr. DURBIN. If the Senator is prepared to double the size of the business from $500,000 to $1 million because it should keep up with inflation, would the Senator be prepared to double the minimum wage of 1990 to what it should be today?

Mr. SANTORUM. I say to the Senator from Illinois, we are increasing--in fact, my amendment does increase the minimum wage by 20 percent.

Mr. DURBIN. By 100 percent?

Mr. SANTORUM. I don't recall exactly what the increase was. I will check and see what the wage was in 1990 as compared to what it is today. We are proposing a modest increase. If the Senator is suggesting it should be a smaller increase, I will be happy to negotiate a smaller increase if it makes the Senator comfortable.....

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Mr. DURBIN. Mr. President, Members of the Senate will have a choice in just a few minutes about the future of the minimum wage.

There was a time when we didn't even debate this. There was a time when Democrats and Republicans agreed that every once in a while you have to raise the minimum wage. The cost of living goes up in America. Republican and Democratic Presidents alike said: Can't we come together and reasonably increase the minimum wage so that the poorest among us have a fighting chance for a decent life?

We used to do it that way. When we stopped doing it 8 years ago when Republicans took control of Congress, they decided this was a partisan issue, that good Republicans didn't support an increase in the minimum wage; only Democrats supported it. Today, we have a choice. The choice is very stark.

Senator Santorum comes to the Senate floor and says let us raise the minimum wage for 1.8 million Americans. That is a pretty good thing. At least they are going to get some help. But look at Senator Kennedy's alternative. In his alternative, 7.3 million Americans would have an increase in the minimum wage.

The Santorum Republican approach helps 1 out of 4 of the workers who Senator Kennedy's approach helps. But it gets worse. In order for Senator Santorum to work up the political courage to bring this to the floor, he said: I have to turn around and do something on the business side. So what I will do is to exempt 10 million workers in America from coverage for overtime pay.

Think about that. You can work 50 hours a week at straight time. That is the deal we are going to offer you for a slight increase in the minimum wage. Does that make sense?

He goes further and says we are going to say that fewer businesses in America are required to pay the minimum wage. What a deal. After waiting 8 years, he helps 1 out of 4 of the workers who Senator Kennedy helps, and for the 1.8 million he helps, he pushes 5 times as many overboard. He says: You are not going to get overtime. I will vote for an increase in minimum wage, but that is just part of the deal.

It is really appropriate that we have this debate on the bankruptcy bill, isn't it, when you think about it? We are going to force some of the most marginal workers, so many of the hardest working people in America, into a position where they can't pay their bills; then our beautiful Bankruptcy Code reform pushed by the credit card industry will make sure they are saddled with debt for a lifetime. That is what this debate comes down to.

In order to bring up the courage on the Republican side to offer any minimum wage increase, they had to offer to the business community this disqualification for overtime pay the incentive that many businesses would not pay a minimum wage, not to mention adhere to the equal pay provisions. Some of these minimum wage workers across America are young, single mothers struggling to raise kids. Sometimes they are working one or two minimum wage jobs. They would like to be paid equal pay in their workplace. Senator Santorum thinks that goes too far when it comes to small businesses. I think this is wrong.

We need to get back to the bipartisan consensus we had on minimum wage. If you stand for moral values--wasn't that the big issue in the last campaign?--wouldn't one moral value be as follows: If you get up and go to work every day in America, if you follow the rules and show up for work, you shouldn't live in poverty in America. That is a fact. Some people working every single day at a minimum wage job are living below the poverty line.

Poverty has doubled since the late 1970s. The poverty rolls have increased by 4 million people since President Bush has taken office. The low minimum wage is a big part of that. Minimum wage employees who work 40 hours a week earn $10,750 a year. Think about how you would get by on $10,700 a year. In fact, we say officially that this is $5,000 less than you need to raise a family of three. We acknowledge that. If you go to work, work hard, and are paid the minimum wage, you are going to live in poverty.

We believe on the Democratic side of the aisle that America, if it is a just nation, should move to the point where hard-working Americans get a decent paycheck.

That is what Senator Kennedy has been fighting for for 8 years. I would be happy to be part of that fight.

I say in conclusion that we talk a lot in the Senate about what our priorities should be. The top priority of this Senate now is to make the bankruptcy laws more difficult for those swamped by medical bills. We have tried to offer amendments to stand up for the activated Guard and Reserve people who are forced into bankruptcy. The Republican side rejected every single amendment we offered. Now we come with a sensible, just amendment to, frankly, raise the minimum wage up to a decent level in America, and what we are offered on the other side of the aisle is an unacceptable alternative.

I yield the floor.

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Mr. DURBIN. Mr. President, I rise to speak very briefly about the amendments I have offered this evening to the pending bankruptcy bill. I have found as I traveled back in Illinois and around the country that some people follow the C-SPAN floor debate very closely. Just over this weekend, having traveled to Arizona and Nevada, I am amazed to find people who heard my speech on the bankruptcy bill, which always intrigues me that so many people suffer from insomnia that they watch C-SPAN gavel to gavel, but in all honesty I admire them for their interest in our Government, and I hope that they follow this debate. But if one is a newcomer to this bankruptcy bill debate, I will say a few words about the bill and the amendments which I have offered.

When it comes to the bill itself, which is 510 pages, it will amend the bankruptcy law of America. It is a bill which has been considered for years. We have had versions of this bill over the last 9 or 10 years. I know because years ago I worked with Senator Grassley on one of the first modifications to the Bankruptcy Code. Some of these changes passed the Senate and failed in the House. Some have passed the House and Senate and been vetoed by President Clinton. The bill has had its ups and downs. It never did become law in that period of time.

Now for the second bill of the session, one of the highest priorities on the Republican side of the aisle--they are pushing for the bankruptcy reform bill. When one thinks of all the challenges in America, the obvious question is, why are we considering bankruptcy reform before we would even consider health care in America or doing something about the economy creating jobs or addressing the budget deficit in America or even addressing Social Security? Why is this bankruptcy bill such a high priority? Well, the reason is this bill makes fundamental changes in the law as to which Americans will qualify for bankruptcy.

Bankruptcy, of course, was created in the law of many civilized nations such as the United States because in the old days if one went deeply into debt they could be put in prison. People decided that was barbaric. They said there should reach a point, if one cannot pay their debts, they can be exonerated or have those debts wiped clean from their record and start new, start fresh. That is what bankruptcy is all about.

Chapter 7 of the Bankruptcy Code is that situation. One walks into the court and they say, here are all of my debts, here are all of my assets, and the court should basically liquidate whatever they have, pay off as much of the debt as possible, and at the end of the day they walk out of the court without much left on this Earth but without any debts, wipe the slate clean. That is bankruptcy.

There are other provisions in the Bankruptcy Code, notably chapter 13. Under chapter 13, one walks into court and says: I have more debts than I can pay, but I can pay something. The court then says: We will work out a schedule for what you will pay over a period of time. That is chapter 13. So one does not walk out with their debts relieved, but they may walk out with fewer debts to pay and a schedule to pay them. The court monitors their progress under chapter 13. So in chapter 7, one walks out with the slate clean. Chapter 13, they walk out still paying off their debts.

In came the credit card companies and the major banks to Congress about 10 years ago and said, we believe that too many people are having the slate wiped clean and that they should continue to pay off their debts, even if they think they should be relieved of all liability. The purpose of this bill is to say that people walking into bankruptcy court are now going to have a much more difficult time wiping the slate clean to start over. More likely than not, particularly if they are making more than the median income in America, which is not a huge, princely sum, the credit card industry comes in and says, we want to make sure that if someone comes into court and wants to file bankruptcy, when it is all said and done, they will still have credit card bills to pay, and not just credit card bills. They could be medical bills. They could be any number of different bills. So they pushed hard for 10 years to get this bill passed by the Senate in the hopes that fewer Americans will have an opportunity to start fresh and to start new. So we have been debating for over a week changes in this bill, changes that were designed to take into consideration special circumstances.

I give credit to my friends on the Republican side of the aisle. They have rejected every single change. Let me say what they have rejected so far. I offered an amendment that said if one served in the Guard or Reserve, if they are in the military and they are serving their country overseas and as a result of their service their family or their business goes into bankruptcy, we are not going to be so harsh on them. We are going to give them an easier time of it in bankruptcy because their circumstances serving our country, risking their lives for America, warrant better consideration than some other circumstances. I thought that was a reasonable amendment. I hear all my fellow Senators praising our men and women in uniform, how they are standing behind them. Well, I had veterans groups and military family groups all supporting my amendment. They said this is a reasonable thing to do. A lot of people who are activated end up losing their businesses, and they should be given some consideration in bankruptcy court.

I lost that amendment 58 to 38. Every Republican Senator voted against it. I cannot quite understand why, but that was their position.

Then came Senator Kennedy. Senator Kennedy said we just did a survey, and the No. 1 reason people file bankruptcy now is because of medical bills. Senator Kennedy said if someone has gone through a medical crisis in their life and they have medical bills they cannot pay, we will at least say that when they go into bankruptcy court because of those bills, they can protect a small home, $150,000 home, which in some communities in America would be a very small home. It says that even though one has been through an illness, they had all of these medical bills, they have been forced into bankruptcy, they will have a roof over their head. That amendment was rejected, too. The thought that we would give people and their families facing medical catastrophes a break to be able to keep a home was rejected.

I then offered an amendment that said, what if the creditor is what we call a predatory lender, somebody who breaks the rules, breaks the law--for example, offers a second mortgage on a home at an unreasonable interest rate, hidden charges, balloon payments that prey upon people like senior citizens--what are we going to do when they come to bankruptcy court? Why should we allow them to take away the home of a person if they have broken the law in giving the loan?

I thought that was pretty obvious. A person coming into bankruptcy court as a creditor doesn't have clean hands if they have broken the law with the loan they are trying to enforce. I thought at least we would stand for the law, that we would only enforce legal loans, not illegal loans.

Rejected. It was rejected largely on a party-line vote. Every Republican Senator but one voted against it.

As you can see, as we have gone through these amendments, whether we are talking about men and women in the military, whether we are talking about people with medical bills, whether we are talking about victims of predatory loans, even if we are talking about people who are victims of identity theft--we are all following the news accounts of ChoicePoint where a lot of personal information has been disclosed about individuals. It scares a lot of folks that someone will grab their Social Security number and their identity and run up some bills. It happens. Unfortunately it happens a lot.

Senator Bill Nelson of Florida said if you are a victim of identity theft, you should be given a break in bankruptcy court. They weren't debts you incurred; they were debts incurred by someone who stole your identity. I thought that was a reasonable amendment, too.

Rejected. Every Republican voted against it. They don't want to take into consideration the real-life tragedies and misfortunes that bring someone into bankruptcy court. They want to make sure that at the end of the day the credit card companies and the major financial institutions will get more money from people walking into bankruptcy court.

Senator Akaka offered an amendment and said, shouldn't these credit card companies disclose more in their monthly statements, these companies that just inundate us with applications for credit cards? Shouldn't their monthly statements at least say: If you make the minimum monthly payment, this is how long it will take to pay off the loan and here is how much you will pay in interest? Is that unreasonable? I don't think it is.

These companies are making huge amounts of money. In 2003 the credit card companies made $30 billion in profit.

So Senator Akaka offered an amendment that said at least these credit card monthly statements should tell the consumer more so they make the right choices for themselves and their families.

Rejected, again, on a party-line vote, with only one Senator from the Republican side of the aisle voting for it.

You think to yourself, if you can't hold the credit card companies to even that minimum standard, what is this debate all about? We are not creating exceptions for real-life situations. We are not giving consumers more tools to decide what is a reasonable amount of credit. All we are doing is saying, at the end of the day, the credit card companies are going to get their bill and they are going to get more money out of people filing in bankruptcy court.

Time and again in this debate, many of my colleagues, whom I respect much, have said: Senator Durbin, you have it all wrong. If people make less than the median income in America, they will not be affected by this bill. They are going to be off the hook. You have to be making over the median income to possibly get into a situation where you are going to have to pay off more of your debts.

I have listened to that over and over. My staff and I, over the weekend, read the bill. It turns out that is not the case. In order to prove that you are below median income, you have to go through an expensive and extensive process under this bill. So I felt that it was only reasonable to say to my colleagues: Why don't we give those below median income a better chance to prove that they should not be covered by the provisions in this bill?

We make clear in amendment No. 110 that debtors in bankruptcy falling below median income need only provide calculations or other information showing the debtor's situation satisfies the below-median-income standard.

In other words, you don't have to hire a lawyer. You don't have to incur thousands of dollars of legal debt if you are below median income. You establish that to the court and then you move forward.

Second, the amendment says that a court may not dismiss a case based on any forms of means testing if the current monthly income of the debtor falls at or below the median family income of the applicable State. What the language in my amendment does is reinforce every argument we have heard from the other side of the aisle. Time and again they have said: If you make low income in America, you will not be affected by this bill.

We say: Fine, then let's change the bill and clarify that so a person filing for bankruptcy doesn't have to go through all of the pain and all of the expense of filing all the documents required under this bill.

We had a program under President Clinton not that long ago called the COPS Program--you may remember it--bringing more police back to the communities of America. It was a wildly successful program. It brought thousands of policemen to the State of Illinois and many other States. We ended up having a one-page application for that program. We prided ourselves on the fact that we were not absolutely swamping people in communities with all kinds of Federal paperwork and applications. With one page you could qualify for a COPS grant in your community.

What we are saying here is, shouldn't a person in bankruptcy court, already probably embarrassed by the process, already worried about paying the legal bills, if they are below median income, shouldn't we simplify the process for them?

I am going to give my colleagues a chance to vote on that.

The second thing we do is to return to the issue of veterans and members of the Armed Forces on active duty, and whether they are going to be treated the same in bankruptcy as other people. I will go back to the argument. I think if someone is serving our country, risking their lives for America, to protect me and my home, that we should do everything we can to help them. So we say, in this case, if your indebtedness as a veteran or a member of the military is primarily incurred while you are on active duty, that you can go into the bankruptcy court and escape the worst parts of the means test. It is a way to consolidate some of the arguments made earlier and to try to appeal to my friends on the Republican side of the aisle, for one last time, to be sensitive to some of the real hardships that have been created for families of Guardsmen and Reserves who have been activated.

The last point is one I almost offer in desperation, amendment No. 112. I cannot believe my colleagues have rejected all of these amendments when they relate to men and women in the armed services, but the last amendment relates to disabled veterans, men and women who become disabled as a result of their service in America and face bankruptcy. It is a final appeal to my friends on both sides of the aisle: If you cannot work up sympathy for men and women in uniform serving our country, at least have some concern for those who are disabled and come back and face bankruptcy. Don't put them through these unreasonable tests and standards in this bill. I would think all of us could agree that disabled veterans should be given some sort of a helping hand in this bankruptcy process.

So we will try again with the amendments that we offer. I know some of them will be debated at length. I just sincerely hope this week the supporters of this bill will at least take a little time and consider the possibility of amending this bill.

To my knowledge, the only perfect law that was ever written were the Ten Commandments, and they were not written by Senators. They were written by somebody in higher office.

This bill, as good as it may be, can be better. It should be better. It should be more sensitive to some of the real-world challenges that we face. I hope we will consider these amendments favorably, enact them soon, and make them part of this legislation. It will make a bill which I think is unfair in many respects a lot fairer.

AMENDMENT NO. 26, AS MODIFIED

One last thing. I ask unanimous consent the Leahy-Snowe privacy amendment No. 26, as modified, be accepted.

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