Hurricane Katrina Bankruptcies
Jim Sensenbrenner, Republican chairman of the House Judiciary Committee claimed: "If someone in Katrina is down and out, and has no possibility of being able to repay 40 percent or more of their debts, then the new bankruptcy law doesn't apply.
The Justice Department's US Trustee program has since said it would not attempt to enforce the means test rules for disaster victims, including those affected by Hurricane Katrina. The Justice Department Trustees oversee the administration of bankruptcy law and are able to file the motions necessary to enforce the means test. Despite these assurances, bankruptcy judges are still able to enforce these rules sua sponte.
The Department of Justice also indicated it would not oppose a debtor's eligibility to file bankruptcy because the debtor did not fulfill the credit counseling requirements before filing. U.S. Trustees have the discretion to grant waivers of the credit counseling requirements to debtors. See 11 U.S.C. ยง 109(h)(2).
Read more about this topic: Bankruptcy Abuse Prevention And Consumer Protection Act
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