In the closing hours of this Congressional session, the pressure is on women to take the good with the bad. The Violence Against Women Act, which provides funding for battered women’s shelters and rape crisis centers, was allowed to expire on Sept. 30. The price of getting funding renewed? According to Senate Majority Leader Trent Lott: agree to a bankruptcy bill that embodies the consumer credit industry’s wish list, a list that would hurt ex-wives in need of support.
The link between the Violence Against Women Act and a bankruptcy bill has puzzled some, but the connection is women in trouble. Both bills involve women’s security: one of them financial, one of them physical.
A blue-ribbon commission established by Congress recommended a series of moderate, balanced reforms to the bankruptcy laws in 1997. The credit industry, angered that the proposals did not refocus the bankruptcy laws to squeeze harder on working families, pronounced the commission’s recommendations “dead on arrival.” Instead, the industry’s friends in Congress proposed a bill that has accurately been described as the credit industry’s “wish list.”
To rally support for the bill, the consumer credit industry has pumped a reported $40 million in lobbying dollars and campaign contributions to both Republicans and Democrats in Congress. In the spring of 1998, industry lobbyists described the bill as a “train that can’t be stopped.” With no political action committee for families in financial trouble and no lobbyists to counter and respond to the credit card companies, immediate passage seemed certain. By February of 2000, different versions of the deeply flawed bill had passed both the House and the Senate.
Proponents of the bill say its purpose is to root out “abuse” in the system, but if the bill had been aimed at stopping abuse, it would have restricted bankruptcy filings for people with more assets (such as million-dollar houses in Florida and Texas) or for big businesses. Instead, the restrictions apply to the poorest families in bankruptcy and the smallest businesses, leaving intact the loopholes for the true abusers. Further, the bill presumes that all the “abuse” is by debtors who take out credit, not by lenders who market high-cost credit to low-income families.
Credit Card Companies Could Compete with Ex-Wives for Alimony, Child Support
Without the involvement of women’s groups across the country, the bankruptcy bill would most likely have become the law of the land by now. After careful study of the complex bill, these groups voiced their opposition because the bill permits credit card companies to compete directly with ex-wives who are trying to collect alimony and child support. Currently, support obligations are one of the very few debts to survive a bankruptcy filing. The bill would increase the opportunities for Visa and MasterCard to join that select group in collecting from ex-husbands.
The bill’s sponsors tell women not to worry. In news releases and opinion pieces, they point out that Congress and the states have created a highly sophisticated child support collection system. They say that all is fine, and it won’t hurt women to share the ex-husband’s income with MasterCard and Visa.
But all is not fine. The Office of Child Support Enforcement reports that in 1998, only 38 percent of all child support cases in which a court order was issued resulted in any payments at all.
By way of comparison, on March 11, 1999, Bruce Hammonds, senior vice-chairman and chief operating officer of the credit card giant MBNA Corp., testified at a House hearing on the bankruptcy bill that more than 96 percent of credit card accounts are paid in full as agreed. For the remaining 4 percent, the bank has sophisticated collection departments. If collection efforts for some of the 4 percent fail, the bank bundles the bad debts and sells them to a specialist for further collection. They wring some payment out of virtually every account. With interest accumulating at 17 percent to 26 percent on the credit balances and with penalties for late payments, the credit card issuers make substantial profits even on the late payers. Most women would scoff at the notion that they can beat the banks in collecting from reluctant ex-husbands.
The issue is an urgent one for many women. Since 1995, more than a million women have become post-bankruptcy creditors of their ex-husbands. These women continue to face collection difficulties, but at least they are not forced to compete with MasterCard and Visa. Thirty-one women’s groups have fought to maintain the same protection for the next million women who are entitled to support. In their fight, they have so far stopped the train that couldn’t be stopped.
Those Convicted of Clinic Violence Should Not Hide Behind Bankruptcy Laws
Democratic Sen. Charles E. Schumer of New York added a special twist to the ongoing debates. He expressed serious doubts about the bill generally, but he proposed that if it was time to reform the bankruptcy laws to squeeze working families harder, then perhaps it was also time to prevent those who violate laws prohibiting clinic violence from using bankruptcy to protect their assets after civil judgments are entered against them. With the active support of several women’s groups, his clinic violence amendment passed the Senate overwhelmingly, only to be dropped out as the bill’s managers negotiated for a combined House and Senate version. The sponsors apparently wanted to keep the bill focused exclusively on working families–not abortion clinic protestors who violate the law.
Now in Washington, it is payback time. Sen. Lott has held up funding for battered women’s shelters, demanding that women’s groups agree to go along with the bankruptcy bill, stripped of the clinic violence amendment, if federal funding is to be restored. Joan Entmacher of the National Women’s Law Center and other lawyers active in women’s rights described the effort to link the Violence Against Women Act and the bankruptcy bill as “extortion.”
Both bills–funding for battered women’s shelters and bankruptcy amendments–should be considered on their own merits. When women are forced to trade protection desperately needed for one group of women against protection needed for another, clearly women are the losers.
Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard Law School and co-author of “The Fragile Middle Class” (Yale Press 2000), former advisor to the National Bankruptcy Review Commission, authorized by Congress to recommend reform of bankruptcy laws, and author of the commission’s 1997 report.
For more information, visit:
American Bankruptcy Institute (updates on pending legislation):
National Association of Consumer Bankruptcy Attorneys:
Time Magazine’s feature story on money, influence and bankruptcy:
The Report of the National Bankruptcy Review Commission:
Testimony of Gary Klein, National Consumer Law Center: