Idaho Examiner - Sen. Larry Craig News Releases

Thursday, March 03, 2005

Craig Hails Passage of Amendment favoring Veterans in Bankruptcy

(Washington, DC) As the Senate moves forward with bankruptcy reform legislation, the Chairman of the Senate Committee on Veterans' Affairs today is hailing the passage of an amendment which will help low-income veterans.

"Reform of our nation's bankruptcy laws is a high priority in this Congress. As we proceed with that debate, I am pleased that steps are being taken to make certain that veterans are protected from any undue hardship," said Sen. Larry Craig (R-Idaho), who chairs the Senate Veterans' Affairs Committee.

The amendment was put forward by Sen. Jeff Sessions (R-Alabama) and offers special consideration in bankruptcy for low-income veterans, active-duty military, and people who have serious medical conditions. The measure, Amendment 23 to Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S. 256), passed by a vote of 66-32.

The new protection for veterans is part of a new income test that Congress is debating for those going through bankruptcy. The legislation seeks to help clarify whether those seeking bankruptcy protection must repay their debts or are allowed to have them canceled.

"Congress will do what we can to protect veterans, but veterans like other consumers must be ever vigilant,'" Craig said.

A report by the National Consumer Law Center in 2003 noted that veterans are often targeted by an expensive scam in which streams of their military pension and benefits payments are purchased for a lump sum, with high interest rates, although federal law prohibits such schemes. Such schemes can drive military retirees into bankruptcy.

Despite that warning, a story late last year in the New York Times last year noted the problems of one veteran who signed up for such an offer. In return for a lump sum payment of $19,980 after fees and insurance, the veteran signed over his $1,000-a-month military pension for the next five years, which amounted to a total of $60,000 and an interest at a rate of 56 percent a year. Despite claims by lenders that such deals are within legal boundaries, two federal bankruptcy judges ruled last year that such offers violate federal law.

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