Possibility for New Bankruptcy Law Reform

As you may know, 2005 was the last year of major bankruptcy law reform with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which effectively made it more difficult for many individuals and families to file for Chapter 7 bankruptcy in Illinois and across the country. Over the last 15 years, the U.S. has grappled with a wide variety of large-scale financial issues that have impacted consumers, from the real estate crash of 2008 and the resulting recession and foreclosure crisis to the COVID-19 pandemic that has resulted in the losses of millions of jobs across the country.

Recognizing the ways in which the current bankruptcy system simply does not work for many struggling consumers, members of Congress are pushing for new bankruptcy reform. We want to tell you more about recently proposed federal legislation that seeks to make changes to the current consumer bankruptcy system in this country.

Senator Elizabeth Warren Proposes Bankruptcy Reform

According to a recent press release from the office of U.S. Senator Elizabeth Warren, Warren (D-Mass.) and House Judiciary Chairman Jerrold Nadler (D-N.Y.) have introduced the Consumer Bankruptcy Reform Act of 2020. The press release explains that the proposed law is “bicameral legislation to simplify and modernize the consumer bankruptcy system to make it easier for individuals and families forced into bankruptcy to get back on their feet.” The legislation has been co-sponsored by a number of democrats in Congress, including Senator Dick Durbin (D-Ill.), Senator Sheldon Whitehouse (D-R.I.). and David N. Cicilline (D-R.I.), who serves as the House Antitrust Subcommittee Chairman.

Senator Warren said that there is a pressing need for changes to U.S. bankruptcy law, explained how “our bankruptcy system too often fails to provide financially struggling individuals and families the relief they desperately need.” She further explained that the proposed legislation, if passed, would “take long overdue steps to make it easier and less expensive for financially strapped families and individuals to obtain meaningful bankruptcy relief and give Americans a better chance to get back on their feet.”

Proposed Changes in the Consumer Bankruptcy Reform Act of 2020

What are some of the changes proposed in the recent legislation? If passed, the Consumer Bankruptcy Reform Act would do some of the following:

• Replace the current two consumer bankruptcy chapters (Chapter 7 and Chapter 13) with a “single system available to all consumers” in order to streamline the bankruptcy filing process;
• Reduce bankruptcy filing fees;
• Making student loan debt dischargeable in bankruptcy;
• Helping renters to avoid eviction during the bankruptcy process;
• Providing filers with better protections to retain their homes and vehicles;
• Ending practices that perpetuate racial and gender disparities in bankruptcy cases; and
• Closing the “Millionaire’s Loophole” and the “spendthrift clause loophole.”

Contact an Oak Park Bankruptcy Attorney

Many debtors in Oak Park and throughout the Chicago area are struggling, and it is critical to seek help if you are considering Chapter 7 or Chapter 13 bankruptcy. At the Emerson Law Firm, we know how difficult it can be to make the decision to file for bankruptcy, but we also know that consumer bankruptcy can provide the relief you need and the opportunity to get a fresh financial start after a devastating year. Regardless of whether new bankruptcy reform legislation passes, one of our experienced Oak Park bankruptcy lawyers can help you to seek relief. Contact the Emerson Law Firm to learn more.



See Related Blog Posts:

Is There More Than One Type of Consumer Bankruptcy?

What is Chapter 13 Bankruptcy Good For?