WASHINGTON (AP) The Senate on Wednesday voted not to allow people seeking bankruptcy protection because of disastrous medical bills to have a better chance of erasing their debts in court than consumers filing for other reasons.
Senators voted, 65-34, to reject the exemption for medical debts from sweeping bankruptcy legislation that would force many consumers to eventually repay their credit card and other debts, rather than have them dissolved.
It was the first Senate vote related to the bankruptcy overhaul legislation, which overwhelmingly passed the House last Thursday and is expected to be signed by President Bush if it reaches his desk.
The bill was vetoed in December by then-President Clinton, who contended it would hurt ordinary people and working families that fall on hard times. It has been pushed by the banking, credit card and retail credit industries, while consumer groups and unions have opposed it.
The amendment exempting medical debts was proposed by Sen. Paul Wellstone of Minnesota, one of the Senates most liberal Democrats and a leading opponent of the bankruptcy legislation.
We know that in the vast majority of cases, bankruptcy is a drastic step taken by families in desperate financial circumstances and overburdened by debt, Wellstone said before the vote. We know that nearly half of all debtors report that high medical costs forced them into bankruptcy. This is an especially serious problem for the elderly.
A study published last May found that catastrophic medical bills play a significant role in personal bankruptcies, accounting for about 40 percent of the filings in 1999.
About 500,000 Americans filed for bankruptcy protection that year at least in part because of heavy medical expenses, according to the study.
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The financial misfortune can befall people with health insurance as well as the uninsured because some insurance policies are inadequate, the survey of bankruptcy filings showed. It also found that seniors and women, as well as families headed by single women, were the groups in bankruptcy that were hardest hit by medical expenses.
But Sen. Orrin Hatch, R-Utah, chairman of the Senate Judiciary Committee, said Wellstones amendment unwisely creates two classes of debtors and would establish an unfair loophole.
Spokesmen for major credit card companies didnt dispute the findings of the study by Harvard law professor Elizabeth Warren; Teresa Sullivan, dean of graduate studies at the University of Texas; and Melissa Jacoby, an attorney.
The spokesmen maintained, however, that the findings did not diminish the need for legislation making it tougher for those who can afford to repay their debts including medical bills, as well as credit card balances to dissolve them through bankruptcy.
The study examined bankruptcy filings in 1999 in eight federal judicial districts in California, Illinois, Kentucky, Ohio, Pennsylvania, Tennessee, Texas and Wisconsin.
Personal bankruptcies in this country reached a record 1.4 million in 1998, despite the strong economy, up more than 300 percent since 1980. But the rate declined to about 1.3 million in 1999 and 1.2 million last year, according to government figures.
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