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| House Passes Bankruptcy Reform Bill |
April 14, 2005 |
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Wilson Says Bill Limits Fraud, But Protects Those in Need
Washington, DC – Congresswoman Heather Wilson today supported bankruptcy reform legislation which passed the U.S. House of Representatives 302-126.
“I believe this is an important initiative to encourage personal financial responsibility for those who can legitimately pay their debts, while protecting those truly in need of relief,” Wilson said.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, S. 256, will now be sent to the President to be signed into law. The legislation encourages personal responsibility, discourages fraud, establishes protections for debtors and contains educational provisions. Bankruptcies have increased over the past decade due to loopholes in the system. This bipartisan legislation closes loopholes while preserving bankruptcy as an option for those who truly need it.
The bill strengthens the requirements for declaring bankruptcy to create a needs-based system ensuring help for those who need it most. Under the legislation, a debtor’s bankruptcy claim is likely to be dismissed if a means test shows the ability to repay, over 5 years, the lesser amount of either $10,000 or 25 percent of the debtor’s total non-priority, unsecured claims.
Additionally, the bill requires that within 180 days prior to filing for bankruptcy, a debtor must attend a credit counseling session, provided through a program approved by the Justice Department or bankruptcy administrator.
After bankruptcy, the debtor will receive an approved instructional course on personal financial management.
Finally, the Act contains a “debtor’s bill of rights” that requires debt relief agencies to disclose appropriate information and have understandable written service contracts for debtors they assist.
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