WASHINGTON, D.C.—Today, U.S. Representative Rahm Emanuel (D-IL) and U.S. Representative William D. Delahunt (D-MA) announced an amendment to the Personal Bankruptcy Abuse Prevention and Protection Act, scheduled to be considered in the House Judiciary Committee later this week.

            “We should not have two bankruptcy laws in this country – one for wealthy Americans who can hire high-priced lawyers and accountants to set up special offshore trusts and avoid their creditors – and one for middle-class families struggling to pay their health care bills,” said Emanuel.

            This Emanuel-Delahunt amendment limits the exemption of “asset protection trusts,” which were created by five states (Alaska, Delaware, Nevada, Rhode Island, and Utah) that passed legislation exempting assets in such trusts from the federal bankruptcy code. People who want to establish the trusts do not have to reside in these five states; they just need to set up their trust in a financial institution located in one of them.

            “More than half of all Americans are forced to declare bankruptcy in the wake of catastrophic health care bills leaving them with years of debt collectors at their doors and bad credit,” said Emanuel. “Meanwhile, our bankruptcy laws give wealthy Americans a pass. They can hide assets like mansions, racing cars and yachts. We need one bankruptcy law in this country.” said Emanuel.

            "One of the biggest give-aways in the Senate bankruptcy bill creates a whole new way for wealthy Americans to game the IRS Code.  The ostensible objective of the legislation is to crack down on abuse – but apparently that’s only supposed to apply to single moms, veterans and retirees of modest means.  Our amendment would at least restore a semblance of fairness," remarked Delahunt.

            The amendment is similar to one offered by Senator Charles E. Schumer (D-NY), which failed by a vote of 39 to 56 on March 7, 2005 during the Senate’s consideration of the bankruptcy reform measure. U.S. Representative John Conyers (D-MI), senior Democrat on the House Judiciary Committee, and U.S. Representative Melvin L. Watt (D-NC) joined Emanuel and Delahunt as original cosponsors of separate legislation (H.R. 1278) introduced in the form of a “stand-alone” bill in the full House of Representatives yesterday.