MEASURE CURBS FRAUD AND ABUSE IN BANKRUPTCY FILINGS

Washington, Apr 14, 2005 - "Filing for bankruptcy should be a last resort instead of a first step," stated Rep. Cliff Stearns (R-Ocala).  "Reforming the bankruptcy laws will improve the economy and protect the pocketbooks of consumers who now pay an average of $400 per family in higher costs and interest rates due to bankruptcy abuse and fraud.  This measure restores personal responsibility in the bankruptcy process.  If you are able to pay your bills you should; if you are not then you should receive relief and a new start."

The House today approved S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act.  This measure reforms the bankruptcy system by establishing a means test to distinguish between legitimate filers who need Chapter 7 protection (liquidation and fresh start) and those who can pay a portion of their debts under Chapter 13 (repayment) or those who do not need bankruptcy at all.   Explained Stearns, "Those who earn less than the state median income, which is about $57,000 for a family of four in Florida, will continue to be able to file under Chapter 7 protection."

This bill also makes it easier to collect alimony and child support from a bankrupt spouse; exempts disabled veterans whose debts arose during military service and includes several other favorable provisions for service members; allows victims of corporate crime to go after any asset the perpetrator had transferred into a trust during the previous ten years; protects family farmers, and helps small business debtors comply with these laws more efficiently so that businesses and their employees can get back to work.

This reform also requires credit card companies to disclose to their customers the dangers of making late or only minimum payments, and prohibits the deceptive advertising of low introductory rates.

Concluded Stearns, "No bankruptcy legislation can be perfect.  However, this legislation continues the generous tradition of America's bankruptcy laws.  It is my hope that this measure will slow down the escalating number of bankruptcies and curb fraud and abuse in the system."