By David Hansen, CCH Washington Staff Writer, and John L. Duoba, Business Owner's Toolkit Staff Writer

The House of Representatives effectively ended bankruptcy reform in the 107th Congress on November 14, 2002, by rejecting a rule for debating a bankruptcy conference report. House Republicans are continuing efforts to try to enact a bankruptcy reform measure during this lame-duck session of Congress, but the maneuvers are seen more as attempts at political cover and not policy making.

The conference report resolved differences between alternative bankruptcy reform bills passed by the House and Senate more than a year ago. However some representatives opposed the vote because it would have kept anti-abortion activists from discharging fines and civil suits from protesting. They joined with liberal Democrats who felt conference report hurt the poor, said a House Republican staffer.

The House voted 172-243 against H. Res. 606, the rule for considering the conference report for the Bankruptcy Abuse Prevention & Consumer Prevention Bill. The rule would have waived all points of order against the conference report and provided for one hour of debate.

Under the procedural rules of the House a conference report must contain provisions that were in either the House or Senate version of the bill or a compromise. Conference reports never meet this standard, said a House Democratic staffer who asked to remain anonymous. So the rules for debating them routinely waive points of order, said the source, and usually pass on a party-line vote. Without the waiver the House was unable to debate the reform measure.

The bankruptcy report pitted two core constituencies of the GOP against each other, said the staffer. Banks and credit card companies who form the base of financial donations lobbied for the reform measure, while religious conservatives who contribute campaign volunteers lobbied against it. The conservatives were incensed that Republicans brought up a bill they found repugnant right after an election where they worked hard to give the GOP control of Congress, said the staffer. In defeating the conference report, they simply lobbied more effectively than the business community, said a Republican staffer.

House GOP Introduces New Surprise Reform Measure

Suddenly, some seven hours later after 2 am EST, in what many are viewing as a political face-saving move, House Republicans introduced and passed a brand-new bankruptcy reform measure without the controversial anti-abortion protestor language by a vote of 244-116, with 72 representatives not voting. No Republicans voted against the bill.

The new bill has been sent to the Senate, but it is unlikely to be approved in the limited time left in this lame-duck session of Congress. The Senate is only considering appropriations bills and conference reports in this special extra session. Senate Majority Leader Tom Daschle (D-S.D.) had stated that the Senate would bring up the bankruptcy conference report only after passage by the House.

"It's time to go back to the drawing board," said a Republican staffer. Bankruptcy reform will return in the 108th Congress without the controversial abortion provision, vowed House Committee on Ways and Means member Rep. Phil Crane (R-Ill.).

Congress' attempts to reform the nation's bankruptcy laws date back five years to the 105th Congress.

For more information on the current rules of bankruptcy and how they interact with a comprehensive asset protection plan for your small business, visit our new chapter of the "SOHO Guidebook"--Protecting Your Assets. New, more stricter rules for debtors will be part of any bankruptcy reform, and you may want to consider what it could mean to you and your business if you're currently experiencing dire circumstances.

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