WASHINGTON (11/29/07)—Senate Banking Committee Chairman Christopher Dodd (D-Conn.) announced Wednesday that he plans to introduce bankruptcy reform legislation that would affect five changes in the country’s bankruptcy code. The bill is intended to establish a safety net for families who have fallen on hard times and offer those who file for bankruptcy a second chance at establishing financial security, Dodd said in a release. Dodd said his bill would:
* Allow judges to consider debtors individual circumstances when determining their ability to pay to ensure that families have enough to meet their children’s needs; * Ensure that child support and alimony payments are settled first and are not eligible for distribution to creditors; * Ensure that medical debts can always be discharged in bankruptcy; * Treat mortgages like other secured debt so that bankruptcy courts can restructure mortgages to help borrowers stay in their homes; and, *Make private student loans dischargeable.
“Financial hardship can strike even the most diligent and hardworking Americans,” said Dodd. “Most often, individuals are forced into bankruptcy by a devastating medical event or the loss of a job. Our bankruptcy laws should not punish these vulnerable members of our society, but instead should help them get back on their feet while protecting them and their families from added suffering at the hands of creditors.” The Credit Union National Association (CUNA) has urged Congress to use the care and precision of a good surgeon in pursuing efforts to address the current subprime mortgage crisis through changes in nation's bankruptcy laws. CUNA President/CEO Dan Mica told lawmakers recently that CUNA has "considerable concerns" with any legislation that would open the Bankruptcy Code to amendment so soon after major revisions were enacted through the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. That law went into effect in October of that year. The CUNA leader sent the credit union letter to Capitol Hill as the House Judiciary Committee was wrestling with a bill to allow mortgage restructurings under the bankruptcy code. The Emergency Home Ownership and Mortgage Equity Protection Act (H.R. 3609) would also give judges power to modify certain terms in existing mortgages.