Bankruptcy reform takes another forward step

Northwestern Financial Review, Apr 15, 2001

The U.S. Senate voted 83-15 in favor of bankruptcy reform legislation. President Bush has endorsed the bill, and he is expected to sign it after differences in the House and Senate versions are reconciled. At the heart of the bill is a provision requiring Americans who file for bankruptcy to meet a means test to determine whether they will be allowed to eliminate all of their debt or be forced to enter into a repayment plan under court order.

Only those who prove they cannot pay at least 25 percent of their debt over five years would be permitted to file under the law's Chapter 7 provisions allowing debt to be wiped out. Others would have to file under Chapter 13 and agree to a court-approved repayment schedule.