Coral Gables — December 11, 2020 — This week Senator Elizabeth Warren, and other members of Congress introduced the Consumer Bankruptcy Reform Act of 2020 in a stated effort to simplify the consumer bankruptcy system. The centerpiece is the entire elimination of both Chapters 7 (a liquidation bankruptcy that wipes out most of your general unsecured debts such as credit cards and medical bills without the need to pay back balances through a repayment plan) and Chapter 13 (a reorganization bankruptcy designed for debtors with regular income who have enough left over each month to pay back at least a portion of their debts through a repayment plan).
The proposed act would replace both chapters with a single, proposed Chapter 10.
“Our bankruptcy system too often fails to provide financially struggling individuals and families the relief they desperately need,” said Senator Warren in a press release. “The Consumer Bankruptcy Reform Act of 2020 will take long overdue steps to make it easier and less expensive for financially-strapped families and individuals to obtain meaningful bankruptcy relief and give Americans a better chance to get back on their feet.”
Perhaps this is just Senator Warren’s ‘opening bid,’ or perhaps this is something to be pushed through if the Democrats carry Georgia in January. Over the next few weeks I’ll report to you on various aspects of the bill.