WASHINGTON-House Judiciary Chairman Jim Sensenbrenner (R-Wis.) recently introduced a bill to prevent the abuse of involuntary bankruptcy filings. The Involuntary Bankruptcy Improvement Act of 2003 (H.R. 1529) states that if an involuntary bankruptcy case against an individual is dismissed as “false or contains any materially false, fictitious, or fraudulent statement,” the court will expunge the record of the petition and prohibit consumer reporting agencies from making any report of the petition. The legislation is aimed at preventing empty and harassing involuntary bankruptcy filings. According to NAFCU Senior Legislative Representative Murray Chanow, an involuntary bankruptcy occurs when as few as one creditor claims a borrower is sufficiently delinquent and asks for relief from the courts to divvy up the debtor’s assets to pay the debts. He explained that the issue was probably recently raised with Sensenbrenner and that the current standalone bill will probably be added to H.R. 975, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2003.

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