Sec. 101. Findings and purpose
551 words·~3 min read·
/bill/116/hr/8902/ih/section-101A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Congress finds that— individuals and families are often in financial distress for reasons outside of their control, such as job loss, medical bills, or educational debt, and an effective bankruptcy system not only provides those individuals and families with a fresh start but also ensures that they can participate fully in the United States economy; the Bankruptcy Code was adopted in 1978, and, since then, consumer lending has grown dramatically and been transformed by technology and the preemption of State usury and consumer protection laws for certain types of lenders; unnecessary paperwork and overly complex laws increase the cost of bankruptcy and prevent individuals and families in the United States who need help from accessing the bankruptcy system; many consumer debtors cannot afford bankruptcy counsel and must instead save up to pay an attorney to file their bankruptcy petitions; the dual-track bankruptcy system produces racially disparate outcomes that disadvantage people of color; student loan debt burdens are creating distortions in the labor and housing market; the nondischargeability of private student loan debt has not resulted in lower financing costs for student loan borrowers; the inability of debtors to restructure home mortgage loans has led to unnecessary foreclosures that have created hardships for individuals and families and their communities without reducing costs of mortgage financing; individuals and families often rely on their cars to get to work and to get dependents to school and medical appointments but often cannot retain their cars in bankruptcy without paying substantially more than the car is worth; the difficulty of enforcing the discharge injunction has enabled illegal debt collection activity that undercuts the fresh start policy of bankruptcy; existing law does not provide a sufficient deterrent to predatory creditors that harm individuals and families in bankruptcy by violating consumer financial laws or failing to comply with bankruptcy rules; and well-counseled, affluent debtors can avoid repaying creditors through asset protection planning.
The purpose of the Act is to establish a bankruptcy system that helps individuals and families in the United States regain financial stability and protects against abusive and predatory behavior by— streamlining the process of filing for bankruptcy, simplifying court procedures in bankruptcy, and lowering the cost of bankruptcy for both consumers and creditors; creating a single-chapter consumer bankruptcy system that allows consumers greater flexibility in addressing their debts and prevents disparate treatment of similarly situated consumers; offering consumers more and better options to deal with debts, while ensuring the fair treatment of creditors; making it easier for consumers to pay an attorney for counsel or representation in a bankruptcy case; simplifying the identification and treatment of cases by expanding the number of routine cases that are handled by the court in which there is no chance of a reasonable payment to creditors and reducing paperwork requirements in those routine cases; allowing the modification of mortgages on all residences; allowing the modification of car loans based on the market value of a car; allowing the discharge of student loan debt on equal terms with most other types of debt; reducing racial, gender, and other harmful disparities in the availability, accessibility, costs, and outcomes with respect to the bankruptcy process; ensuring the fair treatment of claimants for domestic support obligations; reducing abusive creditor behavior; and closing bankruptcy loopholes that allow the wealthy to exploit the bankruptcy process.