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The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Pennsylvania (Mr. GEKAS) is recognized for 5 minutes.

Mr. GEKAS. Mr. Speaker, the purpose of the special order to which I am attached today is to announce the introduction of the new bankruptcy reform act that we hope will be enacted into law during this current session and swiftly to arrive at the President's desk for signature. We are naming the new effort the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001, and we have over 50 cosponsors already even at the early stages of this session to help us shepherd through much-needed bankruptcy reform.

Mr. Speaker, my colleagues will recall that in the waning days of the last session, the House by voice vote and the Senate by an overwhelming vote of 70 to 28 approved the bankruptcy bill of the last term only to have it vetoed by President Clinton in the last days of the congressional session during the year 2000. So we have to start all over again.

In starting all over again, Mr. Speaker, we are adopting as the starting vehicle about 99 and 44/100 percent of the bill that was approved in the last days of the last session by both the House and the Senate, which was of course veto-proof. In the previous House vote, there were 315 votes, well over the veto-proof level, and in the Senate it was 70 over something which also allows for veto override. Happily, we may not require a veto-proof majority in this current session because we believe that bankruptcy reform could be part and parcel of President Bush's overall plan to meet the unstable economy head on to prevent some of the worst consequences of an economic downturn. It fits in perfectly.

Two main themes are part of the new bankruptcy reform effort to which I allude. These same two themes guided our actions from the very beginning. The first theme, and the most important one, is that it is tailored to make certain that anyone who is so overwhelmed by debt, so swamped by the inability to pay one's obligations that that individual after a good close look at his circumstances would be entitled to a fresh start, to be discharged in bankruptcy, to be free of the debts that so overwhelmed him. That is a salient feature of this bankruptcy reform bill and the ones that we were able to get these favorable votes to accomplish in the last two sessions.

So we never lose sight of, nor will we ever lose sight of, the real purpose of bankruptcy reform or any bankruptcy legislation to allow an American citizen the right to gain a fresh start after finding himself incapable of meeting his obligations. But the other tandem theme that is also part of what we have been doing for the last 3 years, and which will be an important feature of the new bill, will be that certain provisions will be put into place which will make certain that those people who have an ability to repay some of their debts will be compelled to do so, so that instead of a Chapter 7 filing which will give that automatic almost-fresh start, we will be able to shepherd some of the debtors into Chapter 13 and propose a plan and adopt a plan by which they could over a period of time repay some of the debt out of their then-current earnings.

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This is a well-balanced concept which we are presenting to the American people and to the Congress so that we can help join in the fight to make sure that our economy remains stable throughout the ensuing several years and into the next decade.

Some of the contentious features that we found occurred on the floor of the House and in committee throughout the last 3 years have been so well settled now and are part and parcel of the new proposal that we believe that only a modicum of new hearings will be needed either in the Senate or in the House for final resolution of the final wording that will go into the bankruptcy reform bill to which we refer. We had some 13 hearings within a year to determine what was out there in the business world and in the consumer world that was important enough for us to note and to provide language to accommodate.

Mr. Speaker, I am asking for cosponsorship.

• [Begin Insert]

I am proud to introduce H.R. 333, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001, today together with original cosponsors from both sides of the aisle.

This bill is identical to the conference report that accompanied H.R. 2415, the Gekas-Grassley Bankruptcy Reform Act of 2000, which passed the House by voice vote last October and passed the Senate with a veto-proof vote of 70 to 28 less than 2 months ago. The only revisions consist of a title change and the deletion of a provision that has already become law.

This bill is a further perfection of its predecessor, H.R. 833, the Bankruptcy Reform Act of 1999, which I introduced on February 24, 1999. With more than 100 cosponsors, H.R. 833 had overwhelming bipartisan support in the House as further evidenced by a vote on final passage of 313 to 108.

The bill I am introducing today consists of a comprehensive package of reforms pertaining to consumer and business bankruptcy law. It also includes provisions regarding the treatment of tax claims, enhanced data collection, and international insolvencies.

This bill responds to several developments affecting bankruptcy law and practice. Based on data released by the Administrative Office of the United States Courts, bankruptcy filings have increased exponentially. Between 1994 and 1998, the number of filed bankruptcy cases grew by more than 72 percent. In 1998, bankruptcy filings, according to the Administrative Office, reached an ``all-time high'' of more than 1.4 million cases. Paradoxically, however, this dramatic increase in bankruptcy filing rates occurred during a period when the economy continued to be robust, with relatively low unemployment and high consumer confidence.

Coupled with this development was the release of a study that estimated financial losses in 1997 resulting from these bankruptcy filings exceeded $44 billion, a loss equal to more than $400 per household. This study projected that even if the growth rate in personal bankruptcies slowed to only 15 percent over the next 3 years, the American economy would have to absorb a cumulative cost of more than $220 billion.

The Judiciary Committee began its consideration of comprehensive bankruptcy reform early in the 105th Congress. On April 16, 1997, the Subcommittee on Commercial and Administrative Law conducted a hearing on the operation of the bankruptcy system that was combined with a status report from the National Bankruptcy Review Commission. This was the first of 13 hearings that the subcommittee held on the subject of bankruptcy reform over the ensuring 2 years. Eight of these hearings were devoted solely to consideration of H.R. 833 and its predecessor, H.R. 3150, the Bankruptcy Reform Act of 1998. Over the course of these hearings, more than 120 witnesses, representing nearly every major constituency in the bankruptcy community, testified. With regard to H.R. 833 alone, testimony was received from 69 witnesses, representing 23 organizations, with additional material submitted by other individuals and groups.

The heart of the bill's consumer bankruptcy reforms is the implementation of a mechanism to ensure that consumer debtors repay their creditors the maximum that they can afford. The needs-based formula articulates objective criteria so that debtors and their counsel can self-evaluate their eligibility for relief under chapter 7 (a form of bankruptcy relief where the debtor generally receives a discharge of his

or her personal liability for most unsecured debts). These reforms are not intended to affect consumer debtors lacking the ability to repay their debts and deserving of an expeditious fresh start.

The bill's debtor protections include significant new credit card disclosure specifications and the requirement that billing statements and other related materials contain explanatory statements with regard to introductory interest rates and minimum payments. These additional disclosures will give debtors important information to enable them to better manage their financial affairs so that they can avoid fiscal disaster.

Important reforms intended to help debtors understand their rights and obligations with respect to reaffirmation agreements are also included in the legislation. To enforce these protections, the bill requires the Attorney General to designate a U.S. attorney for each judicial district and a FBI agent for each field office to have primary responsibility regarding abusive reaffirmation practices, among other responsibilities.

In addition, the legislation substantially expands a debtor's ability to exempt certain tax-qualified retirement accounts and pensions. It also creates a new provision that allows a consumer debtor to exempt certain education IRA and state tuition plans for his or her child's postsecondary education from the claims of creditors.

Most importantly, the legislation's credit counseling provisions will give consumers in financial distress an opportunity to learn about the consequences of bankruptcy--which can be very devastating to their credit rating, among other matters--and about alternatives to bankruptcy, as well as how to manage their finances, so that they can avoid future financial difficulties.

Other debtor protections include heightened requirements for those professionals and others who assist consumer debtors in connection with their bankruptcy cases, expanded notice requirements for consumers with regard to alternatives to bankruptcy relief, and the institution of a pilot program to study the effectiveness of consumer financial education for debtors. The legislation also addresses a problem under the current law with respect to those individuals who are precluded from obtaining bankruptcy relief because they simply cannot afford to pay the requisite bankruptcy filing fees and related charges. Under the legislation, these fees and charges may be waived in appropriate cases.

With regard to business bankruptcy reform, the bill addresses the special problems that small business cases present by instituting a variety of performance criteria and enforcement mechanisms to identify and weed out those debtors who are unable to reorganize. It also requires more active supervision of these cases by United States Trustees and the bankruptcy courts. The bill includes provisions dealing with business bankruptcy cases, in general, and family farmer bankruptcies, in particular. It also clarifies the treatment of certain financial contracts under the banking laws as well as under the Bankruptcy Code. The bill responds to the special needs of family farmers by making chapter 12 of the Bankruptcy Code--a form of bankruptcy relief available only to eligible family farmers--permanent.

The small business and single asset real estate provisions of the bill are largely derived from consensus recommendations of the National Bankruptcy Review Commission. Many of these recommendations received broad support from those in the bankruptcy community, including various bankruptcy judges, creditor groups, and the Executive Office for United States Trustees.

The bill, in addition, contains several provisions having general

impact with respect to bankruptcy law and practice. These include a provision permitting certain appeals from final bankruptcy court decisions to be heard directly by the court of appeals for the appropriate circuit. Another general provision of the bill requires the Executive Office for United States Trustees to compile various statistics regarding chapter 7, 11, and 13 cases, to make these data available to the public, and to report annually to Congress on the data collected.

It is also important to note that the legislation includes a plethora of provisions intended to protect the interests of women and children. For example, the legislation--

Gives domestic support obligations the highest entitlement to payment in bankruptcy cases where there are assets available to pay the claims of creditors. Current law only accords a seventh level payment priority to these claims.

Establishes a uniform and expanded definition of the term ``domestic support obligation'' to better protext the rights of women and children with support claims and to reduce litigation.

Prevents deadbeat parents from enjoying the benefits of bankruptcy relief without having first satisfied their spousal and child support obligations.

Ensures that bankruptcy cannot be used by deadbeat parents to interfere with the enforcement efforts of federal, state and local authorities with respect to overdue child support obligations.

Ensures that bankruptcy cannot be used by deadbeat parents to interfere with the enforcement efforts of federal, state and local authorities with respect to overdue child support obligations.

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Does not allow deadbeat parents to discharge other obligations relating to divorce or separation agreements.

Requries those who are responsible for the administration of bankruptcy cases to provide important information and notices to their holders of spousal or child support claims as well as to state child support agencies.

Many professionals and organizations responsible for federal child support enforcement programs such as the National District Attorneys Association, the National Association of Attorneys General, and the National Child Support Enforcement Association (which represents more than 60,000 child support professionals across America) have enthusiastically expressed their support for these important reforms.

I urge my colleagues to support H.R. 333, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001.

• [End Insert]

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