Changes to Bankruptcy Code to Benefit Debtors

Congress surprisingly changed the Bankruptcy Code in ways that can be helpful to debtors.

In the HAVEN act, Congress allows a veteran’s disability income to not be counted on the means test in the same way social security income is not included in that test.

This will benefit many veterans by permitting them to file Chapter 7 instead of forcing them into a potentially unaffordable Chapter 13 plan.

Congress also passed the Small Business Reorganization Act. This creates a new subchapter of the Chapter 11 program. Small Chapter 11 cases can avoid the more complicated Chapter 11 process and opt for a financial reorganization that is similar to Chapter 12 bankruptcy. Chapter 12 is a flexible tool to help farmer and fishermen resolve their financial problems. The new small business Chapter 11 will loosely resemble Chapter 12 and may give debtors more options than previously available and can minimize creditor objections to the reorganization process.

Molleur Law Office regularly files Chapter 11 cases and will help clients determine the best financial choices available to them in Chapter 11, whether it is a traditional larger Chapter 11 case, or the new, more streamlined option just enacted by Congress.