Thursday, April 14, 2005

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.


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.


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

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