Gamers win round in bankruptcy debate

Brian Seals

Wednesday, June 10, 1998 | 3:59 a.m.

Gaming state congressmen Tuesday defeated a plan limiting the ability of casinos and banks to collect debts from bankrupt gamblers and hotel-casino shoppers.

A bill to overhaul the nation's consumer bankruptcy laws sponsored by Rep. George Gekas, R-Penn., was heard in the House Rules Committee before heading to the House floor for a vote.

Rep. Jerrold Nadler, D-N.Y., had offered amendments in committee that would have made uncollectible debts incurred in or adjacent to a gaming facility. There was the possibility Nadler would offer that provision when the bill came to the floor.

Nevada Reps. John Ensign and Jim Gibbons, both Republicans, worked with New Jersey's House delegation to defeat that effort in the House Rules Committee, which sets the parameters of debate for a bill once it reaches the House floor. The Senate is debating a bankruptcy bill, but no provision involving gambling looms in that chamber.

Representatives in gaming states and the gaming industry derided Nadler's provision, saying it singled out the gaming industry.

"It was ridiculous," Ensign said by phone Tuesday from Washington. "Someone at Caesars Palace, for instance, could take money out of the ATM and use it at one of the shops and not ever gamble with it. That's crazy."

Ensign said he and Gibbons fought to defeat that provision because it would effect Nevada's No. 1 industry and, thus, the state's whole economy.

Gibbons said in a statement: "I am pleased the Rules Committee decided to preclude floor debate on this amendment. I was confident that, once educated on this issue, those members would clearly see this amendment as a personally motivated attack on the gaming industry."

Attempts to contact Nadler failed.

The American Gaming Association had lobbied against Nadler's provision as well, saying it threatened everything from cash advances to casinos offering credit to gambling customers.

With the gaming provision apparently defeated, the House is braced for a major overhaul of the nation's bankruptcy statutes.

Gekas' bill is backed by the credit industry because it would force more consumers into repayment-plan (Chapter 13) bankruptcy rather than liquidation of assets that erases all debt whether creditors are fully paid or not (Chapter 7).

It would use a means test to determine who could file for Chapter 7. People who earn the national median income and could pay $50 per month or 20 percent of their unsecured debts, after paying secured debts, would be forced into repayment plans.

Nadler's amendments were backed by consumer advocacy groups because they sought to place some responsibility for the increasing number of bankruptcies on credit card companies and the easy flow of credit they offer.

Ensign is siding with Gekas, saying that bankruptcy laws are being abused. He said that especially hurts small businesses that often don't have the resources to recover debts and often are the last creditors to be paid under bankruptcy repayment plans.

Ensign said credit was easy to get, but that didn't negate a person's obligations. "I think they're luring people into that market, but at the same time, that's where personal responsibility comes in," he said.

Nationwide, about 1.3 million Americans filed for bankruptcy in 1997, totaling about $40 billion in erased debt. Nevada was third in per-capita personal bankruptcies in 1997, behind Tennessee and Georgia.