Bankruptcy

OBAMA PROMISES CHANGES TO BANKRUPTCY LAWS

By J. Michael McBride

During a speech in Powder Springs, Georgia, on Tuesday, Barack Obama promised changes to the nation’s bankruptcy laws in an effort to help military families, senior citizens, and victims of natural disasters.

Obama accused Senator McCain of backing the interests of the banking industry and credit card companies “at the expense of hardworking Americans.” Those comments were made in reference to McCain’s support of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, which tightened the country’s bankruptcy laws and made filing more difficult and expensive for many debtors. Obama had voted against the measure.

Obama’s new proposals include speeding up the bankruptcy process for military families and exempting them from a “harsh means test, unnecessary paperwork, and token counseling.” Military families would also qualify to use the federal exemption scheme, regardless of their home state.

Other proposals concern victims of natural disasters, such as Hurricane Katrina, and would waive “unnecessary paperwork” and “unneeded credit counseling requirements.” He also promised a 120-day moratorium on “adverse credit actions from collectors, such as foreclosure” to help such victims recover.

These new proposals supplement previous bankruptcy changes promised by Obama, such as giving more help to people who find themselves in financial distress because of medical bills, and allowing homeowners in bankruptcy to renegotiate the terms of their mortgages.

Obama also proposed that if debtors are over the age of 62, they would have a better chance of keeping their homes in bankruptcy. His comments come at a time when the AARP has announced that the economy is hitting senior citizens particularly hard. Of the more than one million Americans who filed for bankruptcy in 2007, nearly 25% were over age 55, and filings among those ages 75 to 84 increased by 433% from 1991 to 2007.

http://ap.google.com/article/ALeqM5hiBZp5QJXYZRlj_zYa0ebd-0RsfwD91POFAG0
http://www.msnbc.msn.com/id/25804814/print/1/displaymode/1098/

Kathleen Munden

Full post as published by Texas Lawyer Blog on August 06, 2008 (boomark / email).