Bill Would Protect Homestead
Exemptions From Feds' Grasp

WASHINGTON —(AP)— Texas and other states that provide debtors with uncommonly generous homestead exemptions would be able to retain their standards under legislation approved Wednesday by the U.S. House.

Texas lawmakers have been fighting to shield the homestead protections enshrined in the Texas Constitution from federal mandates that would supercede state standards.

Under the cherished Texas perk, homes and ranches — regardless of their value — are protected from seizure to settle debt. The only limitation is on size: One acre in urban areas or 200 acres of rural property.

The unlimited provisions have been under attack from congressional critics who contend some people on the verge of filing for bankruptcy shield their assets by buying homes in Texas, Florida or the handful of other states with generous homestead exemptions.

Disputing the tales of abuse, Rep. Ken Bentsen, D-Houston, termed the federal provisions an ``egregious'' incursion by Washington into historic Texas practices.

Bentsen succeeded last week in softening homestead exemption language in a bankruptcy reform bill adopted by the House on a 313-108 vote.

While the bankruptcy legislation would allow debtors to shield a maximum $250,000 in homestead equity from bankruptcy proceedings, the House adopted a Bentsen amendment that would allow Texas and other states to opt out of that monetary cap.

Lawmakers also approved a second Bentsen amendment delaying the effective date of the $250,000 cap until each state's next legislative session. That would buy the Texas Legislature, which is wrapping up its current session and doesn't meet again in regular session until 2001, time to opt out, Bentsen said.

``The Texas Legislature and the governor have the ability to opt out of this unfair burden, which I think they will do,'' said Bentsen, who is a member of the House Banking Committee. ``It's a little bit of a burden that they have to go through, but it's better than having (the law) just imposed upon them.''

The bankruptcy bill marks an attempt by the House to stem the rising tide of personal bankruptcies by making it tougher for people to erase their debts. The legislation, pushed by credit card companies, was welcomed by House Majority Leader Dick Armey.

``This is about personal responsibility,'' the Irving Republican said. ``It's become too easy to run up massive debts and then abuse the system to welsh on those obligations.''

But Rep. John Conyers of Michigan, the Judiciary Committee's senior Democrat, said during debate on the House floor that the bill ``is bad for women, children, working Americans ... it is good for the credit card industry.''

The White House has objected to the bill but has not specifically threatened a veto.