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Bankruptcy Reform

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It’s deja vu all over again as the U.S. House of Representatives this week passed bankruptcy reform legislation for the seventh time. In a vote of 315-113 the House passed H.R. 975 late Wednesday. The House also agreed to three significant amendments including an amendment to increase the look-back period on fraudulent transfers from one to two years. The other two amendments included one which requires courts to reinstate health benefits to employees that were changed by a corporate debtor within 180 days of filing. The third amendment will permit rescinding of certain corporate retention bonuses. The House defeated an amendment which sought to change the means test, based on IRS standards, to one based on the debtor’s actual expenses and income. The defeated amendment also included language relating to debts associated with abortion clinic protests. Several other amendments were also defeated. Republicans blocked six Democratic amendments from being offered by the Rules Committee, including one proposal to cap the exemption on home equity at $125,000. A total of 90 Democrats voted for H.R. 975. The bill now goes to the Senate, however, there is no indication it will be able to gather the necessary 60 votes to take a vote.

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