BANKRUPTCY UPDATES

• Minnesota Distillery of Fine Vodkas Files Chapter 7 Bankruptcy (February 10, 2012)
• Court Approves Newspaper Magnate Lee Enterprises’ Bankruptcy Plan (February 07, 2012)
• Suspected Felon Filed for Bankruptcy Shortly Before Untimely Death (February 09, 2012)
• Ireland Overhauls Bankruptcy Laws (February 06, 2012)
• IL State Representative Files for Chapter 13 Bankruptcy (February 08, 2012)

Obama Addresses Possible Bankruptcy Law Changes

While everyone knows that campaign promises are sometimes just promises, Democratic presidential candidate Barack Obama has been speaking repeatedly about his plans to overhaul small portions of the way that the government regulates the economy; and collectively, these plans add up to big changes.

The most recent instance came when Obama spoke in Powder Springs, Georgia about bankruptcy protection for those filing bankruptcy.

Obama revealed how he would provide greater protections for senior citizens, military families and victims of natural disasters when filing bankruptcy - all groups of people who have found themselves in need of extra help amidst financial turmoil and whom current bankruptcy laws treat the same as all others.

Obama's plans for the specific groups he mentioned are the following:

• Senior citizens - With an increase in the number of seniors between 55-84 filing bankruptcy between 1991 and 2007, the needs of this population are important to take into account. Obama noted that he would work hard to help seniors keep their homes when coming out of bankruptcy, continually hitting on the theme of homeownership as being a "cornerstone of retirement," according to an Atlanta Journal-Constitution article. He specifically talked about elderly over the age of 62 receiving a minimum federal homestead exemption equal to the median cost of a home in the state with the goal of making it easier for them to keep their homes and maintain financial independence and security.
• Military families - As the foreclosure rate for military families surges to nearly four times the U.S. rate, Obama spoke in terms of a "fast-track bankruptcy practice" for military families that would include, among other things, exempting them from the Chapter 7 means test, removing paperwork that he deemed "unnecessary," and allowing them to keep a greater share of their home's value through a minimum homestead exemption.
• Victims of Natural Disasters - As he indicated with military families, Obama talked about streamlining the filing process for families in certified natural disaster areas by eliminating paperwork and waiving credit counseling requirements which an Associated Press story described him as respectively calling "unnecessary" and "unneeded."

In short, Obama's extra protections for these specific groups of people are very similar to what he's talked about doing in the past for people facing bankruptcy as a result of staggering medical bills brought on by unexpected illnesses.

His proposals were similar in nature to other bankruptcy reform legislation proposed by fellow Illinois Senator Dick Durbin to allow bankruptcy courts to modify the mortgages of a debtor's primary residence.

Quoted in a Wall Street Journal article, law professor Robert Lawless of the University of Illinois and The Credit Slips Blog indicated how Obama's targeted proposals are about as far as someone can go without saying that he would undo the 2005 bankruptcy law.

Obama and The New Bankruptcy Law

Obama specifically mentioned the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) in his criticism of the bankruptcy regulations, casting Republican opponent John McCain as a friend of the credit card industry with his vote in favor of the bill.

McCain's campaign quickly retorted via email that 18 Democrats voted for that very same bill. Of course, despite the historic nature of the 2008 elections, it seems to be politics as usual.

For more information on the stances of the presidential candidates on such issues, check out the following resources:

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