Proposed Legislation Could Make the Consumer Bankruptcy Process Easier
Are you considering personal bankruptcy in Orlando? If you are thinking about filing for Chapter 7 bankruptcy, you may know that you will need to pass the “means test” in order to be eligible to have debts discharged following a liquidation bankruptcy. And if you are thinking about filing for Chapter 13 bankruptcy, you also may know that you will need to be able to show the court that you are a wage earner who can meet the terms of the debt reorganization plan associated with your Chapter 13 bankruptcy case. In short, consumer bankruptcy is an incredibly complex process, and it is often difficult for struggling consumers to find the specific relief they need due to the constraints in U.S. bankruptcy law. According to a recent press release, members of Congress have proposed the Consumer Bankruptcy Reform Act of 2020, which is designed to “simplify and modernize the consumer bankruptcy system.”
What should you know about the proposed legislation and the changes it could make to U.S. bankruptcy law?
Response to the BAPCPA and the COVID-19 Pandemic
The Bankruptcy Reform Act of 2020, which has been introduced by U.S. Senator Elizabeth Warren and House Judiciary Committee Chairman Jerrold Nadler, is in part a response to both the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), as well as the financial crisis set in motion by the COVID-19 pandemic.
Back in 2005, the BAPCPA was intended to reform U.S. bankruptcy law to prevent abusive Chapter 7 filings by making it more difficult for consumers to be eligible for liquidation bankruptcy. The BAPCPA is what resulted in consumers needing to pass the means test in order to be eligible for Chapter 7 bankruptcy. Since then, the foreclosure crisis and recession have left many Floridians in difficult financial circumstances, and many of those people who were able to rebuild their financial lives found them devastated again by the COVID-19 pandemic. The Bankruptcy Reform Act of 2020 is designed to make the bankruptcy process easier and fairer to all of those consumers in need of bankruptcy protection.
How the Proposed Bankruptcy Reform Would Help
The proposed legislation makes the following changes to U.S. bankruptcy law:
- Creates a single bankruptcy system so that consumers do not need to deal with separate Chapter 7 and Chapter 13 systems, and reduces bankruptcy filing fees;
- Ensures that debtors can remain in their homes and can keep their motor vehicles during the bankruptcy process;
- Helps to do away with biases based on race and gender in the consumer bankruptcy system;
- Closes existing loopholes in the consumer bankruptcy system; and
- Takes additional steps to prevent predatory debt collection actions against consumers.
Contact an Orlando Bankruptcy Lawyer
Whether you have questions about how potential changes to U.S. bankruptcy law could impact your ability to file in the near future, or if you need assistance with a bankruptcy case now, one of our experienced Orlando bankruptcy attorneys can assist you. Contact Anderson & Ferrin today for more information about the consumer bankruptcy process in Florida.