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Sarah Rosen
04/30/98 05:18:26 PM
Record Type:
Record
To:
Christine N. Macy/WHO/EOP
CC:
Sally Katzen/OPD/EOP, Jake Siewert/OPD/EOP, Melissa G. Green/OPD/EOP
Subject: Bankruptcy
Attached is the draft letter FYI. bankrupt.a30
The two paragraphs that might change are Principle #1 and the last paragraph. However, other
parts of the letter are new. For example, we haven't yet said we're open to "responsible consumer
bankruptcy reform." So, to ensure that the news produced is on the child support issue that she.
is targeting, I would suggest that the First Lady say something like:
Congress is currently considering various proposals to change our consumer bankruptcy
laws. While it is a bit early to comment on these proposals, we are sure today that the
Administration will not support any proposal that impairs the ability of bankrupt debtors
to meet their child support and alimony obligations. Today, the bankruptcy system
protects the payment of child support or alimony, Proposals that could put some credit
card bills on an equal footing with child support or alimony are wrongheaded.
bankrupt.a30
Page 1
DRAFT
April 30, 1998
Senator Orrin Hatch
Chairman
Senate Judiciary Committee
U.S. Senate
Washington, DC
Dear Mr. Chairman,
I am writing to express the Administration's general views on consumer bankruptcy
reform proposals currently under consideration in the Congress.
Over the past two decades, consumer bankruptcy filings have risen sharply. While
there are many contending theories on the cause of that increase, it is clear that there is no single
explanation. Nonetheless, the growing number of filings, examples of abuse of Chapter 7 and
state exemptions, and evidence of imprudent extensions of credit suggest some changes to the
consumer bankruptcy laws are appropriate. The lack of definitive evidence about the reasons for
the rise in bankruptcies means that it is difficult to predict the effect of reform efforts. The
Administration, therefore, has developed the following set of principles to guide its review of
changes to the consumer bankruptcy laws.
1.
Access to Chapter 7 should not be governed by an arbitrary means test; the court
must have discretion to fairly account for the great variations in circumstances that
bring debtors into bankruptcy (including medical expenses, unemployment, divorce,
responsibility for the care of others, etc.) To promote more uniform application of
bankruptcy standards, this determination should take place within indicative or
presumptive guidelines established by Congress that take into account factors such
as the debtor's income and ability to repay a portion of the debt.
2.
National bankruptcy policy can respect state variation in exemption levels without
allowing state exemptions to be used to shield luxury assets from creditors.
3.
It is appropriate to expect debtors who can afford to repay a portion of their debts
(taking into account all relevant circumstances) to act responsibly; but the
bankruptcy and credit reporting system should reward those who complete a
Chapter 13 plan.
4.
Bankruptcy reform should not create opportunities for creditors to coerce debtors
to forgo bona fide rights in bankruptcy.
5.
Bankruptcy rules should discourage bad faith repeat filings and other attempts to
abuse the privilege accorded by access to bankruptcy.
bankrupt. 130
Page 2
6.
Child support and alimony payments should be carefully protected.
We must ensure that reforms have no unintended adverse impact on debtors'
ability to meet these, and other, priority payments.
7.
Bankruptcy data collection and accuracy must be improved.
Analysis and understanding of the forces affecting bankruptcy filings are impeded
by the lack of high-quality, nationally uniform data. Better data collection and
verification procedures should be incorporated in any reform proposals. Such
data can be used to assess and monitor the impact of reform legislation.
8.
Scrutiny must also be given to credit industry practices that have led some
borrowers to overextend themselves.
While some of these issues may fall outside of the Judiciary Committee's
jurisdiction, Congress and the Administration should consider proposals to ensure
that consumers are well informed about the dangers of excessive debt
accumulation and understand the implications of their credit agreements.
The Clinton Administration is open to responsible consumer bankruptcy reform that meets these
principles. We have reluctantly concluded that we cannot support H.R. 3150 in its present form.
We would look forward to working with Congress toward legislation more similar to the
approach of S. 1301 -- with modifications necessary to meet the principles articulated above.
Sincerely,
Audrey T. Haynes
04/30/98 03:40:49 PM
Record Type:
Record
To:
Christine N. Macy/WHO/EOP
CC:
Subject: Draft Principles Letter on S1301 Consumer Bankruptcy Reform Act of 1997
Forwarded by Audrey T. Haynes/WHO/EOP on 04/30/98 03:42 PM
Ronald E. Jones
04/30/98 01:4 :45 PM;
Record Type:
Record
To:
See the distribution list at the bottom of this message
CC:
James J. Jukes/OMB/EOP
Subject: Draft Principles Letter on S1301 Consumer Bankruptcy Reform Act of 1997
The following letter was prepared following meetings involving NEC Principals and
Deputies. Discussions continue on who will sign the letter. Please provide
comments to me ASAP, but no later than 10:00 AM, tomorrow, Fraidy, 5/1.
You will receive a hard copy of this request also.
DRAFT
Senator Orrin Hatch
Chairman
Senate Judiciary Committee
U.S. Senate
Washington, DC
Dear Mr. Chairman,
I am writing to express the Administration's general views on consumer bankruptcy
reform proposals currently under consideration in the Congress.
Over the past two decades, consumer bankruptcy filings have risen sharply. While
there are many contending theories on the cause of that increase, it is clear that there is no
single explanation. Nonetheless, the growing number of filings, examples of abuse of Chapter
7 and state exemptions, and evidence of imprudent extensions of credit suggest some changes
to the consumer bankruptcy laws are appropriate. The lack of definitive evidence about the
reasons for the rise in bankruptcies means that it is difficult to predict the effect of reform
efforts. The Administration, therefore, has developed the following set of principles to guide
its review of changes to the consumer bankruptcy laws.
1.
Access to Chapter 7 should not be governed by an arbitrary means test; the court
must have discretion to fairly account for the great variations in circumstances
that bring debtors into bankruptcy (including medical expenses, unemployment,
divorce, responsibility for the care of others, etc.) To promote more uniform
application of bankruptcy standards, this determination should take place within
indicative or presumptive guidelines established by Congress that take into account
factors such as the debtor's income and ability to repay a portion of the debt.
2.
National bankruptcy policy can respect state variation in exemption levels without
allowing state exemptions to be used to shield luxury assets from creditors.
3.
It is appropriate to expect debtors who can afford to repay a portion of their debts
(taking into account all relevant circumstances) to act responsibly; but the
bankruptcy and credit reporting system should reward those who complete a
Chapter 13 plan.
4.
Bankruptcy reform should not create opportunities for creditors to coerce debtors
to forgo bona fide rights in bankruptcy.
5.
Bankruptcy rules should discourage bad faith repeat filings and other attempts to
abuse the privilege accorded by access to bankruptcy.
6.
Child support and alimony payments should be carefully protected.
We must ensure that reforms have no unintended adverse impact on debtors' ability to
meet these, and other, priority payments.
7.
Bankruptcy data collection and accuracy must be improved.
Analysis and understanding of the forces affecting bankruptcy filings
are impeded by the lack of high-quality, nationally uniform data. Better data
collection and verification procedures should be incorporated in any reform
proposals. Such data can be used to assess and monitor the impact of reform
legislation.
8.
Scrutiny must also be given to credit industry practices that have led some
borrowers to overextend themselves.
While some of these issues may fall outside of the Judiciary Committee'
S jurisdiction, Congress and the Administration should consider proposals to
ensure that consumers are well informed about the dangers of excessive debt
accumulation and understand the implications of their credit agreements.
The Clinton Administration is open to responsible consumer bankruptcy reform that meets
these principles. We have reluctantly concluded that we cannot support H.R. 3150 in its
present form. We would look forward to working with Congress toward legislation more
similar to the approach of S. 1301 -- with modifications necessary to meet the principles
articulated above.
Sincerely,
Message Sent To:
03:19:23-PM
Record Type: Record
To:
Christine N. Macy/WHO/EOP
CC:
Subject:
BODY:
Opposition is building to bills in Congress that could make it
harder for women to collect child support and alimony from ex-husbands
who file for bankruptcy.
"The current proposals would make hard-working women with children
more vulnerable," says Sen. Edward Kennedy, D-Mass.
Critics are especially concerned that Congress is rushing the
GOP-sponsored bankruptcy reform bills to a vote.
"It will be shockingly irresponsible if the House and the Senate
don't give the impact of what they are doing on child support
the consideration it deserves," says Donna Lenhoff, general counsel
to the National Partnership for Women and Families.
Current bankruptcy law makes child support and alimony a priority.
So even though bankruptcy under federal Chapter 7 wipes out most
debts, it doesn't absolve debtors from paying child support and
alimony they owe.
The pending bills don't change that. But proposed changes could
make it harder for bankrupt men to make support payments. Both
House and Senate bills would force debtors to repay more unsecured
debts, such as credit card debt.
That means a bankrupt ex-husband could still be saddled with big
credit-card bills, plus child support and alimony. "MasterCard
and the ex-wife will be competing for same limited dollars,"
says Harvard law professor Elizabeth Warren. "It's hardly a fair
fight."
Bills sponsored by Rep. George Gekas, R-Pa., and Sen. Charles
Grassley, R-lowa, are awaiting committee action. Representatives
for both lawmakers insist the bills will protect child support
and alimony.
And there are plenty of other safeguards to make sure child support
gets paid, says C. Bruce Allen, a Gekas spokesman. But Lenhoff
is skeptical. "It's not true that the state child support enforcement
apparatus can or will ensure that all child support debts are
paid."
Says Kenneth Klee of the National Bankruptcy Conference, a non-partisan
group that advises Congress, "The credit industry will be taking
money out of the pockets of women and children."
04/30/98 THU 11:15 FAX 608 283 2528
LAFOLLETTE SINYK
J.
001
Brady C. Williamson
LA FOLLETTE & SINYKIN
One East Main Street
Post Office Box 2719
Madison, Wisconsin 53701-2719
Telephone: (608) 257-3911
Fax: (608) 283-2524
TELEFAX TRANSMITTAL COVER PAGE
DATE:
April 30, 1998
TIME: 11:16 AM
TO:
Melanne Verveer
Chief of Staff/The First Lady
(202) 456-6244
FROM:
Brady C. Williamson
NUMBER OF PAGES TRANSMITTED (INCLUDING THIS COVER SHEET):
2
MESSAGE:
If you have any problems with this transmission or do not receive all of the pages, please call Ann V.
at (608) 257-3911 as soon as possible.
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT
IS ADDRESSED AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND
EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. If the reader of this message is not the intended
recipient or the employee or agent responsible for delivering the message to the intended recipient, you are hereby
notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have
received this communication in error, please notify us immediately by telephone (collect) and return the original
message to us at the above address via the U.S. Postal Service. Thank you.
04/30/98 THU 11:15 FAX 608 283 2528
LAFOLLETTE SINYK
002
MEMORANDUM
TO:
Melanne Verveer
Chief of Staff/The First Lady
FROM:
Brady - (608) 284-2636
DATE:
April 30, 1998
SUBJECT: Bankruptcy/Boston/China/Milwaukee Follow-Up
On bankruptcy, today's USA Today has a front-page article, which is enclosed, on the pending
bankruptcy legislation and women and children. The subject probably will come up tomorrow
with Cong. Meehan and his forum, and I do hope you can spare a few moments for Prof. Warren,
who essentially instigated the USA Today story. If you're interested, just have the advance
person call, and Liz will do hand springs to get to visit with you and hand you our draft column.
Dan Rosenthal called yesterday and asked me to do Shanghai. I agreed. It's probably not my
place to discuss Bob B. with him. How do we proceed on that score? I'd gladly have him on my
team and will do whatever you think I can/should do to make that happen.
By now, you should have received the news clips from Milwaukee. Everyone's very happy with
the events, and the news coverage did not become sensational on the political front. Talk with
you soon.
TELEFAX TRANSMITTAL
(202) 456-6244
av:34192 v1
4/30/98
003
USA Today
Thursday, April 30, 1998
Page 1A
LAFOLLETTE SINYK
Critics say bankruptcy bills threaten child support
By Christine Dugas
cerned that Congress is rushing
though bankruptcy under fed-
with big credit-card bills, plus
er safeguards to make sure
USA TODAY
the GOP-sponsored bankrupt-
eral Chapter 7 wipes out most
child support and alimony.
child support gets paid, says C.
cy reform bills to a vote.
debts, it doesn't absolve debt-
"MasterCard and the ex-wife
Bruce Allen, a Gekas spokes-
Opposition is building to bills
"It will be shockingly irre-
ors from paying child support
will be competing for same
man. But Lenhoff is skeptical.
in Congress that could make it
sponsible if the House and the
and alimony they owe.
limited dollars," says Harvard
"It's not true that the state child
harder for women to collect
Senate don't give the impact of
The pending bills don't
law professor Elizabeth War-
support enforcement appara-
child support and alimony
what they are doing on child
change that. But proposed
ren. "It's hardly a fair fight."
tus can or will ensure that all
from ex-husbands who file for
support the consideration it de-
changes could make it harder
Bills sponsored by Rep.
child support debts are paid."
bankruptcy.
serves," says Donna Lenhoff,
for bankrupt men to make sup-
George Gekas, R-Pa., and Sen.
Says Kenneth Klee of the
"The current proposals
general counsel to the National
port payments. Both House and
Charles Grassley, R-lowa, are
National Bankruptcy Confer-
would make hard-working
Partnership for Women and
Senate bills would force debt-
awaiting committee action.
ence, a nonpartisan group that
women with children more
Families.
ors to repay more unsecured
Representatives for both law-
advises Congress, "The credit
vulnerable," says Sen. Edward
Current bankruptcy law
debts, such as credit card debt.
makers instst the bills will pro-
industry will be taking money
Kennedy, D-Mass.
makes child support and ali-
That means a bankrupt ex-
tect child support and alimony.
out of the pockets of women
Critics are especially con-
mony a priority. So even
husband could still be saddled
And there are plenty of oth-
and children."
04/30/98 THU 11:15 FAX 808 283 2528
04/30/98 THU 13:35 FAX 608 283 2528
LAFOLLETTE SINYK
001
Brady C. Williamson
LA FOLLETTE & SINYKIN
One East Main Street
Post Office Box 2719
Madison, Wisconsin 53701-2719
Telephone: (608) 257-3911
Fax: (608) 283-2524
TELEFAX TRANSMITTAL COVER PAGE
DATE:
April 30, 1998
TIME: 1:29 PM
TO:
Melanne Verveer
Chief of Staff/The First Lady
(202) 456-6244
FROM:
Brady C. Williamson
NUMBER OF PAGES TRANSMITTED (INCLUDING THIS COVER SHEET): 12
MESSAGE:
Melanne: Some Boston-specific bankruptcy articles.
Brady
If you have any problems with this transmission or do not receive all of the pages, please call Ann V.
at (608) 257-3911 as soon as possible.
THIS MESSAGE IS INTENDED ONLY FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHICH IT
IS ADDRESSED AND MAY CONTAIN INFORMATION THAT IS PRIVILEGED, CONFIDENTIAL AND
EXEMPT FROM DISCLOSURE UNDER APPLICABLE LAW. If the reader of this message is not the intended
recipient or the employee or agent responsible for delivering the message to the intended recipient, you are hereby
notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have
received this communication in error, please notify us immediately by telephone (collect) and return the original
message to us at the above address via the U.S. Postal Service. Thank you.
04/30/98 THU 13:35 FAX 608 283 2528
LAFOLLETTE SINYK
002
6/50/97
Page 1
Citation
Found Document
Rank 6 of 133
Database
6/6/97 BOSTONG Al
BOSTONG
6/6/97 Boston Globe A1
1997 WL 6256506
The Boston Globe
Copyright 1997
Friday, June 6, 1997
METRO/REGION
Sears may pay $265m for card-debt tactics
Bruce Mohl, Globe Staff
A chain of events that began eight months ago when a Somerville
man pleaded for relief from his $1,161 Sears card debt culminated
yesterday with the giant retailer agreeing to pay up to $265 million
to settle charges that it systematically broke bankruptcy laws in
collecting debts.
The nation's No. 2 retailer admitted it pressured hundreds of
thousands of bankrupt customers to reaffirm their debts and then
failed to disclose the agreements to bankruptcy courts as required by
law. As a result, customers ended up paying debts that had legally
been erased.
The Sears case blew the lid off what appears to be a widespread
illegal practice by some major retailers. Similar class-action
lawsuits are now pending against Filene's and Lechmere and their
parent companies.
The settlement proposed yesterday was described by the attorneys
involved as unprecedented in size and scope for a retailer. It would
have Sears pay its victims all the money it had tried to collect from
them plus interest at 10 percent a year, an amount it estimated could
total between $113 million and $200 million. The chain also agreed
to split an extra $25 million among the victims and give $40 million
to state attorneys general for consumer education programs.
The cost to the company, based in Hoffman Estates, Ill., will
probably go even higher if, as expected, additional sanctions are
imposed by US Bankruptcy Judge Carol J. Kenner or by a federal judge,
based on a complaint filed by the US attorney's office in Boston.
Arthur Martinez, Sears chairman and chief executive officer, said
in a telephone interview that the company will take a charge against
earnings in its second quarter. He described the settlement as a
"black eye" and a "heavy burden," but the company's stock dropped
only 1/8 yesterday, to 48 7/8.
Copr. © West 1997 No Claim to Orig. U.S. Govt. Works
04/30/98 THU 13:36 FAX 608 283 2528
LAFOLLETTE SINYK
003
Page 2
6/6/97 BOSTONG A1
Martinez indicated Sears is not backing away from its aggressive
pursuit of those who fail to pay their credit card debts. He said
the company will continue to seek reaffirmation agreements with
bankrupt customers to the extent the law allows.
"We have this old-fashioned view, he said. "If you take the
goods, we think the customer should pay for them."
Sears apparently didn't file the reaffirmation agreements with the
bankruptcy courts out of fear that they would be rejected. The
practice began in 1985 and probably would have remained undetected
but for Francis Latanowich of Somerville.
Latanowich, who is unemployed and collects a $500 disability check
each month, declared bankruptcy last year and, representing himself,
won a discharge of $12,805 in mostly credit card debts. Yet even
though his monthly expenses going forward were triple his income,
Sears persuaded him to reaffirm his Sears debt of $1,161.
Latanowich said Sears officials told him they could reclaim his
television set and his car battery if he didn't agree.
His case typified the Sears approach. While most credit card
companies rarely contest bankruptcy filings, Sears sends
representatives to practically every bankruptcy hearing around the
country to protect its interests.
Sears also takes a secured interest in purchases made with its
card, which carries a 21 percent interest rate. When a person
defaults on a Sears credit card debt or tries to wipe it out with a
bankruptcy filing, the secured interest gives Sears the right to
reclaim the item. Although bankruptcy attorneys say it would be a
waste of time and effort for Sears to reclaim used Walkmans, washing
machines and hair dryers, Sears uses the threat to persuade debtors
to reaffirm their debt.
Latanowich struggled to pay his $28 a month to Sears, but in a
handwritten note to Judge Kenner in November 1996, he said the
payment was "keeping food off the table for my kids." He asked
Kenner if his bankruptcy case could be reopened and the Sears debt
wiped out.
Kenner investigated and discovered that the agreement Sears
negotiated with Latanowich had never been filed for her review. She
said she would have rejected it out of hand, in part because it was
too onerous but also because Sears overstated the amount Latanowich
owed. She said Latanowich should have been given the option of
paying the current market value of the TV set and battery -- about
$450 -- and not the original purchase price.
Copr. © West 1997 No Claim to Orig. U.S. Govt. Works
04/30/98 THU 13:36 FAX 608 283 2528
LAFOLLETTE SINYK
004
Page 3
6/6/97 BOSTONG Al
Kenner's inquiries forced Sears to admit that it had not filed
reaffirmation agreements in thousands of cases in Massachusetts.
Yesterday, Sears said it had also failed to file the agreements in as
many as 331,500 cases nationwide.
Kenner, who must approve the settlement agreement, said yesterday
she was curious to know why Sears initiated the illegal practices.
Sears' attorney promised answers after the US attorney's office
completes its investigation.
Said Martinez: "It was a practice that escaped our detection in
our normal checks and balances process. And it became
internalized."
Martinez said an internal investigation had revealed that several
lower level staff people involved with legal matters and debt
collection had acted improperly and that they would be disciplined.
He said senior management had no knowledge of the practice.
INDEX REFERENCES
EDITION:
CITY EDITION
Word Count: 836
6/6/97 BOSTONG A1
END OF DOCUMENT
Copr. © West 1997 No Claim to Orig. U.S. Govt. Works
Mon
Siege a
Founder's Son
Fights to Rule
Humbled Chair
By CHARLES V. BAGLI
NASHVILL
R
AYMOND D. SCHOENBAU
dropped heavily into a boo)
at the Rio Bravo restaura
on West End Avenue here, orderin
chicken quesadillas, fresh tortilla
UFS
and Iced tea as he launched into
passionate account of his mare
Associated Press
across the South to recapture Shor
After successfully retooling Sears, Arthur C. Marti-
ey's the now-alling restauran chai
nez found the company caught in a new scandal
founded by his father, Alex, 50 year
ago
Though he is one of the company
The Harder
largest shareholders; Mr. Schoen
baum is an outsider today who mus
plot his takeover campaign from 1
seat in the Rio Bravo chain he start
Side of Sears
ed, rather than at the Shoney Inc
headquarters about a mile away or
Elm Hill Pike
His plan to take over the company
and management's attempt to fend
him off have become the subject of
much speculation on fiercely humid
Safeguards Didn't Stop
days at the country clubs, banks and
law offices of Nashville and among a
generation who grew up eating at
Debt-Collection Scandal
Shoney's and buying stock Ln what
was a hometown favorite and a Wall
Street blockbuster The battle pits
Mr. Schoenbaum, a lifelong estan
By BARNABY J. FEDER
rateur with a family legacy against,
C/Stephen Lynn, chairman and chief
CHICAGO
B
ECAUSE a disabled, financially strapped Massa
chusetts father was desperate to keep a televi
sion set to entertain his children, Arthur C.
Martinez faces a defining moment in his remarkable
Raymond D. Schoenbaum wants
career as chairman and chief executive of Sears, Roe-
to overthrow the Shoney's board
buck & Company.
The father, Francis M. Latanowich, overwhelmed
and recapture the good old days
by his monthly bills from Sears, turned for help last
for the business his father began
November to Carol Kenner chief judge of the United
States Bankruptcy Court in Boston Judge Kenner won-
dered why Sears was in contact with Mr. Latanowich,
who had gone through bankruptcy proceedings in 1996
that should have wiped clean his debts to the company
04/30/98 THU 13:38 FAX 608 283 2528
LAFOLLETTE SINYK
006
generation who grew up eating at
Debt-Collection Scandal
Shoney's and buying stock In what
was a hometown favorite and a Wall
Street blockbuster. The battle pits
Mr. Schoenbaum, a lifelong restau-
By
BARNABY J. FEDER
rateur with a family legacy, against
C.Stephen Lynn, chairman and chief
CHICAGO
ECAUSE a disabled, financially strapped Massa-
chusetts father was desperate to keep aftelevi-
state set to entertain his children, Arthur C
Martinez faces aidefining moment in his remar table
Raymond D. Schoenbaumwants
career as chairman and chief executive of Sears Roe
to over throw the Shoney's board
buck & Company,
and recapture the good old days
The father, Francis M Latanowich, overwhelmed
for the business his father began
by his monthly bills from Sears, turned for help last
November to CarolyKenner chief judge of the United
States Bankruptcy Court in Boston, Judge Kenner won-
deredminy Sears was in contact with Mr Latanowich,
whoched gonerthrough bankruptcy proceedings In 199G
have wiped clean his debts to the company
A Her astonishing conclusion: Sears had talked Mr.
Entanowich into signing a new debt-collection contr act
that used threatening wording that it had been told in
court was Illegal In Massachusetts, and then, to avoid
having the contract thrown out, had ignored its obliga-
tion to file It with the bankruptcy court for review,
Further Inquiries revealed that Sears had been
doing much the same with other debtors. It had routinely
skipped filing such contracts in some areas as far back
as 1985, and since 1992 it had collected up to $160 million
without judicial oversight.
Sears looked the bankruptcy laws straight In the
eye and defied them,' seld Jay Westbrook, an expert on
bankruptcy law at the University of Texas.
For Mr. Martinez, who says he learned of the illegal
activity in March, the revelations came as a bitter
surprise. Nearly five years earlier, he had arrived at
Sears headquarters In Hoffman Estates, ПL, with a
mission to revive a corporate dinosaur. Sears's aging
stores and beloved but outdated catalogue were per-
forming so weakly that the retailer was getting nearly
all of its profits from the finance charges paid by its 38
million credit-card customers. And, just months before
he took the job. the company's reputation and sales had
been battered by disclosures that some of its auto-
service centers had routinely bilked customers by per-
forming unnecessary repairs.
Mr. Martinez proceeded to pull off one of the great
corporate turnarounds of modern history, through cost
curting. sharper marketing and improved efficiency
Profits soared, Sears's stock roughly quadrupled and he
became a hero on Wall Street.
Through it all, Mr. Martinez was working hard to
put his stamp on Sears's corporate culture, starting with
as zero tolerance" policy for ethical lapses. Now, figur-
ing out why Sears went so wrong despite those efforts -
and how to respond to the scandal - has emerged as the
greatest challenge yet to his Image as a leader.
There is no evidence that the vast majority of Sears
customers care about what Mr. Martinez quickly brand-
ed "a black eye" and "a clear failure" growing out of
bad advice from the company's own legal department
Continued on Page 8
MARKET WATCH
Mr. Maffei said in an Interview on Friday.
record high when it posted profits last week,
Mr. Maffel is not a money manager. He Is
although they were well below what Wall
FLOYD NORRIS
the treasurer and incoming chief financial
Street had been forecasting before the com-
officer of Microsoft, a company that hereto-
pany toned down expectations in May
fore has bought back stock almost every
Intel would have done worse than it did
Who Says
quarter, seeking to avoid dilution from the
but for discovering what the company is
company's huge stock option program.
calling an "accounting error." It seems that
If $120 - about the price at which Micro-
it had overestimated its depreciation ex-
soft could have bought In the quarter, given
pense for this year by $300 million. Revers-
Microsoft
its policy of avoiding trades until after in-
ing that error would, in the absence of other
vestors have digested the previous quar-
changes, raise expected pre-tax profits by
ter's earnings - seemed rich to Microsoft
that amount. But not with chip prices evi-
8
F
THE NEW YORK TIMBS; SUNDAY, JULY 20, 1997
SPERDIWGIT
In a Scandal,
How a Scandal Came to Light
The Harder
Last Nov. 10, Francis M. Latanowich of Somerville, Mass., wrote a letter to Judge Carol Kenner, right, asking her to reopen
his bankruptcy case. He had promised Sears that he would continue making payments on a television set and a car battery,
but the reaffirmation agreement was Illegal because Sears never sought Judge Kenner's approval
Side of Sears
LAFOLLETTE SINYK
Continued From Page 1
One survey showed that fewer than 2 per-
cent were even vaguely aware of the scan-
TOR
dal. in sharp contrast to the aftermath of the
auto-service fraud, sales have continued to
every
climb steadily since the news broke, rising
7.1 percent in the second quarter of this year
Kide
at domestic stores.
Even SD, Mr. Martinez resisted any temp-
fation to play down his employees' behavior
or to stonewall potential adversaries. Sears
moved quickly this spring to research and
2528
expose the scope of the transgressions to
government and private lawyers investigat-
ing or suing the company. Sears also re-
283
tained two respected bankruptcy lawyers,
Prof. Lawrence King of New York Universi-
EXCERPTS FROM ONE OF SEARS'S REAFFIRMATION AGREEMEN
ty Law School and Richardo I. Kilpatrick,
who has a private practice in Michigan, to
review and overhaul the company's collec-
tion practices.
Even though Mr. Martinez did not agree
with critics that Sears had been systemati-
cally overaggressive in pursuing or threat-
ening creditors, be quickly offered an unex-
pectedly generous settlement plan for po-
tential claims. Tens of thousands of former-
ly bankrupt consumers were promised not
just debt relief and cash repayments with
Interest but also $100 certificates toward
E
new Sears merchandise, &sweetener later
he
replaced with a cash banus. That pre-empt-
in
ed potentially drawn-out confrontations
with the Federal Trade Commission, state
attorneys general and plaintiffs' lawyers.
$475 million
008
THE NEW YORK TIMES; SUNDAY, JULY 20, 1997
SAPLE R:D-I. ROST
How a Scandal Came to Light
Last Nov. 10, Francis M. Latanowich of Somerville, Mass., wrote a letter to Judge Carol Kenner, right, asking her to reopen
his bankruptcy case. He had promised Sears that he would continue making payments on a television set and a car battery,
but the reaffirmation agreement was illegal because Sears never sought Judge Kenner's approval.
S
LAFOLLETTE SINYK
:r-
&
STOR
he
9
every month
ng
ar
Kids
ip-
Case coulds
lor
ars
M
md
to
at-
re-
rs,
rsi-
EXCERPTS FROM ONE OF SEARS'S REAFFIRMATION AGREEMENTS
THU 13:41 FAX 608 283 2528
lck,
(if
to
lec-
ree
atl-
eat-
Tex-
Debree
po-
ner-
not
with
Even before Mr. Latanowich's Nov: 10 plea, Sears
and
had been warned that its typical reaffirmation letter!
ater
included inappropriate language. For instance; the
04/30/98
npt-
ions
reference to section 523 of the Bankruptcy Code,
tate
excerpted above, suggests that a debtor committed
fraud or some other act that would prevent the debt
from being wiped out in bankruptcy
Ilion
ond-
THU
13:44
FAX
608
283
2528
LAFOLLETTE SINYK
008
insconduct
Bankruptcy Courts Perform a Delit
There not a dollar's worth of profit
worth having if it compromises your Integri-
The main goal of bankruptcy law is to
ther Chapter 7 or Chapter 13 of the law
ty," Mr. Martinez said.
give debtors a chance to get back on their
former provides for a complete discharge
Wall Street is taking all this as yet more
feet, but other considerations guarantee
most debts. (One must still pay back taxe
evidence that Mr. Martinez deserves his
that the process will never be easy. The law
among other things) It bars the debtor
executive stardom. "I give him an A-plus
also tries, for instance, to make sure that
from refiling for six years, and asse
for how he's handled it," sald Bernard Sos-
debtors cannot escape their liabilities for
certain limits- they vary among the
nick, a retail industry analyst at Genesis
assets they pile up through fraud. And it.is
- must be made available to creditor
Merchant Group Securities in New York,
intended to take make sure that whatever
Under Chapter 13, obligations to creditor
who has followed Sears since the 1960's.
wealth the debtor must surrender Is fairly
are based on the debtor's Income level
But for all the kudos he has won, the crisis
distributed among creditors.
cured debts, like a mortgage or canloan
is far from over. For while Mr. Martinez has
Debt-rldden consumers can file under el-
rescheduled over three to five years. Then
reassured investors, he and his top manag-
ers have barely begun to assign responsibil-
ity and mete out discipline internally. The
way that is done could affect the company's
culture and morale for years to come.
shifted blame to the law department," one
very subtle judgments about the state,
The questions concern not just who gave
Sears lawyer said. "Jane Thompson headed
people's minds."
faulty advice but which employees partici-
the business."
In the end, Mr. Martinez will have
pated in illegal activity and which manag-
Two missing pleces of the puzzle to outsid-
choose between unpalatable alternative
ers knew about the wrongdoing but failed to
ers are how Ms. Scott viewed Sears's credit-
Either publicly identify and punish all ti
intervene - and for that matter, which
collection practices and whether she re-
people responsible, and risk the appear and
managers should have known but didn't.
layed her thoughts to her bosses. She has not
of vindictiveness - and worse, the possib
The final answers may not be comfort-
appeared at any public legal functions since
ty of lawsuits - or take action privately ar
able for some of Sears's most senior execu-
April and could not be reached for com-
risk creating suspicions of a whitewash
tives, including Michael C. Levin, the chief
ment, despite various attempts. Mr. Duffy
favoritism. So far, he has said, Sears WC
corporate counsel since 1995, and Jane
sald he could not comment or even confirm
keep to Its traditional course of keeping
Thompson, a highly regarded protégé of Mr.
that Ms. Scott is his client. Ms. Thompson,
disciplinary actions as private as possible
Martinez who ran the credit operations
who now heads Sears's rapidly expanding
from 1993 until early last year. So far, most
home repair division, has declined through a
of the blame seems to have landed on
S
EARS says its leeway to go public
company spokeswoman to comment on her
constrained not only by its intern
Emma G. Scott, a 44-year-old assistant gen-
former job.
policies but also by a Department,
eral counsel, who had direct legal oversight
In sorting out individual responsibility,
Justice Investigation into whether its det
of the collection system. She has been put on
Mr. Martinez will also have to confront the
collection activities violated criminal law
leave and has retained Joseph Duffy, a
broader questions all companies face dur-
(Its proposed settlement is aimed at satisf
noted Chicago lawyer, as her private coun-
ing corporate scandais. For instance; did
ing claims that It violated civil laws.) Whi
sel. lawyers involved in the affair say.
Sears's corporate culture and compensation
Judge Kenner asked a Sears lawyer at
But how central Ms. Scott was to the
systems seduce loyal, well-intentioned em-
settlement hearing In June why Sears ev
scandal is very much In doubt. She did not
ployees into unwise or simply Illegal behav-
began its illegal activity, she was told th
even join Sears until 1990, well after many of
ior? And if so, what is to be done?
any public comment could interfere w
the questionable activities apparently be-
"It's a very complicated hand to play,"
negotiations with the Justice Department
gan. An outgoing woman who appeared in
said David Messick, an ethics professor at
And on Thursday, Mr. Martinez said th
many industry forums and joined the board
the Kellogg Graduate School of Manage-
although Sears had already interview
of the American Bankruptcy Institute, the
ment at Northwestern, who uses the way
more than 110 employees In its Intern
bankruptcy bar's equivalent of a trade
that Sears handled the auto-fraud scandal
investigation, disciplinary actions would
group, Ms. Scott is widely seen in the bank-
as a case study on how not to respond to a
be taken until the Department of Justi
ruptcy bar as an unlikely mastermind.
public-relations crisis. "My guess is that
finished its work because the compa
"The whole Idea that It was Emma Scott's
they are facing the gamut from technical
wanted to be sure it had "all the facts
flawed judgment is a joke," said one outside
mistakes that did not really hurt anybody to
"It's clear, though, that there are multip
lawyer involved in the litigation, who spoke
clear ethical abuses in how they treated
individuals that will be affected by this.
on the condition of anonymity. And some
some debtors. There is an important Issue of
said. "There's shared responsibility,
colleagues among the 53 lawyers at Sears
how much forgiveness Is built into a corpo-
Mr. Martinez has had plenty of he
headquarters also wonder whether Ms.
rate culture. You want to root out Immoral
weighing the Issues, including a coΓpoΓa
Scott and their department in general may
activity because it's wrong and it's bad for
ethics office he established in 1994. There
be made scapegoats.
business. On the other hand, you need room
also a monthly policy committee, ests
"It is Interesting how the company has
for honest errors. It often hinges on making
lished in 1995 with members from Leve
business unit, including the law departme
that reviews the ethical Implications
Sears's policies and procedures. Mr. Mai
The Retailer's Terms of Settlement
nez is also chairman of a quarterly busine
practices meeting
With so many forums for identifying m
EARS'S proposed settlement of class-
group whom the company cannot find in its
conduct, the obvious question is why
S
action lawsuits was announced early
records. But the burden would be on those
debt-collection abuses festered undetect
last month. It covers contracts the
customers to produce evidence of their eligi-
until this year. To be sure, Mr. Martinez 6
so much to fix when he took over Sears if
company made from 1979 to April 1 of this
billty.
he may well have had neither the time
year with bankrupt customers to renew
In addition, the proposed settlemention-
their debts, but only If such reaffirmation
the incentive to probe deeply into the cre
cludes a $25 million pot, to be distributed
operations that appeared to be a jeweL I
agreements were not filed with a bankrupt-
among all those receiving restitution. Each
average balance of the company' 38 milli
cy court.
participant's share of this bonus would be
credit customers topped $800, roughly qui
Customers whose reaffirmations Sears,
proportional to the other restitution. Thus, if
ruple that of rivals like J. C. Penney, a
Roebuck filed with bankruptcy courts are
Sears ends up paying back a total of $100
though bad debt write-offs ran to hundre
not covered, even If the agreements include
million, each participant would get $1 from
of millions of dollars annually, the ope
language that may be illegal.
the bonus pot for every $4 of this basic
tion' profits were far higher
Under the settlement, Sears would try to
compensation.
Things seemed only to get better after
Identify and repay all customers with un-
Sears has also proposed paying a total of
Martinez gave the job of running the cre
filed agreements who made payments to It
$40 million to support consumer education
business in early 1993 to Ms. Thompson
amhitious former McKinsev R Comna
2528
LAFOLLETTE SINYK
010
btar or Chapters the law.The no time limit on refiling
Courtstare most likely to approve reaffir-
rovides for a complete discharge of
Nearly two-thirds of bankrupt consumers
mations for assets, like cars, that can be
its. (One must still pay back taxes,
use Chapter 7. The law requires them to list
crucial to holding a job. But judges are sup-
ther things.) It bars the debtor
their debts and what they plan to do about
posed to review reaffirmation agreements
Illing for six years, and assets over
them. Consumers who owe money for Items
to make sure the debtors can afford them
imits they vary among the states
purchased on credit can redeem them- -
and that they were accurately informed
be made available to creditors.
that is, buy them outright at their current
about their options. If the debtor has a law-
Chapter 13, obligations to creditors
market value. They can also surrender
yer, the judge may decide simply by looking
d on the debtor's Income level. Se-
them and be rid of the debt. Or they can re-
at Affidavits. If the debtor has DO legal help,
ebts, like a mortgage or car loan, are
affirm the debt, agreeing to be liable for
the law requires a hearing.
uled over three to five years. There
payments as if they had never filed for
BARNABY J. FEDER
ibile Judgments about the state of
lowering credit standards, adding more
ville living on a monthly Social Security
S minds."
than 17 million new customers by the end of
check of $518, complained to Judge Kenner
IC end, Mr. Martinez will have to
1995 and bolstering the credit group's net
in a hand-scrawled note that his payments
between unpalatable alternatives:
income by 45 percent, to an estimated $593
to Sears to keep his television and car
publicly Identify and punish all the
million, according to Edward Weller, a re-
battery were making it Impossible for him
responsible. and risk the appearance
tall industry analyst at Robertson Stephens
to feed his children.
Ictiveness - and worse, the possibili-
& Company. And that strong performance
wsults or take action privately and
continued under Steven Goldstein, a former
HE subsequent debt-collection scandal
eating suspicions of a whitewash or
American Express Company executive re-
at Sears, the nation's largest retail
Ism. So far. he has said, Sears will
cruited to succeed Ms. Thompson after she
credit card issuer, immediately fo-
) its traditional course of keeping all
moved to head Sears's new home-repair
cused attention on the credit practices of
inary actions as private as possible.
division early last year.
other retailers. Two, May Department
The company's credit operations were so
Stores and Montgomery Ward, have recent-
ARS says its leeway to go public is
huge that Sears could afford to pay much
ly been hit with class action lawsuits over
constrained not only by its internal
closer attention than other retailers to the
their reaffirmation practices.
policies but also by a Department of
small but growing percentage of consumers
Federated Department Stores, realizing
e investigation into whether its debt-
who were going bankrupt each year. Unlike
that it, too, had a problem. mounted a pre-
tion activities violated criminal laws.
any other retailer, Sears routinely appeared
emptive strike. "Immediately after hearing
roposed settlement is aimed at satisfy-
in virtually every bankruptcy affecting it.
about Sears, we investigated our practices,"
ilms that it violated civil laws.) When
Typically, it sought to negotiate new credit
said Carol Sanger, a Federated spokesworn-
Kenner asked a Sears lawyer at a
agreements, known as reaffirmations, 80
an. It discovered that 17 percent of the 17,000
ment hearing in June why Sears ever
that debtors would continue to hold active
reaffirmations collected since 1990 had not
its illegal activity, she was told that
Sears accounts and make payments for
been filed with courts, she said, so It devised
wblic comment could interfere with
goods bought prior to bankruptcy - includ-
a plan to send refunds totaling $4.3 million to
lations with the Justice Department
Ing accumulated Interest and late-payment
the 3,000 people affected. "The checks are
10n Thursday, Mr. Martinez said that
penalties.
going out this month," Ms. Sanger said.
igh Sears had already interviewed
Without such an agreement, Sears's only
There is also likely to be fallout this fall in
than 110 employees in its internal
recourse for nonpayment would be to go to
Washington when Congress is scheduled to
tigation, disciplinary actions would nòt
court to try to repossess the goods - and
consider possible amendments to the bank-
ken until the Department of Justice
even that is allowed only for appliances and
ruptcy law. This harder side of Sears has
ed its work because the company
other substantial items in which retailers
become Exhibit A for critics who say It is
ed to be sure it had "all the facts."
are allowed to retain a "secured" interest
too easy for creditors to bully debtors -
's clear, though, that there are multiple
when they sell them on credit: With reaffir-
especially those without legal help - into
Iduals that will be affected by this." he
mation, a debtor becomes personally liable
giving up their right to a fresh start
"There's shared responsibility.
just as if he had never been through bank-
Leading credit-card issuers like Visa In-
Martinez has had plenty of help
ruptcy, and Sears or any other creditor with
ternational and lawyers who work with
hing the Issues, including a corporate
such a contract can go after other sources of
them respond that Sears Is an aberration.
S office he established in 1994. There-Is
wealth, like wages, to get payment.
They say current bankruptcy law already
a monthly policy committee, estab
In retrospect; Sears's reaffirmation rate
makes It too easy for some million
d in 1995 with members from every
of nearly 40 percent far higher than that
Americans a year to declare bankruptcy.
1883 unit, Including the law department,
of any other large retail credit issuer -
Fraud is on the rise, they contend, and any
reviews the ethical Implications of
should have hade senior officials at. head-
new curbs on their ability to bargain with
8'43 policies and procedures. Mr. Marti-
quarters on edgeli It had raised eyebrows
debtors would only make things worse.
is also chairman of a quarterly business
elsewhere in the credit industry, where crit-
Lawyers involved In the Sears case say
times meeting.
(cism had been growing about reaffirmation
the violations varied by region. The most
ith 80 many forums for Identifying mis-
practices from judges and bankruptcy law-
flagrant - failing to file affirmation agree-
luct, the obvious question is why the
yers on both sides of the fence.
ments for court review - appear to have
collection abuses festered underected
"Sears always beat its chest about being
become most common in areas like Massa-
Libis year. To be sure, Mr. Martinez had
the leader in reaffirmation," said William
chusetts, California and other states where
much to fix when he took over Sears that
Weinstein, a Seattle lawyer who said the
bankruptcy Judges had become vocal about
nay well have had neither the time nor
feared that a few "bad actors" would rob
the abuse of reaffirmation agreements and
incentive to probe deeply into the credit
other creditors of the reaffirmation tool.
were likely to throw out a high proportion of
rations that appeared to be a jewel The
Reaffirmation critics have attacked not just
those brought to them.
rage balance of the company's 38 million
the aggressive pursuit of debtors but also
But there's no place where every agree
dit customers topped $800, roughly quad-
the willingness of many debtors' lawyers
ment got filed or none got filed, sald John
le that of rivals like J. C. Penney, and
and lax Judges to allow or even encourage
Roddy. a Massachusetts:lawyer who is rep.
ugh bad debt write-offs ran to hundreds
consumers to sign Burdensome reaffirma-
resenting 2) consumers in class actions
millions of dollars annually, the opera-
tions rather than invite confrontations that
against Sears and other retailers,
is profits were far higher
would drag out the bankruptcy case.
The more contentious Issue is that where
hings seemed only to get better, after Mr.
Sears's credit lewel began cracking in
agreements were filed, Sears's methods for
rtinez gave the job of running the credit
Massachusetts in 1995 when Judge William
obtaining them have often been questioned
lness in early 1993 to Ms. Thompson, an
C. Hillman of Federal Bankruptcy Court
Critics say Sears sometimes threatened
bitious Rormer McKinsey & Company
ruled that the reafilmation letter Sears
repossess Items like trash cans and used
sultant #She had joined Sears as vice
was using included illegably threatening lan-
sporting equipment, even though 16 knep
sident for ing anning in 1988 and had be-
guage. Sears continued to use, the form,
that recovering and re-selling osuch Items
me one of Martinez's inner circle of
however, but stopped filing agreements with
was, not worth the cost. It is Illegal for
collegones
in
Boston:
creditor comake threats It has no intention
THE NBW YORK TIMBS, SUNDAY, JULY 20, 1997
9
SPENDINGIT
alifornia Attorney General's
news of the scandal became public that it
It made DD estimate of the years before
lion a year of net income, or a little over 3
igeles who has been involved
expected that 35 percent to 60 percent of all
1992 because of the difficulty of sifting
percent of the $1.3 billion that Sears earned
settlement, "Virtually every
reaffirmations It received were flawed. But
through several generations of record keep-
on revenues of $38.2 billion last year?
d to felt terrible about being
just reconstructing the paper trail is ex-
ing technology, each less automated than
Mr. Weller said Sears realizes that it
04/30/98 808 283 2528
and a moral obligation to pay
pected to cost the company $10 million,
the system that replaced it. And Sears has
had simply followed the rules, it probably
5. Sears counted on that."
according to court documents.
reduced the number of credit-control offices
could have persuaded many bankrunt debt.
S. Mr. Martinez said Sears
A key question is how much tainted mon-
to 9 today, from 81 in 1986, as part of its cost-
ors to sign reaffirmation agreements and
to-press for reaffirmation
ey Sears actually received from debtors
cutting efforts, further scrambling the
probably could have received court approv.
much as Ls legally possible.
who signed the hundreds of thousands of
records.
ai for a numbers of them. Plus they
Id-fashioned view," he said.
agreements It entered into since 1985;
Mr Weller, the Robertson Stephens ana-
would have more customers in the long run
pay for what they take."
Sears's initial and only public estimate was
lyst, guesses that the final tab will show that
by not ticking people off,' Mr. Wellen said
it of Sears's profits from the
that it had collected no more than $160
Sears generated about $50 million in pretax
"Sears agenda in the collection process.
ations may never be known.
million of the $400 million covered by about
profits annually in recent years from illegal
not just to get the money but also to pre-
old industry analysts when
500,000 reaffirmations from 1992 to 1997,
reaffirmations. That translates into $30 mil-
serve the customer
LEGAL NOTICE
ATTENTION
LAFOLLETTE SINYK
FBI), Washington, D.C. gives notice that the following properties were seized for various federal forfeiture violations which are mentioned below. Laws and procedures applicable to the
1619 and Title 21, Code of Federal Regulations, (C.F.R). Sections 1316.71 1316.81 (if drug related saizures) or Title 28, Code of Federal Regulations (C.F.R.), Section 8. 8.10 (If
trick Court by filing a claim of ownership and a bond In the form of cash (U.S. Currency): cashier's check or approved aureties, in the amount specified below for each saizure, or an
/ but, no more than $5,000 maximum and no less than $250 made payable to the U.S. Department of Justice. A swom affidavit of indigency may be filed in Neu of the cost bond and a
h an affidavit you must fully disclose your finances. If you want to request a pardon of the forfeited property, you may submit a petition for remission or mitigation. The petition must con
xu. were a victim of the offense underlying the pending forfeiture. or a related offense, and the facts and circumstances which you believe justify a return of the property, & return of your
eguiations pertaining to remission or miligation of the forfeiture, see Title 28, C.F.R., Sections 9.1 dated January 3, 1997, effective February 3. 1997. The criteria for requesting
(a). The critéria for requesting miligation of the forfeiture are found at 9.5(b), You should file the petition within thirty days (30) following receipt of the mailed notice of seizur e. Submit all
ralegal Specialist. FBI locations and telephone numbers can be found in local telephone directories or through directory assistance with local telephone companies. When submitting any
certain circumstances involving seizures based upon the possession of personal use quantities of a controlled substance or seizures of conveyances (aircraft, vessels or vehicles) expe.
Act of 1988: See Title 21, C.F.R., Sections 1316.90-1316.99 (54 Register 97610-37613).
olled Substances Act, Title 21; U.S.C., Section 881. CSA1 = The Controlled Substances Act, Title 21, U.S.C., Section 881 (Anti-Drug Abuse Act of 1988 Property seized for
tances Act, Title 21, U.S.C., Section 881 (Anti-Drug Abuse Act of 1988 Conveyance seized for Drug-Related Offense): MVT Motor Vehicle Theft Law Enforcement Act of
e Goods Statute, Title 18, U.S.C., Section 1762. GB If Prohibition of lilegal Gambling Businesses, Title 18, U.S.C., Section 1955, SEC = Sexual Exploitation of Children, The
intercéption of Oral Communications Statute, Title 18; U.S.C., Section 2513. COP # Copyrights Act, Title 17; U.S.C., Section 509 TGD = Transportation of Gambling
llegal Exportation of War Materials Statute, Title 22, U.S.C., Section 401. MLC = Money Laundering Control Act of 1986,Tile 18, U.S.C, Section 981
01,MLC;
$2,450.00 in U.S. Currency seized from the
CA; 1995 Buick Century
4101 East Charleston Boulevard, Les Vegas.
MARYLAND
Sunset Boulevard,
person of Billy Joe Church
VIN#-1G4AG65M9S6440433.
NV: $1,433.53 nu.S. Currency,
3920-97-F-0138; $19,600 $1,960; CSA2;
lized from
3410-97-F-0222; $800; $250; MLC; 03/08/97;
3380-97-F-0016; $838; $260 MLC; 02/28/97;
04/20/97; 1907 Seven Locks Road, Reckville,
name of
OHIO SOUTHERN
San Jose St. & Markdain Ave., Mission Hills,
Cyrin Date Bogart, Carl Cititrell, East
MD 1995 Chevrolst Tahoe
at the Bank
3160-97-F-0103; $5,300; $530. CSA
CA; 1984 Pontisc 6000 STE VIN#
Charleston Boulevard, Les Vegas, NV;
VIN# IGNEK18K7SJ311487
02/21/97; Larry Caldwall, Jr.. 2013 Wes)
2G2AH19Z7E1220689.
$836.63 in U.S. Currency,
D: MLC
Grand Avenue, Dayton; OH: Seized by Dayton
3410-07-F-0223; $6,500; $650; MLC;
3380-97-F-0017; MLG:
MICHIGAN PASTERN
Unbet Boulsvard,
Police Department FBI Agents adopted the
03/08/97; 2650 Pepperdate Drive, Rowland
02/28/97; Lynn Date Bogar, Carl Citarelli,
3220-97-F-0159; $5,000; $500; CBA
ized from
seizure on 05/22/97 al Cincinnati, OH.
Helchts. CA- 1992 Marride
THE NEW YORK TIMBS, SUNDAY JULY 20.1997
SPENDING
lawyer In the California Attorney General's
news of the scandal became public that It
It made no estimate of the years before
lion
04/30/98 FAX
Sears
office in Los Angeles who has been involved
expected that 35 percent to 60 percent of all
1992 because of the difficulty of sifting
per
In the proposed settlement, "Virtually every
reaffirmations received were flawed But
through several generations of record-keep
on Γ
victim we talked to felt terrible about being
just reconstructing the paper trail is ex
ing technology, each less automated than
M
Continued From Previous Page
in bankruptcy and a moral obligation to pay
pected to cost the company $10 million,
the system that replaced it And Sears has
had
sets, depriving debtors of 8 realistic choice
for these things. Sears counted on that."
according to court documents.
reduced the number of credit-control offices
coul
when they were deciding whether to pay off
And still does. Mr. Martinez said Sears
A key question is how much tainted mon-
to 9 today, from 81 In 1986; as part of its cost
ors
the claim, do nothing And risk repossession,
would continue to press for reaffirmation
ey Sears actually received from debtors
cutting efforts, further scrambling the
prol
or reaffirm their debt and continue making
agreements as much as is legally possible.
who signed the hundreds of thousands of
records
al "
payments.
'We have an old-fashioned view." he said.
agreements it entered into since 1985
Mr. Weller the Robertson Stephens ada
wou
Unfortunately, the group most affected
'People should pay for what they take.
Sears's initial and only public estimate was
lyst guesses that the final tab will show that
by
by these things was the poor and working
The full extent of Sears's profits from the
that it had collected no more than $160
Sears genet about $50 million In pretax
Se:
poor, who don't understand their rights
Illegal reaffirmations may never be known.
million of the $400 million covered by about
profits annually in recent years from illegal
not
were being violated," said Ronald Reiter, a
The company told industry analysts when
500,000 reafti mations from 1992 to 1997
reaffirmations. That translates into $30 mil.
sen
LEGAL NOTICE
ATTENTION
The U.S. Department of Justice, Federal Bureau of Investigation (FBI), Washington, D.C. gives notice that the following properties were seized for various federal forfeiture violations which are mentioned below. Lav
forteiture process can be found at Title 19, U.S.C., Sections 1602-1619 and Title 21, Code of Federal Regulations, (C.F.R,), Sections 1316.71 13.16.81 (if drug related seizures) or Title 28, Code of Federal Regulat
non-drug related seizure). You may contest the seizure in U.S. District Court by filing a claim of ownership and a bond In the form of cash (U.S. Currency), cashier's check onapproved surelles, in the amount specific
LAFOLLETTE SINYK
amount equal to 10% of the appraised value of the seized property but, no more than $5,000 maximum and no less than $250 made payable to the U.S. Department of Justice. A swom affidavit of Indigency may be
suitable form may be obtained from your nearest FBI office. In such an affidavit you must fully disclose your finances. If you want to request a pardon of the forfeited property, you may submit a petition for remission
tairproof of your ownership interest in the property or proof that you were a viclim of the offense underlying the pending forfaiture, or a related offense, and the facts and circumstances which you believe justify a rel
Interest in the property, or a return of part of the property. For the regulations pertaining to remission or mitigation of the forteiture, see Title 28, C.F.R., Sections 9.1 9:9, dated January 3, 1997, effective February 3.
remission of the forfeiture are found at Title 28, C.F.R., Section 9.5(a). The criteria for requesting mitigation of the forteiture are found at 9.5(b). You should file the petition within thirty days (30) following receipt of the
documents to the nearest FBI Field Office, Attention: Forfeiture Paralegal Specialist FBI locations and telephone numbers can be found in local telephone directories or through directory assistance with local teleph
documentation, please reference the FBI Selzure Number. Under certain circumstances Involving seizures based upon the possession of personal use quantities of a controlled substance or seizures of conveyance
dited release procedures are available under the Anti-Drug Abuse Act of 1988. See Tille 21, C.F.R., Sections 1316.90-1316.99 (54 Register 37610-37613).
Legand of Federal Forfeiture Statutes: = The Controlled Substances Acl, Title 21; U.S.C., Section 881 CSA1 = The Controlled Substances Act Title 21, U.S.C. Section 881 (Anti Drug Abuse Act of 1
Personal Use Quantities). CSA2 = The Controlled Substances Act, Title 21, U.S.C., Section 681 (Anti Drug Abuse Act of 1988 Conveyance seized for Drug-Related Offense): MVT Motor Vehicle Theft
1984; Title 18, U.S.C., Section 512. PMG = Prison-Made Goods Statute Title 18.U.S.C., Section 1762, GB = Prohibition of llegal Gambling Businesses, Title 18, U.S.C. Section Saxual Ex
18, U.S.C., Section 2254. WIR = Wire Interception and Interception of Oral Communications Statute, Title 18, U.S.C., Section 2513:COP - Copyrights Act, Title 175 U.S.G., Section 509 TGD = Transpor
Devices Statute, Title 15, U.S.C., Section = Illegal Exportation of War Materials Statute Title 22, U.S.C., Section 401. MLC - Money Laundering Control Act of 1986,Tite 18.U.S.C Section 9
FIRST NOTICE
3410-97-F-02T3; $9,013: $901; MLC;
$2,460.00 in U.S. Currency seized from the
CA: 1995 Bujck Century
4101 East Charleston Boulevard Las Vegas,
M
DEADLINE TO FIL BOND 08/18/07
05/23/97; Abe Siltani, 6300 Sunset Boulevard,
person of Billy Joe Church,
VIN# 1GAAG55M9S6440433.
NV; $1,433.69 In U.S. Currency
31
SEIZURE NO., APPRAISED VALUE,
Hollywood; CA; $9,013.77 seized from
2410-97-F-0222,8800; $250. MLO. 03/08/97
3383-97-F-0016, C/02/26/87
04
BOND AMOUNT, STATUTE CODE,
account #03734-08939 In the name of
OHIO SOUTHERN
San Jose St. & Markfelo Ava., Mission Fills
Evnn Date Bogan, Carl Citarelly 4101-East
M
DATE SEIZED, SEIZED FROM,
Adolescent Alds Foundation al the Bank
3160-97-F-0103 $5,300; $530,CSA:
GA; 1984 Pontiac 6000 STE VIN#:
Charleston Boulevard Las Vegas, NV;
VI
PLACE SEIZED
of America.
02/21/97; Larry Caldwell, Jr. 2013 Wes)
2G2AH19Z7E1220689.
$838 U.S. Currency
3410-97-F-0274; $2,299,8250 MLC;
Grand Avenue, Dayton, OH; Selzed by Dayton
3410-97-F-0223; $8,500; $650; MLC,
3380-97 F-0017; 851 $4,485. MLC;
MI
ARIZONA
05/23/97; Abe SMani, 6300 Sunset Boulavard,
Police Department. FBI Agents edopted the
03/08/97; 2650 Pepperdale Drive, Rowland
02/26/97; Lynn Date Bogart, Carl Citarelli,
32
363D-97-F-0004; $8,219; $821;1GB; 04/17/97;
Hollywood, CA; $2,299.93 seized from
seizure on 05/22/97 at Cincinnall; OH.
Heights; CA; 1992 Mercury Grand Marquis
4101 East Charleston BouleVard, the Vegas,
03
David Cullen, 1003 W. 9th Street, Temps, AZ;
account #03738-08353 In the name of
$5,300.48 In U.S. Currency.
VIN# 2MECM74W1NX724280.
NV; $44,851 85 in U.S. Currency.
a
$8,219.04 In personal checks.
SCWBCA at the Bank of America
3160-97-F-0105; $2,638; $263; CSA;
3410-07-F-0224; $5,200, $520; MLC:
de
LATE
PAGE
3
The Washington Times, February 13, 1997
off when a family member is gravely ill. Most sons want to ensure that their
elderly parents have health care coverage.
Instead of the "feminization of politics,' I prefer to think of this
phenomenon as the "humanization of politics. What we have seen being played out
in the political arena is how people's personal concerns can become political if
they use their voices - and their votes - to define them.
The gender gap we hear so much about is simply a measure of how women, who
are experts on the hazards and vicissitudes of life, vote their self-interest
and their values. In SO doing, they deliver a clear message that the issues
they care about deserve to be on the front burner of national politics.
While political scientists often discuss realpolitik, the balance of power
among nations, working mothers are saying that national politics must also be
about real-life politik - about how we live and work together and how we achieve
balance in our lives.
Regardless of our political affiliation or where we stand on any particular
issue, or even where we come down on the larger question of how we attain a
balance of power in our own lives, we must acknowledge that much is at stake for
women collectively in this debate.
Will public and private institutions help empower women with the tools they
need to expand their choices and take responsibility for their lives? And by
that, I mean, will businesses initiate policies that make work more
family-friendly? Will employers value women by paying them equal pay for equal
work?
Will individual women be respected for the choices they make about family,
work and personal growth - and will they be able to make those choices free of
the burden of other people's and society's expectations? Will we stop
pigeonholing women and invoking stereotypes that limit their potential? Will we
admit that there is no formula for being a successful or fulfilled woman in
today's society - that one can choose full-time motherhood and homemaking or be
committed to work outside the home without marriage or children or, like most of
us today, balance work and family responsibilities?
Whether they are CEOs or minimum-wage workers, most women are doing
everything they can to do right by their families and their jobs. Now it's time
for society to let them know that their choices are supported and respected.
A new contributor joins The Washington Times this morning. Hillary Rodham
Clinton's syndicated column will appear as part of "Culture, et cetera" on Page
2 every Thursday.
She writes of the domestic details and life at the White House, larded with
her opinions and views on politics and the passing parade of current events.
The column, "Talking It Over," is modeled on the informality of Eleanor
Roosevelt's "My Day,' which appeared in hundreds of newspapers in an earlier
era.
PAGE
4
The Washington Times, February 13, 1997
" 'Culture, et cetera' is meant to provide news and opinion at the
intersection of politics and culture," says Wesley Pruden, editor-in-chief of
The Times, "and Mrs. Clinton's column will provide insights on the view of that
intersection from the White House.
"Our efforts to provide as much information as we can about as much of the
nation's politics and culture as we can, taken from as many sources as we can
find, has made The Times as necessary as the first cup of coffee every morning
in the nation's capital, and we're delighted that Mrs. Clinton has become a
contributor to the growing newspaper in town."
LANGUAGE: ENGLISH
LOAD-DATE: February 13, 1997
PAGE
2
84TH STORY of Level 1 printed in FULL format.
Copyright 1997 News World Communications, Inc.
The Washington Times
February 13, 1997, Thursday, Final Edition
SECTION: Part A; CULTURE, ET CETERA; TALKING IT OVER; Pg. A2
LENGTH: 964 words
HEADLINE: The 'real-life politik' at the White House
BYLINE: Hillary Rodham Clinton; SPECIAL TO THE WASHINGTON TIMES
BODY:
I always enjoy meeting other working mothers because I love to share stories
about raising children while holding down jobs.
So I was delighted to host a luncheon at the White House this week honoring
women who have successfully combined work and family life.
Some of our nation's most accomplished working women were there, including
Deputy Attorney General Jamie Gorelick (who had to leave early to attend her
daughter's ballet recital); Pat Summitt, head coach of the University of
Tennessee Lady Volunteers basketball team; Jill Barad, the CEO of Mattel Inc.;
Elaine Pagels, a renowned scholar and professor at Princeton University; and
other leading women from the fields of law, entertainment, journalism, business
and politics.
Also on hand were some working mothers whose names you wouldn't know. They
aren't famous or well-to-do. And they aren't in positions of national
influence. They represent the vast majority of women in America, who struggle
every day to fulfill their obligations at home and on the job, often with meager
resources and little help. I felt that women like Tina Garcia deserved to be
honored, too.
Tina grew up on welfare and was a single mother for eight years. She
couldn't afford child care, so she improvised by working during school hours or
bringing her children to work. She also shared duties with another single
mother, who didn't drive. Tina would run errands and do grocery shopping in
exchange for baby-sitting. Today, this mother of four runs a thriving real
estate company in Virginia.
In recent years, women such as Tina Garcia have become a driving force in
our country - politically, socially and economically. That's because their
concerns - finding affordable child care, spending more time with their
children, being valued at work, being compensated fairly and having flexible
leave time for family emergencies - are real-life issues confronting tens of
millions of working mothers across our country.
You may remember that many of these were summed up during the presidential
campaign as the "feminization of politics." I think that's an unfortunate term.
After all, most fathers worry about whether their children are in safe,
dependable and affordable child care. Most men want to be able to take time
PAGE
2
3RD STORY of Level 1 printed in FULL format.
Copyright 1998 The New York Times Company
The New York Times
April 27, 1998, Monday, Late Edition - Final
SECTION: Section A; Page 15; Column 2; Editorial Desk
LENGTH: 390 words
HEADLINE: Bankrupt? Pay Your Child Support First
BYLINE: By Elizabeth Warren; Elizabeth Warren is a law professor at Harvard
who specializes in bankruptcy.
DATELINE: CAMBRIDGE, Mass.
BODY:
The Senate and House are considering legislation to reform bankruptcy laws.
The credit industry has lobbied aggressively for this legislation, complaining
that it is difficult to collect from people hiding behind bankruptcy filings.
But it is important to recognize the unintended consequences of the changes
the industry wants -- specifically, their devastating impact on the tens of
thousands of women who turn to bankruptcy courts to collect alimony and child
support from former husbands who have sought bankruptcy protection.
In 1903, Congress declared that child support and other marital obligations
were "nondischargeable debts" meaning that no one who declares bankruptcy can
escape liability for these obligations. Like taxes and student loans, these
debts must be repaid in full both during and after a bankruptcy. Congress quite
properly declared that child support and alimony were a priority and must be
paid first and in full.
But some proposals before Congress would add to the list of nondischargeable
debts. Credit card debt piled up in the 90 days before a bankruptcy filing or
incurred when the person did not have "a reasonable expectation or ability to
repay" would be included.
This means that even if a debtor declared bankruptcy, credit card bills, with
their compounded interest, penalties and collection fees, would survive forever,
and have just as much priority as child support payments.
This could be devastating to children. A system in which almost everyone must
be paid could very well mean that no one is paid -- or, more likely, that only
the most aggressive and powerful creditors are.
Last year, some 300,000 bankruptcy cases involved child support, alimony or
another form of family maintenance. In about half of the cases, women were
creditors trying to collect court-ordered support from their former spouses.
Without such recourse, some families would have to turn to public assistance.
All creditors are victimized by fraudulent debtors. But bankruptcy law
already gives creditors effective tools to root out such abuses. Modest changes
to the bankruptcy laws, like authorizing routine audits of debtors' petitions,
would give creditors even better protection. But one thing should not change:
PAGE
3
The New York Times, April 27, 1998
when it comes to paying off debt, women and children should come first.
LANGUAGE: ENGLISH
LOAD-DATE: April 27, 1998
Sarah Rosen
04/30/98 05:18:26 PM
Record Type:
Record
To:
Christine N. Macy/WHO/EOP
CC:
Sally Katzen/OPD/EOP, Jake Siewert/OPD/EOP, Melissa G. Green/OPD/EOP
Subject: Bankruptcy
Attached is the draft letter FYI. bankrupt.a30
The two paragraphs that might change are Principle #1 and the last paragraph. However, other
parts of the letter are new. For example, we haven't yet said we're open to "responsible consumer
bankruptcy reform." So, to ensure that the news produced is on the child support issue that she
is targeting, I would suggest that the First Lady say something like:
Congress is currently considering various proposals to change our consumer bankruptcy
laws. While it is a bit early to comment on these proposals, we are sure today that the
Administration will not support any proposal that impairs the ability of bankrupt debtors
to meet their child support and alimony obligations. Today, the bankruptcy system
protects the payment of child support or alimony, Proposals that could put some credit
card bills on an equal footing with child support or alimony are wrongheaded.
Pentagon asks Gulf cuts for morale, cost
that allows him to dictate what we
By Rowan Scarborough.
do," said a senior military officer.
THE WASHINGTON TIMES
"We're going to make it absolutely
The Pentagon wants to signifi-
clear we're not going to react to his
cantly reduce ground and air
every whim."
forces in the Persian Gulf by mid-
The administration is discuss,
summer and will submit options
ing the option of coupling a with-
later this month to President Clin-
drawal to precrisis levels with
ton, senior military officers said
heightened U.S. warnings that de-
yesterday.
fiance of U.N. weapons inspections
With Gulf tensions receding,
would bring military strikes.
one officer said the Defense De-
Another consideration is the
partment may ask to shrink force
levels from the 38,000 troops to
mer heat is an unhospitable envi-
20,000 and one aircraft carrier -
ronment for soldiers housed in
THURSDAY, MAY 7, 1998
The Washington Times
weather: The region's intense sum-
the Gulf deployment before Sad-
tents in Kuwait.
dam Hussein began defying Unit-
"Most of our troops stationed in
ed Nations inspectors seven
Kuwait and Saudi Arabia are in
months ago.
tents," a military spokesman said.
Meanwhile, six senators yester-
day put pressure on the White
John Hillen, a former Army of-
House to scale back, saying the in-
ficer and analyst at the Council on
creased deployment was draining
Foreign Relations, said the admin-
defense dollars and morale.
istration is mistaken if it believes it
Sen. Ted Stevens
Sen. Kay Bailey Hutchison
"Clearly, I think it's time for us
can influence Saddam's behavior
to reduce the deployment in the
without robust military forces.
Persian Gulf and get it down to the
precrisis levels."
more and more of our men and
"It will be difficult to deter Sad-
point where people do not have to
One of two carriers in the Gulf,
women in uniform, and they have
dam on the cheap. I don't know
go back," said Sen. Ted Stevens,
the USS Independence, is due to
longer deployments, we're going to
what model they're going to use,"
Alaska Republican and chairman
leave the region at month's end.
have to work harder to make sure
Mr. Hillen said. "There's no free
of the Senate Appropriations sub-
Defense Secretary William S. Co-
they get adequate support."
lunch. You have to be excessively
committee on defense. "I think this
hen on Tuesday ordered a possible
A senior military officer said
creative to not wear out our forces
repeated deployment to the same
replacement carrier, the USS
planners want a new Iraq policy
by keeping them in the Persian
locale under the same conditions
Dwight D. Eisenhower, to depart
that doesn't involve the costly,
Gulf, but at the same time to keep
- they cannot go off the bases,
the United States on June 10, as
morale-draining deployment of
enough there to deter Saddam."
there's no towns for them to visit.
planned. The scheduling raises the
troops everytime Saddam acts up.
A senior officer at the Pentagon
They really are very confined.
prospect of leaving one carrier in
With Saddam less bellicose in
said the United States "lost the
And that's leading to a long-term
the region as the first stage of a
recent months, the administration
propaganda war" in the latest cri-
loss of morale."
troop downturn.
has sent signals it was considering
sis with Saddam. Fewer nations
Sen. Kay Bailey Hutchison,
At the White House, Mr. Clinton
a drawdown.
now back continued economic
Texas Republican and a member of
told reporters, "Secretary Cohen
The administration's dilemma is
sanctions as a lever to force Iraq to
the Senate Armed Services Com-
has not recommended a final de-
cost VS. iron-fisted diplomacy.
reveal its prohibited weapons of
mittee, said: "I would describe the
cision to me on this, and I have
The buildup is projected to re-
mass destruction.
morale in the desert as adequate.
certainly not made one, and we've
quire $1.3 billion this year in extra
"Saddam seems to gauge our
There are very severe problems in
done our best to keep all of our
defense spending. But withdraw-
threshold for tolerance, and he op-
that regard, and there's no ques-
options open."
ing forces could wrongly signal
erates underneath that threshold,"
tion we're going to have to go
On the morale issue, the pres-
Saddam that he again is free to
Mr. Hillen said. "He operates at
through some kind of a deploy-
ident said, "One of the things I rec-
defy U.N. weapons inspectors.
just under the threshold where we
ment reduction here back to the
ognize is that as we ask more and
"We've got to get out of the mode
would knock the crap out of him."
TallangurOver
By Hillary Rodham Clinton
Bankruptcy shouldn't let
parents off the hook
ver the past weeks, I've
debt-free.
O
learned about proposed
The aspects of the House bill
bankruptcy-reform leg-
that concern me would elevate
islation in the House of
certain types of credit card debt
Representatives that could under-
to the same high priority as taxes,
mine the ability of some parents
school loans and family support.
to collect child support. I have no
The challenge for Congress is to
quarrel with responsible bank-
pass a law that is balanced and
ruptcy reform, but I do quarrel
fair to both the creditor and the
with aspects of the bill that would
debtor protecting families and
force single parents to compete
children while reducing abuse of
for their child support payments
the bankruptcy laws.
with hig banks trying to collect
The challenge for our economy
credit card debt. The welfare of
IS to preserve access to credit
our children must come first.
while making sure that eligible
Let me tell you about a hypo-
consumers are educated, respon-
thetical family: Jan and Simon
sible and protected from unscru-
have three children, ages 1, 3 and
pulous practices. It wasn't too
5. Simon is the manager of a
long ago that large segments of
small shoe store with an annual
our society were denied credit. At
salary of $33,000. Jan is a full-
the time, it was important to pro-
time homemaker.
vide people with this valuable
Sadly, they divorce, and Simon
economic tool, but now, as we all
agrees to pay child support. Un-
know, credit is readily available.
fortunately, within a year, he's in-
How many times in the past
volved in a serious car accident
few months has your phone rung
and loses his job. Jan, struggling
during dinner? You excuse your-
to raise their three children, stops
self, leave the table and pick up
receiving child support checks.
the receiver, only to be greeted by
Unable to find work, and behind
a cheery voice on the other end of
on his bills, Simon files for bank-
the line happily offering you a
ruptcy protection. Jan is just one
"pre-approved credit card." Or
of his creditors.
how many times have you seen or
Under current bankruptcy law,
heard advertisements encourag-
Simon is obligated to pay his
ing people with bad credit to bor-
THURSDAY, MAY 7, 1998
taxes, his student loans and his
row more?
child support and alimony. But
For many people in financial
The Washington Times
under the legislation being con-
straits for whatever reason -
sidered by the House, certain of
such offers may sound too good to
his credit card debts would also
be true. Unfortunately, down the
be mandatory. In Simon's case, as
line, too many people find they
parties vie in the fierce competi-
didn't comprehend how much
tion for limited funds, child sup-
they would owe and don't have
port payments and credit card
the means to repay the additional
obligations would be pitted
debt.
against each other.
The average bankruptcy filer
Unfortunately, Jan and Simon's
in this country earns less than
story is all too common. This year
$18,000 a year after taxes. And,
alone, 1.4 million families will file
now, credit card companies even
for protection from unmanage-
target college and high school
able consumer debt under our
students.
bankruptcy laws. This represents
Most people use their credit
an increase of about 400 percent
cards responsibly and pay their
since 1980. While some reform is
bills reliably. But, for many
in order, any accompanying
Americans like Jan and Simon
threat to child support and ali-
- the difference between fiscal
mony payments is not.
security and financial ruin is just
This administration has
one calamity away. A divorce, a
worked too long and too hard to
lost job, an accident or a child's
improve child support collection
illness can rob a family of its fi-
to see it now threatened. The
nancial security and eventually
president has cracked down on
lead to bankruptcy court.
nonpaying parents and strength-
As members of Congress grap-
ened enforcement. Since 1992,
ple with bankruptcy reform, they
collections are up 68 percent.
must deal with the problems that
Today, families that file under
face both creditors and debtors.
Chapter 7 are relieved of certain
But one issue is clear. Any effort
debts, but as in Simon's case, they
to reform the bankruptcy system
must still repay others, including
must protect the obligations of
taxes, educational loans and fam-
parents to support their children.
ily and child support obligations.
To find out more about Hillary
Many also try to continue making
Rodham Clinton and read her
home mortgage and car pay-
past columns, visit the Creators
ments. They leave court relieved
Syndicate World Wide Web page
of some debt but certainly not
(www.creators.com).