Bankruptcy reform clears Senate

Northwestern Financial Review, Apr 1-Apr 14, 2005

By a 74-25 vote, the U.S. Senate passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, signaling a likely end to an eight-year-long battle over bankruptcy reform. House leaders are expected to act on the legislation quickly; President Bush is expected to sign it. The legislation establishes a means test to identify whether individuals should file under Chapter 7 or Chapter 13 of the bankruptcy code.

Filers who make less than the median household income in their state would continue to have a free choice of bankruptcy chapters. The bill includes new disclosure provisions for credit card borrowers; it also reprioritizes debt to ensure that alimony and child support are accorded first priority among all unsecured debt.