Citing Bankruptcy Protection's Role in the Social Safety Net
Contact: Jeff Mandell, (202) 387-2800
WASHINGTON February 25, 2000 — As the House and Senate versions of the Bankruptcy Reform Act proceed to conference committee, Union of American Hebrew Congregations (UAHC), whose 895 congregations across North America encompass 1.5 million Reform Jews, and the Central Conference of American Rabbis (CCAR), whose membership includes over 1700 Reform rabbis, is urging President Clinton to veto the legislation should it ever reach his desk.
The welfare of the economically disadvantaged has always been a paramount concern of the Jewish people. A 1981 UAHC resolution on The Budget and Social Welfare' affirms this commitment: "Any economic system deserves to survive only if it effectively provides for the wellbeing of the least powerful, least advantaged members of society." The Bankruptcy Reform Act works against the goal of a just and compassionate society by seriously curtailing the amount of bankruptcy assistance currently available.
In a letter to the President released today, Rabbi David Saperstein, Director of the Religious Action Center of Reform Judaism and Judge David Davidson, Chair of the Commission on Social Action of Reform Judaism, stated the Reform Movement's opposition to the legislation on the grounds that it "works against the interests of America's poor."
The text of the letter follows:
On behalf of the Union of American Hebrew Congregations, whose 895 congregations across North America encompass 1.5 million Reform Jews, and the Central Conference of American Rabbis (CCAR), whose membership includes over 1700 Reform rabbis, we are writing to express our concern regarding the recently passed bankruptcy reform legislation. We feel that the bill works against the interests of America's poor and we urge you to veto H.R. 833 / S. 625 when and if it reaches your desk.
This one-sided legislation elevates the interests of creditors above the needs of working families. By subjecting bankruptcy cases to a complex and arbitrary means test (that assumes that all individuals face the same housing, food, and transportation costs) the legislation would deny many applicants access to Chapter 7 bankruptcy, which excuses most debts. Instead, the legislation would divert these individuals into a Chapter 13 payment plan. Many families would find themselves bereft of bankruptcy assistance altogether when expenses absorb household income, making a Chapter 13 payment plan an impossibility.
Contrary to the claims of the bill's proponents, the recent surge in bankruptcy cases does not reflect an abuse of the system by applicants, which might warrant such drastic reforms. Studies estimate that only 4% to 10% of consumer bankruptcies are filed in bad faith to erase financial obligations that debtors could afford to pay.
H.R. 833 and S. 625 would make American families even more vulnerable when uncontrollable circumstances - layoffs, divorce, and medical crisis - plunge them into financial crisis. African-American and Hispanic families, both over-represented in bankruptcy, would suffer disproportionately if this legislation were to become law. In general, home-ownership represents a greater proportion of family wealth for these families than among whites and such families are more likely to seek bankruptcy protection to prevent losing their homes, according to a study done at Harvard Law School.
The bill would also unduly burden single women raising families. Following a divorce, families are often unable to sustain two households on their divided income; both men and women are more likely to declare bankruptcy. The proposed tightening of bankruptcy restrictions would further prevent working single mothers from staving off credit card debt in order to meet day-to-day needs and hamper the collection of child support payments. This legislation can only deepen child poverty, which has already spun out of control. The number of American children living in families with incomes below one-half of the poverty line rose to 2.7 million in 1997, according to the Children's Defense Fund.
In addition to the misguided reform of the bankruptcy system, the Senate-passed bill contains a troubling and extraneous provision on "Student Safety and Family School Choice" that would allow federal funds to be used to pay for private and religious schools in the name of school safety. While we recognize the critical importance of making all of our schools safe, we believe this language does nothing to actually improve school safety and is simply another attempt to funnel public money to private and religious schools. Because the voucher language would allow Title I dollars and funds from "any other federal education program" to pay for Title I students who are victims of a "violent criminal offense, including drug-related violence," to attend any other public, private, or religious school, and because the legislation does not define the term "victim," we fear that significant amounts of public funds could be diverted for this purpose.
Voucher funding is a small bandage over a large wound. Voucher programs help only a few of the nation's children and divert desperately needed resources away from the public school system. The perceived popularity of vouchers reflects the need for some dramatic change and improvement in the public school system. The government should be investing its funds in programs that reinvigorate the public school system and return the system to its role as the heart of American identity-formation.
Bankruptcy assistance acts as a critical social safety net, relieving individuals suffering from financial disaster. Social justice for the socially and economically disadvantaged is a matter of paramount concern for us as Reform Jews. We are taught, "For there will never cease to be needy ones in your land, which is why I command you: Open your hand to the poor and needy kinsman in your land" (Deuteronomy 15:11). As a nation we must deal compassionately with those left behind during the longest period of economic growth in American history and craft our public policy accordingly.
We urge you to veto the Bankruptcy Reform Act.
Rabbi David Saperstein
Judge David Davidson
The Religious Action Center of Reform Judaism is the Washington office of the Union of American Hebrew Congregations, representing its 895 congregations across North America, whose membership includes 1.5 million Reform Jews, and the 1700 rabbis of the Central Conference of American Rabbis.