Bankruptcy Reform To Hurt Legitimate Debtors
An almost nine year intense congressional
lobbying effort may prove successful for creditors, such as
banks and credit card companies, should the President sign
Congress’s forthcoming Bankruptcy Reform Act.
The proposed reforms are creditor friendly
and make it more difficult for individual debtors to file
Chapter 7 bankruptcy. Chapter 7 bankruptcy allows, with few
restrictions, an individual to liquidate or eliminate all
debt obligations. The proposed reform would require individuals
whose income exceeds state specific income thresholds to instead
file for Chapter 13 bankruptcy. Chapter 13 filers are required
to pay back a portion (based on complicated calculations)
of their outstanding debt instead of eliminating it all together.
Critics of the proposed reform allege that
the bill goes too far because it casts a broad net over legitimate
filers facing financial strife because of medical problems
or lost employment. Those in favor of the reform state that
it will curb credit abusers, such as dead-beat parents and
gamblers, by making them pay back their debts instead of wiping
their debt slate clean.
Critics and proponents both agree that
bankruptcy attorneys will be busier once the President signs
the act into law. A “mad rush” of Chapter 7 filings
is expected during the six-month window period after the bill
is signed into law and before the reform takes effect.
Contact one of the professionals
in our Resource Directory to learn more how the reform will
affect your rights.
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