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Federal legislation making it more difficult for individuals to file for bankruptcy sailed through the Senate on March 10. Passage in the House looks certain.

Bankruptcy is a serious and growing problem in the United States. According to researchers Elizabeth Warren and Amelia Warren Tyagi, the number of women filing for bankruptcy increased from 69,000 in 1981 to 500,000 in 1999.

The bill addresses both Chapter 7 and Chapter 13 bankruptcy filings. The former type allows individuals to wipe out nearly all of their debts, while the latter reorganizes debt and sets a repayment plan. The bill says anyone with an income 25 percent greater than the state median cannot file Chapter 7.

Christians are divided on the bill, which passed after an eight-year lobbying effort by the banking industry. Radio host and financial counselor Dave Ramsey called it "one of the worst pieces of legislation to come out of Washington in years."

Ramsey told CT, "This legislation is based on the lie that most people who file for bankruptcy are deadbeats or con artists."

But the bill's sponsor, Sen. Charles Grassley, R-Iowa, told CT the "bill seeks to hold accountable those who have spent recklessly while preserving the principle of a fresh start for those who are in debt by no fault of their own."

Attorney Bradford Botes of Birmingham, Alabama, spearheaded opposition by a group of 75 Christian bankruptcy attorneys. "Half of the bankruptcies in America are medically related," Botes said. "The bill would apply bright-line tests instead of allowing judges to discern the right solution for debt-ridden people. This is not reform."

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The text of the bill is available from The Library of Congress.

News elsewhere on the bill includes:

Christian lawyers say bill, Bible don't mesh | A national attorney group calls on church leaders to lobby against bankruptcy reform legislation. (Des Moines Register, March 4, 2005)

Bankruptcy reform hits women hard | By making it tougher and, possibly, more expensive to declare insolvency, the bill aims to encourage personal responsibility and restore more power to creditors in an era when personal bankruptcies have become more popular. If the reform becomes law, however, women will be the most affected, experts say. (The Christian Science Monitor, April 04, 2005)

Senate ready to pass bankruptcy bill despite Christian opposition | A group of 70 Christians who are members of the National Association of Consumer Bankruptcy Attorneys took the rhetoric a step further, sending an open letter to religious leaders March 1 that said the bill violates biblical principles. (Associated Baptist Press, March 10, 2005)

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May 2005, Vol. 49, No. 5