Herb Kohl: “The Senate finds that-- (1) one of the most flagrant abuses of the bankruptcy system involves misuse of the homestead…”

“The Senate finds that-- (1) one of the most flagrant abuses of the bankruptcy system involves misuse of the homestead exemption, which allows a debtor to exempt his or her home, up to a certain value, as established by State law, from being sold off to satisfy debts; (2) while the vast majority of States responsibly cap the exemption at not more than $40,000, 5 States exempt homes regardless of their value; (3) in the few States with unlimited homestead exemptions, debtors can shield their assets in luxury homes while legitimate creditors get little or nothing; (4) beneficiaries of the homestead exemption include convicted insider traders and savings and loan criminals, while shortchanged creditors include children, spouses, governments, and banks; and (5) the homestead exemption should be capped at $100,000 to prevent such high-profile abuses. (b) Sense of the Senate.--It is the sense of the Senate that-- (1) meaningful bankruptcy reform cannot be achieved without capping the homestead exemption; and (2) bankruptcy reform legislation should include a cap of $100,000 on the homestead exemption to the bankruptcy laws.”