Chuck Grassley: “The efforts of Senator Dole and Congressman Synar ultimately resulted in the creation of Section 707(b) of the…”

“The efforts of Senator Dole and Congressman Synar ultimately resulted in the creation of Section 707(b) of the Bankruptcy Code. This section gives bankruptcy judges the power to dismiss the bankruptcy case of someone who has filed for chapter 7 bankruptcy if that case is a 'substantial abuse' of the bankruptcy code. While this idea sounds good, it has not worked well in the real world. First, nobody knows what the term 'substantial abuse' actually means. So we have conflicting court decisions around the country and people just aren't sure what the rules are. Second, creditors and private trustees are actually forbidden from bringing evidence of abuse to the attention of a bankruptcy judge. The Consumer Bankruptcy Reform Act corrects these shortcomings. Under this bill, 707(b) now permits creditors and private trustees to file motions and bring evidence of chapter 7 abuses to the attention of a bankruptcy judge. This change is very important since creditors have the most to lose from bankruptcy abuse, and private trustees are often in the best position to know which cases are abusive in nature. Additionally, the bill requires judges to consider repayment capacity of bankrupts in chapter 7.”