It's Very Hard to Change Bankruptcy Laws

News broke this weekend about the Paris Agreement, a pact among most of the world's countries to ramp up their efforts to reduce the emissions of greenhouse gases to limit the damage of global climate change. While this is undoubtedly a good thing (preserving the earth is commendable), what struck me was bits of news like this:

“U.S. ratification would require only President Obama’s signature, not Senate approval, since the agreement was crafted in a way so it would not be a treaty requiring ratification from a Republican-controlled Senate that might be hostile to the accord.”
I'm Just a Bill...

I'm Just a Bill...

So in short, the entire agreement had to be structured in a way that allowed for avoidance of a legislative body of one country, so the agreement might have a chance of being enforced. Skipping the myriad issues surrounding power plays among the branches (and our country’s odd policy stances on climate science), this is illustrative of a problem discussed by bankruptcy attorneys (especially consumer lawyers) on a regular basis: Why is it so hard to get the laws changed?

There are a number of changes most consumer bankruptcy attorneys would like to see: Some ability to modify primary home mortgages, an adjustment to the discharge standards for student loans, and perhaps some rollbacks on the more ineffective changes wrought by the 2005 amendments. These would, in my opinion, make bankruptcy more affordable, effective and powerful for regular people who are struggling.

Just a Lonely Old Bill...

Just a Lonely Old Bill...

We consumer bankruptcy lawyers are not holding our breath, however. Skipping the money factor (Rule 1: Lobbying matters), just take a look at this (non-exhaustive) list of points in the United States Congress where a bill may just die before becoming law:

  • Committee - Most bills need a majority vote to get out of a congressional committee, which basically means the majority party must be in favor. Also, in the Senate, “holds” placed by Senators are generally honored.
  • “Hastert Rule” - In the House of Representatives, most bills will not be allowed a floor vote by the Speaker of the House unless it has the support of a majority of the majority (more than 50% of the Republicans, currently). This makes bipartisan bills more difficult, and has the side effect of increasing the procedural hurdles the minority will place to the passage of certain bills.
  • Cloture - In the Senate, debate on any given bill can only be stopped by a vote of ⅗ of the Senators. This has the effect of preventing a vote on almost any bill the minority (of 40 or more) don’t want passed. In order to do business at all, the Senate Majority Leader must allow certain bills to die without a final vote, which further slows the legislative process.
  • Veto - Any bill actually passed by both houses can, of course, be vetoed by the President, subject to a legislative override (which is terribly difficult to achieve).

In effect, a bill can be stalled or killed by groups of just a few Congresspersons (on committee), 28% of House members (if all Republicans, currently), 40% of Senators, or one President. Counting both houses (and subcommittees), there are at least seven different veto points on any given bill. If you add in the extremely partisan environment we see now, it is amazing that any bills get passed at all, let alone “smaller” items like amendments to bankruptcy law.

And I'm Sitting Here on Capitol Hill

And I'm Sitting Here on Capitol Hill

This does not mean that it is worthless to try. There are serious consumer advocates in Congress, and as pressure builds over time, a small change can occur that reaps significant benefits for many. But it does mean that unless you have strong majority support (and solid lobbying), the game of legislative change is a long one.