Sensenbrenner Introduces Legislation to Combat Frivolous Involuntary Bankruptcy Cases

News Advisory

For immediate release

Contact: Jeff Lungren/Terry Shawn

April 1, 2003

202-225-2492

Sensenbrenner Introduces Legislation to Combat Frivolous Involuntary Bankruptcy

Cases

WASHINGTON, D.C. - House Judiciary Committee Chairman F. James Sensenbrenner, Jr. (R-Wis.) today introduced legislation to combat the growing trend of

frivolously-filed involuntary bankruptcy cases. These frivolous cases can

potentially ruin an innocent person's credit rating and permanently damage his

or her reputation in the community.

     Chairman Sensenbrenner stated, "Under current law, anyone can be a potential

target of a frivolous bankruptcy case filed by someone acting in bad faith or

solely for the purpose of harassment. Even if the case is dismissed, a person's

credit rating, ability to obtain future credit, and reputation in the community

can be devastated severely. This legislation, H.R. 1529, addresses these

problems, thereby eliminating incentives for filing frivolous involuntary

bankruptcy cases against innocent persons."

     Under certain circumstances, a person can be involuntarily forced into

bankruptcy by the filing of an involuntary bankruptcy case against that person.

Nevertheless, even if the involuntary bankruptcy case is ultimately dismissed

because it was filed in bad faith, the fact that this person was the subject of

an involuntary bankruptcy case can be listed on that innocent individual's

credit report for up to ten years and otherwise be a matter of public record

indefinitely.

     Chairman Sensenbrenner's "Involuntary Bankruptcy Improvement Act of 2003"

combats this abusive practice in two ways. First, it amends the Bankruptcy Code

to require the bankruptcy court, at the debtor's request, to expunge from the

court's file all records and references relating to the filing of the dismissed

involuntary bankruptcy case if the petition commencing the bankruptcy case

contains false or fraudulent claims.

     Second, the bill amends the Bankruptcy Code to authorize a bankruptcy court to

prohibit any credit reporting agency from issuing a consumer report containing

any information relating to a dismissed involuntary bankruptcy case if the

debtor is an individual.