Chuck Grassley: “I think that we need to consider once again the very important issue of bankruptcy. Senator Durbin has cooperated very…”

“I think that we need to consider once again the very important issue of bankruptcy. Senator Durbin has cooperated very well in the subcommittee's work and the committee's work to bring the bill this far. Why are we introducing a bankruptcy bill? Why do we need major bankruptcy reform? I think it is pretty simple that under the current system an individual can avoid paying the debts that he has incurred with few, if any, questions asked even if that individual has some ability to repay all or a portion of those debts. This much too easy bankruptcy system encourages irresponsible behavior and costs businesses and ultimately consumers they serve millions of dollars a year, adding up to $40 billion a year in added cost to product and service. They have to raise their prices to cover this. You, as a consumer, pay this. That is $400 for the average family--a hidden tax. You can see this being possible because individuals can declare bankruptcy under chapter 7 where debts are rarely repaid. Or there is the choice of chapter 13 which requires debtors to repay a discounted portion of their debts. And obviously--and this bill does that--Congress should encourage the use of chapter 13 where creditors will at least receive something, whereas under chapter 7 rarely anything. Our bill imposes a means test for people who declare bankruptcy.”