Washington, D.C.--Sixth District U.S. Congressman Frank Lucas helped pass H.R. 3150, the "Bankruptcy Reform Act" with a vote of yes yesterday on the House floor. The final vote was 306 to 118. The bill restores personal responsibility, fairness and accountability to U.S. bankruptcy laws.

"Americans who work hard and pay their bills should not be held accountable for the debts incurred by those who irresponsibly file for bankruptcy," Lucas said. "The key term there is 'irresponsibly.' I think it is evident that the system is being abused by the astronomical increase in individual bankruptcies filed in healthy economic times.

"It has been nearly 20 years since Congress rewrote America's bankruptcy law and during that period the number of bankruptcy filings has risen by more than 600 percent," Lucas continued. AApproximately 1.4 million consumer bankruptcies were filed in 1997 which resulted in $40 billion in forgiven consumer debt.

"Those losses were passed onto consumers, costing every household that pays its bills, $400 in hidden taxes," Lucas said, "and that is absolutely unfair.

"There are individuals out there who, immediately prior to filing for bankruptcy, will run up their credit card," Lucas said. "This bill discourages that behavior by requiring individuals to pay back credit card charges made in the 90 days preceding the filing."

Chapter 7 bankruptcies allow individuals to wipe away most of their debts. The bill imposes a means test to limit Chapter 7 filings to individuals with incomes below the nation's median--presently the median income is approximately $50,000 annually. Those who have the ability to repay their debts are steered into Chapter 13 bankruptcy, which requires a repayment plan.

"For those debtors who truly need a fresh start, H.R. 3150 contains a Debtor's Bill of Rights that includes, among other provisions, additional steps in adequately advising and educating individuals of the potential harm filing bankruptcy can cause," Lucas said.

Other important entities are protected in the bill also.

"Provisions in the bill are very explicit about insuring that child support and alimony remain as priority debts, meaning that these debts cannot be discharged even with the filing of bankruptcy and must be paid before one penny makes it into the creditors' pockets," Lucas added. "Our mothers and fathers and the needs of their children must take precedence over creditors."

Creditors will not be able to go after contributions made to qualified religious or charitable organizations by individuals prior to their bankruptcy filing. Individuals who have established a pattern of giving prior to filing bankruptcy are allowed to tithe or contribute up to 15 percent of their annual income to these entities.

"This is a good and thorough bill," Lucas concluded. "It encourages personal responsibility among Americans which has been a theme for this Congress. We are working to shrink the size of the federal government and let people run their lives at the local levels. Personal responsibility is crucial to that success."