Bankruptcy Legislation
I applaud your June 8 editorial, “Bankruptcy Non-Reform,” for its penetrating accuracy in describing a badly flawed legislative process. The consumer credit industry has employed Lloyd Bentsen, Lloyd Cutler and other high-powered lobbyists to pursue a multimillion-dollar campaign to buy so-called bankruptcy “reform” legislation. That legislation would put certain consumer debtors in bondage solely to raise profits of the consumer credit industry.
Simple steps can be taken to deal with abuses that are actually caused by a minuscule portion of debtors who use our bankruptcy system. Specifically, Congress should enact amendments to the 1978 Bankruptcy Code to dismiss cases for clear abuse, prevent repeat bankruptcy filings and cap state exemption laws that permit debtors to shelter exorbitant amounts of money on the eve of filing a bankruptcy case.
The real purpose of the credit industry is to enact legislation that will prevent debtors from discharging credit card debts in bankruptcy. That way the credit industry can continue to charge debtors interest at 17% on outstanding balances for the rest of their lives. This is the real financial battle and the real tragedy of the pending bankruptcy legislation.
The legislation is also flawed in diminishing the prospects for rehabilitation of small businesses and debtors who own single-asset real estate projects. As a Republican, a former Republican congressional staffer and a principal draftsman of the 1978 Bankruptcy Code, I am embarrassed that the Republican Party would take such a hostile position toward small businesses, whose cause the party has so long championed.
The credit industry and its apologists will stop at nothing to enact this oppressive legislation.
KENNETH N. KLEE
Acting Professor
UCLA Law School
* Should the credit card industry be treated like the tobacco industry and be required to label its advertisements and credit cards with a memo stating “misuse may cause bankruptcy and lifelong debt”? Our schools should make a debt management course mandatory for graduation. Perhaps a tax on the credit industry would finance such courses.
MARVIN BERMAN
Sherman Oaks
