Bankruptcy Relief and Natural Disaster Victime (CRS Report for Congress)
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| Release Date |
Revised Nov. 14, 2005 |
| Report Number |
RL33082 |
| Report Type |
Report |
| Authors |
Robin Jeweler, American Law Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
In the wake of Hurricanes Katrina, Rita, and Wilma, many questioned whether implementing
the
new procedures of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), P.L.
109-8 , which became effective on October 17, 2005, should have been delayed or revised.
This report considers whether bankruptcy law in general, and the BAPCPA in particular, may
present unique challenges to financial recovery for those whose life, livelihood, and/or home have
been damaged or destroyed.
To some extent, the new goals of the BAPCPA, which is designed to restore personal
responsibility to individual's financial affairs and reduce the number of chapter 7 filings, may be at
odds with the goals of those who want to assist Katrina victims through a speedy financial
rehabilitation procedure under chapter 7 of the U.S. Bankruptcy Code.
The BAPCPA is an extremely lengthy, complicated, and technical overhaul of bankruptcy
practice. Many of its provisions will undoubtedly be of assistance to debtors, while others are more
problematic. This report reviews just a few elements of the new law in areas such as burden of
proof, debt forgiveness, flexibility, transaction costs, and small business reorganization and considers
their implications for disaster victims. It concludes that it may be impossible to predict how the
implementation of a new bankruptcy system will impact Katrina victims, whose specific needs in
a bankruptcy context are not yet known.
To date, several bills that address the issue of bankruptcy relief for Katrina victims have been
introduced. These bills include provisions to push back the effective date for implementation of the
BAPCPA, and to make substantive changes to the Bankruptcy Code for the benefit of disaster
victims. This report will be updated as events warrant.
