As reported, S. 420, the Bankruptcy Reform Act of 2001, will enact reforms to prevent upper-income creditors who have the means of paying some or all of their debts from unjustly filing for chapter 7 bankruptcy, will enact reforms to protect consumers from unfair credit practices, and will enact other bankruptcy reforms.
People commonly declare bankruptcy a month or so after they have lost good, high-paying jobs.
When they find new work, it is often at substantially lower salaries. Under this bill, though, they many be forced into repayment plans that are based on the expectation that their future earnings will be equivalent to their average earnings in the 6 months preceding bankruptcy. When they are in those plans, they simply will not have enough money to make the required payments. The Wellstone amendment would fix this problem by having the means test look only at income earned in the 2 months preceding a declaration of bankruptcy. This amendment is fair.