Bankruptcy overhaul nearing passage by Congress

The U.S. Congress is close to passing major bancruptcy legislation, which would make it impossible for thousands of people to wipe away their debts:

Opponents say the change would fall especially hard on low-income working people, single mothers, minorities and the elderly and would remove a safety net for those who have lost their jobs or face crushing medical bills.

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Going into effect six months from enactment, the measure sets up an income-based test for measuring a debtor's ability to repay debts. It also requires people in bankruptcy to pay for credit counseling.

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Those with insufficient assets or income could still file a Chapter 7 bankruptcy, which if approved by a judge erases debts entirely after certain assets are forfeited. Those with income above the state's median income who can pay at least $6,000 over five years — $100 a month — would be forced into Chapter 13, where a judge would then order a repayment plan.

Critics say that's unfair because many people who file for bankruptcy have lost their jobs, or are going to lose them.

Under the current system, a federal bankruptcy judge determines under which chapter of the bankruptcy code a person falls — whether they have to repay some or all of their debt.

via USATODAY.com - Bankruptcy overhaul nearing passage by Congress, spotted on K-LOVE's News Page