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Democratic Amendments Defeated, Debate to Continue Into Next Week

The Senate defeated an amendment by Sen. Paul Wellstone (D-Minn.) that would have exempted all of the bill’s provisions from application to any debtor who was found by a court to have filed for reasons of medical debts. The amendment was defeated by a bipartisan vote of 34-65, with one voting “present.” In support of his amendment, Wellstone cited studies suggesting that as many as three-quarters of all consumer bankruptcies arise from health and medical problems, rather than those abusing the bankruptcy system. “Should people with major medical bills be treated with the same presumption of abuse as wealthy slackers who are gaming the system?” Wellstone asked. “These people aren’t slackers, they’re not cheats. They didn’t ask for medical problems, they didn’t ask for disabling injuries.” The bill’s sponsors countered that the bill’s means test formula already allows a debtor to deduct actual medical expenses in calculating the ability to repay, and that extraordinary expenses, such as care and support for an elderly, chronically ill or disabled household member, are also covered by the means test. Given the slow pace of floor action, the Senate will not reach final passage today. Senate Majority Leader Trent Lott (D-Miss.) acknowledged that debate would continue into next week.

The Senate also defeated an amendment by Sen. Patrick Leahy (D-Vt.) that would have amended the bill’s small business provisions to give a repayment priority to small business creditors (those with 25 or fewer employees) over other general unsecured creditors, just behind priority creditors. The amendment was defeated by a bipartisan vote of 41-58, with one voting “present.” Leahy may offer another amendment that would limit the personal information available online about individuals filing for bankruptcy, according to CQ Daily Monitor.

Sen. Richard Durbin (D-Ill.) attacked credit card companies as the culprit behind the rising numbers of bankruptcies and offered an amendment that would invalidate claims made against borrowers by creditors who have committed illegal lending practices. That proposal will be voted on today. Another Durbin amendment aimed at the credit industry would require credit card companies to provide customers with specific account information, including how long it would take to repay their debt by making only the minimum monthly payment. Both Durbin and Sen. Dianne Feinstein (D-Calif.) will propose an amendment limiting the credit that companies could extend to customers under age 21 without parental permission. Other items to be voted on during today’s session include amendments to the means test, homestead exemption, lienstripping in chapter 13, household goods definition, length of chapter 13 plans, subprime lending and the so-called “Lloyd’s of London” provision, among others. A GOP-supported manager’s amendment will also be offered. Also coming are non-germane amendments, such as a handgun amendment requiring trigger locks on newly made guns, to come from Feinstein.

Senate debate proceeds as the Fed Wednesday reported that U.S. consumers used their credit cards freely in January, pushing up consumer debt by $16.1 billion, far greater than the $6.5 billion forecasted by Wall Street. The total included $6.7 of new revolving debt, with nonrevolving debt up by $9.3 billion. Find a lawyer for Chapter 13 bankruptcy.

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