Bankruptcy Act Of 2005 Disclosure And Homestead Exemption
The legislation would amend the Truth in Lending Act (TILA) to require enhanced minimum payment disclosures under an open end credit plan; enhanced disclosures regarding the tax deductibility of credit extensions which exceed the fair market value of a dwelling for credit transactions secured by the consumer’s dwelling; disclosures related to introductory “teaser” rates; disclosures related to Internet-based open end credit solicitations; and disclosures related to late payment deadlines and penalties. TILA would also be amended to prohibit the termination of a credit account because the consumer has not incurred finance charges.
Wealthy individuals to shelter millions of dollars in expensive homes to avoid repaying their creditors have used the homestead exemption. S. 256 includes a lengthened residency requirement to take advantage of state exemptions, an extension of the time to prove a fraudulent transfer to 10 years, and a cap on the homestead exemption to $125,000 in equity if the house was acquired within three and a half years of filing bankruptcy. The legislation would also impose a firm $125,000 cap on an individual who is convicted of specified felonies (including violations of federal securities laws) or who commits criminal acts, intentional torts, or willful or reckless misconduct that caused serious physical injury or death within 5 years preceding the bankruptcy filing.