Bankruptcy Bill Awaits President Signature

April 14, 2005

The House passed bankruptcy reform legislation (S. 256) by a vote of 302 to 126 on Thursday clearing the way for President George W. Bush to sign the bill into law. The reform bill would move people who can afford to repay their debts into a Chapter 13 debt repayment plan rather than a Chapter 7 debt cancellation plan. The bill would allow debtors to file under Chapter 7 if they make less than their state’s median income, which is estimated to cover 80 percent of the people filing for bankruptcy. Other provisions of the bill would change the priority of debts putting child support and alimony ahead of legal fees and would require disclosures to help borrowers understand the importance of making more than the minimum payment on credit card loans.