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MEDICAL BANKRUPTCY FAIRNESS ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

ON

H.R. 901 

JULY 15, 2010 

Serial No. 111–141 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DANIEL MAFFEI, New York 

JARED POLIS, Colorado 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Majority Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

STEVE COHEN, Tennessee, Chairman 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

DANIEL MAFFEI, New York 

ZOE LOFGREN, California 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

JOHN CONYERS, JR., Michigan 

JUDY CHU, California 

TRENT FRANKS, Arizona 

JIM JORDAN, Ohio 

HOWARD COBLE, North Carolina 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

JULY 15, 2010 

Page 

THE BILL 

H.R. 901, the ‘‘Medical Bankruptcy Fairness Act’’ ................................................ 3 

OPENING STATEMENTS 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee, and Chairman, Subcommittee on Commercial and Administrative Law ........................................................................................................... 1 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Commercial and Administrative Law .................................. 8 

The Honorable Daniel Maffei, a Representative in Congress from the State 

of New York, and Member, Subcommittee on Commercial and Administrative Law ................................................................................................................ 13 

The Honorable Trent Franks, a Representative in Congress from the State 

of Arizona, and Ranking Member, Subcommittee on Commercial and Administrative Law .................................................................................................. 13 

The Honorable William D. Delahunt, a Representative in Congress from 

the State of Massachusetts, and Member, Subcommittee on Commercial 

and Administrative Law ...................................................................................... 15 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Member, Subcommittee on Commercial 

and Administrative Law ...................................................................................... 15 

The Honorable Steve King, a Representative in Congress from the State 

of Iowa, and Member, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 17 

The Honorable Melvin L. Watt, a Representative in Congress from the State 

of North Carolina, and Member, Subcommittee on Commercial and Administrative Law ........................................................................................................ 17 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Member, Subcommittee on Commercial and Administrative Law ........................................................................................................ 18 

The Honorable Robert C. ‘‘Bobby’’ Scott, a Representative in Congress from 

the State of Virginia, and Member, Subcommittee on Commercial and Administrative Law .................................................................................................. 20 

The Honorable Judy Chu, a Representative in Congress from the State of 

California, and Member Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 22 

WITNESSES 

The Honorable Cecelia G. Morris, United States Bankruptcy Judge, Southern 

District of New York 

Oral Testimony ..................................................................................................... 85 

Prepared Statement ............................................................................................. 88 

Ms. Aparna Mathur, Ph.D., Resident Scholar, American Enterprise Institute 

Oral Testimony ..................................................................................................... 96 

Prepared Statement ............................................................................................. 99 

Page

IV 

Mr. Peter S. Wright, Jr., Director of Clinical Programs, Consumer and Commercial Law Clinic, Franklin Pierce Law Center 

Oral Testimony ..................................................................................................... 120 

Prepared Statement ............................................................................................. 122 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Chairman, Committee on the 

Judiciary, and Member, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 9 

Material submitted by the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Chairman, Subcommittee on Commercial and Administrative Law ........................................................................ 25 

Prepared Statement of the Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Georgia, and Member, Subcommittee on Commercial and Administrative Law ......................................... 83 

Material submitted by the Honorable Trent Franks, a Representative in 

Congress from the State of Arizona, and Ranking Member, Subcommittee 

on Commercial and Administrative Law ........................................................... 142 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Post-Hearing Questions from the Honorable Cecelia G. Morris, 

United States Bankruptcy Judge, Southern District of New York .................. 185 

Response to Post-Hearing Questions from Aparna Mathur, Ph.D., Resident 

Scholar, American Enterprise Institute ............................................................. 189 

Response to Post-Hearing Questions from Peter S. Wright, Jr., Director of 

Clinical Programs, Consumer and Commercial Law Clinic, Franklin Pierce 

Law Center ........................................................................................................... 191 

(1) 

MEDICAL BANKRUPTCY FAIRNESS ACT 

THURSDAY, JULY 15, 2010 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 11:32 a.m., in 

room 2141, Rayburn House Office Building, the Honorable Steve 

Cohen (Chairman of the Subcommittee) presiding. 

Present: Representatives Cohen, Conyers, Delahunt, Watt, 

Maffei, Johnson, Scott, Chu, Franks, Coble, and King. 

Staff present: (Majority) James Park, Counsel; Adam Russell, 

Professional Staff Member; and Daniel Flores, Minority Counsel. 

Mr. COHEN. This hearing of the Committee on the Judiciary, 

Subcommittee on Commercial Administrative Law will now come to 

order. Without objection, the Chair will be authorized to call a recess of the hearing. I will recognize myself for a short statement. 

Today we will revisit the issue of medical debt as a contributor 

to bankruptcy. Last year the Subcommittee held a hearing on this 

issue focusing on a Harvard study in 2007 on nationwide filing for 

bankruptcy. Disturbingly, that study concluded that 62.1 percent of 

bankruptcy debtors can trace at least part of the cause of their 

bankruptcies to medical debt. The 2007 data also indicates that 

there was a 49.6 percent increase in medical bankruptcies as a proportion of bankruptcy filings between 2001 and 2007. 

Three years ago this Subcommittee held a hearing on a predecessor Harvard study, which examined the 2001 bankruptcy filing 

data inside select judicial districts around the country. That study 

concluded that illness or high medical bills contributed to almost 

half of all the bankruptcy filings that were studied. 

The study further suggests that medical debt was driving middleclass families into bankruptcy. Of these classified in this study as 

medically bankrupt, more than 60 percent had attended college, 

more than 66 percent at one point owned a home, and 78 percent 

had health insurance at the time they became sick or injured. 

H.R. 901, the ‘‘Medical Bankruptcy Fairness Act,’’ introduced by 

Representative Carol Shea-Porter of New Hampshire, represents 

an important step forward to addressing this problem of debtors 

forced into bankruptcy because of overwhelming health care costs. 

This legislation would increase the Federal homestead exemption 

to $250,000, and if state law requires that a debtor claim a lower 

2 

state law homestated exemption, it allows the debtor to nonetheless choose the higher Federal homestead exemption. 

These measures would allow a debtor who was forced into bankruptcy because of high medical debt to protect his or her interest 

in their home from being transferred into the bankruptcy estate 

and sold or liquidated. They would also provide some peace of mind 

for medically distressed debtors, who have enough to worry about 

without also having to wonder whether their hard-earned home equity will be lost because of accident or illness. 

H.R. 901 would also exempt medically distressed debtors from 

the Chapter 7 means test. Other Subcommittee Members and I are 

on record as being critical of the means test and other provisions 

of Bankruptcy Abuse Prevention and Consumer Protection Act of 

2005, otherwise known as BAPCCA, or something like that— 

BAPCPA—BAPCPA. 

The unnecessary expense and burden that it places on debtors 

should not be placed upon those who seek bankruptcy relief because of medical costs or loss of income associated with providing 

care. In 2005, BAPCPA supporters pointed to a Department of Justice court record analysis that concluded the majority of the sample 

had no medical debt at all; that among those with medical debt, 

the average medical debt was under $5,000 and medical debt comprised only 5.5 percent of the total unsecured debt of the sample. 

A recent Law Review article examined the Department of Justice 

analysis and concluded that the protocol used by the DOJ, which 

relied solely on documents filed by debtors in connection with the 

bankruptcy cases ‘‘produced a skewed undercount of medical bills 

and failed to account for bankruptcy filers with significant medical 

hardship, who had no debt on Schedule F that could be identified 

as medical.’’ 

As the authors of the Law Review article noted, the clock cannot 

be turned back to 2005, when the Dow Jones—excuse me—the Department of Justice analysis enabled lawmakers to vote with a 

clear conscience in favor of BAPCPA and against amendments that 

Members of Congress proposed to protect people with medical problems from certain harsher effects of the bill. 

H.R. 901 is a critical first step in correcting this legislative oversight by restoring balance for medically distressed individuals facing financial ruin. I thank Representative Shea-Porter for introducing H.R. 901 that brings together two of the most important 

issues that this Congress and America has faced recently, which is 

our lack of a national health care policy, which we rectified this 

past year, an historic vote taken in by mostly, almost entirely, 

Democrats, and the terrible home foreclosure crisis that continues 

to ravage and wreck this country and take people into terrible 

bankruptcies and debt caused by years and years of neglect during 

the previous Administration. 

And I thank our witnesses for their participation today. 

[The bill, H.R. 901, follows:] 

3 


HR901-1.eps
4 


HR901-2.eps
5 


HR901-3.eps
6 


HR901-4.eps
7 


HR901-5.eps
8 

Mr. COHEN. I now recognize my colleague, Mr. Franks, who is 

not here, but I would recognize Mr. Coble, if he would like to take 

his moment in the limelight in lieu thereof, in place thereof. 

Mr. COBLE. Thank you, Mr. Chairman. I am told that the Ranking Member from Arizona is en route, so I will waive any opening 

statement. 

Mr. COHEN. Thank you. 

We will then put in reserve the opportunity for Mr. Franks, the 

distinguished Ranking Member, to make his opening remarks. I 

would now like to recognize Mr. Conyers, the most esteemed, distinguished and erudite Chairman of this Committee, for any opening remarks he would like to add. 

Mr. CONYERS. Thank you, Mr. Chairman. 

For the benefit of our friends that are here today, that is a very 

expansive introduction that I get from him on a regular basis. 

The only thing I wanted to do was to welcome Dr. Mathur 

today—she has testified before us—and also to welcome, extend a 

welcome, to her parents, who are here as well. We are proud of 

your daughter, except in one respect. And that is that she is still 

questioning the fact that 60 percent of all bankruptcies are created 

by medical indebtedness. 

Now, this is not the most complicated issue that has ever been 

before the Committee, and the 60 percent figure is affirmed by 

all—well, almost everyone except our witness today, Dr. Mathur 

herself. And so what we are trying to do is to persuade her that 

everybody else isn’t wrong. 

And I don’t think that that would be too hard a subject with all 

my distinguished friends, Mr. Chairman. And so I ask unanimous 

consent to put my statement into the record. 

Mr. COHEN. Without objection, it will be done. 

[The prepared statement of Mr. Conyers follows:] 

9 


A-1.eps
10 


A-2.eps
11 


A-3.eps
12 

Mr. COHEN. And the Chair of the Subcommittee likewise recognizes Dr. Mathur and her parents. And even if one person may be 

considered wrong, one woman with courage. And there is something else that follows it up, I think. 


A-4.eps
13 

Is there anybody else who would like to make an opening statement or recognize any of the other panelists or their parents? 

Mr. Maffei, you are recognized. 

Mr. MAFFEI. Thank you, Mr. Chairman. I will be very brief. But 

I do appreciate the Subcommittee having this hearing. 

It is clear that medical bankruptcy is reaching epidemic proportions. Whatever the percentage is, it continues to be a huge problem in my district, and the percentage does seem to continue to rise 

in this squeeze, where family budgets are shrinking and yet medical costs continue to skyrocket. It seems to be affecting more seniors in my district. 

The other thing—just a note in my district, we have not had the 

kind of home foreclosure crisis in the rest of the country, mainly 

because we haven’t seen the big bubble, so our bubble never burst 

in terms of home foreclosures. So most of the plurality of the bankruptcies coming that are actually affecting regular people are because of medical costs. And often these are people who have insurance. 

And so that is the other point I would make is that while clearly 

we made a step in the right direction in our health care actions in 

this Congress, we are still going to have this problem into the future. 

Whether Ms. Shea-Porter’s bill is the answer or something else, 

I am not sure. I will proceed to this hearing without prejudice 

about that, but clearly something is necessary to address it. 

And it is my feeling, just to conclude, that given that the overall 

costs of health care tend to involve five basic chronic conditions, 

and not necessarily catastrophic illness, is that it seems that this 

is a problem that should have a solution. 

But, you know, look, if we pool all of our risk together, we should 

be able to find a way to be able to make sure that families don’t 

go bankrupt in the relatively rare instance where they have these 

catastrophic diseases. And yet, of course, to that family it is huge. 

And my last point, you know, given when a family faces very difficult illness of a loved one, the last thing that we should do as a 

society is then put on top of that this incredible financial burden 

and the possibility of losing their home and et cetera. 

And so whatever we can do on this, I appreciate the panelists 

coming to testify. Thank you very much. 

Mr. COHEN. Thank you, Mr. Maffei. 

I would now like to recognize the distinguished Ranking Member 

of the Subcommittee, the gentleman from Arizona, Mr. Franks, for 

his opening statement. 

Mr. FRANKS. Well, thank you, Mr. Chairman. I apologize. I just 

got back from votes, but I got there a little late, so that made me 

late here. But thank you. 

Mr. Chairman, in July 2009 this Subcommittee held a hearing on 

whether medical debt was bankrupting Americans. And the conclusion was that the answer was no. The evidence continues to support that answer today, and there is thus no need for the legislation that is the subject of today’s hearing. And I am surprised that 

the biggest piece of news since our hearing has not convinced my 

colleagues on the other side of the aisle of that conclusion. 

14 

The big news was, of course, Obamacare. Obamacare was pitched 

to the American people as the magical legislation that would increase coverage and simultaneously decrease costs. It was the silver bullet that would somehow protect Americans from rising medical costs while spending at least a trillion of those same Americans’ dollars. 

Of course, the American people didn’t believe that sales pitch, 

Mr. Chairman. The majority of them today want Congress to repeal 

Obamacare. Instead of being a silver bullet, they believe 

Obamacare is proving itself to be a lead balloon. 

That being said, every one of my colleagues on the other side of 

the aisle today voted for Obamacare. Is today’s hearing the other 

party’s admission that Obamacare won’t work? Are my colleagues 

worried that the millions who will lose their medical insurance of 

their choice under Obamacare will be bankrupted by the effect of 

that legislation? 

Are my colleagues worried that small business owners, who face 

higher insurance benefit costs and higher Medicare taxes under 

Obamacare, will be forced into bankruptcy because of it? Or are my 

colleagues worried that the $569 billion in new health care taxes, 

taxes that violate the President’s promise not to raise taxes on the 

middle class, will threaten individuals and small business owners 

with bankruptcy? Are my colleagues worried that the $311 billion in rising health 

care costs under the Obamacare that the Department of Health 

and Human Services’ own actuaries identified will bankrupt Americans, who will have to pay for that? 

Now, I don’t see those issues addressed specifically in today’s bill, 

and I wonder if one of my colleagues could point me to where they 

are addressed. Of course, perhaps they are not addressed at all, 

Mr. Chairman, because Obamacare supporters have steadfastly refused to admit that realities like these exist. 

In a rose-colored world painted by Obamacare’s backers, oppressive medical debts that bankrupted Americans and American businesses were supposed to become a thing of the past. They weren’t 

supposed to become permanent features of the landscape that 

meant we had to pass medical debt bankruptcy legislation. 

Now, Mr. Chairman, let me just close by a couple of comments. 

Under this legislation as it is written, if I went out and ran my 

credit cards up to $50,000, all I would have to do to get rid of those 

would be to go out and run my health care costs up to $10,000 and 

then wipe the entire $60,000 clean. And that puts the situation beyond even the ostensible scope of this legislation. 

And I guess I have to suggest in the context, you know, a little 

over a week ago, this country had a 1-day deficit—1 day—of $166 

billion. Now, that is larger than the entire 2007 deficit. That is the 

last time Republicans totally controlled the budget process for the 

entire year, and yet in 1 day under the Obama administration, we 

have raised that more than we did in an entire year under the last 

Republican-controlled process. 

And, of course, that is $20 billion more than Obamacare was supposed to save over 10 years. And, of course, I would just say, and 

finally, you know, I want so much. I mean, I have had 16 surgeries, 

and my parents were burdened with incredible medical challenges 

15 

when I was a little baby, and I want you to know that I identify 

so much with the people that deal with these kinds of things. 

But under this situation in the final analysis, the socialized approaches and these things that just simply ignore the laws of mathematics end up hurting more people, and usually the ones that 

need it most in the long run. And I am just suggesting to you that 

if we don’t start recognizing realities here, we are going to hurt everybody in the country. And the people at the bottom rung of the 

economic ladder are going to be hurt the worst. 

And so with that, Mr. Chairman, I just wonder where it will all 

end and yield back. 

Mr. COHEN. Mr. Johnson, you are—— 

Mr. Delahunt, do you seek—appreciate your—— 

Mr. DELAHUNT. Yes, I would be very brief, Mr. Chairman. Thank 

you. 

I just want to remind my good friend from Arizona that the financial collapse that has immersed us into this economic quagmire 

occurred in September of 2008. We all remember the panic, the 

concern and the uncertainty. It was devastating. It will take time 

to emerge. 

I believe we are heading in the right direction. There are some 

pieces of light that are piercing the darkness. But let us not forget—and I don’t want to make this partisan, but clearly the Ranking Member refers to Obamacare and people on the other side of 

the aisle, and I have got respect for him, and I know he is very 

sincere when he expresses his empathy and sympathy for people 

who find themselves in this situation. 

But I also can’t let go without some rejoinder that it was a Republican administration and a Republican Congress that is responsible for policies that led us to the disaster that we saw consume 

us in September of 2008. 

We can talk about the deficit. Every night during special orders, 

or every other night, I spoke to that deficit. It is a Republican deficit. Let us understand that. That is really what it is. That is what 

we inherited when President Obama came to office and a new majority came to both the House and the Senate. 

We landed on a ship of state that could best be described as the 

Titanic in economic terms. We managed to steer and scrape the iceberg. We still have some shoals that have to be navigated. But 

where we are today is the result of the Bush-Cheney administration that received overwhelming support from Republicans in both 

the House and the Senate. And with that, I yield back. 

Mr. COHEN. Thank you, sir. 

Does anybody else seek recognition? 

Mr. Johnson of Georgia? 

Mr. JOHNSON. Thank you, Chairman, for holding this hearing on 

the Medical Bankruptcy Fairness Act. And fairness is so important, 

as we adjust the scales from my colleagues on the other side’s predisposition to always support the big business over consumers. 

And, you know, I mean, it was my friend on the other side of the 

aisle fought with the vengeance of a mother whose child was under 

attack like a bear, a mama bear trying to take care of her cubs, 

fought so hard to keep the bankruptcy laws as they are so that people, say, like my friend, my good friend John McCain, who forgot 

16 

how many houses that he owned—it was about seven, I believe— 

and fought hard to make it legal for him to be able to select which 

of those seven houses he is going to declare as his residence under 

bankruptcy, should something happen and he would have to file. 

And they can get the mortgage totally reworked on the other six 

homes of his choosing. They can—that beach home, the chalet in 

Vail, you know, the Florida, Miami, you know, seaside villa, the Arlington, Virginia, condo, the Ritz-Carlton condo in D.C., whatever 

the case—just take one of those and if you get into trouble, you can 

turn yourself right-side up in bankruptcy. You can get your balance 

reduced to what the home is worth now, as opposed to what it was 

when you took out the. 

And they fought so hard for that, and they fought hard to maintain the right of those folks with the six and seven homes to be 

able to get their interest rate reduced, should the need arise. But 

they fought so hard against just allowing consumers to be able to— 

with the only home that they have—to have that debt restructured. 

And so I am not surprised at the righteous indignation that has 

been on display today from my friend on the other side of the aisle 

and I mean, you know, folks calling BP, apologizing to BP, and 

then calling financial regulatory reform an ant, you know. These 

things are just—it is part of a clear pattern of supporting big business over consumers. 

And I am glad that we are having this hearing today, Mr. Chairman, because this gives the Members the opportunity to explore 

whether the Medical Bankruptcy Fairness Act is a tool that should 

reform the bankruptcy code to respond to the needs of distressed 

medical debtors, most of whom are just working people, just ordinary consumers. 

And I applaud the Chairman for exploring the solutions to the 

overall problem of rising medical debt. According to the IXIS 

project in 2007, the most recent year for which data are available, 

an estimated 72 million Americans have medical bill problems. 

Many of these Americans made paying off medical bills a top priority, and therefore struggled to pay for other basic necessities like 

food, rent, clothing and the mortgage note. 

According to that report, more than 30 million American adults 

used about all their savings or borrowed against their homes in 

order to pay off medical bills. This, however, did not stop the bill 

collector from knocking on their door if they came up short. 

According to a June 2009 American Journal of Medicine study, 

62 percent of all bankruptcies filed in 2007 were linked to medical 

expenses. And of those who filed for bankruptcy in 2007, nearly 80 

percent had health insurance. 

And so that is why I like to refer to the medical care reform not 

as Obamacare, as it is derisively referred to by my colleagues on 

the other aisle, singing from a script in unison, not even in harmony, but in unison, and that is why I like to refer to medical care 

reform as medical insurance reform. And they love to protect those 

insurance companies also. 

According to the same study, most medical debtors were welleducated and middle-class. Due to the recent recession and record 

unemployment, more and more Americans cannot afford health insurance. Last year Families USA released a report that showed 

17 

nearly 3 million people under the age of 65 in my home state of 

Georgia were uninsured at some point in 2007 or 2008. 

This session Congress scored a historic victory in the centurylong battle to reform the Nation’s broken health care system. Passing health care reform will definitely improve the situation, but a 

number of the provisions do not kick in until 2014. Thus, medical 

debt is a problem that must be adequately addressed. 

I hope this hearing will give us all the opportunity to understand 

the serious consequences that medical debt has on our constituents, 

and I look forward to hearing the witnesses’ views on how Congress 

can solve this problem. 

Thank you, Mr. Chairman, and I yield back the balance of my 

time. 

Mr. COHEN. Thank you, Mr. Johnson. I appreciate your warming 

Mr. King up. I imagine Mr. King is ready. 

Now on deck, the next batter will be from Iowa, Mr. Steve King. 

Mr. KING. Thank you, Mr. Chairman. Appreciate the testimony 

of the witnesses, and I regret that I wasn’t here to hear it all, but, 

of course, it is a matter of record. 

And I would like to first just explore something. I am always interested in foundational things that we do and turn to Judge Morris, because I know she will know this, as this is a completely simple softball question. Where does the Federal Government get the 

authority to control bankruptcy? 

Judge MORRIS. Constitution. 

Mr. KING. Thank you. I knew you would know the answer right 

away. And so when I look at Article I, Section 8, it says that the 

Congress shall have the power to—excuse me. 

Oh, excuse me. 

Mr. COHEN. Would the clerk make note that Judge Morris answered the first question correctly? Our second question? 

Mr. KING. Well, thank you, Mr. Chairman. I have just been advised that I came in—this is for an opening statement invitation, 

rather than questioning the witnesses, so as I listened to Mr. Johnson, I got the wrong impression. And so what I will do instead is 

say that I will be interested in the testimony of the witnesses here 

and looking forward to hearing that and evaluating that testimony. 

And I would be happy to ask those questions at the appropriate 

time. Thank you. And I yield back. 

Mr. COHEN. You are welcome, Mr. King. 

Mr. Watt, you are recognized. 

Mr. WATT. Mr. Chairman, I was trying to stay out of this very 

partisan debate but I was just going to try to give some content to 

Mr. Delahunt’s statement. 

I was feverishly looking through my BlackBerry, because for 

months and months and months I kept in my BlackBerry a magic 

date back in September of 2008 on which on a Friday afternoon at 

3:30 in the afternoon, 185 members of our Democratic caucus were 

on a nationwide conference call about the impending meltdown 

that was about to occur in our economy. 

And I was trying to recall whether President Obama—he wasn’t 

President at that time—was on that call. And I recall that he specifically was not. That call was with Secretary of the Treasury 

Paulson in the Bush administration, the chairman of the Federal 

18 

Reserve, Chairman Bernanke, and the leadership. And we were advised that a similar call had taken place earlier that day with 

members of the Republican conference to advise them of the dire 

straits that our economy we are in. 

And as best I recall that—as best I recall that conversation—and 

I am trying to be equal about this; this not, you know, I just want 

the record to be square about where we were at that time—it was 

Secretary Paulson, a member of the Bush administration, who likened the condition of our country at that time to what could, according to him, become worse than the condition that we faced in 

the Great Depression unless we took dramatic action to address 

that. 

So my good friend from Arizona needs to understand that all of 

these things take place in an historic context, that this situation 

in which we find ourselves didn’t just all of a sudden happen one 

day when President Obama became President of the United States 

or didn’t happen one day when we passed what he characterizes as 

Obamacare. There is historical context to this economic meltdown. 

There is also historical context to the deficit in which we find 

ourselves, because I happened to be here and took one of the very 

difficult votes in 1993 or 1994 that people attribute to the Republican majority becoming a reality in 1994, a very difficult vote for 

a number of members of our caucus, but a vote which led to, by 

the end of the Clinton administration, a surplus in our Federal 

budget projected out as far as the human eye could see. 

It took almost that whole 8-year term of the Clinton administration to get us there. This is a process. I am confident that we are 

moving in the right direction, and we will be a lot closer at the end 

of the Obama administration, either 2 years from now or 6 years 

from now, than we were at the end of the Bush administration. 

But we need to put this in historical context, that the Clinton administration left the Bush administration with a serious surplus 

projected as far as out into the future as we could and that within 

6 months after the Bush administration started, we were back into 

a deficit situation. 

So we can be partisan about this. I try not to be partisan about 

our economy. To be honest with you, you know, our economy is 

something that should be above politics. Our national defense 

should be above politics or partisanship. So I just want to set the 

record straight that there are some historical facts that exist here 

in which we are operating. 

And with that, Mr. Chairman, I yield back. 

Mr. COBLE. Mr. Chairman? 

Mr. COHEN. Do I hear a voice from North Carolina? Another 

voice from North Carolina? 

Mr. COBLE. A brief voice. 

Mr. COHEN. Mr. Coble, you are recognized, and you are respected 

and appreciated. 

Mr. COBLE. Thank you, sir. I am going to insert my oars into 

these partisan waters. 

There is nothing wrong with being partisan, by the way. But I 

think during the time that Mr. Watt referred to during the Clinton 

administration, the surplus, I believe a good part of that time there 

19 

was a Republican majority, at least in the House. So I think we 

need to have some credit for that as well. 

Mr. WATT. If the gentleman will yield, I am happy to give whoever voted for the turnaround the credit that they deserve. My 

recollection there was not a—there were maybe two or three people 

who on your side who voted for it, but I think the turnaround occurred in a Democratic majority House—— 

Mr. COBLE. Well, this is my time. 

Mr. WATT [continuing]. Not a Republican majority. 

Mr. COBLE. Mr. Franks asked for this. Let me yield to the gentleman from Arizona for the remainder of my 5 minutes. 

Mr. FRANKS. Well, I thank the gentleman. And I don’t want to 

carry this much further, but there is no question that the past Administration has responsibility in these challenges. I was one of the 

members of my own party that did vote against some of the socalled solutions to those problems. 

But let me just say to you whatever the Bush administration did 

in terms of debt, the Obama administration has surpassed them 

profoundly. This Administration has done for spending what Stonehenge did for rocks. And let me suggest to you that when I mentioned that 160 billion—$166 billion of spending deficit in 1 day 

was higher than the last totally controlled—Republican-controlled 

deficit for 1 year, that is a matter of fact. 

But in any case we just have to realize that sometimes we got 

to get back to 101 economics and realize that no matter how much 

money we have in our pockets, if there is nothing being produced 

in this country in terms of goods and services, it won’t work. And 

everything I see coming out of this Democrat majority has put a 

burden on the jobs market and has weighed down the economy in 

ways that I will suggest to you that the future will manifest in fairly dramatic terms. It already has done that. 

And I guess I would have to go ahead and take one last thought 

here, Mr. Chairman. My friend says that we shouldn’t politicize the 

defense of this country. I couldn’t agree with him more. And yet 

the last two defense authorization bills passed by this Congress has 

had major social engineering forced on the backs of our soldiers by 

this majority. So I just would suggest that that is something that 

probably he probably should have left off. 

And with that, I will yield back. 

Mr. CONYERS. Could the gentleman yield? 

Mr. FRANKS. I would be glad to yield to the gentleman. 

Mr. CONYERS. I just wondered what were those social engineering projects that were forced upon the—— 

Mr. FRANKS. Well, this is the hate crimes legislation, the Don’t 

Ask, Don’t Tell. That should be legislation that should be voted 

separately, not when we are trying to fund the people out there 

pouring their blood out on some battlefield for all of us. 

Mr. WATT. Gentleman yield? 

Mr. COBLE. Well, it is my time. I will yield very briefly, Mel, but 

I think the Chairman wants to get on with the witness, but I will 

yield. 

Mr. WATT. Well, we didn’t—— 

Mr. COHEN. No, I think we are all enjoying this. 

20 

Mr. WATT. We are just trying to finish it on a very positive note, 

my friend from North Carolina. And just to let him know that people who don’t ask and don’t tell of all persuasions shed their blood, 

too. So, you know, that is not social engineering. That is personal 

characteristics of people, and all of them are Americans just like 

we are. 

Mr. FRANKS. Mr. Chairman, could I move that we just put the 

witnesses’ statement in the record and continue this debate up 

here? That might be a quick—okay. I see that we got the Chairman 

here. I think we got a consensus here at last. 

Mr. COBLE. Let me reclaim and yield back. 

Mr. COHEN. Mr. Coble, normally you are much more temperate, 

but look what you have got us into. 

Mr. COBLE. Hold me harmless for that, Mr. Chairman. 

Mr. COHEN. You are. You have got many credits. 

Mr. Scott of Virginia? 

Mr. SCOTT. Thank you, Mr. Chairman. 

Mr. Chairman, I am a Member of the Budget Committee, and 

when I hear the other side talking about fiscal responsibility, I 

would first like to point out that there was—everybody knows we 

have a big deficit, and there was a suggestion in the Senate that 

we have a budget commission to make the tough choices that nobody likes to make when you are dealing with the budget. If you 

got a deficit, you have to raise taxes or cut spending, and nobody 

wants to do that. 

And we had a suggestion to have a budget commission to make 

the tough choices. It is a bipartisan idea in the Senate. When the 

President endorsed it, it came out to vote and was defeated in the 

Senate, because at least seven Republicans, co-sponsors of the bill, 

voted no. So this, you know, that is how serious this debate is. 

Now, the fact of the matter is we have a big budget deficit, but 

we would like to be precise as to what the criticism is. The criticism is that the policies we have now were instituted during the 

Bush administration. We have a deficit because of Republican policies, and Democrats now in control haven’t cleaned it up fast 

enough. Okay. 

We haven’t cleaned it up fast enough, because we made a deliberate choice that we would deal with jobs first. We didn’t want to 

increase taxes or cut spending in the middle of the worst recession 

since the Great Depression. So we will take the criticism. We 

haven’t cleaned up the mess as quickly as we should have, because 

we had another mess that we were dealing with. 

Now, the gentleman from North Carolina, Mr. Watt, talked about 

the 1993 vote where we turned around and went on a course of fiscal responsibility that included PAYGO, and we fixed the budget. 

We went on a trajectory that got us to the point where in 2001 we 

had a surplus, a projected surplus sufficient to pay off the national 

debt held by the public by 2008. If we hadn’t messed up, we would 

have paid off the debt held by the public. 

And to show you what was going on, Chairman Greenspan in answering questions had to answer questions like what will happen 

when we pay off the national debt? What will happen to interest 

rates? What is going to happen to the bond market when we pay 

21 

off the national debt after the first tax cut? That was the last time 

you heard anybody talking about paying off the national debt. 

Now, the gentleman from Arizona says—or somebody over there 

said, ‘‘But wait. We were in control after 1995 of the Congress, so 

we deserve some credit.’’ Now, that is a bold statement when you 

look at the facts. 

In 1995 when they came in, they passed a budget. It had reckless 

fiscal policies in it, and President Clinton promptly vetoed it and 

would not sign the bill. He let the government get shut down rather than sign those irresponsible budgets. And as a result of his vetoes and enough Democrats left over to sustain the vetoes, we went 

on course to be paying off the national debt. We would have finished paying off the national debt by 2008. 

For someone to take credit for being there when they tried to dismantle the policies that were in effect and institute policies that 

would take us in the direction, and they want some credit, that is 

a bold idea. And do you want to know what would have happened 

if President Clinton had signed it? We found out in 2001. President 

Bush signed it, and we promptly went right into the ditch with the 

worst fiscal policy, the worst stock market, the worst job performance since the Great Depression, for 8 consecutive years. 

Now, we are going to fix the problem. In 1993 when the bills 

passed, we passed that great budget without a single Republican 

vote in the House, not a single Republican vote in the Senate. And 

as a matter of fact, when Marjorie Margolies-Mezvinsky cast the 

218th vote to pass the bill, the Republicans started chanting, ‘‘Byebye, Marjorie,’’ and they used that vote to defeat her in an upcoming election. 

We are going to fix the job situation. We are going in the right 

direction. We haven’t gotten where we need to be, but we are going 

in the right direction. We passed the jobs bill without a single Republican vote in the House or the Senate. 

And then we are going to attack the deficit, and we don’t expect 

any support from the Republicans. We are going to just go and fix 

it over their objections. But to be lectured by somebody about fiscal 

responsibility with that history is a bit much for somebody on the 

Budget Committee to take. 

Now, one of the things that we passed—again, without any Republican votes—was medical health care reform. And talking about 

medical bankruptcies because of health care reform when it is fully 

implemented, there will be caps on how much money the insurance 

companies can make you pay out of pocket. And so when you reach 

the cap, all the rest is on the insurance companies. And this will 

significantly reduce the need for bankruptcy because of health care 

expenses. 

The gentleman from Georgia talked about people going bankrupt 

with medical expenses. Most of them have insurance. There are the 

co-pays and deductibles that killed them. And so with the limit on 

out-of-pocket expenses and no caps on insurance companies having 

a cap on how much they are going to spend a year or how much 

they are going to spend on a lifetime, people will be able to have 

their health care needs addressed without having to resort to bankruptcy. It will take a couple of years to fully implement it, but that 

22 

is what we did—again, without a single Republican vote on final 

passage of that bill. 

Thank you, Mr. Chairman. We just thought we would get all the 

facts on the table so that we can talk about fiscal responsibility and 

health care. 

Mr. COHEN. Ms. Chu? 

Ms. CHU. Mr. Chair, I would like to yield my time to the distinguished Chair of our entire Judiciary Committee, Mr. Conyers. 

Mr. CONYERS. Thank you very much. 

I want to hear the witnesses, believe it or not. But this is a pretty interesting conversation going on, you have to admit, because 

there is really wonderful recall on the part of Bobby Scott and Mel 

Watt about the history of how we got to where we are. 

But Trent Franks happens to be a friend of mine. The fact that 

we have differences in some approaches doesn’t bother me a bit. 

But for a person who has had so many surgeries in his own personal life, it is difficult for me to understand why he would resist 

health care reform with such fervor. 

Those surgeries were probably pretty expensive, and we have 50 

million people in America that don’t have a dime’s worth of insurance right now. And for him to say and to talk in a derogatory 

manner about health care reform being Obamacare—I never mind 

him using that phrase, because it is to Obama’s credit that he got 

this bill through. 

It took a year-and-a-half to finally get through a very modest set 

of measures that brought health care to 31 million people that 

weren’t qualified. It ended pre-existing conditions as an excuse to 

kick people off of insurance. And so, as modest as it was, he called 

it socialized approaches. That is a veiled way of saying it is socialized medicine. 

Mr. FRANKS. Correct. 

Mr. CONYERS. And the whole idea strikes me as inappropriate for 

someone who, not by choice, was required to go through so much 

medical attention himself. It really leaves us something to talk 

about, and I would be pleased to yield to the gentleman, if he 

would like me to. 

Mr. FRANKS. Well, Mr. Chairman, I will be really brief, because 

I appreciate your intent and your heart, and I know that our disagreement here is based not on any sort of humanitarian foundation, but on a genuine conviction that the strategies to pursue the 

desired end are different. 

I truly believe—and I really didn’t mean to get personalized in 

this situation—that if I had been born under a socialized medicine 

era, that I simply would not have gotten the level of care that I 

got, because if there is anything that one might say—I mean, history has borne out. I think Bastiat said it best. He said, ‘‘Government is that great fiction through which everyone endeavors to live 

at the expense of everyone else.’’ 

And in the final analysis, over time nothing has dragged more 

people—poor people—out of poverty, nothing has given more children born with deformities like myself or others, nothing has done 

more for those who needed it—needed help—more effectively over 

a sustained period of time than free people pursuing their dreams, 

whether it is as a doctor or whatever it might be, so they are able 

23 

to provide these kinds of services in the most effective, efficient 

manner. 

And somehow we just think that it all appears magically by simply saying, ‘‘Well, the government will pay for it.’’ We don’t realize 

that when the government gets in the middle of all this, it actually 

retards the situation, actually hurts the situation. 

If I had been born in the Soviet Union—it wasn’t that people 

aren’t smart over there. It is that their system’s no damn good. 

And unfortunately, if I had been born there, I wouldn’t be able to 

speak here at this Committee. And so I first of all thank God for 

the chance to do that, but I will say to you that I am convinced 

with all of my heart that my motivation here for free enterprise is 

so people like me can be born and have the kind of care that they 

need, and I don’t think socialized medicine will deliver. It never 

has. 

Mr. CONYERS. Well, thank you very much for that statement, because I know it is heartfelt. Trent, in the Soviet Union they have 

a communist system of government, not a socialist system of government. They are two quite different things. 

Mr. FRANKS. [Off mike.] 

Mr. CONYERS. Of course, there is a difference. And you still persist in describing the health care reform bill that was passed by a 

majority of the House and the Senate as a socialist system. What 

is socialized medicine about allowing more people on Medicaid by 

raising the ceiling eligibility? What is socialist about that? 

Mr. FRANKS. [Off mike.] 

Mr. CONYERS. Of course, I do. 

Mr. FRANKS. Mr. Chairman, the difference in—you know, I guess 

socialism is sort of socialism on a retail basis, and communism is 

socialism on wholesale basis. But the reality is that when you put 

government in control, where government is in control of the mechanisms for delivery, you inevitably create a socialist environment. 

And it just doesn’t work. 

I mean, it is true that free enterprise is sometimes the unequal 

distribution of wealth. That is true. But socialism is always the 

equal distribution, ultimately, of poverty. It always ends in that direction. And I don’t think we realize that unless the system incents 

productivity, in the final analysis there is nothing there for anyone. 

And it is hard to express it in terms that sound, you know, humanitarian, but that is what I want to do. I think, for instance, I 

think all of us have a right to run for office here. But not all of 

us have a right to call on the government to make sure that we 

win. All of us have a right to have access to our courts, but not 

all of us have a right to say to the government, ‘‘You must make 

sure that I win my case.’’ 

Equal opportunity and equal outcomes are different. And I just 

think that if there is anything that has taught us it is, I mean, the 

highway of history is littered with the wreckage of socialism. And 

I don’t know why we have to continue to learn this lesson. And yes, 

I do think Obamacare moves us precipitously and dramatically in 

that direction. 

And so with that, I don’t want to—you know, I state all of this 

respectfully to the Chairman and yield back. 

Mr. CONYERS. Of course, Trent. Thank you very much. 

24 

Well, perhaps you may be right. Let me ask you. Who runs Social 

Security in this country? Who runs Social Security in this country? 

Mr. FRANKS. Mr. Chairman, I think you make a good example. 

I think if we had a long time ago created a system where it said 

to people, ‘‘You must put a certain amount of your money into the 

mechanism of your choice,’’ and we require that as a referee, we 

could have done that. But instead, government took it over, and 

now it is going to hell in a hand basket. So you make my point for 

me. 

Mr. CONYERS. I see. Okay. Let me ask you this. Who runs Medicare in this country? 

Mr. FRANKS. Well, I just would repeat my last statement. 

Mr. CONYERS. All right. Then finally, Mr. Chairman, my friend 

Trent said that the majority of people in this country do not like 

the health care reform bill that was passed. And I am passing over 

to you a article—I think this is from the New York Times. 

Mr. FRANKS. Where is this from? 

Mr. CONYERS. Associated Press—in which it says, ‘‘Support for 

health care bill hits new high. More now support plan than oppose 

it.’’ And I would pass it to my dear friend for his scrutiny and further discussion on it at another time. 

Mr. FRANKS. Well, Mr. Chairman, I would just leave you with 

this. Not that the poll should be our deciding conclusion here, but 

the ones I have seen show in excess of 50 percent of the American 

people want to fully repeal the plan. So, and—— 

Mr. CONYERS. Do you have any citation for that, sir? 

Mr. FRANKS. Could we try to find that for you? 

Mr. CONYERS. I would like you to. 

Mr. FRANKS. I will try to do that. I think I saw it just recently. 

Mr. CONYERS. All right. Thank you. 

Mr. FRANKS. Thank you. 

Mr. CONYERS. And I want to thank the Chairman for his indulgence. 

Mr. COHEN. I want to thank everybody for their input. It has 

been quite enlightening. I am a little confused, though, because Mr. 

Franks, who I respect, and I suspect knows a lot about socialism 

and communism, said communism is wholesale and socialism is retail. And my mother always told me to buy wholesale. So, you 

know, but I am confused. 

And I would like to conclude this, if I could. It is my prerogative 

as Chairman to quote the former speechwriter of President George 

Bush, David Frum, who said on his Web site that the Republican 

Party’s decision to uniformly oppose health care reform backfired. 

‘‘We went for all the marbles. We ended with none. It was the Republican Party that made the big mistake,’’ he argued, ‘‘by losing 

its grand bet that uniform opposition to Obamacare could prevent 

the measure from becoming law.’’ 

He said it is hard to exaggerate the magnitude of the disaster. 

He wrote while Republicans may win a short-term benefit, add 

more seats in Congress in November, he argued, ‘‘they will get little compensation for the enactment of a liberal—little compensation for the enactment of a liberal policy objective that could last 

generations and will be difficult, if not impossible, to repeal.’’ 

So we will see if Mr. Frum is correct. 

25 

With that said, I would like to ask unanimous consent to include 

in the record an article in the Yale Journal of Health Policy Law 

and Ethics titled ‘‘Managing Medical Bills on the Brink of Bankruptcy.’’ Without objection, it will be done. 

[The information referred to follows:] 


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Mr. COHEN. Now, thanking everyone for their statements, without objection other Member statements will be put in the opening 

record—placed in the record. 

[The prepared statement of Mr. Johnson follows:] 


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Mr. COHEN. I am now pleased to introduce the witnesses and 

hear their testimony. 

First, thank you for all participating in today’s hearing. Without 

objection, your written statements will be placed into the record, 


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and we would ask you to limit your oral remarks to 5 minutes. We 

have a lighting system. Green means you have started and you 

have got 5 or less minutes to go. Yellow means you are in your last 

minute, and red means you should have finished. 

After each witness has presented his or her testimony, Subcommittee Members will be permitted to ask you questions with 

the same 5-minute limitation. 

Our first witness is the Honorable Cecelia G. Morris. Judge Morris was appointed United States bankruptcy judge for the Southern 

District of New York and took the bench on July 1 of 2000. Prior 

to appointment to the bench, Judge Morris served as assistant district attorney in the Child Support Recovery Unit of the District 

Attorney’s Office of the Spalding Judicial District headquartered in 

Griffin, Georgia. 

Judge Morris also worked in private practice and served as clerk 

of the court for the United States Bankruptcy Court for the Southern District of New York from 1988 to 2000, the first bankruptcy 

court to implement electronic filing of original documents to the 

court via the Internet. 

She is a frequent writer and lecturer on issues related to bankruptcy, published articles on mediation, consumer credit counseling 

requirement in bankruptcy, and cross border insolvency cases 

under Chapter 15. She has roots in Texas and Georgia and though 

she claims now to be a northerner, she is a southerner at heart. 

Thank you, Judge Morris. Will you begin your testimony? 

TESTIMONY OF THE HONORABLE CECELIA G. MORRIS, 

UNITED STATES BANKRUPTCY JUDGE, SOUTHERN DISTRICT 

OF NEW YORK 

Judge MORRIS. Thank you, Chairman Cohen and Ranking Member Franks and other distinguished Members of the Subcommittee. 

Good morning. Thank you for inviting me to testify concerning H.R. 

901. I testify today at your invitation. I do not represent any group 

or organization. The thoughts expressed are mine. 

As someone with over 25 years experience in the bankruptcy 

field and as the former clerk of court for the Southern District of 

New York and, as has been noted from my accent, the Middle District of Georgia, and now for the past 10 years as a judge in a busy, 

mostly consumer division of one of the largest consumer courts and 

commercial courts in the world, the Southern District of New York, 

I come before you. 

You have many sources, including quotes from my written materials about the statistics concerning medical debts and bankruptcy. 

And I agree that this has been a very interesting discussion, and 

I have been so pleased to be an eavesdropper on the discussion that 

you have had amongst yourselves. 

I would like to share with you a courtroom observation. Day before yesterday—Tuesday—is my regular hearing day. This is often 

the first time I see the debtors. They are in court with their attorney, or they come alone. They are in attendance for confirmation 

of chapter 13 plans, to defend motions to dismiss or motions to lift 

the automatic stay, and that, of course, is usually so that a foreclosure can proceed. 

86 

Many matters are before me on Tuesdays, and because that day 

has many different types of issues, I begin to know the debtors and 

their stories. This Tuesday was typical. Tuesdays are long, hard 

days made harder by the emotional moments revealed during proffers by the lawyers and testimony of the debtors. And this Tuesday 

was no exception. 

A gentleman came to a counsel table with his lawyer. The debtor 

was vaguely familiar. The lawyer, who often appears in my court, 

is experienced and one of the best in representing consumer debtors, immediately informed me, as she should, that the debtor was 

a repeat filer. He had been before me previously, and he was unable to make his Chapter 13 plan payment and to physically attend 

the first meeting of creditors. 

The lawyer knows that while I am a supporter and believe in the 

bankruptcy system and feel that we—and as Congressman Franks, 

Ranking Member Franks has suggested—that as citizens of this 

country we are really blessed with many things, and one of the 

things that we are blessed with is a debt forgiveness statute. 

I lose patience with those, though, who take advantage of our 

system and do not work with their attorneys and the trustees and 

the court. So you can imagine how quickly I regained my patience 

when the lawyer quietly told me that the debtor had now progressed to stage IV cancer. A once robust man, now a shadow of 

himself, he had been unable to fulfill the requirements of his previous bankruptcy filing. 

The lawyer was unaware of the client’s battle with cancer. She 

had prepared his petition. Remember, this is a good lawyer. She 

had looked at his financial information. She had gone over these 

bills. Significant medical debt was not apparent in reviewing this 

information. It was characterized as other debt. 

Under H.R. 901 debtors like this gentleman will be able to pass 

the means test, an important step. 

Additionally, under the current bankruptcy code, lenders can be 

compelled to—can’t—excuse me—can’t be compelled to agree to 

loan modifications on the first mortgage for a primary residence. At 

least in the Southern District of New York, debtors suffering from 

chronic medical problems, such as this debtor, or caregivers have 

an opportunity to negotiate to keep their homes. 

Using the Civil Justice Reform Act of 1990, the bankruptcy 

judges of the Southern District of New York adopted a loss mitigation program aimed at bringing debtors and secured creditors together. 

The Southern District of New York’s loss mitigation program 

opens communication in two significant ways. First, it requires the 

lender to disclose direct contact information for a person with full 

authority to make a decision on a re-mod—re-fi. And second, it provides the lender with protection from the violation of the automatic 

stay allowing them to speak directly with the debtor. 

Who knows what awaits this debtor in my court with stage IV 

cancer magically? We do know that he needs to stay within the 

protection of the bankruptcy law, and he needs to have an ability 

to speak with an accountable human being from the secured lender 

to make sure he and his family are not disrupted from their home 

87 

during a time when he needs to be concentrating his energies on 

healing. I thank you. 

[The prepared statement of Judge Morris follows:] 

88 

PREPARED STATEMENT OF THE HONORABLE CECELIA G. MORRIS


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Mr. COHEN. Thank you, Judge Morris. I do wonder, and I am not 

supposed to ask you questions now, when you said somebody was 

a good lawyer as suggesting that there were something else other 

than? So anyway, thank you for your testimony. 

And our next witness is Dr.—— 

Judge MORRIS. That is another day. 

Mr. COHEN [continuing]. Aparna Mathur—Mathur? 

Ms. MATHUR. Mathur. 

Mr. COHEN. Mathur. 

Dr. Mathur is an economist who writes about taxes and wages. 

She has been a consultant to the World Bank and has taught economics at the University of Maryland. Her work ranges from research on carbon taxes and the impact of state health insurance 

mandates on small firms to labor market outcomes. Her research 

on corporate taxation includes the widely discussed, co-authored 

2006 ‘‘Taxes and Wages’’ paper, which explored the link between 

corporate taxes and manufacturing wages. 

She is fortunate to have the parents she has, and genetics proves 

that intelligence and attractiveness can be passed from one generation to the next. 

Dr. Mathur, you are recognized. 

TESTIMONY OF APARNA MATHUR, Ph.D., RESIDENT SCHOLAR, 

AMERICAN ENTERPRISE INSTITUTE 

Ms. MATHUR. Chairman Cohen, Mr. Conyers, Ranking Member 

Franks and distinguished Members, thank you for inviting me to 

testify here—I am happy to be back—and especially for recognizing 

my parents. I am sure they are thrilled. 

I am going to talk about the Medical Bankruptcy Fairness Act, 

I am sorry to say that I will not be—you now have two people in 

this room who do not accept the hypothesis that 60 percent of the 

filings are due to medical reasons. 

The Medical Bankruptcy Fairness Act is intended to institute 

amendments to the bankruptcy code of 2005 to make the bankruptcy process easier for medical debtors. I am sure all of us would 

agree that a person who is undergoing a medical crisis needs help 

more than someone who recklessly spends money on the credit 

cards. 

We all have friends and family who are struggling with illness 

and death and yet have to deal with hospital and medical bills. 

However, I would like to caution the Committee about the act, 

which may be an example of good intentions that could go bad. 

My testimony will show how the act could harm exactly the people, the debtors, that you are trying to help. The Medical Bankruptcy Fairness Act focuses on medical debtors, and as is clear to 

me, the urgency to tackle the issue of medical bankruptcies is being 

largely justified on the basis of the Himmelstein studies claiming 

that more than 60 percent of court filings are caused by medical 

debt. 

These statistics are simply not borne out by household surveys 

carried out by institutions like the Federal Reserve as well as other 

datasets widely used by academics. 

While bankruptcy filings have increased by 25 percent since the 

start of this decade, medical debts—or even if you think that medVerDate Aug 31 2005 17:26 Dec 01, 2010 Jkt 000000 PO 00000 Frm 00100 Fmt 6633 Sfmt 6601 H:\WORK\COMM\071510\57432.000 HJUD1 PsN: DOUGA
97 

ical debts are all part of credit card debts—have not changed significantly as a share of total debt over this period, as per the Federal Reserve data. 

To put things in perspective, in 2007 only 2.4 percent of families 

reported any medical debt. In fact, the large economics literature 

using standard estimation techniques to study the link between 

medical debt and bankruptcies has found little in back, if any, of 

medical debts on bankruptcy filings. That seems obvious to me that 

medical debts could not be a significant factor in rising consumer 

bankruptcies. 

The reason the Himmelstein studies find such a significant impact is because of methodological problems, which I deal with in 

my longer written testimony. 

To take a simple example, it seems to me that the Himmelstein 

studies by including in medical bankruptcies anyone who missed 2 

weeks of work due to illness or anyone reporting any medical problem at all are overstating the problem. We have all experienced illness and taken sick days off from work, sometimes for a week or 

more, and yet the bankruptcy filing rate for the Nation as a whole 

is less than 1 percent. So just the fact that in their sample people 

also reported these problems cannot be taken to imply that these 

problems caused the bankruptcy. 

The point I am making is that if we are misdiagnosing the problem, if we are saying that medical debts are the largest single factor responsible for bankruptcies, when in fact something like involuntary unemployment is, then the solutions we come up with will 

be equally mis-targeted. We cannot afford to make those mistakes 

today and divert scarce resources when people need help urgently 

in other areas like unemployment, which we all know is at a historical high. 

Now, to get back to my point about good intentions gone bad, I 

would like to caution that the act itself may be open to abuse and 

fraud, even if we believe that we really want to help medically 

bankrupt people. 

The act defines a medically distressed debtor as a debtor who has 

medical debts in excess of 25 percent of household income or 

$10,000, whichever is less. So imagine a filer with $70,000 in annual income, which is almost double the average income in the 

country. If he accumulated $10,000 in medical debts, then he or 

she can file for medical bankruptcy under Chapter 7. 

The problem with this is that a study of bankruptcy filers by income in 2000 to 2002 show that credit card debts averaged approximately $42,000 for this group. While such provisions are unlikely 

to affect honest debtors, we all know that there are borrowers who 

behave strategically when faced with such incentives. 

In the worst-case scenario, such opportunistic debtors could, by 

not paying off their medical debt, take advantage of the high exemptions and the debt discharge provisions of Chapter 7 to get rid 

of their high credit card debts. 

Further, removing the means testing requirement from medically 

distressed debtors and allowing the much higher homestead exemption would simply perpetuate these perverse incentives. Doing 

away with the means test would allow high-income individuals to 

98 

walk away from not only the medical debts, but also all other 

debts. 

Now, the reason we care about this kind of strategic behavior 

and these unpaid costly debts is that it has implications for medical debtors and other debtors who are caught in a helpless situation. 

Study after study has shown that when you make filing for bankruptcy easier through removal of means testing through providing 

high exemptions, credit markets react adversely. Lenders account 

for the high risk of lending by raising interest rates on loans 

charged or by rationing credit. Borrowers are more likely to get 

their loan requests rejected. Medical service providers pass on the 

costs of bad debt to consumers in the form of higher prices—— 

Mr. COHEN. Dr. Mathur, we are getting into the red world. 

Ms. MATHUR. Yes. I am almost done. I will—imagine—— 

Mr. COHEN. You are beyond almost done. 

Ms. MATHUR. Imagine not getting a loan to pay for your prescriptions and other medical bills. In short, the lives of borrowers—particularly honest borrowers—are made worse off. In my opinion the 

2005 law introduced the means testing requirement to restrict this 

kind of strategic behavior, and there is no real justification to 

amend that law. 

To conclude, we obviously cannot wish illness away. However, 

some solutions may help families deal with the situation better. 

For example, employers and employees could try to come up with 

flexible work arrangements that would enable the employee to 

function even in the middle of a medical crisis. Job loss should not 

be the inevitable result of a prolonged medical condition. 

Finally, the act could be modified to allow debtors to obtain relief 

under Chapter 7 only on the medical debts rather than all of their 

other debts as well. This may reduce the misuse of the system by 

opportunistic debtors. 

Thank you. 

[The prepared statement of Ms. Mathur follows:] 

99 

PREPARED STATEMENT OF APARNA MATHUR


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Mr. COHEN. Our next witness is Professor Wright. Professor 

Wright is the director of clinical programs, Consumer and Commercial Law Clinic at the Franklin Pierce Law Center. During 18 years 

of practice in the public and private sectors, Professor Wright handled civil trials and appeals in state, Federal and bankruptcy 

courts on behalf of individuals and corporate clients. 


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His public service included 4 years as a member of the New 

Hampshire Workers Compensation Appeals Board, 2 years as mediator at the New Hampshire Department of Labor, and 12 years 

as a hearing officer in the Federal Medicare program. Actively involved in efforts to improve the Administration of justice, in 1993 

and 1995 he was chair and co-chair of state conferences devoted to 

this subject. Professor Wright has been here before. He is aware of 

our 5-minute system. 

And I would ask you to accept that. You are now recognized. 

TESTIMONY OF PETER S. WRIGHT, JR., DIRECTOR OF CLINICAL PROGRAMS, CONSUMER AND COMMERCIAL LAW CLINIC, FRANKLIN PIERCE LAW CENTER 

Mr. WRIGHT. Thank you. Chairman Cohen, distinguished Members, good morning. 

I have got the button on. Is it? Oh, all right. I am sorry. How 

is that? Better? All right. 

I appreciate the opportunity to be here to share with you the perspective that I might offer as a clinical professor, who is essentially 

running a legal aid program in which the students serve as lawyers. Because our focus is on consumer credit, these days the kind 

of cases we are handling involve foreclosure defense, credit card defense and consumer bankruptcy. 

I appreciate the opportunity to speak to the merits of H.R. 901, 

because in our clinic we have witnessed many examples of the 

types of debtors which are described in H.R. 901 as a medically distressed debtor. I would like to give you a couple of examples of the 

profile of these clients. And I think this will be instructive, because 

within H.R. 901 there is actually a very thoughtful definition of the 

medically distressed debtor. 

The issue that we spend so much time talking about of the percentage of people who are driven to bankruptcy by massive debt is 

only one of the definitions. The other two definitions actually capture the type of debtor that we most frequently see as medically 

distressed. And that is the type of debtor who is unable to work 

or experiences a severe and prolonged loss of income, because they 

are caring for a family member or they themselves are stricken 

with a serious medical condition. 

Examples of such clients—we saw one family where the wage 

earner was a over-the-road or door-to-door salesman for Comcast, 

selling cable subscriptions. And he would drive around in his own 

vehicle making his rounds. He was involved in a head-on accident, 

head-on automobile collision, which put him in the hospital for 6 

weeks. 

When he was released and undergoing physical therapy, he really couldn’t pursue his work of driving and walking and knocking 

on doors, so he got behind on everything. He had insurance, because he worked for Comcast, but what he didn’t have was any 

means of paying his mortgage, so that fell into default along with 

this car payment and everything else. 

Another example is a young couple. They owned a condominium. 

The husband, who worked as a roofer, developed cancer. He could 

not work, as he devoted his full time and attention to handling that 

medical problem. He was successful in overcoming the cancer, but 

121 

during the time he was out of work, his mortgage fell into arrears, 

his car was repossessed, and he was not able to pay the credit card 

bills and other bills for the family. 

Net result was he had to file bankruptcy to clear up the deficiency after his condominium was foreclosed. Again, this is an example of someone who, because of the medical condition, was unable to pay the ongoing bills to hold on to the necessities—house, 

car, et cetera. 

And finally, we just took a case in this last week where the individual who is the wage earner, who happened to be a mortgage 

broker, made a lot of money during the bubble, had a heart attack 

while he was driving, and the impact of the accident and the heart 

attack had him laid up enough that he ran up $200,000 in medical 

bills. Then he died, leaving his widow with a house in foreclosure, 

plus all these medical bills. 

This last situation illustrates what I think is the significance of 

high medical bills. They are often a symptom or an incidental impact caused by a severe medical problem, which is really the hallmark of the distressed medical debtor. 

Now, H.R. 901 is very skillfully crafted and carefully crafted and 

narrowly drawn to provide relief to people who are truly medically 

distressed debtors as defined in the last two parts of the definition—that is, who have experienced either loss of child support, alimony or who have lost their income because of a medical catastrophe. The first definition, of course, is the one where there is 

massive—or actually medical debt which reaches the levels that we 

discussed earlier. 

Now, what is the relief that 901 provides? It is an enhanced 

version—an enhanced amount of the homestead exemption. As you 

know, it would increase the homestead exemption to $250,000 regardless of whether the debtor is filing using the Federal exemption, which would otherwise only be $20,200 for homestead, or the 

state exemptions. 

It raises both of those exemption levels to $250,000. And this is 

laudable, because it enables a debtor to hold onto the homestead, 

even if they lose everything else through a Chapter 7, but it also 

enables them to have a workable and feasible Chapter 13, if they 

are able to remove the value of their homestead from the liquidation test, which we could talk about. 

It is a little technical, but it really is a major plus, because many 

elderly people, who have a lot of equity in their homes, are not able 

to qualify for Chapter 13, because they can’t pass the liquidation 

test. 

And as I am out of time, I will not speak to the means test right 

now, but thank you for the opportunity. 

[The prepared statement of Mr. Wright follows:] 

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PREPARED STATEMENT OF PETER S. WRIGHT, JR. 


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Mr. COHEN. Thank you very much. 

I want to thank all our witnesses for their testimony, and I will 

start with the questions. 

And first of all, Professor Wright, I would like to ask you what 

your thoughts are on the means test. 

Mr. WRIGHT. Well, generally or as it applies to this 901? 

Mr. COHEN. As it applies to this bill. 


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Mr. WRIGHT. So as—— 

Mr. COHEN. Dr. Mathur made a point that possibly high-income 

individuals could get away with things. Is there a way to see to it 

that high-income individuals don’t and that it is strictly tailored to 

medical bills? 

Mr. WRIGHT. If we viewed 901 as a whole and appreciate that 

the only way the homestead exemption benefits a debtor is if that 

debtor has substantial equity in their house, you are going to eliminate a lot of debtors right off. You are going to eliminate all the 

debtors who use their homes as ATM machines, so-called during 

the bubble, those who did practice abusive borrowing. 

You are really going to be targeting and benefiting elderly people, who worked their whole life to pay off their mortgages and 

then as they approach their retirement, they simply want to be 

able to hold onto their homestead. Those debtors who then face a 

catastrophic illness, which interrupts their income or saddles them 

with medical debt, will be able to retain their home. They don’t 

need to be tested under the means test, because they are not gaming the system. 

To be the victim of a medically—well, as someone, I think, the 

Chairman may have put it—the medically lost life lottery to be 

suddenly stricken with a serious medical illness is not part of gaming the system. They don’t need to be means tested. 

Mr. COHEN. Thank you, Dr. Wright. 

Dr. Mathur, let me ask you this. As Professor Wright has mentioned and I have said before, the lottery of life, the people that 

have these great health care disasters, catastrophic illnesses, is 

that it just happens. It is, most cases, not just unfortunate. 

Do you agree that some people who get catastrophic illnesses— 

cancers, heart disease, whatever—end up getting massive medical 

debt that causes some people to go into bankruptcy? 

Ms. MATHUR. Absolutely. I absolutely agree that there are people 

with medical debt who will go into bankruptcy, and I believe that 

the current bankruptcy code in fact allows those low-income debtors to take advantage of the bankruptcy filing. 

Mr. COHEN. Those who, debtors? 

Ms. MATHUR. The low-income. 

Mr. COHEN. What if you are not low income, but you got cancer 

and you have been wiped out? 

Ms. MATHUR. And then if the means test shows that you still 

have an ability to repay some part of your debt, then I believe that 

the current bankruptcy system will—— 

Mr. COHEN. So you don’t believe if you have got tremendous medical debt and you are a middle-class person and you have got some 

income, but you have got enormous debt, hundreds of thousands of 

dollars worth of debt, and you have got cancer and maybe, you 

know, maybe you potentially lose your job, that there shouldn’t be 

relief somehow fashioned for you? 

Ms. MATHUR. I think the chapter code redeeming procedure allows for the medical expenses to be deducted in calculating what 

your ability to repay is, so I don’t see what the new act is trying 

to achieve by saying that we should not have means testing at all. 

133 

Mr. COHEN. Judge Morris, can you explain why that is important 

that we give some relief to people who have been wiped out because of the lottery of life? 

Judge MORRIS. I think this is hard for me to explain. And I have 

been listening to the means test question here. And once upon a 

time before 2005, you wouldn’t confirm a Chapter 13 plan unless 

the unsecured creditors were going to get a substantial amount. 

Now you confirm a .003, which is basically a Chapter 7. And the 

reason you do it is for some of the matters that they talked about. 

You know, I see the medical people in—the medical debtors in 

front of me all the time. They walk in. In my testimony I talk 

about the five—my written testimony—my courtroom deputy coming in to me and saying, ‘‘It is going to be a hard day today, Judge.’’ 

‘‘Why is it going to be hard today?’’ ‘‘There are five women in the 

courtroom with turbans on. Your Honor, you are going to have to 

hear the story of those five cancers.’’ And sure enough, I have to 

hear the story of the five cancers. 

The means test is simply meant that it moves them to Chapter 

13. It just simply means that it is more expensive for them to file. 

Those people needed—most of those people need to be in 7. They 

need to be able to get rid of some debt and move on. 

We are in a wonderful place in this world, in this country, in this 

here that we have the ability to file bankruptcy, that we have an 

ability to start anew. And sometimes we need to just take and look, 

and they need to be able to cut their losses and move on. 

I don’t agree that—the means test is just more expensive. It just 

makes it more difficult for them to come in and forgive the debt 

and move on. 

Mr. COHEN. Thank you, Judge. 

Dr. Mathur, are you familiar with the study by Melissa Jacoby 

and Miyra Holman published in the Yale Journal that debunks the 

2005 Department of Justice survey that you have in your written 

testimony? 

And being familiar with it, do you still hold to your belief that 

this 2005 DOJ study has validity? 

Ms. MATHUR. I think the Jacoby study tries to say that there 

could be a lot of hidden medical debt that you are not actually observing in the bankruptcy filing. And that, you know, that is entirely possible, and we have debated that issue a lot of times. 

So that is why it makes more sense to not sort of rely on just 

those kind of, you know, bankruptcy statistics, but to actually see 

what household surveys are saying about medical debt and how, 

you know, what is really happening to medical debts over this period. 

And there is nothing to suggest that there has been, you know, 

that tremendous a jump that, you know, medical bankruptcies 

should have risen by 50 percent in the 7-year period, because if 

that had really been the case, then when bankruptcies went up, 

you should have seen a tremendous increase in the medical debts 

as well, which you don’t see. 

So I completely agree that there could be problems with the DOJ 

study, but that doesn’t deny the fact that they—you know, that neither of those studies has conclusively proven that medical debts are 

a significant fraction of all bankruptcies. 

134 

Mr. COHEN. Thank you, Doctor. 

Mr. Franks, you are recognized. 

Mr. FRANKS. Mr. Chairman, could I pass on to Mr. Coble for his 

questions? 

Mr. COBLE. I thank the Ranking Member, thank the Chairman. 

Good to have you all with us today. 

Dr. Mathur, this is not unlike much proposed legislation. There 

are loopholes. What loopholes do you think are most unfair in this 

bill? 

Ms. MATHUR. I think the biggest loophole in the bill is the requirement to do away with the means test, because I think the reason we had the means test instituted in 2005 was because we saw 

a lot of instances where people were exploiting the system by having a lot of wealth in their homes, having a lot of incomes, but they 

had the choice to still file under Chapter 7 bankruptcy and have 

their, you know, million-dollar debts paid off and still retain a million-dollar house. 

And so I think the biggest loophole that could be exploited under 

the Medical Bankruptcy Fairness Act is the fact that high-income 

debtors could take advantage of the system to basically have the 

same provisions that they had before 2005, which is, you know, you 

accumulate a certain amount of medical debt and you still get all 

the advantages of Chapter 7. 

I think if we had a system where we said you could only do away 

with the medical debts by filing under Chapter 7, then, you know, 

I think that would correct some of these loopholes. 

Mr. COBLE. I thank you, Doctor. It seems to me that this—I will 

qualify this is my opinion—I think Obamacare has failed its stated 

goal of decreasing health care costs and probably will in fact increase health care cost. Given the incentives in H.R. 901, will this 

bill not increase health care costs, making the health care system 

perhaps even more unsustainable? 

Ms. MATHUR. Yes, I think that any time we sort of—if we think 

that we are going to keep absorbing the cost of all these unpaid 

debts, you know, infinitely into the future and that it is not going 

to have an impact on how people behave and how creditors and 

how lending markets behave, then, you know, you are wrong. 

At some point all of these unpaid debts and all of these, you 

know, huge costs that we think we are subsidizing, at some point 

they are going to tremendously increase costs on borrowers. 

Mr. COBLE. Your Honor, Chapter 7’s means that there was never 

intent to inquire into whether the causes of someone’s bankruptcy 

were either good or bad, it seems to me—— 

Judge MORRIS. Right. 

Mr. COBLE [continuing]. But simply whether the debtor had the 

income sufficient to repay a substantial or meaningful portion of 

unsecured debt. 

Do you believe—well, strike that. It is my belief, and I will ask 

you if you believe this, that Congress may be opening a Pandora’s 

box if it started to pursue down that path of choosing which kinds 

of debt are ‘‘good’’ or which kinds of debt are ‘‘bad.’’ What do you 

say to that? 

135 

Judge MORRIS. I don’t disagree with you, but I think the door 

that opened in 2005, and I think this might go some ways to helping some people that need the help. 

Mr. COBLE. I thank you both. 

And, Professor, I don’t want to ignore the gentleman from New 

England. My favorite New England state, by the way, Professor, is 

New Hampshire. Professor, do you have the fear that abusive filings might promote or distract from the court’s ability to process 

promptly the cases of the truly needy—that is, those who may 

abuse it? 

Mr. WRIGHT. Well, I think that abusive filings are never good for 

the system, but I don’t believe abusive filings will be any easier if 

H.R. 901 were to pass because of the way it is drawn. 

Mr. COBLE. Dr. Mathur, do you want to weigh into that? 

Ms. MATHUR. I am not clear why it would not, because, I mean, 

the fact that you are doing away with the means test does mean 

that there would be high-income people with the ability to repay, 

who you are now saying should be excused from using them. 

Mr. WRIGHT. The reason I think that the chances are very low 

is because, at least from my experience, when a family or an individual bases one of these catastrophic injuries that interrupt income flow, you no longer have a high-roller high-wage earning 

debtor. 

They—in my cases, in fact—I mean, I don’t want to say in all 

cases they are going to pass the means test, but given the way we 

calculate current monthly income by looking at the last 6 months, 

if there has been a tragic and unanticipated medical problem, 

whether it is an injury or a disease, a lot of times the income is 

so disrupted that the means test isn’t really going to be an issue. 

Mr. COBLE. I got you. Thank you, Professor. 

Mr. Chairman, I want you to note that the red light has illuminated, and I am yielding back. 

Mr. COHEN. Thank you, Mr. Coble. I appreciate your continual 

courtesies. 

Now the Chairman, Mr. Conyers, is recognized. 

Mr. CONYERS. Thank you. 

I would like to ask Dr. Aparna Mathur if when Professor Wright 

was giving his explanation about the nature of medical indebtedness, did he say anything that disturbed you or that you didn’t 

agree with? 

Ms. MATHUR. I think the kind of examples that Professor Wright 

gave would typically file under Chapter 7 bankruptcy, and they 

would meet the means test. But they are the kind of people that 

he was speaking about with no incomes, who have mainly had a 

catastrophic, you know, medical expense. 

You know, from all that I think I understand about how the 

bankruptcy code currently works, those people should meet the 

means test, and they should be allowed to file under Chapter 7. 

The people who will not meet the means test are people who do 

have an ability to repay, and I think that they—you know, the current system, the way it is functioning would—you know, should 

make them repay a part of those debts. I don’t see why we need 

to do away with that particular feature of the current code. 

136 

Mr. CONYERS. Professor Wright, did she accurately interpret your 

examples? 

Mr. WRIGHT. Yes, I think she is right. In all three of those cases, 

those individuals would not have a problem with the means test. 

In fact, in the very first one with the car accident, we put them 

into Chapter 13 to save his home. So even though he passed the 

means test as consumer bankruptcy lawyers say, meaning he 

wasn’t forced to go into Chapter 13, he voluntarily went into 13 to 

catch up on a delinquent mortgage and to save his home. 

So, yes, she did accurately gauge the impacts, at least on those 

three cases. They would not have been—they would not have been 

caught up or forced to file a different chapter than they chose. 

Mr. CONYERS. Well, does that mitigate your examples, then? 

Mr. WRIGHT. No, because the examples—well, I unfortunately— 

I don’t have an example of a high-roller who suffers a major medical calamity and then runs up against the means test, partly because my clinic only represents low-income people. I mean, we are 

not allowed to represent the high-rollers or just the upper middle 

class, because we don’t do that. 

But I really—I still—when I studied this in preparation for coming down here, I don’t really understand all the fuss about the 

means test, to tell you the truth, because I really think that people 

who are overtaken by one of these terrible medical tragedies, if 

they had any inclination to game the system, their fight for their 

lives or for that of a family member becomes paramount in their 

minds. 

And it certainly would be more convenient for them if they didn’t 

have to go through all the paperwork that Judge Moore spoke 

about and the added expense that lawyers are able to charge because of the paperwork. But given that they may very well lose 

their income as their sole—they are just so fixated, and their attention and thought is all devoted to obtaining a cure, I think the 

gaming question is really irrelevant at that point. 

And I also have to say that I don’t think that—I just don’t quite 

understand how someone can game or contrive or conjure up medical bills to try to invoke this as a way to game the system. I mean, 

even at the level of $10,000, that is a little hard to envision, frankly. 

Mr. CONYERS. Do you agree, Dr. Mathur, with what the professor 

said? 

Ms. MATHUR. I don’t believe that people can conjure up medical 

bills, but I do believe that you could create the incentive that if you 

had medical debt and you had other kinds of debt, that the incentive to sort of accumulate the medical debt and not pay it off and 

pay off the other kinds of debt, you might perverse those kinds of 

incentives, because you know that if you had a certain amount of 

medical debt, then your lawyer would tell you, ‘‘Well, you know, if 

you had so much in medical debt, then you could take advantage 

of Chapter 7.’’ 

So a person who—I am not saying that they are going to conjure 

up an illness, but you could change incentives for them by saying, 

you know, if you had so much in medical debt, then, you know, you 

can take advantage of all the Chapter 7 exemptions and the high 

137 

exemptions and the debt discharge that comes with that. Those are 

the kinds of incentives that I am talking about. 

Mr. CONYERS. That does not sound persuasive to me. 

Judge Morris, what is your experience in this area? 

Judge MORRIS. Well, as I am listening, the one thing I am thinking is now we have it, a system where the medical debt is hidden 

as credit card debt or second mortgages, because the one thing you 

want to do is not go bankrupt against your doctor, because you will 

be fearful that the doctor will not treat you. 

Mr. CONYERS. Of course. 

Judge MORRIS. So right now the debtors come in, and they paid 

the medical bill with—their co-pays with the credit card. They have 

paid it by taking out the second mortgage. 

I had personal experience of a dear friend who lost his wife to 

cancer. It was the secondary cost, too. Tell me, anybody, if you 

have a family member that needs a heating pad, if you have a family member that needs a humidifier, and in the mail comes your 

checks, those little credit card checks, that is not going to be attributed to medical bills. 

So when I hear this talking about that they will now run up a 

medical bill as opposed to a credit card bill, when in fact it has 

been the opposite right now, where they have been running up a 

credit card bill in order to maintain the medical care for their family, it just seems unconscionable to me. 

Let us have a real—let us have a real reason for the bankruptcy. 

And if the real reason for the bankruptcy is a medical catastrophe, 

then why not give people like that in those situations a break? 

Mr. CONYERS. Do you agree, Dr. Mathur? 

Ms. MATHUR. I think that it all comes down to how would you 

in your bankruptcy—Medical Bankruptcy Fairness Act define what 

is a medical debt. I mean, it is then we need the act to be clearer 

on what you are saying—— 

Mr. CONYERS. There is no question about what constitutes a 

medical debt. 

Ms. MATHUR. Yes, but that is what Judge Morris just said, that 

we cannot distinguish between credit card debt and medical debt. 

And so if that happens to be the problem, then you are going to 

see $10,000 in credit card debt, and you won’t know if it is—— 

Mr. CONYERS. But that is the problem. That is what she is saying. The medical debt is hidden by using your credit cards. 

Ms. MATHUR. Yes. And so how would you—— 

Mr. CONYERS. So don’t you agree with her? Or you don’t agree 

with her. 

Ms. MATHUR. So what I want to know is if there is—— 

Mr. CONYERS. Do you agree or not with her? 

Ms. MATHUR. Yes, there is some medical debt on credit card debt. 

Absolutely. 

But even if you are saying that that is—I mean, there are two 

issues. If you are saying that, you know, that debt has somehow 

been going up and that is causing the bankruptcy, there are no 

data to support that either, because even if you look at total credit 

card debt, that has gone up by .3 percentage points between 2000 

and 2007. 

138 

The other issue is if we say that, you know, is credit—are we 

going to sort of try to uncover all the medical debt that people have 

on credit cards and, you know, is the second mortgage really a form 

of medical debt, then the act needs to be clear on what all it is 

going to—you know, how are we going to distinguish all the sources 

of medical debt rather than just what we see as a medical bill. 

Mr. CONYERS. Well, Professor Wright was complementing our 

drafters on putting together a proposed piece of legislation that 

does take care of some of that problem. 

Isn’t that right, Professor? 

Mr. WRIGHT. Yes. Yes, I think that the—when I sat down and 

carefully studied the act, I was impressed by how thoroughly the 

drafters understand the problem of medical catastrophe first and 

then applied it to the plight of debtors. 

So you covered all the possibilities—massive debt, then prolonged 

interruption of income from earnings, and finally interruption of 

child support, alimony and support, the domestic support obligations, as they are called. So you covered all the main drivers that 

force people into bankruptcy when they have lived through or are 

living through catastrophic medical problems. 

Mr. CONYERS. Dr. Mathur, do you agree more with Judge Morris 

or Professor Wright? 

Ms. MATHUR. I have problems with both. 

Mr. CONYERS. You probably agree with some of both, what both 

are saying. 

Ms. MATHUR. I think that if you prove that that actually drove 

the bankruptcy, then we have the case that we have a medical 

bankruptcy. 

If, like in this Himmelstein study, we simply found that someone 

reported that at some point in the previous 2 years we had, you 

know, a week’s worth of lost, you know, work, and then we say, 

‘‘Okay, that is a medical debtor and that is a medical bankruptcy,’’ 

then that is overstating the problem. 

I think if we had a way, a convincing way of showing that, you 

know, this is what drove the person to bankruptcy, then I would 

agree with Professor Wright. 

Mr. CONYERS. Well, all you have to do is show that their medical 

debt is on the credit card and that—what else—what more would 

you need? 

Ms. MATHUR. Pardon me? 

Mr. CONYERS. What else would you need to prove what the real 

costs of the—the real reason for the credit card indebtedness was 

because of medical bills? 

Ms. MATHUR. Yes, if you can show that the credit card—— 

Mr. CONYERS. It is easy. All you do is read. It says it is from X 

hospital. 

Ms. MATHUR. Yes, I understand that. 

Mr. CONYERS. $20,000. You don’t need any more than that, do 

you? 

Ms. MATHUR. Yes, that is absolutely credible. Yes. 

Mr. CONYERS. Well, then you agree with both Morris and Wright. 

Ms. MATHUR. I agree that if we could have a procedure for determining exactly where the debt was. So, for instance, she said if—— 

139 

Mr. CONYERS. It is easy. You have to identify. On a credit card 

you have to—when you are going into bankruptcy, you have got to 

identify where the indebtedness came from. 

Ms. MATHUR. Right. 

Mr. CONYERS. You got to name it. You can’t just say $150,000 

worth of debt. They are saying, ‘‘What debt?’’ Well, when you see 

it is from doctors, clinics and hospitals, that is pretty obvious 

where it came from. 

Ms. MATHUR. I completely agree with that. I think if you had a 

certain way you could make the debtor show that there was so 

much medical debt on credit cards, then that is exactly the way to 

show how much medical debt you had. But if you say, ‘‘Oh, I took 

out a second mortgage because of this,’’ or ‘‘I did’’—you know, if 

there is no way of actually tracking it, then I don’t think—— 

Mr. CONYERS. But there is a way. When you go in—have you— 

are you familiar with—well, no, you are not a lawyer. You are an 

economist. 

Professor Wright? 

Mr. WRIGHT. Well, the fact is on Schedule F of the official forms, 

which every debtor must fill out, there is a column as part of the 

description of unsecured debt where the debtor is required to say 

what was the debt for. 

So if you have a $15,000 charge because you paid a clinic, it 

should say Capital One or Visa, and then the consideration for the 

debt is where you would state this was for the clinic or the hospital 

for whatever the care was, and then the total. So there is provision 

currently in the official forms for revealing that information. 

Mr. CONYERS. You should know, Dr. Mathur, that there is no 

way you can go through a bankruptcy proceeding without identifying the source of your indebtedness. 

Ms. MATHUR. I thought that was the point that Judge Morris 

was making, that there is so much debt on credit cards, there is 

so much, you know, other kinds of debt that is arising because of 

medical illnesses that we are not able to track. 

If that was the point that she was making, then, you know, that 

is what I thought she was making. If you are saying that we can 

track medical debt on credit cards, then you can easily—— 

Mr. CONYERS. Well, you can. And they do. 

Ms. MATHUR. Exactly. 

Mr. CONYERS. That is the only way they can pay it. 

Ms. MATHUR. Exactly. 

Mr. CONYERS. Because they don’t want to—— 

Ms. MATHUR. Then I think the best—— 

Mr. CONYERS [continuing]. They don’t want to name—— 

Ms. MATHUR. Then I think—— 

Mr. CONYERS [continuing]. They don’t want to—— 

Ms. MATHUR. And I think that the best modification you could 

make to the act would be to say that you would only forgive the 

medical debt under Chapter 7, because if you are trying to help 

medical debtors, then that is exactly what you want to do. 

Mr. CONYERS. But sometimes you go into a different form of 

bankruptcy, because you don’t want to lose your house. That is 

what Professor Wright was saying. 

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Professor Wright, as I close down, do you know how many pages 

this—that is in a statement, a means test? Have you seen this? 

Mr. WRIGHT. I am familiar with the—— 

Mr. CONYERS. No, I mean have you read it? 

Mr. WRIGHT. No. 

Mr. CONYERS. This is more complicated than the average income 

tax form. 

Mr. WRIGHT. Oh, you are just speaking about the code itself? 

Mr. CONYERS. No, I am speaking about the means test—Form 

22A. 

Mr. WRIGHT. Yes, in fairness and so the Committee is fully apprised, most bankruptcy practitioners use software, which greatly 

eases. To draw a rough analogy, it is like the difference between 

filling out the IRS forms for your taxes and using TurboTax. There 

are fields that you can fill in, which does ease—just so you know, 

it does ease the burden of that. So it is not as onerous as you might 

think, looking just at the—— 

Mr. CONYERS. Yes, but suppose a person going into bankruptcy 

can’t afford that? 

Mr. WRIGHT. Well, that is true. Or if they can’t afford the lawyer, 

who has the software—— 

Mr. CONYERS. Exactly. 

Mr. WRIGHT [continuing]. And they don’t have a clinic like mine 

that does it for free, yes, that is a problem. That has been a problem with the means test all along. 

Mr. CONYERS. May I give you this form as a thank you for coming before the Committee and invite you to read it? To me it is very 

complicated. Now, to tell me that, ‘‘Don’t worry. Your lawyer has 

a computerized form to expedite this’’ is—most debtors can’t afford 

that. 

Am I incorrect, Judge Morris? 

Judge MORRIS. Not only can most debtors not afford it, I think 

it can be discouraging, if you do not have an attorney. If they start 

reading it, it is more difficult than the income tax return, as you 

said, so it is very discouraging. So if you don’t have an attorney 

that says, ‘‘I understand this. Let me walk you through it,’’ then 

you are discouraged. 

And if you add on top of that someone that is going through a 

medical catastrophe that has to file insurance forms, which we all 

know are also complicated—— 

I mean, I have the same insurance you do. My insurance is good. 

And yet I get turned down. Right. And I call them up. We are 

blessed. I get to pick them up on the—and honestly, when they 

changed my first name to Judge, people answer the phone a little 

quicker. Well, not everybody has that asset. But even I, when I 

have to go through all the medical insurance forms, find that difficult. 

So in the middle of trying to heal, in the middle of going to chemotherapy or going to physical therapy or going to the doctor, and 

like I had in front of me not this past week, but a month ago, 

where their child was dying, and I was insisting that somebody 

come to court not knowing that a child is dying, they have to go 

through that test, appear at the first meeting of creditors, have the 

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U.S. trustee try to decipher are not whether or not they are abusive, and do all of that at the same time. 

I think there is something going on at the table here, though, 

that I think I just need to give a little insight from me. Dr. Mathur 

talked about lending markets and credit markets. 

Professor Wright and I are the boots on the ground. We look in 

the eyes of the people that are filing. We don’t look at statistical 

data. We see what comes in front of us. We can’t look at statistical 

data. That is not our job. Our job is to deal with the case that is 

in front of us and the people that come before us asking for relief. 

By its very definition, bankruptcy has to do with the debtor. Yes, 

we are fair to creditors. Yes, we listen to creditors. Yes, we follow 

the law. That is what we are sworn to do, and we do it. But by 

definition we are looking at those debtors, and we see them eyeball-to-eyeball. 

Mr. CONYERS. Thank you, Judge Morris, because you reminded 

me. Heaven help the poor debtor that goes into a law office where 

the lawyer is not familiar with bankruptcy proceeding. 

Judge MORRIS. Yes. Exactly. 

Mr. CONYERS. And I think—— 

Judge MORRIS. I just asked for the license of two New York State 

people because of what they did to debtors by not knowing bankruptcy law. 

Mr. CONYERS. Yes. 

Thank you, Mr. Chairman. 

Mr. COHEN. Thank you, Mr. Conyers. 

And we will now recognize Mr. Franks, and we will do these 5 

minutes. We have votes coming up, and we should—— 

Mr. FRANKS. I will stick to the 5 minutes, I promise. 

Mr. Chairman, I just wanted to just out of courtesy here, not trying to prove any special point, but I had mentioned in the opening 

statement that 53 percent or a majority was in favor of the repeal 

of Obamacare, and this is a Rasmussen poll done on—it came out 

July 12th, just a few days ago. And 53 percent of the voters nationwide favor the repeal of the recently passed national health care 

law. 

And I don’t say that to prove anything, because I don’t think we 

should base policy on polls. I just wanted you to know that I was 

being forthright when I mentioned that statistic to you. 

And also, Mr. Chairman, I am hoping that I can put into the 

record the Obama administration report confirming that the health 

care law actually increased the health care spending. And I will 

ask it to be placed in the record. 

Mr. COHEN. Without objection. 

[The information referred to follows:] 

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Mr. FRANKS. All right. 

Mr. Chairman, I guess here is the thing I hope we are not missing here is that all of us want for there to be a way for people in 

crises to be able to have a bankruptcy action. I want that very 

much. I have never had to do that, but I have been so poor I 

couldn’t pay the lawyers to file for bankruptcy. And so I always 

want that. 

But we are losing sight of what we are really talking about here. 

We are talking about doing away with a means test, and I know 

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that—and we are not talking about a catastrophic standard here— 

apart from that, someone like myself, you know, could under this— 

under this law, if I—you know, I am tall, dark and harelip. 

If I decide to go out and get plastic surgery, which probably my 

wife might even appreciate—I don’t know—or a tummy tuck or 

something, my insurance company wouldn’t pay for that. But that 

would put me over the $10,000 amount. And even if I had a lot of 

money, I could game the system pretty significantly. 

And here is the problem. I realize maybe that doesn’t happen as 

much as a lot of people try to portray. But whenever it does, whenever there is a bankruptcy, whenever someone doesn’t pay—especially if they have it—that means someone else either pays or 

doesn’t get the care. And that is the thing here that we always 

miss. 

We think that somehow there is just a magic way to wipe these 

things clean. But unfortunately, it doesn’t work that way. It means 

that someone else is deprived of care or has to pay for it. 

And I want everybody to have access to care. And I wish everybody could have free care, if it didn’t mean that we had to force 

somebody else to pay for it. That is the problem with socialism is 

after a while you run out of other people’s money. That is a quote 

I stole, but let me just quickly ask a couple of questions here. 

Judge, I will ask you. Under this legislation, if I had $100,000 

in credit card debt and I did my tummy tuck and my plastic surgery for $10,000, could I get rid of the $100,000 in the process? 

Judge MORRIS. I don’t think so, because I think both you and I, 

again, are under the same medical care. We also understand we 

have our health savings plan. They are not going to pay for your 

tummy tuck. 

Mr. FRANKS. That is right. But I mean—— 

Judge MORRIS. So and I think you could be—— 

Mr. FRANKS. But that means I am in debt now $10,000, because 

I didn’t want to pay for it either. And so I am coming to you—— 

Judge MORRIS. But you are not going to get a medical—you are 

not going to get a medical reprieve for that. 

Mr. FRANKS. Well, I am saying, what would change that? I mean, 

that is money I owe for medical care, and there is nothing in this 

legislation that says it can’t be a tummy tuck. 

Judge MORRIS. I don’t think that is called medical care, but I will 

let you legislate that. 

Mr. FRANKS. All right. Well, I would challenge the majority to 

counter that, if that is true. 

Let me suggest to you—ask you also, then. If I lived with someone, if my wife lost her income for 4 weeks in the last 3 years, 

would that qualify me under this? 

Judge MORRIS. I don’t know the answer to that. 

Mr. FRANKS. Well, I am suggesting to you the answer is yes, according to the law. 

And I am just saying, Mr. Chairman, that—and I am done 

here—the bottom line is that we all want a bankruptcy to be there 

for those people who desperately need it, and I know that happens. 

But we don’t want to have a system that just says all you have to 

do is to come up with $10,000, and you can game the system, and 

181 

in the process make either somebody else pay for it or deprive 

someone else of medical care. 

Let us help those who really need it, and let us don’t let this socialist train keep roaring down the track and absolutely decimate 

everybody long-term. 

And with that, I yield back. 

Mr. COHEN. Thank you, Mr. Franks. I appreciate you cutting 

your questions short and Mr. Johnson for yielding, as I have corrected Ms. Chu, because we do have votes. 

I would like to thank all the witnesses for their testimony today. 

Without objection—— 

Mr. JOHNSON. Oh, oh, oh, Mr. Chairman, no, I didn’t yield. If I 

could have—— 

Mr. COHEN. Mr. Johnson, quickly, because we got a vote. 

Mr. JOHNSON. Yes, I feel compelled. 

Mr. COHEN. Sorry. I got the wrong information. 

Mr. JOHNSON. Okay. All right. 

The Bankruptcy Abuse Prevention and Consumer Protection Act 

of 2005 was a revision to bankruptcy law so that it would make it 

more difficult for consumers to avoid payment of credit card debt. 

Isn’t that correct, Dr. Mathur? 

Ms. MATHUR. The 2005 law was to prevent against exploitation 

of the system by high-income borrowers who have the ability to 

repay that debt, but were still filing—— 

Mr. JOHNSON. By high-end borrowers, you say? 

Ms. MATHUR. By high-income borrowers. 

Mr. JOHNSON. High-income, but it—— 

Ms. MATHUR. Who had the ability to repay. 

Mr. JOHNSON [continuing]. Mostly affects, though, lower income 

individuals—— 

Ms. MATHUR. No, I don’t think that is true, though. 

Mr. JOHNSON [continuing]. Middle-class people. 

Ms. MATHUR. I don’t think that is true, though, because as Professor Wright, I am sure—— 

Mr. JOHNSON. Well, let—— 

Ms. MATHUR [continuing]. Will agree that a lot of people who 

were earlier able to file under Chapter 7 are still able to do so. 

Mr. JOHNSON. Well, let me ask Judge Morris, who practices in 

this area daily as a bankruptcy judge. 

Judge, how long have you served in bankruptcy court? 

Judge MORRIS. Well I have been a judge for 10 years. 

Mr. JOHNSON. And—— 

Judge MORRIS. And before that I was the clerk of the court in 

Georgia. 

Mr. JOHNSON. Okay. 

Judge MORRIS. And in New York. I know. It is a difficult move, 

but I did it. 

Mr. JOHNSON. Yes, yes. Well, that is all right. Did you have experience under the old bankruptcy law? 

Judge MORRIS. No, actually, I did not. I did not practice bankruptcy law at the time. But what I did practice was family practice. 

Mr. JOHNSON. I see. 

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Judge MORRIS. I had a domestic practice, so I do understand, and 

sent some people to bankruptcy lawyers, so, yes, I know a lot about 

that. 

Mr. JOHNSON. Okay. 

Judge MORRIS. And one thing I saw is the means test could have 

possibly been corrected, if you had just simply changed the exemption in five states. 

Mr. JOHNSON. Well, exemptions in Georgia, by the way, are quite 

puny. 

Judge MORRIS. Exactly. Same thing in New York. As the law was 

coming into effect, New York State changed their law. It was only 

10,000 in equity in a home, and they changed it to 50,000 in response to the law. 

Mr. JOHNSON. I think Georgia was—— 

Judge MORRIS. No bankruptcy person had anything to do with it. 

Mr. JOHNSON. Yes. I think Georgia was—and still is—$7,500 equity. 

Judge MORRIS. But basically, you would have gotten rid of most 

of the, I think, at least from what I hear, if you just change the 

five states that had unlimited amount. 

Mr. JOHNSON. So this is an ant being killed by a sledgehammer 

by their 2005 so-called Abuse Prevention and Consumer Protection 

Act. 

But isn’t it a fact that in your testimony, Ms. Mathur—Dr. 

Mathur, you state that it is surprising that the Medical Bankruptcy Fairness Act focuses on medical debt to the exclusion of 

other debtors in the current economic climate? You state that. And 

are you suggesting that this bill should be expanded to other types 

of debtors? 

Ms. MATHUR. I am suggesting that the reason why you are having hearings on this bill is because of the Himmelstein studies, and 

if we did not have those studies, which are flawed, then we would 

not be sitting here. 

Mr. JOHNSON. And should medical debt, though, get special treatment, especially since Americans, due to no fault on their own, fall 

victim to sickness and disease? 

Ms. MATHUR. There are debtors who are in bankruptcy for no 

fault of theirs, the people who are losing jobs, the people who are 

going through painful divorces. And we need a policy that either 

helps all of them, which I think the current bankruptcy code does, 

and we don’t need this bill. 

Mr. JOHNSON. Well, you know, perhaps high-cost or high-income 

individuals, million-dollar homes, that kind of thing, may not need 

it, but certainly working people who may be overextended on credit 

for whatever reason, whether or not it was for a pair of shoes or 

whether or not it was to pay a medical bill for a doctor for treatment that they need on an ongoing basis to remain able to pay the 

bills—— 

Ms. MATHUR. Absolutely. And I think—— 

Mr. JOHNSON. And I just think that we need to have some heart 

for regular working people, who get caught up in the economic conditions that they did not create. 

Ms. MATHUR. Absolutely. And I think those kind of people will 

be helped—are being helped under the current code. 

183 

Mr. JOHNSON. Well, I take exception, and I believe that people 

are being hurt. Even if you can’t go to court unless you have an 

attorney, you cannot pro se file anymore for—and get accomplished 

in bankruptcy what you could have prior to the 2005 changes. You 

have got to go through a lawyer, and then even lawyers are not capable, some of them, of having the proper tools to produce a satisfactory result in bankruptcy court. 

So with that I will conclude. Thank the witnesses for coming. 

And, Professor, I appreciate the work that you do with your indigent persons. 

Thank you. 

Mr. COHEN. I thank all the witnesses. Without objection, Members have 5 legislative days to submit additional questions. You 

will have the opportunity to respond to them, and I hope you will 

do them promptly as possible. They will be part of the record. 

Without objection, the record remains open for 5 legislative days 

for submission of any other additional materials. 

Thank everybody for their time and patience. The hearing of this 

Subcommittee is adjourned, and we will vote. Thank you. 

[Whereupon, at 1:28 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

RESPONSE TO POST-HEARING QUESTIONS FROM THE HONORABLE CECELIA G. MORRIS, 

UNITED STATES BANKRUPTCY JUDGE, SOUTHERN DISTRICT OF NEW YORK


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RESIDENT SCHOLAR, AMERICAN ENTERPRISE INSTITUTE


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CLINICAL PROGRAMS, CONSUMER AND COMMERCIAL LAW CLINIC, FRANKLIN PIERCE

LAW CENTER


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