If Bankruptcy Law is Changed, Will it Affect My Current Case?
If you are considering the possibility of filing for personal bankruptcy under Chapter 7 or Chapter 13, you might have encountered information about a recently proposed law that would change the consumer bankruptcy process. In December, Elizabeth Warren and Jerrold Nadler introduced the Consumer Bankruptcy Reform Act of 2020 (CBRA), which aims to streamline the consumer bankruptcy process and to make it easier for certain types of debts to be discharged. You may be wondering if this proposed legislation can affect your existing bankruptcy case. In other words, if you file for consumer bankruptcy at some point in the coming weeks or months, and if this law passes, can it change your case or affect your discharge? Or, if you have filed for Chapter 13 bankruptcy and are making payments on a repayment plan that will last from three to five years, can the Consumer Bankruptcy Reform Act change the nature of your repayment plan or your ultimate discharge?
In short, if the law does pass, it will not change an ongoing bankruptcy case. Yet more importantly, it is likely to take some time before the law would be passed and ultimately take effect. Our Oak Park bankruptcy attorneys will tell you more.
Details of the Proposed Consumer Bankruptcy Reform Act
We want to start by providing you with information about the CBRA, which should help to clarify that the proposed legislation, if passed, would not alter existing bankruptcy cases but would make the process easier for most consumers who filed after that point. According to the text of the bill, the CBRA “revises consumer bankruptcy law by establishing a new Chapter 10 for individual debtors with not more than $7.5 million in debt,” and “eliminates the ability of individual debtors to file for bankruptcy under Chapter 7 liquidation bankruptcy and repeals Chapter 13, which requires individual debtors to comply with a repayment plan to receive a discharge.”
If individual debtors will be required to use Chapter 10 if the law passes, what will that look like? As the bill explains, under the proposed Chapter 10 bankruptcy, “debtors may receive a discharge of debt through making minimum payment obligations based on the debtor’s assets and income which may result in immediate discharge for individuals with no minimum payment obligation.” The proposed legislation would also expand the category of dischargeable so that, in particular, more student loan debt can be discharged in bankruptcy.
Existing Bankruptcy Cases Would Not be Impacted
If you file for Chapter 7 bankruptcy, your case would most likely be completed (and you would receive a discharge) before the CBRA could even take effect. Since most Chapter 7 bankruptcy cases only take a few months or slightly longer, a Chapter 7 case would be unlikely to be impacted as a result of timing alone. Even if a debtor were in the middle of a Chapter 7 case if and when the CBRA passes, the case would be completed before the CBRA would be likely to take effect.
For Chapter 13 debtors in years-long repayment plans, if you wish to continue with your Chapter 13 bankruptcy case and repayment plan, the passage of the CBRA would not impact your case or your ability to receive a discharge based on the terms of your bankruptcy. If the CBRA did pass while you were in the midst of a Chapter 13 repayment plan and you wanted to convert to Chapter 10, you could speak with a lawyer about your options.
Contact an Oak Park Bankruptcy Lawyer
Since there is no promise that the CBRA will pass, you should not wait to file for bankruptcy because you are planning on reform. Our experienced Oak Park bankruptcy attorneys can help you to determine debt relief options that are currently available to you, including consumer bankruptcy. Contact the Emerson Law Firm for more information.
See Related Blog Posts:
Can a Creditor Force Me to Reaffirm Debt After a Bankruptcy Discharge?
How Soon Can I File for Bankruptcy Again?
In short, if the law does pass, it will not change an ongoing bankruptcy case. Yet more importantly, it is likely to take some time before the law would be passed and ultimately take effect. Our Oak Park bankruptcy attorneys will tell you more.
Details of the Proposed Consumer Bankruptcy Reform Act
We want to start by providing you with information about the CBRA, which should help to clarify that the proposed legislation, if passed, would not alter existing bankruptcy cases but would make the process easier for most consumers who filed after that point. According to the text of the bill, the CBRA “revises consumer bankruptcy law by establishing a new Chapter 10 for individual debtors with not more than $7.5 million in debt,” and “eliminates the ability of individual debtors to file for bankruptcy under Chapter 7 liquidation bankruptcy and repeals Chapter 13, which requires individual debtors to comply with a repayment plan to receive a discharge.”
If individual debtors will be required to use Chapter 10 if the law passes, what will that look like? As the bill explains, under the proposed Chapter 10 bankruptcy, “debtors may receive a discharge of debt through making minimum payment obligations based on the debtor’s assets and income which may result in immediate discharge for individuals with no minimum payment obligation.” The proposed legislation would also expand the category of dischargeable so that, in particular, more student loan debt can be discharged in bankruptcy.
Existing Bankruptcy Cases Would Not be Impacted
If you file for Chapter 7 bankruptcy, your case would most likely be completed (and you would receive a discharge) before the CBRA could even take effect. Since most Chapter 7 bankruptcy cases only take a few months or slightly longer, a Chapter 7 case would be unlikely to be impacted as a result of timing alone. Even if a debtor were in the middle of a Chapter 7 case if and when the CBRA passes, the case would be completed before the CBRA would be likely to take effect.
For Chapter 13 debtors in years-long repayment plans, if you wish to continue with your Chapter 13 bankruptcy case and repayment plan, the passage of the CBRA would not impact your case or your ability to receive a discharge based on the terms of your bankruptcy. If the CBRA did pass while you were in the midst of a Chapter 13 repayment plan and you wanted to convert to Chapter 10, you could speak with a lawyer about your options.
Contact an Oak Park Bankruptcy Lawyer
Since there is no promise that the CBRA will pass, you should not wait to file for bankruptcy because you are planning on reform. Our experienced Oak Park bankruptcy attorneys can help you to determine debt relief options that are currently available to you, including consumer bankruptcy. Contact the Emerson Law Firm for more information.
See Related Blog Posts:
Can a Creditor Force Me to Reaffirm Debt After a Bankruptcy Discharge?
How Soon Can I File for Bankruptcy Again?
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