On Saturday, November 7th, Joe Biden was declared the winner of the presidential election by all major news outlets. According to Joe Biden’s official campaign website, Biden plans to adopt the bankruptcy reform proposal brought forth by Senator Elizabeth Warren.
Warren believed the 2005 bankruptcy bill, originally sponsored by President-elect Biden, made it harder for individuals to obtain a full discharge. Under the current laws for bankruptcy court, bankruptcy filers who want to file under a Chapter 7 must meet certain requirements under a means test. If the debtor currently makes less than the median income in their state, the debtor can file for bankruptcy under Chapter 7. However, if the debtor makes above the median income in their state, and the debtor can afford monthly payments, they have to file a chapter 13. The bill also requires filers to take a credit counseling course through a government-approved program.
The 2020 bankruptcy reform plan is firmly intended to reshape the system by replacing Chapter 7 and 13’s with a single path to personal bankruptcy. The Biden/Warren plan makes it easier to get relief through bankruptcy by streamlining the process, reducing the cost, and providing more flexibility. This plan tackles all the issues Warren had objected to back in 2005 like eliminating spending limits to expand a debtor’s rights to take care of themselves and their families, creating uniform federal homestead exemptions that vary by county to let people protect their assets so they can start back up on firm foundations, and closing loopholes so the wealthy and corporate creditors don’t abuse the system. The plan also intends to address racial and gender inequalities in the system which was proven by studies in ProPublica to disproportionally affect black Americans. Biden promises that as president there is an extensive plan set in place that imposes more accountability and fewer obstacles in the bankruptcy process so that the system is fair and accessible.
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