William G. Schwab and Associates
811 Blakeslee Blvd. Dr. East (PA Route 443) PO Box 56 Lehighton, PA 18235
Tel 610-377-5200 Fax 610-377-5209
Bankruptcy November 29, 2015
Personal Injury
Criminal Law
Elder Law
Estate Planning/Probate
Real Estate

Protecting the Public From the Abuses of Credit Repair Clinics Under the CROA

Credit repair clinics generally promise consumers that they will permanently remove negative information from credit reports, for a fee. A ...(more)


The Homestead Exemption and Shielding a Personal Residence from Creditors

Upon filing for bankruptcy under either Chapter 7 or Chapter 13, a debtor can face the risk of losing some ...(more)


Guidelines for Consumer Protection in Billing Disputes: the FCBA and the EFTA

The Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA) were enacted by Congress as a means to ...(more)


Appointing a Creditors' Committee to Control and Supervise Chapter 11 Reorganization

As the efficient administration of the Chapter 11 debtor's reorganization plan is crucial to the successful rebirth of the business ...(more)


Bankruptcy Law In The News

Former NFL Quarterback Vince Young Files For Bankruptcy

Central California Diocese Files for Bankruptcy

Duke Energy settles suit over Crescent bankruptcy

Detroit water department mediation to continue next week

Detroit bankruptcy plan threatens survivor benefits of families of fallen cops, firefighters

House Passes the Involuntary Bankruptcy Improvement Act

Although seldom used, a creditor can force an individual into Chapter 7 or Chapter 11 bankruptcy by filing an involuntary bankruptcy petition. For creditors, such a collection tool can prove effective in protecting debtor assets from dissemination and liquidation.

However, tax protestors and others have abused this collection tool by improperly using it against public officials and non-bankrupt individuals. Even though bankruptcy courts ultimately may dismiss these claims once fraudulency has been established, the individuals will still experience the ramifications of filing bankruptcy. As such, in early 2005, the Congress passed the Involuntary Bankruptcy Improvement Act as a subpart of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Objectives of Involuntary Bankruptcy Improvement Act
The objectives of the Involuntary Bankruptcy Improvement Act are twofold:
  1. To expunge all records of fraudulently filed bankruptcy petitions if the debtor is an individual
  2. To prohibit all credit agencies from issuing consumer reports regarding fraudulently filed bankruptcy petitions if the debtor is an individual and a bankruptcy court has dismissed the case
Provisions of the Act
The bankruptcy code provides that the court shall "seal all the records" relating to an involuntary petition against an individual that is dismissed by the court and "is false or contains any materially false, fictitious, or fraudulent statement." The court may also enter an order prohibiting all consumer reporting agencies from making any consumer report that contains any information relating to such a petition or to the case commenced by the filing of such a petition. Furthermore, the act gives the debtor, in certain circumstances, the right to file a motion to expunge any records relating to a petition filed under this section. Finally, the act specifically adds fraudulent involuntary bankruptcy petitions to Section 157 of Title 18, criminalizing bankruptcy fraud. Section 157 provides that a person found guilty of bankruptcy fraud may be fined or imprisoned for a term of not more than five years.

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