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Closing the Book

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It is very likely the U.S. Senate will pass S. 420, the bankruptcy reform bill, this week. The U.S. House approved the same legislation last week by an overwhelming majority. The House vote was 306 – 108 vote which included 93 “yes” votes from Democrats. The new legislation will close the book on Chapter 7 bankruptcies for many consumers. H.R. 333 and S. 420 implements an income/expense screening mechanism to assess the debtor’s repayment ability. Those above a specified income threshold, would be channeled to file under Chapter 13 bankruptcy, which involves reorganizing debt and a repayment plan. Currently, many of these debtors file for Chapter 7, which allows for the discharge of debt after the debtors’ assets have been liquidated. H.R. 333 (the Bankruptcy Abuse Prevention and Consumer Protection Act of 2001) was introduced by Rep. George Gekas (R-PA) and is very similar to legislation that was strongly supported in both Houses of Congress last year but was pocket-vetoed by former President Bill Clinton in December. President Bush has indicated he will sign-off on the legislation if it passes both Houses. For more information visit www.abiworld.org.

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