Signed by President George Bush

Vote Smart's Synopsis:

Vote to pass a bill that imposes a means test for individuals wishing to file for bankruptcy. The means test determines whether the individual would be allowed to file under Chapter 7, essentially exonerating their debts after they have liquidated their assets, or if they would be forced to file under Chapter 13, requiring them to pay back creditors on a court approved time table.

Highlights:

• Alters prior bankruptcy codes Chapter 11 and Chapter 12, which apply to small-business and healthcare business bankruptcies and mandate that the debtor file a reorganization plan.

• Defines a debtor eligible for Chapter 13 as anyone financially capable of paying back their creditors at a rate that still allows them to earn above their state's median income (Sec. 102).

• Allows special accommodations for active-duty service members, veterans, and those with serious medical conditions (Sec. 102).

• Requires debtors to pay for and attend credit counseling prior to filing for bankrupcy (Sec. 106).

• Places domestic support obligations such as child support and alimony amongst the first priority claim category of non-dischargeable debts on a debtor filing for bankruptcy (Sec. 211).

• Caps home equity protection at $125,000 if the debtor purchased a house within 40 months of filing for bankruptcy (Sec. 322).

• Requires credit cards to include warnings, examples, and a toll-free number to address interest rates, repayment plans, and fees on monthly statements (Sec. 1301).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that imposes a means test for individuals wishing to file for bankruptcy. The means test determines whether the individual would be allowed to file under Chapter 7, essentially exonerating their debts after they have liquidated their assets, or if they would be forced to file under Chapter 13, requiring them to pay back creditors on a court approved time table.

Highlights:

• Alters prior bankruptcy codes Chapter 11 and Chapter 12, which apply to small-business and healthcare business bankruptcies and mandate that the debtor file a reorganization plan.

• Defines a debtor eligible for Chapter 13 as anyone financially capable of paying back their creditors at a rate that still allows them to earn above their state's median income (Sec. 102).

• Allows special accommodations for active-duty service members, veterans, and those with serious medical conditions (Sec. 102).

• Requires debtors to pay for and attend credit counseling prior to filing for bankrupcy (Sec. 106).

• Places domestic support obligations such as child support and alimony amongst the first priority claim category of non-dischargeable debts on a debtor filing for bankruptcy (Sec. 211).

• Caps home equity protection at $125,000 if the debtor purchased a house within 40 months of filing for bankruptcy (Sec. 322).

• Requires credit cards to include warnings, examples, and a toll-free number to address interest rates, repayment plans, and fees on monthly statements (Sec. 1301).

Full Bill Text

Full Bill Text