Senate Judiciary Committee Votes out a Bankruptcy Bill
Seiberg, Jaret, American Banker
The Senate Judiciary Committee approved legislation Thursday that would make it more difficult for consumers to eliminate their unsecured debt in bankruptcy.
In a display of bipartisanship, the committee voted 15-to-2 to give creditors the right to ask judges to force consumers to repay debts in Chapter 13 rather than eliminating them in Chapter 7. Currently, only court-appointed bankruptcy trustees may make these requests.
To prevail, the creditor must prove the debtor is abusing the bankruptcy system. Abuse is defined as attempting to eliminate debt in Chapter 7 when the consumer could afford to repay at least 20% of unsecured credit over five years.
This is the second major vote this month on needs-based bankruptcy reform. The House Judiciary Committee approved a bill last week that uses a formula based on income and living expenses to determine if consumers may eliminate their debts in Chapter 7.
"This was a very strong bipartisan vote," said Philip S. Corwin, a principal at Federal Legislative Associates who lobbies for the American Bankers Association. "This bill represents a balanced approach that has an excellent chance of Senate passage this year."
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Senate Judiciary Committee Votes out a Bankruptcy Bill. Contributors: Seiberg, Jaret - Author. Magazine title: American Banker. Volume: 163. Issue: 97 Publication date: May 22, 1998. Page number: 2. © 2009 SourceMedia, Inc. COPYRIGHT 1998 Gale Group.
This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.