As you may have already heard, Donald Trump is just weeks away from being sworn in as the new President of the United States of America. This is not a blog about President-Elect Trump’s politics. Instead, I will discuss how President-Elect Trump may affect bankruptcy laws in this country.
Previous Efforts at Bankruptcy Reform
The last major changes to the Bankruptcy Code were enacted by a Republican Congress and President Bush in 2005. Known in the business as “BAPCPA,” the Bankruptcy Abuse Prevention and Consumer Protection Act materially changes bankruptcy laws for the first time since the 1980s.
Among other things, BAPCPA enacted the much-decried Means Test and lengthened the time between eligibility for Chapter 7 filings from six years to eight years. BAPCPA was strongly supported by major financial institutions and opposed by consumer groups. Many folks describe the 2005 law as the “best law money can buy.”
What’s Next for Bankruptcy Reform?
Just as in 2005, Republicans in 2017 will control both houses of Congress and there will be a Republican in the White House. Does that mean that significant changes are in store for bankruptcy laws?
President-Elect Donald Trump is an avid and frequent user of our nation’s bankruptcy laws. Unlike most regular people though, Donald Trump filed bankruptcies for his various corporations under Chapter 11 of the bankruptcy code. BAPCPA, on the other hand, mostly made changes to Chapter 7 and Chapter 13 of the bankruptcy code (chapters under which most “regular” people file).
Will President Trump succumb to pressure to materially change bankruptcy laws to make them even less favorable to regular debtors? We will have to wait and see. On the one hand, a President Trump will likely be a populist. On the other hand, President-Elect Trump is nominating a whole stable of billionaires to his cabinet. Will President Trump’s advisors really be able to understand what it means to face a bankruptcy? Only time will tell.
Don’t let uncertainties about the future drive your financial decisions. Please contact my office at (916) 333-2222 to discuss whether bankruptcy is right for you.