Consumer Bankruptcy Reform Act of 2020 (CBRA)

Congressional Democrats spearheaded by Elizabeth Warren (Mass.) and Jerrold Nadler (N.Y.) have proposed sweeping legislation that would overhaul consumer bankruptcy law as we know it.  The bill still has a long journey to becoming law and will almost undoubtedly undergo tweaks by the time if/when its finalized.  Therefore its important to track the progression and follow changes.  However, as it stands some of the notable points include:

  • Consumer chapters 7 and 13 will eliminated and practitioners will no longer have to defend eligibility or the means test.  Instead, the options will be replaced with a new chapter 10.
  • There will be a distinction for secured creditors between “residence” and “properties.”
  • Discharge may occur immediately upon initiating the plan payments.
  • Attorneys’ fees may be spread out over time.
  • And, one of the most hotly contested points, is that certain student loans may be discharged.