Sen Elizabeth Warren Looking to Pass Major Bankruptcy Reform Legislation
Back in 2005, under the Administration of Bill Clinton, major changes in the bankruptcy laws were made that benefited creditors. The 2005 bankruptcy reform bill was signed into law by President George W. Bush. Bush and the Democratic controlled Congress at the time were heavily lobbied by the credit card industry.
Senator Joe Biden voted in favor of the 2005 reform bill. Elizabeth Warren was a consumer rights advocate and Harvard Law professor at the time. Warren lobbied against the 2005 bill. The passage of the bill caused Warren to enter politics.
President Biden is proposing student loan forgiveness. Warren has just proposed major bankruptcy reform that would roll back the 2005 law and benefit debtors. According to recent studies African American debtors are advised by bankruptcy attorneys to file costly Chapter 13 repayment bankruptcy petitions 1.5 times more frequently than similarly situated White debtors. White debtors are more frequently advised to file Chapter 7 petitions, which completely eliminate credit card debt, require no repayment plan, and have lower attorney fees. Warren has proposed that the two petitions be combined so that a debtor will still be able to discharge all of his debt if he is qualified to do so.
Warren has also proposed that debtors be allowed to enter into payment plans with bankruptcy attorneys even after they file their petition. In most cases an attorney is not permitted to accept attorney fee payments after the bankruptcy is filed.
Under current law criminal fines, criminal penalties and criminal orders of restitution are not allowed to be discharged in bankruptcy. Warren will seek to make such criminal debts fully dischargeable in bankruptcy due to the fact that African Americans disproportionally get arrested and targeted by law enforcement, and thus get stuck with criminal fines more often than White Americans.
There is a good chance, with Biden as President, that bankruptcy reform will soon pass and benefit debtors.
If you would like to discuss bankruptcy and your options please don’t hesitate to contact the Law Offices of Ruth Weissman at 2037724848, and discuss your issues over the telephone.