Rep. George Gekas and Rep. Marge Roukema [letters, May 22, June 3] say that the bankruptcy bill recently passed in the House protects children owed support. It does not.
The bill gives credit card companies, auto lenders, finance companies and other commercial creditors greater claims during and after bankruptcy. It does not ensure that women and children will prevail over the collection departments of these powerful interests.
Reps. Gekas and Roukema note that the House bill moves child support from seventh to first priority. This sounds good -- but it doesn't mean that "child support will come first," even in the Chapter 7 liquidation cases to which the amendment applies.
Under the bill, secured creditors would be paid ahead of "priority" creditors. But the bill would give many secured creditors the right to much larger payments. Currently, secured creditors are entitled to receive only the value of their collateral; for the balance, they go to the end of the line with other unsecured creditors. A little-noticed provision of this bill would give many secured creditors the right to full payment. Even today, only 5 percent of debtors in Chapter 7 have any assets to distribute to priority creditors. Under the bill, most children will have "first priority" to nothing.
A similar problem undermines purported protections for child support in Chapter 13 bankruptcies. The House bill states that to get a Chapter 13 repayment plan approved and a discharge of certain other debts, debtors must pay all child support claims. But Chapter 13 plans also must provide for payments to secured creditors.
The Senate is expected to take up a similar bill soon. Senators must recognize that quick fixes won't protect children during and after bankruptcy.
Vice President and Director
Family Economic Security
National Women's Law Center