Bankruptcy–1970 Amendments to the Bankruptcy Act–an Attempt to Remedy Discharge Abuses
December 18, 1970, marked the end of a fifteen-year chapter in the history of American legislative proceedings dealing with “personal” bankruptcy. On that date Public Law Number 91-467 took effect and thereby instituted changes in the Bankruptcy Act designed to “effectuate more fully the discharge in bankruptcy by rendering it less subject to abuse by harrassing creditors.” The legislative steps leading to the 1970 amendment began with the introduction of the first “dischargeability” bill in 1955. This initial effort at reform stimulated a continuing flow of similar proposals leading to the ultimate acceptance of new substantive and procedural rules for discharge in bankruptcy. Prior response to the changes embodied in such proposals ranged from the belief that they were “revolutionary” to the view that they were merely a beneficial “updating [of] the procedural aspects of the discharge.” If the changes made by Public Law Number 91-467 were revolutionary, they effected a surprisingly quiet revolution: in both the House and the Senate, bills containing the reforms were favorably reported out of committee without hearings and were passed in their respective chambers without debate. However characterized, these recent amendments will have marked economic effects upon both lenders and consumer-borrowers. Consequently, this recent legislation warrants examination. To provide meaningful analysis, it is first necessary to examine the previous form and function of bankruptcy discharge as it applied to consumers.