Herb Kohl: “I am in support of the Kennedy-Kohl amendment. It would eliminate the most flagrant abuse of the bankruptcy system under…”

“I am in support of the Kennedy-Kohl amendment. It would eliminate the most flagrant abuse of the bankruptcy system under current law--the unlimited homestead exemption. This exemption allows debtors in five states to purchase expensive homes and shield millions of dollars from their creditors. All too often, millionaire debtors take advantage of this loophole by buying mansions in states with unlimited exemptions like Florida and Texas, and declaring bankruptcy and yet continue to live like kings. Our measure will generously cap the homestead exemption at $300,000--that is: it permits a debtor to keep $300,000 of equity in his or her home after declaring bankruptcy. This amendment, with even lower threshold amounts, has been adopted twice by the Senate by wide margins in the course of considering previous bankruptcy bills, in both the 106th and 107th Congresses. As a result of my efforts in the past bankruptcy debates, the underlying bill that we are debating already contains a provision on the homestead amendment that gets at the worst abusers of this loophole, including felons. In fact, it will be the first Federal law ever on the homestead exemption. The provision included in the bill, however, while obviously better than the current law's allowance of an unlimited homestead exemption, is still not a comprehensive solution to the current abuses of the law.”