Bankruptcy Reform

 

In recent years, the number of bankruptcy filings has sky-rocketed.  A substantial factor driving the incredible rise in bankruptcies is not the need to get out from crushing debt, but a desire to walk away from debts that could otherwise be paid.  This type of abuse transfers the debt burden from the individual consumer to businesses like yours.

 

 

To combat bankruptcy abuse, S. 256 would institute a deliberate and straightforward “needs-based test.”  This test would require wealthy debtors to work out a repayment plan under Chapter 13 of the Bankruptcy Code.  This legislation constitutes meaningful bankruptcy reform and moves a step closer to rewarding personal responsibility and restoring fairness to the bankruptcy system, while protecting those who need the support that bankruptcy offers, such as a fresh start and protection from creditors. This bipartisan bill will stop the rampant abuse of the bankruptcy system that is harmful to consumers, workers, and small businesses.

 

 

The House of Representatives passed the Bankruptcy Abuse Prevention and Consumer Protection Act conference report by a vote of 244-116 on November 14, 2002. The Senate failed to take action on the bill before it adjourned for 2002.
 
The House, by a vote of 306-108, first approved the bill (HR 333) on March 1, 2001. The Senate followed suit two weeks later by voting 83-15 in favor of its reform bill (S 220). Both bills would have instituted a deliberate and straightforward "needs-based test" requiring wealthy debtors to work out a repayment plan under Chapter 13 of the Bankruptcy Code.

 

In February 2003, U.S. Rep. James Sensenbrenner (R-WI) reintroduced the comprehensive bankruptcy conference report (HR 975), but without a controversial provision that derailed the previous version.