Web posted and Copyright © 1/12/98, American Bankruptcy Institute.

The following abstract summarizes the text of submissions made to the National Bankruptcy Review Commission. The abstract is organized by NBRC working group and topic.
The Final Report of the NBRC can be viewed on-line. To obtain a copy of any document shown below, contact the Center for Legislative Archives, Room 205, National Archives Building, Washington, D.C. 20408. The telephone number is 202/501-5350. Mr. R. Michael McReynolds, Deputy Director, will be able to assist with specific inquiries. (The NBRC documents will be housed at this location until June, 1999. Thereafter, the records will be transferred to the Center's archives in College Park, MD.)

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Consumer: Payments
IDNameGroupOtherCode
Sec
Cross
Ref
Problem ReferencedProposed Solutions
NBRC-
0002
Jack N. BeasleyPresident; Liberal Loans of Louisiana, Inc. (Credit Company)11/13/95 Letter from Rep. Jim McCrery1322(a)(2)503(b)(4), 5071. Atty Fees get admin. expense priority ahead of other unsecured creditors; 2. Chapter 13 plans permit debtors to retain oversecured property without paying creditors use value.1. Attys should get paid out over time (according to length of plan) and share the same risk of nonpayment as other unsecured creditors; 2. Creditors should have option of retaining collateral in lieu of debt.
NBRC-
0074
William E. CumberlandGeneral Counsel; Mortgage Bankers Ass'n of America


Currently, Ch. 13 trustees unnecessarily delay making payments to mortgage holders.Chapter 13 Trustees should be required to make interim disbursements of monthly mortgage payments in all cases which are not confirmed within a specific period of time, say, three months, and should be required to make the monthly payments on time, or pay late fees as provided in the mortgage.
NBRC-
0098
Polly S. HigdonBankruptcy Judge; District of OregonInvited Participant to Consumer group - Santa Fe meeting.

Chapter 13 costs too much. If attorney provides services to the client throughout the plan period, the full charge is between $3,000 and $4,000. Not uncommon to see applications for $10,000-$13,000. Few debtor's attorneys will take a ch. 13 for a flat fee as they cannot anticipate the amont of services that will be required. If it is a "pot" plan, there is no earmarking provided for in the plan and all administrative payments reduce the amount received by unsecured creditors.No suggested change made.
NBRC-
0101
Ike SchulmanPresident; National Association of Consumer Bankruptcy AttorneysInvited Participant to numerous NBRC meetings.

Under current law, ch. 13 debtors are allowed to classify and provide different treatment for certain categories of debt. Separate classification of cosigned consumer debt is already allowed, enabling debtors to both repay such debts in full and protect individual cosigners on such debts. Some courts have found that separate classification of certain nondischargeable debts is not permissible and that such creditors may not receive favorable treatment through the ch. 13 plan. Such debts may include student loans, support owed to gov't agencies and court fimes or restitution. Important public policy considerations support allowing debtors to separately classify and pay in full such debts in ch. 13 cases.NACBA recommends that the bankruptcy code be amended to clarify that ch. 13 debtors may separately classify all nondischargeable debts.
NBRC-
0133
William E. CumberlandGeneral Counsel; Mortgage Bankers Ass'n of America


Chapter 13 trustees should be required to make interim disbursements of monthly mortgage payments in all cases which are not confirmed wihtin a specific time period, say, three months, and should be required to make the monthly payments on time, or pay late fees as provided in the mortgage.Eliminate unneccessary delay in receipt by mortgage holders of monthly payments. Ch. 13 trustees should be required to make these payments in all cases where a plan is not confirmed wihtin three months.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"

The Code does not waive filings fees for debtors who cannot them.Filing fees whould be waived for individual who cannot afford them.
NBRC-
0152
Kenneth L. RobinsonPresident; National Ass'n of Federal Credit Unions


Problem exists in chapter 13 about when payments will be received. The determination of when a credit union will receive payment on a secured debt is often dictated by the jurisdiction of the bankruptcy proceeding. There is often disparity within a single jurisdiction.To reduce uncertainty and disparity, Code should require trustee to begin payments within 30 days of confirmation or wihtin 30 days of the 341 meeting, whichever occurs earlier. In addition, debtor's attorney should be required to provide copies of the proposed, confirmed and modified plan within 45 days of a bankruptcy filing. Copies of plan will increase creditor awareness.
NBRC-
0152
Kenneth L. RobinsonPresident; National Ass'n of Federal Credit Unions


Time for debtor to make payments under ch. 13 plan is too short.The period of time that a debtor has for making payments in a ch. 13 bankruptcy should be extended to allow the debtor an opportunity to repay his/her debt without being forced to switch to a ch. 7.
NBRC-
0156
Mr. & Mrs. Fred DrakeIndividuals from Whiteland, IndianaLetter from Congressman Dan Burton, dated 10/23/96, request for Comm'n resp

Chapter 7 permits tenants to leave apartments without paying for the utilities as they are evicted and subsequently file for bankruptcy.Bankruptcy Code should be amended so that debtors are unable to leave residential landlords with the utility bills in bankruptcy.
NBRC-
0274
Steven D. GoldsteinPresident, Credit - Sears, Roebuck and Co.
1325(b)(1(B)
Sears and other National Retail Federation members state that proposed plans receive disparate treatment under existing law because chapter 13 debtors are permitted to make payments pursuant to a plan to commit to an auto loan for a period of time exceeding the length of the average repayment plan.Amend § 1325(b)(1)(B) to extend, upon application by the trustee or objection to the plan by an unsecured creditor, the length of a chapter 13 plan to five years.
NBRC-
0274
Steven D. GoldsteinPresident, Credit - Sears, Roebuck and Co.; also on behalf of other National Retail Federation members
1325
Debtors should not be able to propose, nor courts approve, a zero percent "repayment" plan for unsecured debts under chapter 13. Judges need a benchmark to replace to widespread discretion that now governs variations in payouts to unsecured chapter 13 creditors.Amend §§ 1325(a) and 1325 (b) to require in every chapter 13 case a minimum specified percentage repayment of the outstanding debt to an unsecured creditor, commencing promptly upon confirmation of the plan in proportion to the total of all claims.
NBRC-
0274
Steven D. GoldsteinPresident, Credit - Sears, Roebuck and Co.; also on behalf of other National Retail Federation members
707, 1307521, 341, Rule 3004Creditors should be able to have more access to information solely under the control of the debtor but necessary to protect the creditor's interests. Existing law requires debtors to perform certain duties but provides no penalties for failure to comply.Amend §§ 707 and 1307 to require automatic dismissal, as well as a one-year bar against refiling, if the debtor fails to appear for two scheduled § 341(a) hearings or Rule 2004 examinaitons or fails to perform any of the duties specified under § 521.
NBRC-
0274
Steven D. GoldsteinPresident, Credit - Sears, Roebuck and Co.; also on behalf of other National Retail Federation members
1325, 1330
Plans should be subject to modication and reconsideration in cases where actual income substantially exceeds the amount origianally projected.Amend § 1325 or § 1330 to subject all actual disposable income, not just protected disposable income, to the repayment plan, and permit unsecured creditors to move for the reopening of a case and a court-mandated modification of the plan if the debtor's financial position is substantially changed or actual disposable income does not correspond to the amount projected in the plan.
NBRC-
0302
Brian L. Mc DonnellPresident, Navy Federal Credit Union
1322
Bankruptcy is increasingly being perceived as an "easy way out" for debtors seeking to avoid responsibility for their actions. In addition, many people no longer consider bankruptcy to be a financial stigma. It is imperative that bankruptcy procedures be revised to discourage financial irresponsibility in today's highly leveraged personal economic environment.Modify § 1322 to extend the chapter 13 plan to provide for payments over a period of six years and, for cause, to permit the court to approve a longer reasonable period without statutory limitaiton.
NBRC-
0313
Joseph L. DonofroArchitect, Donofro and AssociatesCover letter from Senator Howard Heflin, enclosing this letter from his constituent

Debtors often use bankruptcy simply to escape financial obligations. Many times, debtors can afford to pay off at least of portion of their debts, but use the bankrtupcy system to avoid any repayment.Bankruptcy Code should be amended to require debtors who have filed for bankruptcy to appear before the court every two or three years to produce tax returns and be evaluated as to their ability to repay their obligations. If the debtors are able to afford repayment, the Bankruptcy Judge should be able to order such repayment, with interest.
NBRC-
0320
Robert M. Zinman, on behalf of the Bankruptcy InstituteAmerican Bankruptcy Institute ("ABI")Numerous position papers, memoranda and research material

The author attaches a white paper by Robert F. Mitsch entitled "The Binding Effect of Plan Confirmation". The paper summarizes and analyzes cases that address the disparity among jurisdictions as to whether the chapter 13 plan or the proof of claim controls the amounts distributed to creditors. The author of the paper concludes that this disparity is arguably inequitable to creditors because: (1) the plan confirmation hearing can be held quickly, preventing a nationally headquatered creditor from effectively obtaining counsel to object to the proposed chapter 13 plan; and (2) Regardless of the circumstances, the creditor still has 90 days after the meeting of creditors to file a proof of claim, and thus confirmaiton of the plan could occur months before the proofs need to be submitted.The author of the white paper suggests that one possible remedy for this disparity would be to provide that the chapter 13 plan be only "provisionally" confirmed, and to permit the trustee to adjust for properly allowed proofs of claim.
NBRC-
0373
National Consumer Law Center Inc.National Consumer Law Center Inc. ("NCLC")


The NCLC believes that a significant majority of debtors are having real financial problems and need help. Famalies across the country are facing economic pressures, and they need a fair opportunity to get an effective fresh start. Many debtors who choose chapter 13 fail. The Commission should examine ways to reduce the chapter 13 failure rate by making chapter 13 cheaper and more effective.Bankruptcy Code should be amended to make chapter 13 cheaper and more effective: (1) trustees should not exceed the actual costs of administerng chapter 13 cases; (2) interest on arrears should be eliminated; (3) stripdown of non-purchase money hme mortgages should be allowed and valuation standards should be set at liquidation value; (4) incentives should be available to encourage consensual modification of secured claims; (5) statutory sanctions and attorneys fees are necessary to control proof of claim abuses; (6) ability to pay should not be interpreted to require payment of a fixed percentage of unsecured claims; and (7) an effective superdischarge should be restored.
NBRC-
0442
Jeffrey W. MorrisProfessor of Law, The University of DaytonAttachment with proposed language to amend §§1322 and 1325.1325(b)1322(b)To increase a debtor's interest in obtaining Chapter 13 relief. As §1325(b) is currently drafted, it requires that all the debtor's projected disposable income be applied to make payments under the debtor's plan. This was included in 1984 amendments to the Bankruptcy Code to increase distribution to unsecured creditors in Chapter 13 cases. Author does not believe that creditors have received any significant increase in recoveries through the adoption of this test.Author suggests that the appropriate provisions be amended to permit the debtor to "save" some of his or her disposable income over the life of the plan. At the conclusion of the plan, this "savings account" could be split equally between the debtor and creditors. This would teach debtors the value and practice of saving, and would provide funds which could be used to meet unexpected expenses that arise post-confirmation, thus increasing the success rate of those Chapter 13 cases in which a plan is confirmed.
NBRC-
0534
William C. WhitfordProfessor of Law, University of Wisconsin, Madison


Currently standards vary widely on minimum required payments to chapter 13 plans. In some districts it is difficult to confirm a plan that pays less than 70% or even 100% of unsecured claims, and such practices tend to force debtors to try to get along on inadequate resources for personal needs. Too often the consequence is a failure of the debtors to complete the chapter 13 plan.Presumptive national standards for payments to unscured creditors, though subject to exceptions for special circumstances as they should be, should help considerably.
NBRC-
0535
John F. SutherlandSenior Attorney, Mercantile Bank National AssociationProposed changes to other Code sections, and a three page Memorandum with comments on the various proposals1325(a)(4)
"The purpose of this proposed amendment is to resolve the conflict over the confirmability of Chapter 13 Plans which only provide for some very low (if any) percentage payment to unsecured creditors. The proposed amendment establishs [sic] a national minimum payment to unsecured creditors in each Chapter 13 case, subject to the court allowing a lower percentage payment for cause."Author suggests that the following language be added to the end of 1325(a)(4): ", but in any case not less than ten/fifteen per cent of the aggregate allowed unsecured claims in each case unless the court for cause shall order otherwise;"
NBRC-
0537
Lisa Hill FenningUnited States Bankruptcy Judge, Central District of California


There are regional differences in the cost of living and the cost of individual goods, especially automobiles."The proposal to use a standard yardstick to determine disposable income for plan purposes has substantial potential. However, it must be sensitive to regional differences."
NBRC-
0538
Randall J. Newsome U.S. Bankruptcy JudgeCopy of 10/10/96 letter from Judge Newsome to Prof. Warren.13221325Payment plan "guidelines" can't take into account "virtually every facet of a debtor's existence" or every regional difference, as judges can. "Assuming somewhere in all of this there is a problem that begs to be solved (and I assume no such thing), does the problem really warrant this kind of a solution"
NBRC-
0559
Lisa Hill FenningUnited States Bankruptcy Judge


"The proposal to use a standard yardstick to determine disposable income for plan purposes has substantial potential. However, it must be sensitive to regional differences.""Standardized regional indexes already exist that cold vorm the basis for cost of living adjustments, and should be incorporated into any yardstick approach."
NBRC-
0562
Kenneth J. DoranAttorney


Concurrent payment on unsecured debt is a boon for unsecured creditors, but this means a worse situation for secured creditors - "the pie is only so big." Stretching out over up to 5 years payments which would now be made much sooner "strikes at the heart of many successful current Chapter 13's."No specific solution proposed.
NBRC-
0566
James A. PusateriChief Bankruptcy Judge, District of Kansas
10
Author is concerned about inequity in proposed guidelines requiring a graduated percentage of income to be paid in chapter 13 cases. Chapter 13 debtors with an expensive house may not be able to keep it and still have enough actual disposable income to make the payments mandated by the guidelines. Also, nationwide disposable income guidelines would have to take account of geographic variations which could make them to complicated to use. No specific proposal.
NBRC-
0583
John C. AkardBankruptcy Judge, Northern District of TexasSix other letters of the same date dealing with Chapter 13 issues.1322(d)1329(c)When Bankruptcy Code was adopted in 1978, most car loans were for three years, and most families had only one car, so it was feasible for debtors to pay off their one car and make a reasonable distribution to unsecured creditors in three years. "With the advent of much longer car notes and multiple car families, it is often difficult to make any significant distribution to unsecured creditors in a three year plan.""...[Y]ou may wish to consider changing § 1322(d) to provide that plans be for five years, but for cause may be reduced to less than five years but not less than three years."
NBRC-
0583
John C. AkardBankruptcy Judge, Northern District of TexasSix other letters of the same date dealing with Chapter 13 issues.1322(b)(1)
If the Commission is considering the classification of claims in Chapter 13 cases, the solution to the problem depends in large measure on the philosophy you hold about Chapter 13 - is the primary purpose to increase dividends to unsecured creditors, to benefit the creditorA Chapter 13 philosophy based on affording relief to individual debtors provides greater returns to the general unsecured creditors as well.
NBRC-
0583
John C. AkardBankruptcy Judge, Northern District of TexasSix other letters of the same date dealing with Chapter 13 issues.1326(a)
Under §1326(a)(2) the trustee is instructed to retain all payments made by the debtor until the plan is confirmed, adn then make the first disbursement to the creditors. Confirmation therefore often takes several months, which is not fair to creditors, especially automobile creditors. The result is often a motion to lift stay, followed by an agreement that the trustee can make preconfirmation disbursements. Other problems are also raisedIf the Commission authorizes preconfirmation disbursements, allow a wage withhold order to be issued to the debtor's employer as soon as the case is filed rather than waiting until after confirmation.
NBRC-
0599
David A. LanderAttorney


The use of a uniform repayment template sacrifices a great deal more than it gains. Variations in parts of courtry and individual circumstances are too great to fit within any set of repayment schedules. The difficulties resulting from differences in payment amounts or interpretations of "projected disposable income" among judges is are not worth the complications and problems the new schedule would create.Do not adopt a uniform repayment template.
NBRC-
0605
Kenneth L. RobinsonPresident, National Association of Federal Credit Unions (NAFCU)


Debtors payments to the plan should be predicated on their actual income. Debtors who are able should be making payments under a Chapter 13 plan instead of getting a total discharge in Chapter 7.All unsecured creditors should receive a pro-rata distribution in a Chapter 13 plan. NAFCU "applauds the Commission on its proposal to review a debtor's income for imprpovement or deterioration." NAFCU supports the proposal for incentives to encourage filing in Chapter 13, and limiting the time the bankruptcy stays on the debtor's credit report is a good one.
NBRC-
0649
Elizabeth S. PetersenAttorney


Often the most a debtor in Chapter 13 can initially pay is enough to catch up his mortgage and pay his car payments and then defer the payments to the unsecured creditors until after those have been paid. They still get money, they just do not get it on an ongoing basis over the entire plan."I think it is unrealistic to require the debtors to pay a fixed amount tot he unsecured creditors over the life of the plan and would prefer that there be some flexibility that would allow the payment of the secured creditors first, if that was all the debtor could do."
NBRC-
0650
Samuel L. BuffordBankruptcy Judge, Central District of California


Author is "much concerned about a repayment template that does not take into account the vastly different housing costs and cost of living around the country."None
NBRC-
0660
Andrena MacLeod-RockManager, United Credit Union


"To allow cramdowns on non purchase money mortgages would force financial institutions to rethink their lending policies."Do not allow cramdowns on non purchase money mortgages.
NBRC-
0694
James H. CossittAttorney


Author feels that audits will do little to enhance the system. The information sought can already be verified by a variety of methods."My experience suggests that the best form of auditing is experienced panel trustees with good nose for the "sniff test" coupled with adequate resources or additional funding for them to investigate irregularities in any given case." "Another option would be to require debtors and counsel to undertake a more thorough and significant prefiling investigation in consumer cases similar to that undertaken in business cases."
NBRC-
0703
Steven J. AbelsonAttorney
1306
"It is important to recognize that no matter howmuch any of us may seek to generalize consumer debtors and their plight, each bankruptcy filing is a separate and independant story." "Those who believe they can impose a universal income percentage formula to compel repayment under §1306 fail to recognize the variances in types of debtors. A fixed 10% plan may be an impossible burden to one client, yet a windfall to the other.""The disposable income test provides the Trustee with room to maneuver through the variances of debtor situations, yet as stated, certain modifications should be made to correct the existing inequities and to encourage more consumer debtors to utilize Chapter 13."
NBRC-
0711
Neal R. AllenAttorney specializing in consumer bankruptcy



"The concept of requiring all disposable income to be used to fund a Plan is a good one, and there should be no guidelines or "templates" income test for Chapter 13 debtors."
NBRC-
0712
Daniel H. BrunnerChapter 13 Trustee, Eastern District of Washington
1325(a)(4)
Section 1325(a)(4) requires debtors in Chapter 13 to pay a dividend to unsecured creditors at least as great as that which they would receive in a Chapter 7 proceeding. Author is seeing cases in which debtors want to deduct certain hypothetical costs from the value of their properties in addition to the exemptions which they are entitled to claim, such as deducting sales costs, captial gains tax, etc. from their equity in their home which they are retaining as exempt property. The 9th Circuit has held that hypothetical sales costs sould not be deducted when valuing a secured creditor's claim, but this was addressed in the context of §506(a). "Thus we have a clear pronouncement that secured creditor's claims cannot be reduced by hopothetical costs, but it appears that unsecured creditors are not afforded the same protection.""I suggest that the statute be amended to make it clear that hypothetical costs cannot be deducted from the debtor's equity when determining the dividend to which creditors are entitled."
NBRC-
0712
Daniel H. BrunnerChapter 13 Trustee, Eastern District of Washington
1325(c)1326(a)(1)§1325(c) provides that the court may enter an income directive against any entity from whom the debtor receives income after confirmation of the plan. Courts have taken this to mean that they cannot enter an income directive prior to confirmation unless the debtor specifically authorizes it. This position appears to be at odds with §1326(a)(1) which requires the debtor to begin making payments within 30 days after the plan is filed. When debtor doesn't pay and won't agree to the directive, administrative burdens are increased.Amend §1325(c) by striking the words "after confirmation of the plan" and adding the words "at any time" after "the court."
NBRC-
0726
Ken Crone, Saul Eisen, Hank Hildebrand, Ike ShulmanAmerican Bankruptcy Institute Consumer Bankruptcy Reform Forum


Presently, a debtor must dedicate "all disposable income" to fund a Chapter 13 plan, or porpose a plan which satisfies all unsecured claims in full within a three year period. The question arises as to what expenses are to be included in the debtor's budget. One proposal has been a standard template which fixes the amount of funds a debtor must dedicate to pay to unsecured clalim holders. While the ABI forum generally felt that the idea of paying "all disposable income," determined on a case by case basis, works reasonably well, there were problems with the uniformity of application, because judges can differ radically on what might be reasonable and necessary for maintenance and support.Keep the current scheme, with the current definition of disposable income. Within certain defined categories of expenses (i.e. food, housing, clothing, etc.) a party challenging the reasonableness would bear the burden of proof. If debtor incurs other types of expenses (i.e. tuition costs, entertainment, gifts, etc.) the debtor would bear the burden of proof on request of the trustee or any unsecured creditor. If the debtor's plan meets the requirements of §12325(b), confirmation of the plan should not be denied solely because the plan fails to meet any minimum payment requirement beyond that required by §1325(a)(4).
NBRC-
0727
Wendell J. SherkAttorney, Eric Taylor & Associates, P.C.


Author does not understand why the disposable income "template" approach should be codified. "The rules of thumb used by our Chapter 13 Trustee are well-known and, though perhaps ungenerous, are generally respected. The template, of course, will lead to a large number of "zero-percent" plans." "I was less impressed with the template being applied in place of the §707(b) test. Everyone agrees the §707(b) "substantial abuse" procedure needs work. I think Trustees and creditors should be allowed to prosecute those objcetions (and, if successful, have an administrative expense claim) but otherwise the process is workable.""I think the Trustees should be encouraged to develop their own templates for their region and publish them as guidance to the debtor bar but codifying a process based on Washington-based bureaucratic indexes will not go down well out in the hinterland."
NBRC-
0728
John C. AkardU.S. Bankruptcy Judge, Northern District of TexasCopy 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.

Author feels the proposed provisions with respect to home mortgages are reasonable and will achieve the goal of protecting the secondary mortgage market. "With respect to other secured debt. you provide "a secured creditor would be entitled to full repayment of the present value of its allowed secured claims, including any arrearage." The phrase "including any arrearage" is not clear to me. I presume you mean that the arrearage would be part of the secured claim and that you do not mean that the creditor would get paid for the arrearage in addition to the present value of its secured claim." "The valuation provision will eliminate a lot of uncertainty about vehicle values, but valuation of real estate is not mentioned. A measuring stick ther would be helpful as well. "Presumably you will settle on fair market value, but is any deduction to be made for sales costs" "The provision about unsecured debts being paid along with the secured debts in a Chapter 13 plan is helpful." "The interest guides are also helpful. If I understand your proposal, the interest rate would vary as the prime rate changed. Presumably, you will specify which prime rate to use."With respect to interest rates, "[h]opefully, you would not specify changes in interest rates based on changes in the prime rate more than once annuyally on a given date each year. An alternative much easier to administer, would be to base the interest rate on the prime rate on the date of confirmation and allow that rate to be used throughout the life of the plan."
NBRC-
0728
John C. AkardU.S. Bankruptcy Judge, Northern District of TexasCopy 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.

In looking at the provisions for payment templates, the author is concerned that "minimums tend to become maximums. Also, it would be very easy for Congress to succumb to creditor pressure to raise the minimums. Further, there is the problem that if a plan proposes the minimum but the debtor could obviously afford to pay much more, what standard should the court use" The author feels that the best interest test is more nebulous and difficult to apply than the disposable income test. Author is concerned about the provision for annual review of debtor's income, with adjustments up or down to the plan. Downward revisions will be taken care of by modifications filed by the debtor. Upward revision is a concern for two reasons: 1) you do not want to destroy the incentive of the debtor to work hard and do well by causing all increased income to be siphoned off to the creditors; and, 2) due to inflation, over the period of a three to five year plan the debtor is going to need increased living expenses, which plans typically do not provide for."One approach would be to use the template (with the safety valve) or the net disposable income, whichever is greater. A more direct way of dealing with this situation would be to continue the present disposable income standard with a provision that the court could not establish an arbitrary minimum payment amount to general unsecured creditors."
NBRC-
0729
Gerald L. White & Gary H. GaleAttorneys, White & Gale


Authors are concerned about the template proposal. "A system that calls for a fixed amount to be paid to fund a plan based on adjustable gross income which doesn't take into account the special needs of families and their respective costs of living isn't flexible enough to allow most plans to succeed. The result will be to force a lot of people into chapter 7..."Do not adopt a template for determining payments unless it takes into account the special needs of families and their respective costs of living.
NBRC-
0730
Thomas C. LeducDirector of Regulatory Issues, Michigan Credit Union League


No discussion, just recommendation."The Task Force recommends an amendment to Chapter 13 which would mandate five-year repayment plans, unless 100% of all principal balances could be repaid within a shorter time period. The Commission may also wish to recommend that an ongoing "payment in full" figure be maintained for all Chapter 13 plans -- It's always possible that a benefactor will offer to completely pay off a debtor's remaining Chapter 13 obligations in one fell swoop."
NBRC-
0731
Rollie R. HansonAttorney, Law Office of Rollie R. Hanson, S.C.


With regard to proposals to replace the disposable income test in Chapter 13 with a template requirement, author believes that the template approach can hurt debtors and they also provide a disincentive to filing a Chapter 13 bankruptcy in some cases. The disposable income test allows the court to take each individual case on its merits and develp a plan with the greatest chances of success. "Any viable Chapter 13 repayment plan must have two basic components to have any chance of success. First of all, it must be a voluntary plan. Second of all, it must be designed to meet the needs of the debtor based upon his disposable income and not on some theoretical benchmark." "The template concept carries an underlying component of an involuntary plan..." "The template will produce a kind of cookie-cutter approach that could require a debtor to service unsecured debt at the expense of a major asset."Do not abandon the disposable income test for a template approach.
NBRC-
0733
Mark R. LeeperManager, River Valley Credit Union


"...I often shake my head in disbelief when I see the paltry amounts that the debtor is required to repay through some of these payments plans on unsecured debt.""When the debtor obviously has the capacity to make higher payments, the plan should be set up with higher allocations for all creditors."
NBRC-
0734
Gregory J. WaldAttorney


"I am most concerned about the suggestion of replacing the "disposable" income test in chapter 13 with a test that relies on percentage of adjusted gross income. This would replace a test that is fair and flexible with a test that is unjust and not flexible." If individual circumstances are not taken into account, some debtors will be forced to pay too much, and others will pay too little.Do not exchange the disposable income test for a percentage of adjusted gross income.
NBRC-
0738
Richard B. JacobsonAttorney, Wendel & Center


"At present, debtors often improve their financial circumstances significantly during the course of a Plan, but do not amend the Plan to pay more in.""I think the debtor should be required to submit a copy of his or her federal tax return to the Chapter 13 Trustee no later than two weeks after it is filed. The Trustee would then have the opportunity to propose an appropriate modification in payments, at least in cases where the debtor is allegedly applying all disposable income to the Plan." "I think that an amendment to §1329 might help in offsetting complaints by the credit card industry (which, after all, pays itself in advance for defaults be means of large interest charges spread over a large population of card-holders).
NBRC-
0793
David A. SchollU.S. Bankruptcy Judge, Eastern District of Pennsylvania


The requirements of a template concept overlook the needs of a substantial number of debtors who are very low-income homeowners and are barely able to propose feasible plans to liquidate their allowed priority and secured claims. Even higher income debtors often have unusual expenses for various good reasons. "It is unrealistic to require many of these debtors to make any set percentage payments to unsecured creditors.""The current disposable income test is quite adequate for preventing any abuses which may arise. If uniformity is the aim, the Commission would be better advised to simply add Code provisions making it clear that arbitrary minimum plan payment percentages are inconsistent with the Code."
NBRC-
0802
Hon. George B. Nielsen, Hon. Redfield T. Baum, Hon. James M. Marlar, and Hon. Charles G. Case IIUnited States Bankruptcy Judges, District of Arizona


Authors are concerned about the proposal to impose a nation-wide minimum percentage return to unsecured creditors as a prerequisite to confirming a Chapter 13 plan. While it may seem at first that the disparity of return to unsecured creditors is a problem which needs solving, authors believe that the other side of the equation must also be looked at, that is, that a debtor may pay certain creditors under a Chapter 13 that otherwise he or she may not pay and that the debtor receives significant benefits as a result. Authors feel there are two main reasons why Chapter 13 cases are filed: to preserve the family home; and, delinquent taxes. In each case, a significant portion of the debtor's disposable income may be necessary to keep the home or pay taxes. Not allowing debtors to get such relief if their situation is so bad that they cannot pay unsecured creditors would not be good.A "one size fits all" requirement for payment to unsecured creditors would seriously undermine two of the primary purposes for Chapter 13, and should therefore not be adopted.
NBRC-
0804
Robert R. WeedAttorney, Law Office of Robert Ross Weed


Templates can serve an education and rehabilititation function by forcing the debtors to be realistic about what kind of house payment and car payment they can afford. (Although it may encourage more debtors to five up that house - which the federal guarantors might not like.)"I also reluctantly agree to your proposed Chapter 13 repayment template found on page 15."
NBRC-
0807
Richard T. Wargo, Jr., Esq.Director, Compliance & Information, Pennsylvania Credit Union League & Pacul Services, Inc.


The debtor must comply with the payment plan. "By filing the plan, the debtor had an opportunity to protect his or her home and nay other collateral permitted to remain in the debtor's possession.""In the event of default, creditors should obtain quick relief from the stay and move on security to extinquish the debt. In exchange for time to cure, Chapter 13 plans should provide for at least 65% repayment." "At some point, upon default, a creditor must be able to recover the security. Otherwise, creditors are exposed to greater losses."
NBRC-
0811
Sharon KellyPresident, Alaska State Employees Federal Credit Union


"...the proposal attempts to equalize all creditors by requiring a debtor to pay none or all - if the debtor wants to repay a secured loan through the courts, he or she has to go through Chapter 13 and repay all creditors to some degree. This encourages members to pursue Chapter 7 and repay no creditors. In addition, the goal of equalizing creditors will in fact punish those of us that attend the 341 meetings, try to work with our members, and charge a credit card interest rate that is approximately 5% below that of the large credit card companies. They will offset their bankruptcy losses through their high rates - we will not.""We ...encourage the commission to place more burdens on the debtor, rather than on the creditor."
NBRC-
0827
H. Allen JohnsonAttorneyCopy of Reply Brief filed in Ussery v. Ford Moter Credit, Case No. CIV-97-0182-R, in the United States District Court for the Western District of Oklahoma.10
Author is forwarding a copy of a Reply Brief he filed in a case concerning the interest rate to be applied to the collateral. "As noted within my Reply Brief, the interest rate is as important as the valuation. From a personal stand point, I believe the 2nd circuit position, In Re: Valenti, 105 F.3rd 55 (2nd Cir. 1997), would appear to be the most logical, fair, and easily applied interest rate to be applied to the value of security in Chapter 13 matters.""Hopefully the Commission will look at the interest rates along with evaluation in their recommendation to Congress."
NBRC-
0832
Arthur S. WeissbrodtU.S. Bankruptcy Judge, Northern District of California


"The most serious problem with the June 10th draft is the attempt to standardize, through an adjusted gross income template, the amount debtors around the country pay on unsecured claims. It is impractical and unworkable, because of the huge differences in the cost of housing."Do not adopt a template for payments. If the problem being addressed is the arbitrary minimum percentage payment on unsecured claims which some jurisdictions apply, there is an easier way to address it - simply amend the code to say that any such minimums are arbitrary and illegal and that each case must be evaluated on its own merits based on the disposable income test.
NBRC-
0832
Arthur S. WeissbrodtU.S. Bankruptcy Judge, Northern District of California


"If you require general unsecured claims be paid at the outset of a plan, you reduce the ability of the debtors to save their homes or cars and pay back taxes and child support because less money is available for secured and priority debt. This undermines the incentive to file Chapter 13 and hurts the system. It will force many debtors into Chapter 7 who could pay something to creditors in a Chapter 13."Do not require that unsecured claims be paid concurrently with (or before) secured claims.
NBRC-
0832
Arthur S. WeissbrodtU.S. Bankruptcy Judge, Northern District of California


"No requirement should be made that there be an annual review and adjustment of debtor's actual income and expense. [The projected disposable income test - which requires that at least 3 years of debtors disposable income be devoted to the Chapter 13 plan - works very well.] It would be enormously expensive and time consuming. It will nearly triple the work of debtor's lawyers and Chapter 13 trustees and be a huge and costly drain ont he courts and the entire bankruptcy system. The cost will far exceed any perceived benefit."No requirement should be made that there be an annual review and adjustment of debtor's actual income and expense.
NBRC-
0837
Francis M. AllegraDeputy Associate Attorney General, U.S. Department of JusticeMemorandum dated June 16, 1997 from Fran Allegra to Jonathan Gruber re: Treasury Comments on Bankruptcy Commission Position on Asset Exemption Levels.

Author agrees with the Commission that the Code should be amended to provide for greater uniformity in Chapter 13 payment plans and to eliminate the practice of "zero payment plans"; however, "the creation of a satisfactory all-purpose template may well prove more daunting, given the cost of living variations across the country and even within a given State." "WE are also concerned that the proposal would allow a debtor to deviate fromt he guidelines subject to an objection by the trustee or a creditor.""If a departure fromt he guidelines is permitted at all, a debtor should be required to obtain leave of court on motion."
NBRC-
0841
Wendell J. SherkAttorney


"I am still very concerned about the template approach to calculating the distributions and about the effort to front-load payments to all claimants."Author concedes the template idea's general legitimacy, but feels that such provisions should be painted in broad strokes to allow some fine tuning as it is executed. Regional differences should be taken into account.
NBRC-
0844
David C. AndersenAttorney


Requiring unsecured debts to be paid along with secured debts means that more interest will be paid to secured creditors over the length of the plan, thereffore, payment plans will require accross the board increases in payment amounts per month. This discourages Chapter 13, whereas in Chapter 7, reaffirmed secured debt are the only payment made by a debtor.Do not require unsecured debts to be paid along with secured debts.
NBRC-
0844
David C. AndersenAttorney


"Requiring yearly audits of income of Chapter 13 debtors is another reason to counsel debtors to file Chapter 7."Do not require yearly audits of income in Chapte 13.
NBRC-
0845
Alan OlsenManager/Treasurer, Evergreen Federal Credit Union


As an individual who has been in the lending business for over 21 years...I must say that I have rarely seen an instance where there was little or no disposable income as a reason for bankruptcy filing.""I support a liberal effort to find a process that requires those who can pay to be required to do so if possible."
NBRC-
0849
Ron HaasChairman, Bankruptcy Task Force, Alabama Credit Union League

11>"To aid Debtors who are unable to meet Plan payments, the Commission should consider extending the length of Chapter 13 Plans from 5 years to 6 or 7 years. This would enable debtors to pay more to their creditors and could perhaps reduce the number of debtors who are dismissed for non-payment."See above.
NBRC-
0849
Ron HaasChairman, Bankruptcy Task Force, Alabama Credit Union League

11"The purpose and spirit of Chapter 13 plans is to provide meaningful repayment to creditors. A zero percent plan clearly fails that test.""The Task Force would also like to see the elimination of zero composition plans....The Commission should establish minimum payment guidelines."
NBRC-
0869
Hon. Leif M. ClarkU.S. Bankruptcy Judge
1322(d), 1329
Many Chapter 13 cases in author's district are 60 month plans. If the debtor runs into a problem during the term of the plan, they have given the debtor a "moratorium" on payments, which has allowed many to be able to complete their plan; however, it stretches the payments beyond 5 years. In their district, Judge Kelly has recently ruled that if the plan runs over 5 years it will be dismissed, meaning the debtor will have made payments for 5 years, then lose their discharge.Author would like to see an amaendment to §1329 to allow moratoriums in payments even thought their net effect might be to extend the overall plan beyond the five year limit set out in sections 1322 and 1329.
NBRC-
0870
Joe LeeChief Judge, U.S. Bankruptcy Court, Eastern District of Kentucky


"The punitive measures the working roup is considering (no refiling; ...) are likely to make chapter 13 less, rather than more, attractive and are likely to harm both debtors and creditors." The incentives being considered for chapter 13 will not outweight the disincentives."I recommend that in addition to the usual assessment against debtors for the chapter 13 trustee's commission and expenses there be an additional assessment of 5% payable to a Debtor Rehabilitation Fund to be administered by the chapter 13 trustee or U.S. Trustee. The monies accumulated in this fund would be used to purchase at a discount claims against cahpter 13 debtors to the extent of say 75% of the allowd amount of any claim secured by movables, particularly automobiles, if the creditor holding the cliam agrees to accept that amount in lieu of payment over the life of the plan....Installment payments of the full allowed amount of the assigned secured claim, plus interest at the federal judgment rate in effect on the date of the commencement of the case, would be made to the fund by the chapter 13 trustee from omnies paid into the plan by the debtor." Creditors would get their money up front. Debtors could have the amount of payment allocable to secured claims reduced and would not have to pay market rate interest on such claims over the life of the plan.
NBRC-
0874
Robin L. LambAuthor writes on behalf of the Board of Directors, Staff and Credit Committee of Allsteel Employees' Credit Union.



Author feels that the rate of interest set contractually by the parties should be used. "However if a standard was set, for example prime, that would be acceptable too. As with vaulation the standard should be know [sic] prior to credit being established."
NBRC-
0874
Robin L. LambAuthor writes on behalf of the Board of Directors, Staff and Credit Committee of Allsteel Employees' Credit Union.



"Making simultaneous unsecured and secured payments would certainly be acceptable. Once again the guidelines should be published so both the debtor and creditor know going into bankruptcy how secured and unsecured loans will be repaid."
NBRC-
0883
Eugene R. WedoffU.S. Bankruptcy Judge, Northern District of Illinois


"Debtors should not be barred from Chapter 13 relief simply because they lack sufficient income to pay both their priority debt and a minimum percentage of income to general unsecured creditors." "In connection with its template recommendation, the Proposal recognizes that extraordinary circumstances...would justify payment of a lower percentage of the debtors income for unsecured claims.""I beleive that the required payments [under a Chapter 13 Plan] should be made to all unsecured creditors, with the division among creditors established by separate Code provisions....Thus, a debtor with substantial priority tax debt would be allowed to pay that debt in full, even if this meant a lower payment to general unsecured creditors than what the Proposal would now require." "The Proposal should also recognize explicitly the need some debtors will have to make payments on secured debt that will affect their ability to make what would otherwise be reasonable template requirements." Finally, "the template payment requirement should be subject to enforcement by the court or any party in interest."
NBRC-
0884
Norma HammesPresident, National Association of Consumer Bankruptcy AttorneysProposed amendment to §1325(a)(13)1325(a)(13)
The template proposal fails to take into account the wide disparity in home mortgage payments for debtors in different regions of the country. The solution to the problem of requiring a minimum percentage of unsecured claims to be paid through Chapter 13 plans lies in the clarification of "good faith/bad faith" - and the substitution of a "bad faith" test for the "good faith" test.Author has attached a proposal for amending §1325(a)(13).
NBRC-
0884
Norma HammesPresident, National Association of Consumer Bankruptcy Attorneys


"Because the consumer framework proposal no longer includes an immediate discharge provision, there is no longer any justification to require that unsecured claims be apid from the outset of a case (reducing payments to secured creditors) to insure that the unsecured creditors actually receive their dividends." Such a requirement would cause secured claims to be paid more slowly, and could cause some debtors to lose their homes if their plans fail at a point when their mortgage arrears could have been cured. Requiring concurrent payments would unjustifiably increase the debtor's required monthly plan payments, making many plans infeasible and forcing debtors into Chapter 7.Do not require unsecured claims to be paid from the outset of a case.
NBRC-
0884
Norma HammesPresident, National Association of Consumer Bankruptcy Attorneys


The requirement that Chapter 13 plans be based on actual rather than projected income causes several problems. One is the administrative cost of periodic post-petition review of the debtor's income. Debtors will be discouraged from filing Chapter 13 cases for fear that a marginal increase in income, even as a result of working longer hours or a second job, could lead to more onerous plan payments. "A debtor who elects Chapter 13 relief is making a long-term financial commitment and should be entitled to reasonable certainty as to the amount of that commitment."Stay with the current "projected" income as the basis for Chapter 13 payment plans.
NBRC-
0884
Norma HammesPresident, National Association of Consumer Bankruptcy Attorneys


The May 6th Consumer Framework prohibits separate classification and full repayment of nondischargeable debts which are not priority claims through Chapter 13 plans. If the debtor cannot use Chapter 13 to pay off the nondischargeable debt through separate classification he would normally be better off filing a Chapter 7 (where no money will be paid to unsecured creditors) so that he can focus all financial resources on repaying the nondischargeable debt.Allow separate classification and full repayment of nondischargeable debts which are not priority clalims through Chapter 13 plans.
NBRC-
0885
Ronald BarliantU.S. Bankruptcy Judge


"The proposal to require payments to unsecured creditors throughout the life of the plan raises concerns about the use of chapter 13 to cure arrearages on home or car loans. Debtors have only so much income.""The Commission should consider ways to reconcile the inherent conflict between secured and unsecured creditor interests and the limited ability of debtors to satisfy all those interests."
NBRC-
0886
William J. PerlsteinAttorney


"We do not understand the continued resistance to the concept of a "needs-based" system. The Wworking Group Draft itself advocates use of a template for determining the amount of a debtor's income that would be available to make payments under a Chapter 13 plan.""If a template can be used for he purpose of establishing such minimum payments...there is no reason why a template cannot be used to screen all cases initially to determine if the debtor appears to have sufficient income to make minimum payments under a plan."
NBRC-
0903
Jill M. SturtevantAssistant General Counsel, Bank of America


Author writes to comment on the ABI Working Group Proposals. Author apparently does not like the ABI proposal on payments, but does agree with the two standards set out for the disposable income test. "I like the list of things that are "clearly" reasonably necessary for the maintenance and support of the debtor and household dependents, and the separate list for "others", where the burden shifts to the debtor upon creditor objection." "...the part I OBJECT (emphasis in original) to strongly is the part which says that 'confirmation of the plan should not be denied solely because the plan fails to meet any minimum payment requirement beyond that required by section 1325(a)(4).'"Author suggests that the item titled "support" under those deemed "reasonably necessary" be clarified. Is it Child Support Alimony "I would prefer that these two types of "support" be listed separately. Otherwise, it would appear that any kind of support the debtor might be paying (elder support church tithing etc) could be included in that category." Also, remove the offending section referred to above.
NBRC-
0925
C. Michael StilsonBankruptcy Judge, Northern District of Alabama, Western Division

11Author 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. Author feels that the use of guidelines to determine payments to unsecured creditors is not the best way to proceed, since guidelines deal with averages, and Chapter 13 cases deal with individuals. There is no substitute for the individual analysis of Chapter 13 debtors' expenses. "I recognize that one of the reasons for the proposed payment guidelines is to address the problem in certain areas where the courts refuse to confirm Chapter 13 plans when unsecured creditors would receive less than a predetermined percentage of their claims. While I feel this position is contrary to the language of the Bankruptcy Code and therefore does not need addressing, the problem could be handled by a specific provision in §1325 providing that there is no predetermined minimum distribution required to unsecured creditors in order to confirm a plan."See above.
NBRC-
0934
Jean BraucherProfessor of Law, University of Cincinnati College of LawJean Braucher, "Counseling Consumer Debtors to Make Their Own Informed Choices--A Question of Professional Responsibility", 5 Am. Bankr. Inst. L. Rev. 165 (1997).

Unrealistic repayment expectations of some judges and chapter 13 trustees have contributed to widespread plan failure. The reasonableness standard is vague, and has led to a lack of uniformity from one bankruptcy district to another.Author feels that the NBRC proposal to base Chapter 13 repayment on income guidelines rather than on disposable income after "reasonably necessary" expenses would be a dramatic imporvement in the law.
NBRC-
0955
ABI Consumer Bankruptcy Reform ForumAmerican Bankruptcy InstituteLetter from Jill M. Sturtevant, Assistant General Counsel, Bank of America Re: ABI Consumer Forum Contribution dated June 4, 1997; Letter from Dean S. Cooper, Associate General Counsel, Freddie Mac, Re: Freddie Mac's Comments on ABI Consumer Bankruptcy Working Group's Proposal on Repeat Filings dated May 21, 1997.

The ABI sponsored a Consumer Bankruptcy Reform Forum which met twice. The goal was to create a process, rather than to produce a spedific set of proposals. This report was prepared by four members to summarize the events of the second meeting held May 15, 1997. It contains options considered for and discussions of the following issues: 1. Default Discharge Option for Failing Chapter 13 Cases; 2. Chapter 13 Superdischarge; 3. Credit Report Forum; 4. Option on Repeat Filings; 5. Disposable Income; 6. Treatment of Rent-to-Own Contracts; and, 4. Stripdown of Mortgages/Interest on Arrears.Solutions are proposed for each issue mentioned above.
NBRC-
0965
Kenneth J. DoranAttorney


Author comments on the June 10 Consumer Bankruptcy Framework Proposals. Chapter 13 should allow debtors to devote thheir resources to those debrs that the law causes to survive bankruptcy - secured, non-dischargeable, and co-signed debts. "The proposal moves in the wrong direction on this, by trying to force debtors to devote more resources to general unsecured -- and dischargeable -- debts." This will move more debtors to seek Chapter 7. The template sets a bad precedent, because requiring higher payments could make Chapter 13 non-viable for many debtors.None
NBRC-
0987
Jerry AffolterCollection Manager, Community America Credit Union

10"The credit union ...feels after review of bankruptcy schedules that there is misrepresentation and inconsistency in the income and expense schedules....It also appears that a number of districts are allowing debtors to get by with minimal repayment, including 0% plans, when a Chapter 13 has been filed and the debtor has the capacity to repay a larger percentage to unsecured lenders."None
NBRC-
0992
Kay L. CampbellCompliance Officer, McDonnell Douglas West Federal Credit Union


"We support the Commission's proposal that the secured creditor would retain all of it's normal contractual rights with respect to the collateral if a debtor is unable to make payments on his/her plan. We also believe that unsecured creditors should receive a prorata distribution in a Chapter 13 plan.""Basing payments on a graduated percentage of income, which would be reviewed by a court for extraordinary circumstances would enhance the successfulness of the repayment plan. An annual review to verify income is an appropriate measure to determine if a debtor's financial situation has improved or deteriorated."
NBRC-
0992
Kay L. CampbellCompliance Officer, McDonnell Douglas West Federal Credit Union


"We agree with the proposal in regars to if the debtor fails to make scheduled payments, the trustee or the creditor could move to lift the stay on collateral by expedited procedures.""A debtor who did not complete a repayment plan should lose the benefits established under the plan. However, if the reason a debtor failed to complete a repayment plan was due to high medical bills, death of working spouse, or divorce, benefits established under the plan should not be lost."
NBRC-
0992
Kay L. CampbellCompliance Officer, McDonnell Douglas West Federal Credit Union


"We support the proposal of allowing a debtor who has filed for bankruptcy and continues to make payments on a secured loan to have no further contact with the courts. When the debtor stops making payments, what then""The court should periodically monitor or allow a creditor to seize it's collateral if the debtor becomes delinquent."
NBRC-
1011
Charles E. BeamCollection Supervisor, K-25 Federal Credit Union


"While we support the proposal to establish a principal basis for determining the payments to which unsecured creditors are entitled, the proposed percentage by the commission is too lenient for a debtor with substantial income."No specific solution proposed.
NBRC-
1016
Richard T. WargoCompliance and Information, Pennsylvania Credit Union League & Pacul Services, Inc.


"The proposed guidelines for committing disposable income to a repayment plan are vague and overly lenient."None
NBRC-
1043
Darren W. HurstCollection Officer, Salt Creek Valley Bank


Debtors try to get rid of debts they accumulated of their own free will.Every Chapter 13 payment play should repay the creditor 100 percent.
NBRC-
1145
Polly S. HigdonBankruptcy Judge, District of OregonLetter by author to Mr. James Shepard dated January 7, 1997.

Author has many concerns with this section. The first is the issue of taxes. Repayment plans must take taxes into account. Author discusses various problems this causes.No specific solution proposed.
NBRC-
1164
Barbara J. SellersBankruptcy Judge, Southern District of Ohio, Eastern Division


"The notion that debtors with substantial unencumbered property can raise capital by private borrowing to pay creditors often is not realistic. The debtors I see who could do that have usually tied up that property before they file bankruptcy. The ones who have not are often older people with real property equity built up over many years, but who have very limited income and could not service a market rate loan....Liquidation of their few, but unliened, assets is not good social policy and that cost would probably just be moved to the public assistance sector."Do not require debtors with unencumbered property to rasie capital by private borrowing to pay creditors.