Advocates and observers in Memphis will be watching this week as the debate over new legislation that could make it harder for consumers to erase debts through bank-ruptcy is taken up by the full U.S. Senate.
Last week the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S.256), which constitutes the first major revision of U.S. bankruptcy law in more than a decade, cleared the Senate Judiciary Committee by a 12-5 vote.
The major intent of the new measure is to require people who can afford to make some payments toward their debt to make those payments, while still affording them the right to have the rest of their debt erased.
It also would limit cram-downs of car loans, provide for netting of derivatives contracts and authorize more credit counseling.
Immediate winners from the legislation would be banks and major credit card and auto finance companies, says analyst Cory Shipman of the Stanford Group.
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