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House Rejects, Then Approves Bankruptcy Bill

On November 15, in the early hours of the morning, the House approved, 244-116, a bankruptcy reform bill (H.R. 333) that eliminates controversial language designed to prevent protesters, including anti-abortion protesters, from filing for bankruptcy to avoid paying court-ordered fines.

The House-approved measure is an amended version of the bankruptcy conference report (H.R. 333) that included the language that the House rejected, 172-243, only nine hours earlier.

The House-approved legislation is designed to prevent bankruptcy abuse by requiring more filings under Chapter 13, rather than Chapter 7. Under Chapter 13, debtors are required to repay a significant portion of debt, while most debt is excused for Chapter 7 filers.

The bill would designate child support payments as the top debt to be repaid by bankruptcy filers and would expand the definition of domestic support obligations to include debts owed or recoverable to a government agency. The measure also would allow a debtor to legitimately claim as necessary expenses those expenses incurred to maintain the safety of the debtor and the debtor’s family from domestic violence and expenses up to $1,500 per child per year for public or private elementary and secondary school.

Additionally, the bill would protect most tax-exempt retirement savings accounts from creditor claims and would protect most education savings account deposits made one-year prior to filing for bankruptcy.

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