Feingold tries to save flood victims from crushing debt - Sensenbrenner tries to make it easier to kick them when they are down

Feingold to seek bankruptcy protections for Katrina victims
By Frederic J. Frommer
Associated Press

WASHINGTON - Sen. Russ Feingold plans to seek legislation aimed at softening the effects of a new, tougher bankruptcy law on victims of Hurricane Katrina and other natural disasters.

Feingold, D-Wis., said he wanted to make sure the new law "does not compound the hardship for thousands of hardworking Americans who simply will not be able to make ends meet as a result of this disaster."

The law, which makes it harder for debt-ridden Americans to wipe out their obligations, takes effect Oct. 17.

Feingold said he hoped to introduce a bill and have it included in disaster relief legislation Congress is expected to pass.

The current outline of Feingold's bill calls for people who lived in the hurricane's disaster zone as of Aug. 28 to be treated under the old bankruptcy law for a year after the new law kicks in.

The bill also would make the following changes for victims of all natural disasters, not just Katrina:

-Exempt payments from the Federal Emergency Management Agency or relief agencies from the definition of income for purpose of bankruptcy eligibility;

-Exempt natural disaster victims from the provisions of the new law that make it easier for landlords to evict tenants who are in bankruptcy than the current law allows;

-Exempt natural disaster victims from the new law's stricter paperwork and documentation requirements."

The bankruptcy system is a safety net that can provide a fresh start," said Feingold, an outspoken critic of the new law.

President Bush signed the law in April, after Congress passed it following eight years of lobbying by banks and credit card companies.

Rep. Jim Sensenbrenner, R-Wis., chairman of the House Judiciary Committee, does not support changes to the bankruptcy law, said his spokesman, Jeff Lungren.

"The chairman is interested in helping and protecting the Hurricane Katrina victims - they would qualify under the special circumstances exceptions under the bill," Lungren said.

Meanwhile, the House Wednesday passed Sensenbrenner's bill that would allow circuit, district and bankruptcy courts to conduct special sessions outside their geographic boundaries when they cannot meet because of emergency conditions.

And Rep. David Obey, D-Wis., said last week he plans to reintroduce legislation that would establish an insurance fund that states can buy insurance coverage from to help cope with future disasters.

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