New study shows debts overwhelming bankrupt Americans
Copyright © 1998 Nando Media
Copyright © 1998 The Associated Press
WASHINGTON (December 2, 1998 00:51 a.m. EST nandotimes.com) -- The American Bankruptcy Institute rekindled the debate over bankruptcy Tuesday when it released the study finding that only 3 percent of people who petition courts to sweep away their debts could afford to repay them.
The institute, a group of 6,400 attorneys, judges, bankers and professors, does not take positions on bankruptcy issues.
"Clearly, the case for a radical rewrite of the bankruptcy code is simply not there, and this independent and impartial study proves it," said Rep. Jerrold Nadler, D-N.Y., a leading opponent of the overhaul legislation considered this year.
On the other side, a banking and retail industry coalition supporting the legislation said the study confirmed its views.
"The bottom line is that this study, like every study before it, confirms that our bankruptcy system is broken," the National Consumer Bankruptcy Coalition said in a statement. The industry group said the study also affirms the need for a federal "means" test to determine whether people filing for bankruptcy court protection from creditors are able to repay their debts -- a feature of the original House bill.
The new study is at odds with a survey commissioned by Visa USA and MasterCard International and conducted by the accounting firm Ernst & Young. That survey, released last winter, found that nearly one in 10 people who escaped debt by filing for Chapter 7 bankruptcy protection had the resources to fully repay their creditors.
It was cited as evidence by backers of the bankruptcy overhaul legislation.
In October the House passed legislation, pushed by credit card companies, that was designed to make it tougher for people to erase their debts in bankruptcy. But the White House threatened a veto and the Senate adjourned for the year without voting on it.
Alarmed by the rising tide of personal bankruptcies in a strong economy, lawmakers have pushed for a crackdown on perceived abuses of bankruptcy court protection and the battle is expected to continue next year.
Unpaid credit card debt is estimated at $40 billion. Almost 1.4 million Americans filed personal bankruptcies in 1997, up more than 300 percent since 1980.
By MARCY GORDON, AP Business Writer
nando.net |
