Bill Proposes to Make Filing for Bankruptcy Easier

Rules relating to bankruptcy are always under scrutiny from lawmakers, as well as interest groups representing both debtors and creditors. In the past several years, we’ve seen the institution and expiration of changes prompted by the COVID-19 pandemic and the 2019 introduction of Subchapter V proceedings under Chapter 11. Some members of Congress are looking to make even more sweeping changes that they say will make the process of filing for personal bankruptcy easier and fairer. 

Under the Consumer Bankruptcy Reform Act (CBRA), individuals would no longer have to choose either Chapter 7 or Chapter 13 relief. Instead, the proposed law would offer a single streamlined filing option, referred to as Chapter 10. Anyone whose total debt is less than $7.5 million could use this chapter without having to qualify under any means test. There would be some similarities to the existing framework however, with the following two potential paths to debt relief: 

• No-payment discharge — This model is designed for lower-income individuals who lack the financial means to repay their debts. Under the no-payment discharge, qualifying debtors could eliminate unsecured debts such as credit card balances, medical bills and personal loans without making any payments. This approach seeks to provide immediate relief to those who are struggling the most and prevent prolonged financial hardship.
• Debt-specific repayment plan — For individuals with sufficient income to manage certain debts, the debt-specific plan would allow them to stay current on secured loans—such as mortgages and car payments—while pausing aggressive debt collection efforts. This option is intended to give more people a structured pathway to retain essential assets while working toward financial stability. People who lease their residences might benefit from this proposed change, because they would be able to stay in their homes by paying back rent over time as opposed to the current system where immediate full payment is required to avert eviction. 

Supporters of the CBRA say these changes and others would modernize the bankruptcy system to reflect the financial realities of today’s consumers. Other potential revisions could include making student loan debt dischargeable and giving filers the chance to deal with debts on a staggered basis rather than all at once. 

While some of the CBRA provisions might be popular, the legislation has not moved ahead in the years since it has been introduced and might never become law. If you are facing overwhelming debt, consulting with an experienced bankruptcy attorney can help you get started on achieving a fresh financial start under the current rules. 

At Jeff Field & Associates, we represent Georgia residents in all types of bankruptcy matters. For a consultation, please call 617-232-5950 or contact us online. Our offices are in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Scottdale.