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.