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Dodd Announces New Bankruptcy Reform Legislation

December 3, 2007

WASHINGTON, D.C. – Senator Chris Dodd (D-CT) plans to introduce bankruptcy reform legislation that will help put bankruptcy laws back on the side of hardworking Americans. Senator Dodd’s legislation will institute five critically important reforms that will establish a safety net for families who have fallen on hard times and offer those who file for bankruptcy a second chance at establishing financial security.

“Financial hardship can strike even the most diligent and hardworking Americans,” said Dodd. “Most often, individuals are forced into bankruptcy by a devastating medical event or the loss of a job. Our bankruptcy laws should not punish these vulnerable members of our society, but instead should help them get back on their feet while protecting them and their families from added suffering at the hands of creditors.” Senator Dodd’s bill will:

• Allow judges to consider debtors individual circumstances when determining their ability to pay to ensure that families have enough to meet their children’s needs;
• Ensure that child support and alimony payments are settled first and are not eligible for distribution to creditors;
• Ensure that medical debts can always be discharged in bankruptcy;
• Treat mortgages like other secured debt so that bankruptcy courts can restructure mortgages to help borrowers stay in their homes; and,
• Make private student loans dischargeable.

Dodd’s reform initiative would seek to undo the most pernicious aspects of the recent bankruptcy legislation that was passed in 2005. Dodd opposed and voted against this bill, in addition to voting against similar measures in 2000 and 2001.