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ABI Member Michael Barnett (Michael Barnett, PA; Tampa, Fla.) has created, and regularly updates, an analysis of the consumer provisions of BAPCPA. Click here to view the analysis.
Adjusting the Rules: What Bankruptcy Reform Will Mean for Financial Market Contracts
House Judiciary Committee’s red-lined document listing changes to existing Bankruptcy Code enacted by the new law (500 kb PDF file)
The bankruptcy reform bill, S. 256, has been passed by the House by a vote of 302–126. The bill was passed without amendment and will now proceed to the White House for President Bush’s signature.
On March 10, 2005, the Senate passed S. 256, the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.” The House Judiciary Committee approved the bill without amendment, sending it to the full House. Prompt passage by the House and approval by the President are expected. The following summary discusses changes in consumer bankruptcy law affected by the bill. This summary addresses the areas of major impact; it is not a complete list of the bill’s consumer provisions.
A summary of major changes to personal bankruptcy law in the new bill, written by ABI Executive Director Samuel Gerdano.
The bill has been approved by a vote of 74–25. Swift passage is expected in the House.
Click here for list of roll call votes.
Click here for list of rejected amendments.
As Attorney General of Texas, John Cornyn argued that the Enron bankruptcy should have been filed in or moved to Houston, where the company is located. He may have lost that argument, but now as a current Senator from Texas, Cornyn has now introduced a bill (S. 314) to restrict the debtor’s choice of venue to the principal place of business. Here, ABI Resident Scholar Jeffrey Morris analyzes the bill.
This Proposal addresses the goals of bankruptcy reform advanced in the last several sessions of Congress and most recently incorporated in S. 256 in the 109th Congress. The Proposal furthers the principal objective of the reform legislation—to curb bankruptcy abuse—both by making bankruptcy relief more difficult for the most likely abusers and by adjusting procedures that could impair the goals of the legislation by imposing unnecessary costs on parties and the court system.
We are writing with regard to The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S.256) (the “bill”). The bill is deeply flawed, and will harm small businesses, the elderly, and families with children.
The correct median income values to use for the means test are now available from the U.S. Census Bureau.
Judiciary Committee Report on S. 256, including the legislative history of the new law.
The House Judiciary Committee’s Democratic staff dissenting views on the bankruptcy reform bill.
Prepared by Thomas J. Yerbich Esq., Anchorage, Alaska
Download the synopsis (moderately large PDF).
The means test requires the application of a series of numbers.
Click here for details on the means test.
Click here to hide these details.
The debtor’s “current monthly income is one-sixth of the last six months income the debtor received from all sources. Deductible actual expenses include reasonably necessary health and disability insurance as well as health savings accounts for the debtor and dependents of the debtor. Also deductible are expenses incurred to maintain safety from family violence under §309 of the Family Violence Prevention and Services Act. Deductions also are allowed for the cost of administering a chapter 13 case (up to 10 percent of projected plan payments), the actual expenses for the care and support of elderly, chronically ill, or disabled household members, and the actual elementary and secondary school expenses up to $1,500 per dependent child under 18 years of age. Each of these figures comes directly from the debtor and the debtor’s financial history.
Other numbers will come from external sources including the census bureau and the Internal Revenue Service. Among those numbers are:
* These links and the categories of income and expenses set out above are illustrative and do not constitute the entirety of the means test. You should consult the Code (if the bill is enacted) for other aspects of the means test.
The primary focus on S.256 has been on its consumer bankruptcy provisions in general, and the means test, in particular. But, with over 500 pages of reform, there are plenty of changes in store for business bankruptcy cases. These changes include an entirely new chapter of the Code, Chapter 15, addressing cross-border insolvency cases, and complicated rules governing the netting of certain financial contracts. Title IV of the Bill includes general and small business bankruptcy provisions, and this paper highlights a number of those amendments.
On October 11, Nathalie Martin and John Penn discussed Bankruptcy Law Changes-Transcript of the Washington Post live discussions
ABI Executive Director Sam Gerdano participated in a live online chat on March 10. It has been archived online at the Post website.
Answers to questions not answered during the live chat by ABI Resident Scholar Jeffrey Morris.
Click here for older media coverage.
Click here to hide older media coverage.