On December 9th Senator Elizabeth Warren and House Judiciary Committee Chairman Jerrold Nadler introduced the Consumer Bankruptcy Reform Act of 2020 (CBRA) in both the House and the Senate. The Act would represent the most significant overhaul of the consumer specific provisions in the Bankruptcy Code since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). If passed, the CBRA will make big changes to everything from the way consumers file bankruptcy to what debts can be discharged and how property is protected.
Goals of the CBRA
According to the sponsors of the CBRA, the new law would:
- Make it easier and less expensive for cash-strapped families and individuals to obtain financial relief
- Ensure that filers can care for themselves and their families during the bankruptcy process
- Help address racial and gender disparities in the bankruptcy system
- Close loopholes that allow the wealthy to exploit the bankruptcy system
- Crack down on predatory practices and hold corporate wrongdoers accountable
Specific Changes that Will Help Achieve the Goals
Some of the specific changes that would help achieve these goals include:
– Restructuring Bankruptcy. Consumers would no longer have to decide whether to file Chapter 7 or Chapter 13 bankruptcy. Instead, there would be a single type of consumer bankruptcy filing. Under the CBRA, the new type of bankruptcy would be called Chapter 10.
– Removing obstacles to filing bankruptcy. The Act would also eliminate the pre-filing credit counseling requirement. Another issue the CBRA would remedy is to remove the complication associated with payment of the bankruptcy attorney’s fees.
– Making additional debts dischargeable. Currently, certain types of debts are excluded from discharge under both Chapter 7 and Chapter 13. Under the Act, most every debt would be discharged. For example, student loan debt would be treated like other unsecured debt and be discharged. The Act would also eliminate bars to discharge for certain types of criminal fines and fees that disproportionately impact the poor and minority filers.
Call an Experienced Central Valley Bankruptcy Attorney
If you are considering Chapter 7 bankruptcy, it is in your best interest to consult with an experienced bankruptcy attorney to help you learn your legal rights and options, especially with respect to Chapter 7 bankruptcy.