New Bankruptcy Bill Introduced in Senate

A new bankruptcy law reform has been introduced to overhaul the nation’s bankruptcy code. This past week Senator Grassley (R-Iowa) introduced a bill which makes it more difficult for debtors to file Chapter 7 bankruptcy The bill aims to cut down on abusive and frivolous bankruptcy filing. Its principal change is a “means test” for people wanting to file Chapter 7 bankruptcy. People who earn less than the median income in their state are exempt from means testing. Especially important for people wanting to take advantage of Florida homestead protection, the bill proposes a limitation on the amount of money which can be exempted in bankruptcy under Florida homestead protection. The limitation applies only to people who have recently moved to Florida. The bills assault on homestead protection applies only to those debtors who file bankruptcy. The bill does not otherwise take away any of Florida’s constitutional homestead protection.

The Senate Judiciary Committee is scheduled to hold hearings on the bill on Thursday, February 13, 2005. The Committee’s chairman, Senator Spector, has indicated he would like the Judiciary Committee to vote on the bill by February 21, 2005. This bill does not include the controversial “abortion provision” sponsored previously by Sen. Schumer which helped defeat what was essentially the same bill during the previous Congress.