The National Retail Federation welcomed the House of Representatives' passage of long-awaited bankruptcy reform legislation.
“It feels like we've been waiting as long to pass bankruptcy reform as Washington spent trying to get baseball back in town,” NRF Senior Vice President for Government Relations Steve Pfister said. “The House hit one out of the park today. Now we're just waiting for President Bush to cross home plate by signing this bill into law.”
“This is a home run for consumers who've been picking up the tab on bad debt for far too long,” Pfister said. “The number of people filing bankruptcy has doubled in the past 10 years, and they've left the average consumer spending hundreds of dollars every year to make up the difference. Many of those bankruptcies are legitimate, but too many are being filed by high-income individuals who could afford to pay but choose not to. This bill will return bankruptcy to being a safety net and not a financial planning tool for those who are sophisticated enough to game the system.”
“This isn't just about big credit card companies and banks,” Pfister said. “There are thousands of Main Street retailers out there selling merchandise on store credit who can't afford not to get paid. Whether it's a Mom and Pop store or a national chain, retailers who get left holding bad debt have to pass that cost on to their customers and everyone ends up paying.”
The House today voted 302-126 to approve S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, sponsored by Senate Finance Committee Chairman Charles Grassley, R-Iowa. The measure passed the Senate 74-25 on March 10 and now goes to President Bush for his signature.
The legislation requires individuals who can afford to repay a significant part of their debt to do so under Chapter 13 rather than having all debts erased under Chapter 7. The option of Chapter 7 would still be preserved, however, for those who truly need it.
NRF has led retailers' support for bankruptcy reform legislation for close to a decade. There were 1.6 million consumer bankruptcy filings in 2004 – roughly twice the number from a decade ago – and retailers who offer store credit or credit cards bear a large share of the increasing volume of bad debt.
