With the inevitability of business closures and company layoffs or reduced hours resulting from the ongoing COVID-19 crisis, more and more people are finding themselves stuck in a situation where they have no choice but to file bankruptcy. Left with this last-minute decision to climb out of debt and start fresh, bankruptcy lawyers in Baltimore, Maryland and anywhere else are more in demand than ever. Because of this, the Congress introduced new legislation in December of 2020 titled the “Consumer Bankruptcy Reform Act of 2020”.
What’s it about?
This proposed legislation aims to simplify and overhaul the current bankruptcy system so that it will be easier for individuals to file. Aside from the Bankruptcy Reform Act of 2005, the Consumer Bankruptcy Reform Act of 2020 will be the most significant change made to the bankruptcy code if passed.
So what can individuals expect from this? We have outlined some of the most significant changes that will happen, but you can always ask your preferred Baltimore bankruptcy attorney to explain it further.
Easier and Less Expensive for Financially-Strapped Families and Individuals
The Consumer Bankruptcy Reform Act will make it easier for the aforementioned individuals to obtain relief by eliminating and replacing Chapter 7 and Chapter 13 bankruptcies with a new Chapter 10 bankruptcy that will handle all types of consumer bankruptcies.
Credit Counseling will No Longer be Required
Current bankruptcy procedures require the completion of a pre-filing and post-filing credit counseling course. The certificates of completion for this course are required before you can obtain a discharge. However, the new bill would eliminate this as a requirement.
Ensure that Filers Can Care for Themselves and Families during the Filing Process
During the bankruptcy process, renters with back rent will be helped to continue making payments to avoid eviction. Student loan debt will also become dischargeable and people will be allowed to protect their homes and cars during the process.
Racial and Gender Disparities in the Bankruptcy System will be Addressed
The special privilege preventing people from discharging local government files will be eliminated. Individuals can also no longer obtain relief from debts caused by civil rights violations. Sources of income, as well as assets that are traceable to alimony, the child tax credit, child support income, and the Earned Income Tax Credit, will be exempted.
Remote 341 Meetings
For every bankruptcy case filed, the debtor is required to attend a 341 meeting (also known as the meeting of the creditors). Because of COVID-19, these have transitioned to telephonic hearings. This will be adapted into the new bill to impose less burden on individuals having to travel to attend this meeting.
Immediate Discharge in Some Cases
The current system allows individuals to obtain a discharge in around 3 months for Chapter 7 and in 3-5 years for Chapter 13. However, the proposed legislation allows immediate discharge under certain special circumstances.
There are many more changes under the proposed legislation which will bring a lot of benefit and ease to filers. To know more, get in touch with renowned Baltimore bankruptcy lawyer, Atty. Richard Hackerman, and he will gladly explain how the Consumer Bankruptcy Reform Act of 2020 will change bankruptcy in the future if it passes.