Oak Park Real Estate & Estate Planning Blog

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...

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...

Should current consumer bankruptcy law be revised to better serve debtors across the country? According to a recent article in The Wall Street Journal , a new report from the American Bankruptcy Institute (ABI) Commission on Consumer Bankruptcy contends that “bankruptcy court . . . has lost its power to help people fix some financial problems stemming from the massive social and economic shifts that have taken place since modern bankruptcy law was passed in 1978.” In other words, consumer bankruptcy law is outdated, and it needs to be revised to take into account the 21st century needs of debtors. The law is now over 40 years old. Bankruptcy Reform in 2005 Does Not Help Consumers in 2019 The 2005 bankruptcy reform is among the first issues that the report takes up. When new bankruptcy rules were put into place in 2005, fewer consumers were filing for bankruptcy. The reform also led to the “means test,” which makes it significantly more difficult for many individual debtors to file...

Almost exactly ten years ago, American consumers learned about the Bankruptcy Abuse and Consumer Protection Act . The legislation became law on October 17, 2005. According to a recent article in American Banker Magazine , the legislation “was the culmination of a bipartisan effort in Congress to change a legal system that seemed to encourage bankruptcy filings during a time of prosperity.” Depending on which side of the economic spectrum you are on, you may have mixed feelings about bankruptcy reform. On the one hand, for many consumer advocates, reform efforts did not do enough to address issues impacting debtors. For example, we have yet to see bankruptcy reform measures that address private student loan payments and the limitations of income-based repayment plans. On the other hand, business advocates argue that the reform measures did not do enough to curb the rate of bankruptcy in our country. Do we need to return to the issue of bankruptcy reform? What are some of t...