Sessions Supports Bankruptcy Reform Bill

U.S. Congressman Pete Sessions (R-Dallas) today voted in favor of S. 256, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It passed the House with an overwhelming bipartisan vote of 302-126. Bankruptcy filings have skyrocketed in the U.S. in recent years. In 2004, there were 1.6 million bankruptcies in the United States. Along with the increasing number of filings, the number of filers who abuse the system by making fraudulent claims has increased as well. “Our goal in passing this bill,” said Sessions, “is to refocus the bankruptcy system to cover those who legitimately need protection.” “We need to ensure that U.S. bankruptcy law helps those with real need to manage their debt,” Sessions continued. “We should not have laws on the books that allow bankruptcy filers who have the means to repay a portion of their debt avoid their obligations.” Bankruptcy abuse hurts individuals and families. Every American family pays a “hidden tax” estimated at between $400 and $550 each year in the form of higher prices and interest rates as a result of the expenses incurred through abusive and opportunistic bankruptcy filings. All too often, individuals run up massive debt and declare bankruptcy in order to avoid paying their creditors. In addition, bankruptcy abuse hurts our nation's small businesses and their employees, making the bankruptcy crisis also a jobs crisis. When businesses take losses due to bankruptcy, they are often forced to make up for those losses by increasing prices, laying off employees, or simply going out of business. The bankruptcy reform legislation passed by the House today will help eliminate the costs of abusive filings by implementing a means test to ensure that people who can repay all or a portion of their debts honor them. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 will give courts greater freedom to dismiss fraudulent and abusive claims and to punish attorneys who encourage their clients to file such claims. It will also provide consumers with increased protections during the bankruptcy process. “All Americans, both families and businesses, pay the price when unscrupulous people game the system,” said Sessions. “Reforming bankruptcy laws in the U.S. will bring fairness back to the system and ensure that we have the resources to help those who legitimately need protection.” Senator Chuck Grassley (R-IA) introduced The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 in the Senate. House Judiciary Committee Chairman F. James Sensenbrenner, Jr. has been the bill’s leading proponent in the House. The Senate passed the bill by bipartisan a vote of 74-25 on March 10, 2005. It will next go to the President for his signature.