Chapter 10 Bankruptcy

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You've heard of the most common Chapters of the Bankruptcy Code, Chapter 7 and Chapter 13.  You've probably even heard of the businesses that file Chapter 11 and 12.  But Chapter 10?  

Chapter 10 is a proposal introduced into Congress that if approved and signed into law, would completely revamp the current set of bankruptcy laws as we know it.  Officially, the proposal in Congress is known as the Consumer Bankruptcy Reform Act of 2020.  This 188 page proposal creates a new Chapter 10 bankruptcy that would replace the current Chapter 7 and Chapter 13 tracks into one approach that focuses on a "minimum payment obligation" based on an analysis of whether the person filing bankruptcy has non-exempt assets or income that would enable them to pay their debts in the bankruptcy.  Under the plan, if the analysis determines that a Debtor (the person filing bankruptcy) does not have sufficient income or assets to maintain a minimum payment obligation, then that person would get an immediate discharge. The idea is that if someone files bankruptcy and can't afford to repay their creditors, then they should be able to move forward quickly and at low cost to get the relief they need.  For those that the analysis determines should have some ability to pay back debt, even a partial amount of debt, they would be required to propose a plan of repayment, similar to the current Chapter 13, but with more options.

Lewis Legal Services is keeping a close eye on these developments and will be ready for any changes as they come.