WASHINGTON – Maryland Sen. Paul Sarbanes, D-Baltimore, joined a slew of Democrats who took the floor of the Senate Thursday in an effort to soften a bankruptcy reform bill that would make it harder for people to erase credit card and other debts.
Opponents, who spent much of the day trying to amend the bill, claim it does not offer enough protection for consumers.
Maryland Sen. Barbara Mikulski has not decided how she will vote on the legislation, an aide said Thursday, but the Baltimore Democrat voted against a similar bill last year. A final vote is not expected until next week.
A version of the bankruptcy bill has already swept through the House, winning support of six of Maryland’s eight House members. President Bush has indicated he would sign it if reaches his desk.
The legislation would make it harder for people to file for Chapter 7 bankruptcy protection, which can erase their debt. Instead, it would force more people to file under Chapter 13, under which the court sets plans for debtors to pay off their bills.
Supporters, which include banks, credit card companies and retail creditors, say loopholes have sparked massive abuse of the system.
In Maryland, Chapter 7 bankruptcy filings rose from 5,500 in 1989 to 26,000 in 1998, before falling to 22,400 in 1999, according to the Department of Justice.
Nationally, bankruptcy filings jumped from about 350,000 to 1.4 million a year in the last 15 years, said the U.S. Chamber of Commerce, which said those bankruptcies cost American businesses about $40 billion each year.
But consumer groups and labor unions say the millions of credit card solicitations that clog America’s mailboxes have contributed to the rise in consumer debt and bankruptcies.
“When 3- and 4-year-olds get credit card solicitations, you know something is wrong,” said Sen. Patrick Leahy, D-Vermont, when the bill was debated before the Senate Judiciary Committee last month.
Opponents charge that, under the bill, bankruptcy protection would no longer be available to many of the people who run into financial difficulties after they lose a job, go through a divorce, get sick or become buried under credit card debt.
Senate Democrats this week have been offering up amendments to the bill, including one from Sen. Paul Wellstone of Minnesota that sought to protect people wiped out by medical bills. That amendment lost on a 65-34 vote Wednesday. Both Mikulski and Sarbanes voted for the amendment.
Among the amendments Sarbanes is supporting is one that would force credit card companies to post consumer warnings on customer bills.
“His main concern is this doesn’t offer enough consumer protection,” said spokesman Jesse Jacobs.
A bankruptcy reform bill passed the House last week 306-108, with overwhelming Republican support and a split Democratic vote. That split held true in Maryland. All four Republicans and two Democrats voted for the bill while the other two Democrats — Baltimore Reps. Ben Cardin and Elijah Cummings — voted against it.
Cardin said bankruptcy reform is sorely needed, but the proposal before Congress is flawed. Congress already passed bankruptcy reform legislation once, but then-President Clinton vetoed it in December.
Cardin said the current bill does not do enough to protect child support payments, for example. The legislation would force a parent to pay off debts first, even it left nothing to make child support payments.
“The bottom line is that we need to pass a bill, but this one goes too far,” Cardin said.