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The World Of Bankruptcy As You Know It May Soon Be History

Today, United States Senator Elizabeth Warren (D-Mass.) and House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) introduced the Consumer Bankruptcy Reform Act, bicameral legislation that would simplify and modernize the consumer bankruptcy system and make it easier for individuals and families forced into bankruptcy to get through the process.

The legislation would eliminate Chapter 7 and Chapter 13, and replace them with a new single, streamlined filing process available to all consumers. Filing fees would be reduced.

Some of the elements would include provisions that allow debtors to care for themselves, their families and elderly parents by helping with back rent and creating obstacles to eviction, and mechanisms to save homes and cars. Certain governmental fines would be dischargeable. The act would also help close loopholes that allow the wealthy to exploit the bankruptcy system, crack down on predatory practices, and hold corporate wrongdoers accountable.

Bankruptcy is an option of last resort, but it also promises a fresh start so that people can get back up and keep working and providing for their families,” said Chairman Jerrold Nadler. “Today that promise rings hollow for many people because the bankruptcy system has become complex, unfair, and even punitive for ordinary consumers. The Consumer Bankruptcy Reform Act ensures that the bankruptcy system works for the American people and not just big corporate creditors. Senator Warren and I have worked on this issue for many years, and I look forward to continuing our fight for consumers with this new legislation.”

The bill is also supported by: the National Association of Consumer Bankruptcy Attorneys (NACBA), the Action Center on Race and the Economy, the American Federation of State, Country, and Municipal Employees (AFSCME), Americans for Financial Reform, AFL-CIO, Association of Young Americans, the National Association of Consumer Advocates, the Consumer Federation of America, Demos, the National Alliance for Partnerships in Equality, the National Association for Equal Opportunity in Higher Education (NAFEO), the National Consumer Law Center, the Progressive Change Campaign Committee, Public Citizen, Service Employees International (SIEU), UnidosUS, U.S. PIRG, Young Invincibles, Tzedek DC, the Center for LGBTQ Economic Advancement and Research (CLEAR), and the Center for Responsible Lending. A group of 86 law professors who specialize in bankruptcy and consumer law have also sent a letter in support of this legislation.

Write to your legislators today and tell them you support the 2022 Bankruptcy Reform Act. For a full copy of the proposed bill or to make an appointment, contact our office.