Proposed Changes in Bankruptcy Threaten Child Support

Large banking companies that issue credit cards are attempting to push through the U.S. Congress legislation that could negatively impact women and children who are owed alimony or child support. The companies want to change payment priorities for non-dischargeable debts.

The Bankruptcy Reform Act of 1998 (H.R. 3150) and its Senate counterpart, the Consumer Bankruptcy Reform Act of 1998 (S. 1301) would place credit card issuers on the same footing as child support and alimony obligations in bankruptcy cases. Women and children then would be in competition with big banks for a limited pool of dollars, making it even more difficult to collect past due child support or alimony payments. Changes would result in many women with children waiting five or more years to receive all of their past due child support, if at all.

H.R. 3150 is sponsored by Representative George Gekas (R-PA) and 39 co-sponsors. The Senate counterpart, S. 1301, is sponsored by Illinois Senator Dick Durbin (D-IL) and Senator Charles Grassley (R-IA).

During 1997, an estimated 243,000 to 325,000 bankruptcy cases involved child support and alimony orders. In about half of these cases, women were creditors trying to collect alimony and child support from their bankrupt ex-partners. About the same number of women filed bankruptcy themselves as they tried to stabilize their precarious post-divorce economic condition. In the past five years well over a million women collecting alimony and child support have been involved in bankruptcy cases.

There are other provisions of the pending legislation that would hurt women as creditors and debtors. For example, the changes could prevent an ex-wife from getting relief from liability for some of her husband’s credit card debt and might also result in the loss of the family home (under Chapter 13 requirements).

Attempts to amend the legislation have been unsatisfactory. The amendments do not sufficiently protect women and children.

The Senate will consider S. 1301 in committee on Thursday morning, May 21. Contact Senator Durbin before Thursday to voice your objections to S. 1301. The Senator’s phone number is 202.224.2152. His fax number is 202.224.0400. Tell Senator Durbin that Illinois residents are troubled by his sponsorship and support of S. 1301 which will hurt women and children. No legislation should be enacted that would place additional roadblocks for women and children to receive the full amount of alimony and child support due or otherwise put women and children at risk of economic instability.

For more information contact Wendy Pollack at 312.263.3830 ext. 238.