Will Chapter 13 bankruptcies change under Trump?

After the 45th president's first hundred days has passed, American consumers can expect the administration to get down to brass tacks with its agenda.

While most bankruptcy professionals have not seen concrete signs that President Trump intends to initiate massive changes with the current system in place affecting consumer bankruptcies, there still are many subtle influences he could wield from his post.

Executive orders have proven to be an expedient way to achieve desired results for recent presidents. However, the internal workings of the bankruptcy courts rest largely with the way the Department of Justice interprets and administers the law.

Trustees are DOJ appointees. They can determine that a consumer's Chapter 7 bankruptcy must be filed as a Chapter 13 bankruptcy. The Means Test is used to identify those consumers who are able to repay some of their debt.

The Means Test indicates whether debtors are presumed to have enough resources to make some restitution to creditors. Abuse of the bankruptcy system is not allowed. However, debtors can offer evidence that overcomes the presumption of abuse not taken into account by the Means Test calculation.

If challenged, debtors must overcome the presumption or file for Chapter 13. Creditors, bankruptcy judges and trustees all may challenge debtors. Should the Trump administration, under right-leaning Attorney General Sessions, take a more hard-line approach to debtors -- via challenges and audits -- it is indeed possible consumers could notice negative repercussions.

That's why it's best not to leave your financial fate up to other forces. Examine all of your legal options to make sure that you make the best choice.

Source: The Balance, "How Will President Trump Change Bankruptcy?," Carron Armstrong, accessed April 20, 2017

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