Members of the House and Senate proposed three bills last week that seek to amend the new bankruptcy reform act in response to Hurricane Katrina.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which will make it harder for heavily indebted Americans to wipe out their obligations, was passed by Congress in the spring and is scheduled to go into effect October 17. Among other things, the new law requires debtors who earn more than the median income in their state and who can repay some of their debts to be put on repayment plans rather than simply having their debts forgiven.

Two bills were proposed in the House of Representatives last week that aim to mitigate the effect of the new bankruptcy rules on Katrina victims. On Tuesday, Representative Louise McIntosh Slaughter (N.Y.) proposed H.R. 3662, entitled the “Financial Safeguards for Hurricane Survivors Act of 2005.” Rep. Slaughter’s bill seeks to universally delay the general effective date of the new bankruptcy law by two years. On Thursday, Representative John Conyers (Mich.) proposed H.R. 3697, which seeks to amend the new bankruptcy law to provide relief with respect to disaster-related debts incurred by victims of Hurricane Katrina and other natural disasters. Last week, Conyers issued a press release on behalf of the bills’ sponsors that stated, “We are concerned that just as survivors of Hurricane Katrina are beginning to rebuild their lives, the new bankruptcy law will result in a further and unintended financial whammy.” The bill was cosponsored by 31 Representatives, including Sheila Jackson-Lee (Tex.) who proposed an amendment to the bankruptcy law that would protect victims of natural disasters when the new bankruptcy law was still being debated by Congress. That amendment was defeated on a party line vote without debate.

The Senate has also joined in the effort to safeguard Katrina’s victims. Sen. Russ Feingold (Wisc.) proposed bill S.1647 on Thursday. The bill proposes to amend the new bankruptcy law to provide relief to victims of Hurricane Katrina and other natural disasters and was cosponsored by 15 Senators, including Hillary Rodham-Clinton (N.Y.), Barbara Boxer (Cal.), Dianne Feinstein (Cal.), Edward Kennedy (Mass.), Joseph Lieberman (Conn.), Barack Obama (Ill.) and Tom Harkin (Iowa).

Some Congress members have questioned the need for amendment and have indicated they will oppose passage of these bills. Jeff Lungren, spokesman for House Judiciary Committee Chairman James Sensenbrenner (Wisc.) stated last week, “The goal of this law was to insure that all bill-paying Americans, including victims of Hurricane Katrina, don’t have to pay the debts of others that can afford to pay.”

The full text of the bills referenced above is available at

Written by: Kristen Techel