The Code should have clear standards in this area and must provide adequate sanctions for untenable creditor claims. Protections against post-bankruptcy discrimination should be clarified and strengthened. Code section 525 was intended to provide broad protections to bankruptcy debtors and former debtors against governmental and private employer discrimination. However, section 525 has been very narrowly interpreted by some courts. If the fresh start is to work effectively, former bankruptcy debtors must be free from discrimination based on bankruptcy as they go forward.
Effective exemptions are necessary in states which opt out of the federal scheme.
States such as Maryland, South Carolina, Ohio and Delaware have opted out of the federal exemption scheme, but provide no meaningful state law alternatives. This precludes many residents of those states from obtaining a meaningful fresh start. The commission should recommend that a floor be set on the opt-out from the federal exemptions so that states cannot impose limitations which are more restrictive than those available under the Code. Improving the Chances of Success for Debtors in Chapter 13 Most debtors choose chapter 13 in order to save the family home or an automobile which is used to get back and forth to work. The consequences of failure are therefore severe.