House Passes Bankruptcy Bill
The House on March 19 approved H.R. 975, the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2003,” by a vote of 315-113. The bill includes two housing provisions relevant to home builders.
Under the first provision, home owners who filed for bankruptcy within 40 months of buying a home would be able to protect no more than $125,000 of home equity from creditors. This measure is intended to prevent debtors who file for bankruptcy as a result of fraud or criminal activity from sheltering their financial assets in a principal residence in a state such as Texas or Florida, where an unlimited amount of home equity is protected.
Existing state homestead laws would apply for those who file for bankruptcy and have lived in their home for more than 40 months.
The second provision would prevent renters from manipulating the bankruptcy process to avoid paying rent by enabling landlords to expedite evictions of residents who, during the bankruptcy process, haven’t paid rent or have used drugs or damaged property.