Top Changes That Could Come to Consumer Bankruptcy in 2021
The consumer bankruptcy process could look quite different in 2021 if proposed reforms pass in the new year. You might already know that U.S. Senator Elizabeth Warren (D-Mass.) has introduced the Consumer Bankruptcy Reform Act of 2020 (CBRA) with House Judiciary Chairman Jerrold Nadler (D-N.Y.). We have discussed some of the proposed changes that would come with the bankruptcy reform package, and its relation to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which made it more difficult for many consumers to be eligible for Chapter 7 bankruptcy. As we near the early weeks and months of 2021, we want to highlight some of the top changes that could come for personal bankruptcy if the proposed legislation passes.
1. Credit Counseling Will Not be Required
The BAPCPA required any consumer seeking a bankruptcy discharge to go through credit counseling and to provide the court with a certificate of completion before any debts could be discharged. The newly proposed bankruptcy law would eliminate this requirement altogether.
2. Chapter 10 Bankruptcy Instead of Chapter 7 or Chapter 13 Bankruptcy
One of the most major changes that would occur—if the new bankruptcy legislation passes—is that Chapter 10 bankruptcy would replace Chapter 7 and Chapter 13 bankruptcy for consumers. As you may know, Chapter 7 bankruptcy is a liquidation bankruptcy, and for a consumer to be eligible, she or he must be able to pass the “means test.” Chapter 13 bankruptcy is a type of reorganization bankruptcy, which requires consumers to develop a repayment plan that lasts over the course of three to five years, after which point remaining debts are discharged. Under Chapter 10 bankruptcy, according to the CBRA, any consumers with debts under $7.5 million would file under Chapter 10 and would not be required to meet all of the same requirements currently necessary.
3. Different Options for Chapter 10 Bankruptcy
In terms of the different options under Chapter 10 bankruptcy, the CBRA would have three different bankruptcy options, including a “residence” plan, a “property” plan, and a general repayment plan. Residence plans would address home debt, property plans would address non-mortgage secured debts, and the general repayment plan would address unsecured debts.
4. Faster Discharges
Under the CBRA, consumers would be eligible for a much faster bankruptcy discharge.
5. Student Loans are Dischargeable
Another of the most significant changes is that student loan debt, which used to be difficult to discharge, would be treated like any other type of unsecured debt and would be dischargeable through bankruptcy.
Contact an Oak Park Consumer Bankruptcy Lawyer
The Consumer Bankruptcy Reform Act of 2020 has not yet become law, and it is possible that some elements of the legislation could be revised or excluded as other members of Congress consider the bill. Yet some of the key proposed changes could provide much needed relief to many consumers. In the meantime, if you are struggling with debt, you should seek advice from an experienced consumer bankruptcy lawyer in Oak Park as soon as you can. Contact the Emerson Law Firm to learn more about how our firm can help.
See Related Blog Posts:
Possibility for New Bankruptcy Law Reform
What Are Bankruptcy Loopholes?
1. Credit Counseling Will Not be Required
The BAPCPA required any consumer seeking a bankruptcy discharge to go through credit counseling and to provide the court with a certificate of completion before any debts could be discharged. The newly proposed bankruptcy law would eliminate this requirement altogether.
2. Chapter 10 Bankruptcy Instead of Chapter 7 or Chapter 13 Bankruptcy
One of the most major changes that would occur—if the new bankruptcy legislation passes—is that Chapter 10 bankruptcy would replace Chapter 7 and Chapter 13 bankruptcy for consumers. As you may know, Chapter 7 bankruptcy is a liquidation bankruptcy, and for a consumer to be eligible, she or he must be able to pass the “means test.” Chapter 13 bankruptcy is a type of reorganization bankruptcy, which requires consumers to develop a repayment plan that lasts over the course of three to five years, after which point remaining debts are discharged. Under Chapter 10 bankruptcy, according to the CBRA, any consumers with debts under $7.5 million would file under Chapter 10 and would not be required to meet all of the same requirements currently necessary.
3. Different Options for Chapter 10 Bankruptcy
In terms of the different options under Chapter 10 bankruptcy, the CBRA would have three different bankruptcy options, including a “residence” plan, a “property” plan, and a general repayment plan. Residence plans would address home debt, property plans would address non-mortgage secured debts, and the general repayment plan would address unsecured debts.
4. Faster Discharges
Under the CBRA, consumers would be eligible for a much faster bankruptcy discharge.
5. Student Loans are Dischargeable
Another of the most significant changes is that student loan debt, which used to be difficult to discharge, would be treated like any other type of unsecured debt and would be dischargeable through bankruptcy.
Contact an Oak Park Consumer Bankruptcy Lawyer
The Consumer Bankruptcy Reform Act of 2020 has not yet become law, and it is possible that some elements of the legislation could be revised or excluded as other members of Congress consider the bill. Yet some of the key proposed changes could provide much needed relief to many consumers. In the meantime, if you are struggling with debt, you should seek advice from an experienced consumer bankruptcy lawyer in Oak Park as soon as you can. Contact the Emerson Law Firm to learn more about how our firm can help.
See Related Blog Posts:
Possibility for New Bankruptcy Law Reform
What Are Bankruptcy Loopholes?
Comments
Post a Comment