BANKRUPTCY “REFORM” BILL GONE FOR NOW; WILL BE BACK IN FEBRUARY

November 26, 2003

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Congress will adjourn this year without enacting legislation to force more bankruptcy filers to pay off more of their debts.

Yesterday the House filed the 2004 omnibus appropriations bill, apparently without the bankruptcy reform act. The Senate will not vote on the appropriations bill until it reconvenes in January.

The House passed a bankruptcy reform bill in March by an overwhelming 315-113 vote, but the Senate has now gone home for the holidays with no bankruptcy bill passed.

Senate sources say that supporters of bankruptcy reform now are looking to next year for persuading the Senate to act on the legislation, which has been approved by Congress three times in the past six years but has never been enacted.

Side issues, such as the Senate’s insistence that the legislation include a provision that prevents abortion clinic protesters from using bankruptcy to avoid paying court fines or judgments, have torpedoed the bill in the past.

Informed sources expect to see the reform bill come back in the period January – March, next year.

SOURCE: Kent Hoover, Washington Business Journal; NACBA

Editor’s Note: If you are considering filing for bankruptcy, do so BEFORE this new law would take effect; it will be far more difficult and expensive to file bankruptcy under the “reform” law, and depending on your situation, it may not be possible for you to “qualify” to file, at least under the chapter of the U.S. Bankruptcy Code that would be most beneficial to you.

The way that the “reform” law is written now, there is a 6 month waiting period, a “delayed effective date” between when the President signs the law (if in fact the U.S. Senate approves it in it’s current form, and/or approves a different bill, and the different bill is then approved by both the House of Representatives and the Senate), and it becomes law.

Therefore, even if the bill passes the Senate and is signed by the President, you should have sufficient time to file a bankruptcy case. That is assuming that there are no further changes to the bill, which is uncertain. It is unlikely, but it is possible that an amendment could be made at the last minute that would make the new Bankruptcy Reform law effective immediately.

If you are concerned about this, monitor this web site regularly, and I will do my best to keep you informed. Thank you, Tom Black