new bankruptcy law: when take effect?

Edwards Finance > Loans

Q. The bill you're referring to was *not* passed into law (thank heavens). Different versions were passed by the House and Senate, and the Conference bill was passed by the House but not be the Senate. The credit card companies (which paid $40 million in "contributions" and lobbying expenses for the bill) got too greedy and the bill didn't make it to the Senate floor for a vote. It was reintroduced in this session, and should be considered again. It's one of the worst anti-consumer, pro-bank pieces of legislation to be considered for a real long time. It absolutely decimates the Bankruptcy Code, will keep people in thrall to the credit card companies for decades, and will ensure record profits for the banks (which had record *profits* in the tens of billions last year).

A. First Means-testing Bill of New Congress Introduced in House Rep. Rob Andrews (D-NJ) has introduced the first "Needs Based" bankruptcy bill of the new Congress. The bill, which was previously introduced during the 105th Congress, would limit the availability of chapter 7 relief for certain consumer debtors who have current monthly income exceeding 75 percent of the state median family income for a family of equal size. The language of the bill (H.R. 333) on means testing tracks closely H.R. 3150 (section 101) as passed by the House in the 105th Congress, except the new bill relates to "state" median family income, rather than "national" median family income. Both statistics are maintained by the Census Bureau. H.R. 3150 was also amended during the committee process to apply only to those making at least 100 percent of the national median, thus H.R. 333 would likely apply to more debtors. ABI's December 1998 study on the repayment capacity of debtors found substantially fewer debtors impacted by the means test when the number was changed to 100 percent of the national median. Like H.R. 3150 as passed by the House, the new bill sets up a three-stage eligibility test. The test under H.R. 333 is (a) current monthly income exceeding 75 percent of the State median family income for a family of equal size or, in the case of a household of 1, exceeding 75 percent of the State median household income for 1 earner; (b) projected monthly net income exceeding $50; and (c) projected monthly net income sufficient to repay 20 percent or more of unsecured nonpriority claims during a 5-year repayment plan. Those who meet all three elements of the test would be ineligible for chapter 7. Net income would be determined by reference to IRS standards, as in the House-passed version of H.R. 3150. Exceptions for extraordinary circumstances would be provided for, as in H.R. 3150. The bill would apply to all cases filed after the date of enactment. The bill makes no other changes to the Code. The bill was referred to the House Judiciary Committee. Rep. Andrews voted for H.R. 3150 in the last Congress. He does not serve on the Judiciary Committee. Thus this bill is not likely to be the principal vehicle for bankruptcy reform this Congress. A more comprehensive bill is expected to be introduced by Rep. George Gekas, the sponsor of H.R. 3150 last session. It is expected that this bill will track closely H.R. 3150, as reported by a House-Senate conference committee last year. The time frame for introduction is not yet clear.

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