Bankruptcy Reform Passes!
Congress has passed legislation reforming the nation's bankruptcy laws. The issue has been debated steadily for the last eight years. The House avoided further delay of the matter by approving legislation already passed by the Senate. President Bush has announced that he will sign the legislation into law. At the center of debate has been the growing abuse of bankruptcy by debtors who do have the capacity to fulfill their credit obligations. Essentially, far too many people have been playing the system, repeatedly running up amazing amounts of debt and filing for bankruptcy to avoid repayment. The bill creates a needs test to determine who should be eligible for Chapter 7 to vacate all existing debt, and who should be required to file for Chapter 13 and establish a court-monitored repayment plan. The needs test assumes that people can repay their debts if they earn more than the median income for their state and have $100 per month left over after paying living expenses and priority payments like child support, alimony and taxes. People who fail to meet this test or who earn less than the state median may still file directly for Chapter 7 bankruptcy relief.
Women & Children First
The top priority for framers of the bankruptcy bill was to protect financial lifelines for women and children by granting priority in bankruptcy proceedings to child support and alimony payments over all other obligations.
No Piling-On
A common practice of serial bankruptcy filers is to go on shopping sprees for non-essential luxury items just prior to filing. Current law says charges or cash advances taken in excess of $1,000 within 60 days of filing for bankruptcy cannot be eliminated. The new law will change that to charges over $500 within 90 days for credit cards and $750 within 70 days for each line of credit.
Homesteading Limits
Some states have no limit on the amount of equity in a primary residence that can be protected from creditors. People who play the bankruptcy game know which states they are, and purchase expensive homes there before a big filing. The new law will say that a bankruptcy filer who moves will be governed by their original state’s homestead exemption for two years, and then limited to a $125,000 limit for 16 months after that.
There are several other significant changes made by the bankruptcy reform bill.
Contact the NHBA if you want a summary to review.
House Passes Budget
The NH House today passed a state operating budget for the next two years. It does not include any increase in business taxes. In fact, business taxes were only mentioned in the context that the state can't go back to that source of revenue again. The House did vote to increase the tobacco tax. Several amendments that would’ve misaligned the balanced budget plan were defeated during a full morning of floor debate. The package now moves to the Senate, where the NHBA will continue to monitor for any hint that business tax increases might be discussed.
Gilleran Resigns
The Director of the Office of thrift Supervision (OTS), James Gilleran, announced this week that he is resigning and will leave office on April 29th. Gilleran has served as head of the OTS since 2001. During his tenure, the OTS asserted its ability to interpret statute to provide its banks with a flexible and responsive regulatory environment and a progressive mix of financial products and services. He led all other regulatory agencies in promulgating new rules that reduced Community Reinvestment Act (CRA) compliance burdens for small community banks.
New Hampshire Bankers Association 15 North Main Street, Suite 204 P.O. Box 2586 Concord, New Hampshire 03302-2586 For more information on above items: call (603) 224-5373, fax (603) 224-3381 or E-Mail jlittle@nhbankers.com. |
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April 20, 2005
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