Congress Considers Reforming Bankruptcy Laws

Sponsors Say New Bill Will Simplify the Process

In December 2020, Democrats in both the Senate and the House introduced a bill to radically reform the nation’s bankruptcy laws. The bill’s sponsors say the proposed legislation seeks to reduce costs and stumbling blocks that prevent consumers from reaping the intended benefits offiling for bankruptcy. The new statute, known as the Consumer Bankruptcy Reform Act of 2020,has a long way to go before it can become law, and it will likely face significant opposition and require substantial revisions. Here, however, are the key provisions:

• The law replaces the current paths—Chapter 7 liquidation and Chapter 13 reorganization—with Chapter 10. Chapter 10 allows consumers to take one of two routes through bankruptcy:
  • No payment discharge—This option allows the debtor to discharge all unsecured debt (with a few exceptions, such as child support arrearages and debts incurred through fraud). However, if the debtor has significant income or valuable assets, the bankruptcy court may require the debtor to make certain minimum paymentsto creditors.
  • Debt-specific plans—This path lets debtors individually resolve specific debts andhas three components:
    • A repayment plan for most unsecured debt
    • A property plan for non-real property debt
    • A residence plan for mortgage debt
• The proposed law eliminates the requirement that debtors pay for pre-filing credit counseling.
• The proposed law provides additional protections:
  • Renters may continue under an existing lease without paying up to six months of rent;
  • There are changes to the exemption amounts for homeowners;
  • Debtors may keep a motor vehicle while in bankruptcy without paying the full amount of their loan; and
  • Student loan debt is dischargeable.

Contact an Experienced Rockwall, TX Bankruptcy Attorney

At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. I am currently communicating with clients by phone, text message, or videoconference. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.