Although bankruptcy filings continued to decrease this past year from the record 1.4 million consumer bankruptcy petitions filed in 1998, they still remain six percent higher than five years ago, when filings first passed the one million mark.  Last year, the number of personal bankruptcy filings in Rhode Island decreased by 12 percent from the previous year, but that number is still too high, as the number of personal filings in the state has more than doubled in the last decade.  Unfortunately, hardworking consumers shoulder much of the economic burden of these bankruptcies.

While there are many factors contributing to the increased number of bankruptcy filings, statistics have shown that a significant number of individuals are permitted to walk away from their debt by filing under Chapter 7 when they have the ability to repay most, if not all, of their debt.  Our bankruptcy system should direct filers to the chapter that best matches their needs and allow them to pay off as much debt as possible.

H.R. 333 will help reestablish a degree of personal responsibility by utilizing a needs-based test to identify debtors making over the median income who have an ability to repay at least a portion of their debts.   However, this legislation is by no means perfect and it fails to hold credit card companies accountable for the credit they issue.  An increasing number of individuals who have experienced events such as illness, job loss or a recent divorce and have no financial recourse other than bankruptcy are being overwhelmed with misleading and abusive marketing strategies of the credit industry.  As a result, too many consumers are prone to predatory lending practices after filing for bankruptcy and are never truly granted a fresh start by the system.  

It is for these reasons that I will support the amendment offered by my colleague from Texas, Ms. Jackson-Lee, and the motion to recommit offered by the Ranking Member of the Judiciary Committee, Mr. Conyers, during consideration of the bill.  These provisions would strengthen the bill and address credit card company practices that have contributed to the increasing level of consumer debt and the rise in consumer bankruptcies.  Specifically, the Jackson-Lee amendment seeks to modify the means test to allow more flexibility in determining a debtor's expenses, including health insurance premiums, other medical expenses, and the costs relating to the care of foster children, and extend the deadline for filing and confirmation of reorganization plans by small businesses.  The motion to recommit would prohibit credit card companies from issuing credit to individuals under the age of 21 unless there is written parental consent or the individual can demonstrate and independent source to pay the debt.  

Nonetheless, even if these modifications are not approved, I do intend to support the underlying bill because I believe Congress must do something to address the current state of abuse and overuse of our bankruptcy system.  However, Congress should also continue to pursue common-sense reforms that will not only cut down on fraud within the system but also hold credit issuers accountable for their actions while protecting the vulnerable consumer.  I would strongly urge the Senate to keep these arguments in mind as it continues to debate its version of the bankruptcy reform bill.