President Embraces Bankruptcy Reform
President George Bush signed a bill to stop abuses in the bankruptcy system and make it harder for consumers with median incomes to avoid repaying at least a portion of their debts.
The president said the bankruptcy reform bill will stop abuses that have allowed too many people to walk away from their debts.
"By making the system fairer for creditors and debtors, we will ensure that more Americans can get affordable credit," the president said at a bill signing ceremony.
The House passed the bill by a 302-126 vote and the Senate passed the bill by a 74-25 vote.
American Financial Services Association president and chief executive Randy Lively said the signing of the bill (S. 256) culminates an eight-year lobbying effort to reform the bankruptcy code. "The new law will bring sweeping changes to an overburdened, antiquated system while encouraging accountability and responsibility," he said.
Personal bankruptcy filings in 2004 totaled nearly 1.6 million.
Passage of the 500-page bankruptcy bill is a major victory for the credit card and auto lending industries. But there are provisions that will benefit mortgage lenders and servicers.
One provision sought by the Mortgage Bankers Association removes a $4 million cap on single-asset bankruptcies so that owners of large commercial properties cannot drag out the bankruptcy process and foreclosure at the lender's expense.
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