Senate Bill Protects WealthiestDebtors

WASHINGTON - (03/11/05) -- The bankruptcy reform bill passed bythe Senate Thursday will come down harder on consumer debtors,especially those near the poverty line, but maintains largeloopholes for the wealthiest bankruptcy filers. Senate Republicanssuccessfully beat back several amendments proposed by the Democratsthis week that would have closed some of these loopholes. Amongthem was a proposal to cap the homestead exemption at $125,000 inevery state, instead allowing the maintenance of unlimitedhomestead exemptions in six states which have been used by wealthydebtors to shield assets through bankruptcy. The Senate alsorejected amendments to prevent upper income debtors from creatingso-called asset protection trusts which are exempt from being usedto pay off debts in bankruptcy; and also increases to $1 millionthe value of retirement funds exempted from bankruptcyclaims.