Thank you Mr. Chairman for allowing me to speak before the committee on bankruptcy reform as the Chairwoman of the Financial Institutions Subcommittee. I voted for last year’s bill and plan on supporting HR 833 - the Bankruptcy Reform Act of 1999.

Consumer bankruptcy reform is an important issue that needs to be addressed now. In 1997 Americans filed a record of 1.33 million consumer bankruptcy petitions representing an over 650 percent increase since 1978. Those who entered into bankruptcy erased an estimated $40 billion in consumer debt. This resulted in a hidden tax of almost $400 per household for families who have to pay monthly bills including mortgages, student loans, and insurance. It is important to note that this surge in bankruptcies in the last few years occurred at a time when the national economy has grown at a strong rate. In fact, between 1986 and 1996, real per capita annual disposable income grew by over 13 percent while personal bankruptcies more than doubled.

Bankruptcy is fast becoming the first stop financial planning tool rather than a last resort. The purpose of reform is to improve bankruptcy law and practice by restoring personal responsibility and integrity in the bankruptcy system but also ensuring that the safety net of the Bankruptcy code is intact for those who need it most. I am a strong supporter of the consumer bankruptcy reforms contained in the bill and I will continue to work hard for bankruptcy reform legislation.

I’d like to speak for a moment regarding the banking issues in the bill and associate myself with the positions stated by Chairman Leach and strongly support the provisions of this bill.

First, the Committee has just heard from Chairman Leach regarding Title X of the Bill or the "Netting Bill" as the Banking Committee referred to it last year. I support the inclusion of Title X in the Bill. This Title will harmonize banking and bankruptcy law with respect to the netting of financial contracts. It was produced by the President’s Working Group on Financial Markets and is strongly supported by the Federal Banking agencies. I support Chairman Leach on this and appreciate that the Committee has included this Title in the Bankruptcy Bill.

I also want to express my concerns with the problems presented by Hedge Funds. I particularly want to work with you, Chairman Gekas on your expressed concerns of privacy protections and other consumer protections. We have dealt with the issue to some degree in the Financial Modernization bill but not in a comprehensive manner. I would offer to work with your Subcommittee as you address this complex issue.

Secondly, I would like to note that there are 4 sections in the Bankruptcy Bill which are clearly within the jurisdiction of the Banking Committee. These provisions, which address disclosures for home equity loans, minimum credit card payments and the ability of credit card companies to terminate inactive cards, are within the jurisdiction of the Subcommittee which I chair.

It is important to not that since there are provisions in this bill which are clearly within the Banking Committee’s jurisdiction, that Banking Committee members should be included in any conference on this legislation in the future. I am submitting a copy of the Letter I sent last year to the Speaker requesting that Banking Committee members be made conferees. When this bill moves to Conference, I look forward to working with your Committee on these issues.

I would also like to make a statement on the child support provisions in the Bankruptcy Reform Bill

I have a long history of standing up for child support enforcement, having been a pioneer on child support reforms and having served on the U.S. Commission for Inter-State Child Support Enforcement. It's a national disgrace that our child support enforcement system continues to allow so many parents who can afford to pay for their children's support to shirk these obligations. The so-called 'enforcement gap'--the difference between how much child support could be collected and how much child support is collected--has been estimated at $34 billion!

This legal abuse is a criminal violation as well as neglect of our children’s most basic needs. In addition, the taxpayers are abused because billions of tax dollars are paid out because these families are falling onto the welfare roles at alarming rates.

I am very pleased that HR 833 - the Bankruptcy Reform Act of 1999 strengthens child support enforcement. I thank the Chairman and the Subcommittee for all their hardwork and their reaching out to diverse groups to form a consensus that the payment of child support should be protected.

HR 833 strengthens Child Support Enforcement by:

• Child support payments are moved to NUMBER ONE when determining which debts are paid first in a bankruptcy case. Currently, child support payments rank seventh behind such "priorities" as attorney’s fees.

• Confirmation and discharge of Chapter 13 plans are made conditional upon the debtor’s complete payment of child support. This will help further ensure that child support receives the priority it deserves.

• Providing that the automatic stay DOES NOT apply to a state child support collection agency that is trying to recover child support payments. I know from speaking with child support advocates in New Jersey, that this change is a top priority for them to ensure continued payment of important child support.

I also want to associate myself with an additional provision, to be offered on the floor by Representative Clay Shaw of Florida, that will require the trustee to notify a claimant parent of the bankruptcy proceeding. This will ensure that claimant parents are not left out when a debtor parent enters into bankruptcy. It is important to note that this was dropped from the Conference report last year. I voted no on that report in protest over that action.

The current child support obligation for this year in New Jersey is $767 million. The total child support payments in arrears is $1.3 Billion. Yes, I said $1.3 Billion, of which about $800 million is still collectable. Bergen county in my district, along with six other New Jersey counties, make up 53 percent of the total collections.

I would like to work with the Subcommittee and all interested parties to see if we can further improve the child support provisions. One of the areas where I want to work is to ensure the trustee notice is received by the claimant. It happens with some frequency, for whatever reason, that incorrect or insufficient information is given by the debtor to the court. This hampers and sometimes seriously delays the delivery of child support. I want to work on a way to ensure to the best of their ability that the proper information is supplied by the debtor. In this effort though I want to issue a strong caveat. The privacy of the ex-spouse and children MUST BE protected in all cases. I want to work with the concerned groups so this important protection is ensured while at the same time we can get the most accurate information for child support payments to be issued.

These are important and significant improvements that ensure that child support enforcement is strengthened. I supported these provisions last year and plan to support them this year.

It is important to remember that failure to pay child support is not a victimless crime. The children are the first and most important victims. We must ensure that these children are taken care of and I applaud the work of the Subcommittee to this end and will continue my work on this issue. I also look forward to reviewing the testimony of the panel on child support today and to further working with the Subcommittee. Thank you.