Consumer: Bankruptcy Fraud
| ID | Name | Group | Other | Code
Sec |
Cross
Ref | Problem
Referenced | Proposed
Solutions |
NBRC-
0073 | Charles G. Milden | Chapter 11 and
Chapter 7 debtor |
|
|
| Asserts that Ch. 11 case was fraudulently converted to 7 by the
UST. Bigger problem than debtor fraud is fraud by USTrustee; trustees,
and attorneys who seize and squander honest debtors
estates. | Asks to address Commission at
October meeting in San Diego. No specific solutions
suggested. |
NBRC-
0102 | Trevor A. Grimm | C.E.O., California
Apartment Law Information Foundation |
|
|
| Problem of unlawful detainers,
namely, tenants who abuse the bankruptcy system by filing petitions in
order to delay eviction proceedings. | CALIF
will be providing the NBRC with an unlawful detainer study that contains
the latest figures on the prevalence of this abuse. |
NBRC-
0113 | Joseph Fischer | Debtor |
|
|
| The Bankruptcy Code and Rules allow trustees, judges and lawyers
to defraud debtors. | Amend Bankruptcy Code to
eliminate bankruptcy crimes of trustees, judges, and
lawyers. |
NBRC-
0116 | Kenneth J. Doran | Doran Law
Offices | Participated at Consumer Bankruptcy
Working Group on July 19. |
|
| Audits of debtors' financial backgrounds should NOT be required
in consumer bankruptcy cases. | The costs of
auditing debtors would outweigh the benefits. Chapter 7 trustees, who
are best situtated to determine the need for audits, do not believe they
are necessary. If audits were required in consumer cases, a pilot
program should be run prior to nationalizing such
requirement. |
NBRC-
0132 | Steven D. Goldstein | President, Credit
Department, Sears Roebuck & Co. | Heard
Brady speak at National Retail Fed'n Credit Mangmnt Advisory
Council | 707(b) |
| While the bankruptcy courts
should as a matter of policy, provide deserving debtors who have been
the victims of financial catastrophe with a fresh start, enforcement of
the corrollary policy to deny overworked and, in some cases, the least
motivated participants in the system, the trustees and the judges.
Creditors have the motives and the resources to assist in enforcing this
aspect of bankruptcy. | Amend section 707(b)
to permit a creditor to file a motion for dismissal of a case on the
grounds of substantial abuse. Provide a definition of substantial abuse
specifically including: 1. Fraud, loading up, hiding assets or disposing
of secured assets; 2. lack of either ability or intent to repay at the
time the debt was incurred; 3. Failing to adhere to the bankruptcy code
or rules to the detriment of the creditor; and 4. ability to repay a
greater portion of the debt if the case were filed as a ch. 13. Further
amend section 1328(a)(2) to extend applicability of the provision to ch.
13 cases. |
NBRC-
0161 | Raymond P. Bell, Jr. | Nationsbank Card
Services, Recovery Department |
|
|
| US Trustee or FBI is not
required to disclose acts of fraud relating to persons involved in the
trustee system. | Require the UST or the FBI
to publish and make available to creditors any fraud or embezzlement
convictions relating to trustees and/or employees of the trustee
system. |
NBRC-
0188 | David A. Szwak | Attorney |
|
|
| Credit industry needs new procedures to combat application fraud,
theft of identity, and resulting credit report errors. The author lists
a number of issues that he feels should be addressed:
1) Why won't credit bureaus suppress unverifyable or inaccurate data
2) Why won't credit bureaus use their manual credit reporting system to
protect the victims of identity theft
3) Why don't all retailers require identification at the point of sale
4) Why are credit bureau data matching algorithms allowed to operate on
a minimum number of points of correspondence between files and incoming
inquiry fields
5) Why are some retailers allowed to capture digitized signatures
without any warning to or consent from the consumer.
6) Why isn't the Federal Trade Commission pushing to increase external
risks to credit industry members who operate recklessly in creating and
fomenting credit fraud
7) Why are credit card bureaus allowed to operate with an error rate of
50%-90%, according to industry experts
8) Why should a deleted piece of information ever reappear in a credit
report due to a creditor's continued automated reporting or a credit
bureau's failure to use suppression procedures
9) Why are credit bureaus allowed to automatically update and use an
"address slide" function to insert unverified identification
information directly into consumers' credit reports
10) Why are credit bureaus allowed to simply mimic subscribers and
automatically insert data into consumer reports based upon unverified
data in subscriber inquiry fields or metro tape reporting of trade lines
11) Why are subscribers allowed to generically report public record
items which frequently are posted across multiple reports due to minimum
points of correspondence on record
12) Why aren't credit bureaus using procedures to suppress and prevent
(or lock in) personal data in their files so as to prevent
"updating" accurate personal data with bogus data thereby
"legitimizing" fraud-related identifiers
13) Why are credit bureaus allowed to operate under the premise that
"maximum information equals maximum accuracy"
14) Why doesn't the credit industry use point of sale identification as
a minimum procedure to prevent low-tech fraud
15) Why do credit bureau reporting systems continue to allow automated
application scoring of files which are "flagged" with fraud
alerts
16) Why should a creditor rick losing thousands of dollars in extending
instant credit when a credit file discloses a fraud alert
17) Why should Congress pass more federal legislation to force
creditors to act reasonably (It is clear that only external risks, such
as litigation by fraud victims, will force credit bureaus and creditors
to correct these problems.)
18) Why don't credit bureaus use their system as a notice to duped
creditors and inquirers that a particular victim's identity has been
stolen and that all credit reporting is suspended pending resolution of
those claims
19) Why should law enforcement attempt to investigate and prosecute
credit defrauders when credit industry members refuse to assist
20) Why do law enforcement members believe that the creditors are the
"real" victims of theft of identity
21) Why are creditors trying to recoup fraud losses from fraud victims
22) Since credit bureaus chose to be in the business of compiling and
reporting data, they must accept the repsponsibility of correcting
erroneous information reported by their subscribers.
23) Why do credit bureaus only require a 7 of 9 match on social
security numbers | The most logical way to
combat credit application fraud and theft of identity would be to allow
fraud victims to "bring civil actions...and force the credit
bureaus and duped creditors to pay damages when they act improperly in
providing the defrauder the victim's personal information and/or
thereafter refuse to prevent the creation and use of fraudulent accounts
and report inaccurate data about the victim...." The onus should
be on credit industry and not the fraud victim to spend time and money
"cleaning up the mess created by the credit
industry." |
NBRC-
0371 | Jean Braucher | Author of Letter to the
Editor in the Wall Street Journal, and University of Cincinnati Law
School Professor |
|
|
| In this editorial, the author responds to a previous editorial
from Diana Culp Bork, who had attributed the rise in personal
bankruptcies to a decrease in social stigma. Ms. Bork recommended that
this problem be resolved by forcing more debtors to choose chapter 13
over chapter 7. The author concludes that Ms. Bork's editorial was
flawed and incorrect because economic factors such as downsizing have
caused the increase in bankruptcy filings. | The author concludes that debtors should not be forced to choose
chapter 13 over chapter 7 because many debtors are financially strapped,
and "adopting legal changes to catch the small fraction of cases
involving abuse won't change that fact and could impose large costs on
the bankruptcy system." |
NBRC-
0371 | William C. Whitford | Author of Letter
to the Editor in the Wall Street Journal, and University of Wisconsin
Law School Professor |
|
|
| In this editorial, the author
responds to a previous editorial from Diana Culp Bork, who had
attributed the rise in personal bankruptcies to a decrease in social
stigma. Ms. Bork recommended that this problem be resolved by forcing
more debtors to choose chapter 13 over chapter 7. The author cautions
that Ms. Bork's proposal may be too radical of a change, and that we
must first learn why chapter 13 debtors sometimes unable to obtain
discharges. He notes that there are other approaches to limiting abuse
by debtors, and that the "democratization of credit" has at
least in part encouraged such abuse. | The
author concludes that debtors should not be forced t choose chapter 13
over chapter 7 because more moderate, measured remedies are available to
combat bankruptcy fraud. |
NBRC-
0371 | Nick Rayes | Author of Letter to the
Editor in the Wall Street Journal; Bankruptcy
Attorney |
|
|
| In this editorial, the author responds to a previous editorial
from Diana Culp Bork, who had attributed the rise in personal
bankruptcies to a decrease in social stigma. Ms. Bork recoomended that
this problem be resolved by forcing more debtors to choose chapter 13
over chapter 7. The author disagrees with Ms. Bork's conclusions,
stating that the rise in bankruptcies is the result of excessive credit
card debt. He argues that credit card companies must share part of the
responsilibility for these filings. | The
author concludes that debtors should not be forced to choose chapter 13
over chapter 7 because creditors already have adequate means for
combatting chapter 7 bankruptcy fraud. If a bank feels that there is
"substantial abuse" by chapter 7 filers, they have the right
to contest the discharge of the debt owed to them. |
NBRC-
0384 | American Bankruptcy Institute | American Bankruptcy Institute
("ABI") |
|
|
| ABI presents this "Report on the State of the American
Bankruptcy System," which is the capstone of ABI's three-year
Bankruptcy Reform Study Project. The Project's efforts culminated with
a 65-question survey covering a broad spectrum of possible areas of
reform. The study indicates that: (1) in general, the Code of 1978 is
working well; and (2) probelms of delay, excessive costs, unfairness,
and abuse need to be addressed in the current round of
reforms. | ABI recommnds: (1) strict deadlines
for dismissal or appointment of trustees to help combat abuse; (2)
reorganization of chapter 11 policy to provide stricter time limits,
elimination of non-viable debtors, and reduction of excessive
professional fees; (3) relaxing eligibility requirements for consumer
reorganizations under chapter 13, and providing time limits, limited
discharge and uniform national exemptions; (4) high standards of
integrity for all professionals; (5) a balance between creditors' and
debtors' rights, and equality of distribution; and (6) not adopting
priority classes of claimants. |
NBRC-
0405 | Richard T. Webb | President & CEO,
Atlantic Financial Federal Credit Union
("AFFCU") |
|
|
| Bankruptcy fraud is increasing,
due primarily to the lack of stigma attached to bankruptcy. One area of
particular concern is the "fresh money theory"--namely, cash
advances taken within 20 to 30 days of filing for
bankruptcy. | Time frame during which cash
advances are considered "fresh" shold be expanded. |
NBRC-
0407 | Edward L. Montedonico | Attorney |
| 707(b) |
| This issue of abusive chapter 7 filing, e.g. debtors who could
afford to pay their debts through chapter 13 but are filing under
chapter 7 instead, has already been adequtely addressed by §
707(b). No additional provisions are necessary are needed to deal with
this concern. | No additional Code provisions
are needed to address abusive chapter 7 filings. Title 11 does need to
be fine tuned, but an overhaul of the system is not
warranted. |
NBRC-
0412 | Ross C. Wilkinson | private
individual |
|
|
| Bankruptcy law is being used to shield dishonest people who run
up debts with no intention of repaying, making the United States an
"unwitting accomplice in a scheme to defraud
creditors." | 1) Establish a presumption
that if a person seeks to excuse themselves from debts that amount to
more than twice (or whatever multiplier the committee determines to be
fair) their annual income they must have incurred those debts
fraudulently, and the discharge should be disallowed. 2) Debts
incurred for nondiscretionary expenses should be categorized separately
from discretionary expenses and the former should not be discharged if
the person did not have the income or wealth at the time to have a
reasonable expectation of repayment. 3) Establish what, in essence,
would be a small claims court division where creditors could represent
themselves without an attorney. 4) Eliminate the concept of total
discharge of a person's debts. Establish a minimum amount to be repayed.
5) Provide that where a petitioner fails to apppear and to testify at
the creditor's meeting and the meeting is continued, the time for any
creditor to file suit to bar the discharge of any debt be extended two
weeks after the last continued meeting so that the creditor will not
have to prepare or file suit in cases where the petitioner
defaults. |
NBRC-
0430 | Gerald R. Miller |
Attorney. Letter received by E-mail - no location
given. |
|
|
|
Trustees in Chapter 7 and current administration of
cases do a fine job. |
Do not initiate "random audits" of
cases. |
NBRC-
0445 | Richard T. Webb | President & CEO,
Atlantic Financial Federal Credit Union |
|
|
| Author's financial institution
is experiencing problems with bankruptcies of "members that have
not been delinquent with [them], but for which [they] have lent money to
help them payoff (sic) off other loans." "'Fraud' is also
increasing!" Author believes "that the root cause is the lack
of negative stigma that now is tied to a debtor that pursues bankruptcy.
One such area of fraud involves the 'fresh money
theory'". | Author "would appreciate
the Commission consider expanding the time frame during which cash
advances are considered 'fresh'". |
NBRC-
0458 | Jan L. Fort | Private
citizen |
|
|
| Author rented property to a tenant who defaulted and filed for
bankruptcy. The bankruptcy case was dismissed for faillure to file a
statement and/or plan. Author feels bankruptcy filing was fraudulent
and solely to avoid eviction. | "I hope
you will do something to correct these abuses." |
NBRC-
0463 | M.A. Bouchard | Private
citizen |
|
|
| "This is one of the things why rents keep going
up." | "Bankruptcy is way out of
line & never ment to be used in this way and should be kept as it
was origanly intended for deversing people." |
NBRC-
0467 | Geraldine Mund | Chief Judge, U.S.
Bankruptcy Court, Central District of California | Report of the United States Bankruptcy Court Central District of
California Ad Hoc Committee on Unlawful Detainer and Bankruptcy
Mills. |
|
| Author is forwarding lastest
report of of the Ad Hoc Committee on Unlawful Detainer and Bankruptcy
Mills. "In summary, due to a variety of factors..., filings to
stop eviction in the Central District of California have decreased from
16.9% in 1991 to 1% in 1996." " As we have previously urged,
we hope that the Commission will deal with the abuse of the automatic
stay in eviction actions." | Congress
should determine that in the case of a month-to-month tenancy or tenancy
at will, there is no property to be protected. |
NBRC-
0494 | Richard T. Webb | President & CEO,
Atlantic Financial Federal Credit Union |
|
|
| Author was involved as creditor
in Chapter 7 bankruptcy case where he alleged tht the loan was obtained
fraudulently, and the Trustee recommended dismissal pursuant to 707(B).
The debtor subsequently filed for Chapter 13, where author "was
advised that fraud is not considered in determining dischargeability in
Chapter 13 cases as it is in Chapter 7 cases. My point is that fraud is
fraud, whether it is a Chapter 7 or a Chapter
13!!!!!!" | None specified. |
NBRC-
0550 | Charles D. Bixby II | Collections
Officer, AB&W Credit Union |
|
|
| Author cites anecdotal evidence
of cases of fraud in the filing of bankruptcies, in which people
intentionally run up huge debts, then file for
bankruptcy. | "So with this in mind I
plea for a more effective checks and balances system within the
bankruptcy system." |
NBRC-
0592 | Jean Iannucci | Private
citizen |
|
|
| Author sold her house to a tenant and took back a purchase money
mortgage. The debtor defaulted on payments and filed for bankruptcy.
Author is "extremely distraught" that debtor is still living
in the house, is not paying for the insurance, and has let the taxes
lapse, leaving a tax debt as well, and creditor can't do anything about
it. | Change the bankruptcy law so that people
who need to file can, but that people cannot take advantage of
it. |
NBRC-
0677 | Thomas J. Miller | Attorney General,
State of Iowa |
|
|
| Author is concerned about cases in which fraud has been
perpetrated on consumers, and the persons committing the fraud file
bankruptcy to avoid reimbursing the victims, or they file an exception
to discharge when their victims file for bankruptcy
protection. | "We believe that these kind
of debts warrant special attention when dischargeability standards are
reviewed. One approach may be to consider deceptive trade practice
judgements granted to a Staate as a non-dischargeable fraud.
Additionally, to protect consumer-debtors victimized by consumer fraud,
we urge the Commission to consider providing consumer-debtors an
affirmative defense to discharge exception against creditors which
created the debt through deceptive trade practices. |
NBRC-
0677 | Thomas J. Miller | Attorney General,
State of Iowa | Copy of loan agreement and
basic cost information statement. |
|
| Author is concerned that "Adding the chapter 7 standards [of
dischargeability] wholesale to chapter 13 may have the unintended
consequence of encouraging some lender practices which we believe are
unfair and deceptive. At the same time, those consumers who became
indebted to those creditors who utilized these practices may find it
harder and more expensive to obtain relief in bankruptcy court."
Author identifies three areas of concern. First, "Fraud and
'Equity-Skimming' mortgage lending." This involves
"asset-based lending", in which very expensive loans are
written without regard to the financial ability to repay, and relying
solely on the equity value in the borrower's home. Attorneys for such
debtors often use chapter 13 as a quick and easy way out. Second,
author notes the danger of open-end and credit card debt. Door-to-door
salesmen sell high cost items, such as satellite dish antennas, and
promise to arrange for financing, usually on a credit card with
exhorbitant interest. The consumer-debtor receives no information
telling them up front how much the financing will cost them. If the
bankruptcy code makes it easier for open-end creditors to be exempt from
discharge, this could encourage what author considers to be an unfair
and deceptive credit practice. Finally, author warns of another form of
consumer lending scheme which could be affected by the way bounced check
debts are treated for purposes of determining dischargeability under
fraud statutes. Some lenders will take a check, post dated two weeks,
for a certain amount, then advance a lesser sum immediately, and deposit
the check two weeks later for a profit. Often, the loan works out to an
enormous interest rate, 450% in the example given. These are illegal in
some states, but legal in others such as Iowa. "It would seem not
onlyh harsh to the debtor to allow the 400+% lender a privileged status,
but also unfair to other unsecured lenders." | Be aware of the fraudulent schemes being perpetrated on consumers
and take these into account in changing provisions for exception to
dischargeability. |
NBRC-
0699 | Edith H. Jones |
Bankruptcy Judge |
|
|
| Author does not remember
discussing a fee shifting proposal within the Consumer Working Group.
"What are the 'false claims' covered by this
idea" | "I am bothered by the policy
of adding fee-shifting provisions throughout the Code. Let's either do
it for all parties or for none." |
NBRC-
0728 | John C. Akard | U.S. Bankruptcy Judge,
Northern District of Texas | Copy of letter
dated 5/2/97 to Susan Jane Darnold from office of United States Trustee;
Copies of 4 letters dated 3/26/97 from Judge Akard to the Bankruptcy
Commissioners on different topics. |
|
| "Certainly there is nothing wrong in the audits you propose.
However, I am not aware that this is a problem....It is up to the
creditors to provide the information they possess to the Chapter 7
trustee or to the auditor. I have seen several instances in which
trustees reported unscheduled assets. In those instances, eithte the
Chapter 7 Trustee or the United States Trustee didligently followed up
on creditor suggestions fo concealed assets. Attached is a letter which
shows the thorough manner in which the U.S. Trustee's staff investigates
complaints and comments." | No specific
solutions proposed. |
NBRC-
0735 | Seth Lehrman | Attorney |
|
|
| "Creditors have threatened and filed meritless
dischargeability complaints alleging fraud against several of my
clients. I believe that in many instances the creditors attorneys are
testing me or my client, or are simply sending boiler plate
correspondence and pleadings to coerce reaffirmation."
"However, it is often not cost effective for my clients to defend
these actions since they may be liable for their own attorney fees even
if we successfully defend the action." | "The code should provide mandatory attorney fees and
statutory damages against creditors who bring nondischargeability
complaints without just cause." |
NBRC-
0743 | Kevin R. McCarthy, Esq. |
Attorney, FAX transmission with no
address |
|
|
| Author relates history of case in which he and his client
(creditor) believe the debtor is transferring fractional interests in a
property to fictitious individuals, who either file a voluntary
proceeding, or another individual files an involuntary proceeding
against them. They have been unable to substantiate names, addresses,
phone numbers and social security numbers on the filings; nevertheless,
the courts have been slow to assist. |
"I urge you to support your discussion paper [on
consumer bankruptcy] and use every resource available to you in seeing
its implementation." |
NBRC-
0777 | Bruce Cramer | President, O Bee Credit
Union |
|
|
| "Under the current code, ther are not provisions for a
creditor to bring [abuse, fraud, concealment of assets] to the attention
of the trustee. Bankrupts have transferred assets to others or just
falsified their filings because ther is no post filing audit or any way
for someone to bring discrepancies to the court's
attention." | "The bankruptcy code
needs a way that creditors can point out abuse, fraud, or the
concealment of assets." |
NBRC-
0787 | Bart DeCamp | VP-Lending, School
Employees Credit Union Clark County |
|
|
| Author feels that bankruptcy is
used as a strategy to gain financial reward. "Debtors are lavishly
spending durieng the holidays or purchasing a new auto knowing they are
filing shortly thereafter. The filing is
premeditated." | No specific solution
proposed. |
NBRC-
0804 | Robert R. Weed | Attorney, Law Office
of Robert Ross Weed |
|
|
| "I emphasize to my moderate
and higher income clients to fill in their budget as though they might
have to prove what they put down, but it would probably be better if I
could add that there is an audit procedure. If, as the creditor
community argues, there is widespread fraud, this is a major concession
I'm glad to make." | "I can't object
to random audits." |
NBRC-
0806 | Jill M. Sturtevant | Assistant General
Counsel, Bank of America |
|
|
| "We endorse the random
audit of bankruptcy files." | "We
believe that the proposal should contain a provision rescinding
discharge if materially inaccurate information is
uncovered." |
NBRC-
0867 |
Sidney B. Brooks |
U.S. Bankruptcy Judge, District of Colorado |
Memorandum Opinion and Order in case of In re Tanenbaum
and Mann |
707 |
10 |
Author is forwarding a decision he handed down in the
case of In re Tanenbaum and Mann. It "discusses the problems and
anomalies in the Bankruptcy Code and attendant rules which govern the
much debated issue of bad faith Chapter 7 filings by high income
debtors." Author raises three issues: 1) Preventing or deterring
high income or "well-to-do" debtors from discharging all their
debt in Chapter 7, and refraining from repaying any portion of their
outstanding, unsecured debt; 2) the explicit distinction between
dismissal of Chapter 7 cases of "consumer" debtors
versus"business" debtors is inherently discriminatory and
inequitable; and, 3) Tanenbaum's case was not dismissed because the
rules, incomplete and rigid, compel granting of a discharge without
adequate time or opportunity to dismiss for bad faith, or other
wrongdoing, under Section 707(a). |
1) Prevention of such abuses "can be rather easily
and quickly implemented by deft adjustment of Section 707 of the Code
and Rule 1017(e), Fed. R. Bankr.P. More dramatic, extensive or
Draconian modifications of the Code to deal with this issue are neither
necessary nor advisable. The "cure" of substantial Code
modifications to deal with this problem could easily have unintended and
unforeseen harsh consequences; 2) Make cases based on business debt
subject to dismissal for "substantial abuse" under subsection
(b) just as cases based on consumer debt are; 3) change the rules so
that they do not restrict the filing of a motion to dismiss for bad
faith or other wrongdoing, under Section 707(a) to a certain time
frame. |
NBRC-
0870 | Joe Lee | Chief Judge, U.S. Bankruptcy
Court, Eastern District of Kentucky |
|
|
| "The proposal for random
audits to verify the accuracy of the representations made in the
debtor's schedules cannot be justified economically, especially in view
of the fact there is little reliable evidence of intentional omissions
by consumer debtors from schedules filed with their bankruptcy
petitions." | "Instead of saddling
taxpayers with the expense of setting up a mechanism for conducting such
audits..., why not privatize this concept. This can be done by
requiring consumer debtors to file, preferably with the petition or
within a short period of time thereafer, a credit bureau
report." |
NBRC-
0874 | Robin L. Lamb | Author writes on behalf
of the Board of Directors, Staff and Credit Committee of Allsteel
Employees' Credit Union. |
|
|
| "Audit would protect both
the debtor and the creditor and would help identify the success of the
system." | "We feel that random
audits to verify the accuracy of bankruptcy schedules for debtors should
be mandatory." |
NBRC-
0884 | Norma Hammes | President, National
Association of Consumer Bankruptcy Attorneys |
|
|
| The provision for debtor audits
"offers a new opportunity for creditors and collection agents to
threaten debtors, pre-petition, with a court inventory of their personal
items in order to further discourage them from obtaining the bankruptcy
relief they need. In addition, there has been no evidence presented of
any widespread debtor fraud to justify creation of such a costly new
process." | Do not institute debtor
audits. |
NBRC-
0916 | Joseph Patchan | Director, U.S.
Department of Justice, Executive Office for United States
Trustees |
|
|
| The Proposal by the Consumer Bankruptcy Working Group includes a
provision by which all consumer debtors would be subject to random
audits to verify the accuracy of the representations contained in their
schedules."We support the concept of debtor audits." Author
also feels that the U.S. Trustee's office should be responsible for the
audits, but they are concerned about the scope and cost of the proposal
under consideration. | "To meet these
concerns, we urge the Commission to recommend a two-year pilot program
during which the United States Trustees could develop and test an audit
program." |
NBRC-
0925 | C. Michael Stilson | Bankruptcy Judge,
Northern District of Alabama, Western Division |
|
| 11 | Author feels that the
"substantial" changes proposed to the Bankruptcy Code are not
necessary, and that remedies already exist for most of the problems
addresed by the Consumer Bankruptcy Working Group. Author addresses
each proposal of the Working Group. With regard to audits, author
suggests that these be done through the existing offices of the
Bankrkuptcy Administrator or United States Trustees' Office and not
create any additional offices. He would also apply it to Chapter 11
cases. He also points out that "Statutes are already in place to
maek criminal certain actions in bankruptcy cases." and goes on to
discuss these. He feels that the proposed national filing system would
be beneficial. |
N/A |
NBRC-
0988 | Perry Caligiuri | President and CEO,
First Iowa Community Credit Union |
|
|
| Author feels it is unfair that
creditors should be penalized if they unknowingly file a false claim,
but debtors can "knowingly" file a false schedule or not
disclose assets and it is difficult for the creditors to prove their
case. | "I respectfully ask the
Commission to consider similar penalties for debtors who file false
claims." |
NBRC-
0992 | Kay L. Campbell | Compliance Officer,
McDonnell Douglas West Federal Credit Union |
|
|
| Author feels that random audits
will increase detection of fraud and abuse and will deter the filing of
bankruptcy with fraudulent intent. | Author
supports the Commission's proposal to require random audits to verify
accuracy of the representations made in the debtors'
schedules. |
NBRC-
1016 | Richard T. Wargo | Compliance and
Information, Pennsylvania Credit Union League & Pacul Services,
Inc. |
|
|
| "The Commission prpoposes to authorize bankruptcy courts to
order creditors who file and fail to correct 'materially false' claims
to pay debtor's costs and attorneys' fees involved in correcting the
claim. Additional sanctions may be imposed where a creditor knowingly
files a false claim." | "The
Commission should define 'materially false'...Creditors should not be
punished for bona fide errors. Nor should a debtor receive a remedy
when a creditor corrects a bona fide error." |
NBRC-
1145 | Polly S. Higdon | Bankruptcy Judge,
District of Oregon | Letter by author to Mr.
James Shepard dated January 7, 1997. | 707(b) |
| Author is concerned that she has seen no discussion of
§707(b). Abuses are occuring because the Code does not provide a
standard for "substantial abuse" or because for some reason
some courts or U.S. Trustees are not using this
section. | Sspecific guidelines for
determining when a motion to dismiss under §707(b) should be
promulgated. There should be a directive that the U.S. Trustee must
file such a motion if the guidelines are triggered. It should be
clearly stated that creditors are not prohibited from providing
information to the U.S. Trustee about the debtor's finances, but if he
decides to pursue the matter, the Trustee should be required to make an
independent review of the facts prior to filing a motion. |