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Reform bill passes
No surprise here. HAA
BANKRUPTCY REFORM REPORT (summary)
3/10/2005: Today's Senate Debate on S. 256 (Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005). All times are Eastern.
UPDATE:THE SENATE PASSES S. 256 AND TWO OTHER AMENDMENTS
What did you miss yesterday after 7:10 PM?
The Senate debate on S. 256 ended at 8:30 PM. Senator Kennedy (D-MA)
went as close to ballistic as one civilly could in the Senate when it
was decided that Leahy amendment #80 would not be voted on before the
close of Senate business. Kennedy accused the "other side of the
aisle" with stalling the vote because they didn't know if they had the
votes to defeat the amendment, which involved investment banking
services in Chapter 11. Kennedy stated that this proves the banking
industry was behind bankruptcy reform. Senator Hatch (R-UT) responded
with an overview of S. 256 and the reasons why many of the amendments
had tasted defeat (because many are addressed in S. 256 or had been
rejected over the years by a majority of the legislators). Hatch
responded to several of the Kennedy accusations with a disgusted "Give
me a break!" When all was done for the day, we decided to take our own
"quorum call" and prepare for what should be today's vote on S. 256.
IF S. 256 PASSES TODAY, WE'LL BE BACK WHEN THE HOUSE CONSIDERS
BANKRUPTCY REFORM.
KEEP YOUR EYE ON: Feingold (D-WI) amendment #93 (being considered by
Senate), which amends the definition of a debt relief agency and
states, in part:
"(12A) `debt relief agency' means any person, other than an attorney
or an employee of an attorney, who provides any bankruptcy assistance
to an assisted person in return for the payment of money or other
valuable consideration, or who is a bankruptcy petition preparer under
section 110..."
As currently written in S. 256:
"(12A) `debt relief agency' means any person who provides any
bankruptcy assistance to an assisted person in return for the payment
of money or other valuable consideration, or who is a bankruptcy
petition preparer under section 110, but does not include"
UPDATE: At 5:37 PM, Senator Feingold announced his withdrawal of
amendment #93. If not addressed in the remaining time in the Senate or
subsequently in the House, does this make all attorneys "debt relief
agents" and subject to the requirements imposed on same by S. 256?
9:30 AM: Senator Frist (R-TN) laid out today's schedule and stated
emphatically that the Senate will vote on S. 256 today. The Senate
then took up morning business, planning to return to S. 256 at 11:00
AM. Notwithstanding, Senator Kennedy (D-MA) rose to denounce S. 256.
After 15 minutes or so, Kennedy was followed by Senator Hatch (R-UT),
who spoke on filibusters and judicial nominations but promised to
answer Kennedy's assertions "later".
11:02 AM: Senator Carper (D-DE) kicked off what is believed to be the
final day's debate on bankruptcy reform. Although his time ran out,
Carper apparently favors passage of S. 256 (one of the few Democrats
who spoke up in support). Kennedy then took the floor for 1 minute in
support of the upcoming vote on Kennedy's amendments #70 (to exempt
single-parent debtors whose financial problems were caused by failure
to receive alimony or child support, or both, from means testing) and
#69 (to amend the definition of current monthly income). The Kennedy
amendment votes will be immediately followed by a vote on amendment
#105 submitted by Senator Akaka (HI), which would prevent creditors
from collecting late fees and interest from debtors in credit
counseling. The Senate then proceeded to a vote:
Results:
Kennedy amendment #70 (certain debtors exempt from means test): NO
(41-58) Kennedy amendment #69 (amends definition of monthly income):
NO (41-58) Akaka amendment #105 (no late fees/interest while in
counseling): NO (38-61)
After a long Quorum Call, the Senate returned @ 2:00 PM to vote on
Leahy amendment #83 (modify the definition of "disinterested person"
in Chapter 11, thus placing limits on investment firms when
representing a company before and after bankruptcy) and Durbin
amendment #112 (to protect disabled veterans from "means" testing in
bankruptcy; disabled veterans must have incurred more than 50% of
their debt while on active duty).
Results:
Leahy amendment #83 (re-define "disinterested person" in CH. 11): NO
(44-55) Durbin amendment #112 (exempts "means" test for disabled
vets): YES (99-0)
The Senate then proceeded to vote on Schumer (D-NY) amendment #129
(limits the exemption on Self-settled Trusts, a.k.a. "millionaire's
loophole", to prevent shielding of assets before declaring
bankruptcy). Senator Talent (R-MO) offered a counter amendment #121,
which would require proving an "intent to defraud" when seeking to
recover the assets in said Trusts.
Results:
Schumer amendment #129 (limits exemption for asset protection Trusts):
NO (43-56) Talent amendment #121 (show fraud to capture Trust assets):
YES (73-26)
After a period to discuss and vote on an unrelated matter (continuing
the Vocational Education Act), the Senate decided to vote on the
remaining bankruptcy amendments and final passage. Prior to the
voting, Senator Hatch (R-UT) rose to thank the Senate for their work
(on S. 256) and mentioned the fact that "not all of Senator Feingold's
amendments" could be accommodated. What did that mean with regard to
amendment #93?? I called Senator Feingold's office (202) 224-5323 and
asked for the status of #93. I was told to wait for the roll call vote
later today on all of the amendments.
5:09 PM: With voting over on the Education Act, Senator Frist (R-TN)
was prepared to call for the stacked votes on the remaining bankruptcy
amendments when Senator Feingold (D-WI) interrupted and asked for a
Quorum Call to negotiate. Frist agreed. I'd love to be a fly on
Feingold's lapel right about now.
5:37 PM: They're back; let's see what happens. Feingold has the floor.
Amongst other amendments, Feingold withdrew amendment #93. Another
Quorum Call was made.
6:09 PM: Frist returned to announce that voting on S. 256 will now
take place (evidently all remaining amendments were withdrawn).
The Voting Results:
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005:
YES(74-25)
SO WHERE'S THE LIGHT AT THE END OF THIS TUNNEL?
Having (painstakingly) observed about every minute of the Senate
debate, I wouldn't say that it is the "end of the world" for consumers
now that S. 256 passed. On the contrary, I believe the "hype" you
heard and read about is not truly indicative of this Bill, again, if
what I witnessed is even half-true (I know, the "wind" blows strong in
Washington). Per Senator Hatch (R-UT), much of the defeated amendment
language is covered in S. 256 and the very bottom line of this Bill is
that approximately 10% of future Chapter 7 filers will now be directed
to file under Chapter 13. Again, that is per Senator Hatch. Time will
tell. On a more personal note, attorneys are going to have to keep an
eye on what will now transpire in the House. Nevertheless, prepare,
don't panic. We'll go through S. 256 as passed and red-line it if we
have to with current law, then we'll be back to give you the facts,
not rumors. And when all is said and done, we'll still be developing
ways to make your ban!
kruptcy practice better. Come visit us at www.daangroup.com for the
light at the end of the tunnel. Sincerely, Ken Jursinski, The DAAN Group.
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