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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.)
Consumer: Miscellaneous
ID Name Group Other Code
Sec
Cross
Ref
Problem Referenced Proposed Solutions
NBRC-
0223
Frank R. Kennedy Professor, Michigan Law School; former Executive Director, Commission on the Bankruptcy Laws of the United States (1973) List of additional recommended topics for consideration

Immunity for farmers and nonmoneyed corporations from involuntary relief under the bankruptcy laws was discussed in the 1973 Commission's report. That Commission recommended the repeal of immunity for nonmoneyed corporations as suggested in a cogent article by Professor Mike Sovern, entitled "Section 4 of the Bankruptcy Act: The Excluded Corporations" (1957). Excluded corporations do not include nonprofit corporations unless they are charitable, religious, educational, or eleemosynary. Staff of the 1973 Commission were persuaded by the logic and policy arguments of the Sovern article that immunity granted to farmers ought to be repealed as well, but members of the Commission recommended retention of this immunity. The NBRC should reconsider the issue of granting farmers immunity from involuntary relief.
NBRC-
0223
Frank R. Kennedy Professor, Michigan Law School; former Executive Director, Commission on the Bankruptcy Laws of the United States (1973) Cover letter discussing various areas of concern

Author provides a list of 30 "Topics for Consideration by Commission on Bankruptcy Laws." The recommended topic relating to Consumer Bankruptcy Miscellaneous issues is: Elimination of immunity for farmers and nonmoneyed corporations. None.
NBRC-
0303
Commercial Law League of America Commercial Law League of America (CLLA)


The Commerical Law League of America believes that the following issue should be considered by the NBRC: should audits of debtors' financial backgrounds become a part of the consumer bankruptcy system The CLLA believes that this issue is a non-priority because the ultimate recommendation would probably be too costly and burdensome to implement.
NBRC-
0303
Commercial Law League of America Commercial Law League of America (CLLA)
707(b)
The Commerical Law League of America believes that the following issues should be considered by the NBRC: (1) Should the bankruptcy system explictly permit or prohibit pre-bankruptcy planning in consumer cases; and (2) Does § 707(b) in its current form serve a useful function The CLLA believes that the first issue is a "non-priority," and that the second issue is a top priority (no additional details are provided).
NBRC-
0303
Commercial Law League of America Commercial Law League of America (CLLA)


The Commerical Law League of America believes that the following issue should be considered by the NBRC: should the bankruptcy system permit in forma pauperis filing of bankruptcy petitions The CLLA believes that this issue should receive moderate priority. The CLLA supports making access to the bankruptcy system as available as possible and suggests that the installment method of payment of the filing fee be the preferred method for making that access to the courts more available.
NBRC-
0303
Commercial Law League of America Commercial Law League of America (CLLA)


The Commerical Law League of America believes that the following issue should be considered by the NBRC: for consumer bankruptcies, is the § 341 meeting efficient and effective The CLLA believes that this issue should receive top priority (no additional details are provided).
NBRC-
0320
Robert M. Zinman, on behalf of the Bankruptcy Institute American Bankruptcy Institute ("ABI") Numerous position papers, memoranda and research material

In this statement before the NBRC, the author states that ABI members generally agree that: (1) Including debtor audits in the consumer bankruptcy system would be a monemental and expensive task; (2) Pre-bankruptcy planning is not necessary in most cases because the debtor has no property, but as a practical matter it would be difficult to prohibit such planning; (3) In forma pauperis filings, without the benefit of a very good community legal aid program, usually result in the bankruptcy petition being filed pro se. The debtor's lack of understaning may lead to "problems, questions and corrections." Consumer audits shold only be conducted when the trustee believes an audit is necessary. Additional legislation is not necessary with regard to pre-bankruptcy planning. When a debtor files for bankrupcy, there is almost always a need for a lawyer.
NBRC-
0320
Robert M. Zinman, on behalf of the Bankruptcy Institute American Bankruptcy Institute ("ABI") Numerous position papers, memoranda and research material

The author attaches a white paper by Joseph R. Prochaska entitled "What Rate of Interest for Secured Claims in Chapters 12 and 13". The paper summarizes and analyzes cases that address treatment of claims secured by property other that the primary residence. None.
NBRC-
0390
Mr. and Mrs. Fred Drake Landlords/Creditors Cover letter from Rep. Dan Burton enclosing this submission

The authors are concerned about the Bankruptcy Code's treatment of landlords, specifically as it relates to utility payments when a tenant declares bankruptcy. Code should be amended to require tenants to pay their utilities before they are eligible to file for bankruptcy.
NBRC-
0431
Barbara J. Sellers Bankruptcy Judge, U.S. Bankruptcy Court, Sourthern District of Ohio, Eastern Division


The Commission appears concerned with a lack of uniformity in the application of the consumer bankruptcy remedy across the country and with certain abuses of the system. Author does not believe that a unitary consumer chapter approach would cure either of these problems. Author chaired a district-wide local rules committee to unify rules for Chapter 13 practice. Author feels Chapter 13 is the most difficult area. Chapter 13 statute needs more "meat on its bones" to eliminate the need for so many local rules and the practice in this area needs to be more uniform.
NBRC-
0449
Henry J. Sommer Attorney Copy of Memorandum sent by Bill Binzel of MasterCard International dated 12/12/96 urging attendance at hearing.

Author was concerned that hearings being held by the NBRC on issues of consumer credit have included many times more creditor representatives than consumer representatives. Author was also concerned about private meetings which he had heard about which included only Commission staff, Commissioners, and a few invited individuals. Again, author's concern was that consumer issues would not be adequately represented. Author was relieved by Brady Williamson's assurances that there will at some point be a chance for consumers to have approximately equal time to rebut the creditor's claims, but did want to reiterate his concerns.
NBRC-
0449
Henry J. Sommer Attorney


Author mentions clients who were only able to file their cases because his district is one in which the pilot in forma pauperis program exists. Author asserts that this program has run extremely smoothly and has not been controversial. Author strongly urges the Commission to expand the in forma pauperis program nationwide.
NBRC-
0473
Eugene R. Wedoff Bankruptcy Judge, Northern District of Illinois Memorandum

Consumer Bankruptcy Reform Author encloses a memorandum outlining some of the ideas he found helpful from the ABI Consumer Bankruptcy Forum. "...it struck me at the ABI forum that the issues need to be addressed in the context of a consistent conceptual framework, and I hope that my memo may help to point the discussion in that direction.
NBRC-
0474
Norma Hammes President, National Association of Consumer Bankruptcy Attorneys Attached list of Government Issues Working Group recommendations which author believes should be reviewed by the Consumer Issues Working Group.

Letter is a response to a request for the names of consumer debtor attorneys who would be able to offer a consumer debtor perspective to the Government Issues Working Group. The NACBA believes that the lack of representation of the interests of consumer debtors and their attorneys on the Working Group panels is a serious problem, and is encouraged that the NBRC is taking steps to address it. Letter contains names of four attorneys recommended for inclusion in future meetings of the Government Issues Working Group. Author requests that the number of government/creditor participants be matched by a like number of consumer debtor participants.
NBRC-
0475
Vincent P. Zurzolo United States Bankruptcy Judge, Central District of California
524 722 Author poses question: "May an individual debtor retain personal property which is encumbered by a security interest if that debtor is current on all obligations with the creditor holding the security interest yet chooses not to reaffirm that obligation under 11 U.S.C. Section 524 or to redeem the collateral pursuant to 11 U.S.C. Section 722" Author hopes that the Commission will address this issue.
NBRC-
0478
Norma Hammes Attorney; President, National Association of Consumer Bankruptcy Attorneys


Copy of presentation to be made by Norma Hammes to the Commission on Friday, February 21, 1997.
NBRC-
0489
Stephen Tsai Attorney, Bankruptcy trustee in the District of New Jersey Article by author, Repairs for a Broken System, New Jersey Law Journal, February 3, 1997.

Author is forwarding an article he wrote for the New Jersey Law Journal suggesting various changes to the handling of consumer bankruptcy cases.
NBRC-
0523
David V. Levy MindSpring Enterprises, Inc. (position in organization and address not given, fax)
1301 362 "Many courts require a creditor to obtain relief fromt he codebtor stay of Section 1301, EVEN IF THE CREDITOR IS ALREADY GRANTED RELIEF FROM THE AUTOMATIC STAY OF SECTION 362..." "If the Debtor has consented to relief from the automatic stary...it makes little sense for the codebtor stay to remain in effect." "...I would urge the Commission to recommend that Congress amend Section 1301(a) to include a provision that the codebtor stay will automatically terminate or will not apply upon termination of the automatic stay of Section 362."
NBRC-
0524
Richard G. Lugar U.S. Senator Letter dated February 24, 1997 from Debra Voltz-Miller to Representative Henry Hyde

Senator Lugar is forwarding a letter by Debra Voltz-Miller, an attorney who wrote to Senator Hyde concerning Senator Hyde's bill with improvements and corrections to the Bankruptcy Code. Ms. Voltz-Miller is concerned about a recent trend of insurance companies refusing to insure residential property if they discover that the owner has filed for bankruptcy. Ms. Voltz-Miller is concerned that if applicants are truly to have a fresh start under the Bankruptcy Code, they must have the ability to insure their homes and possessions. Ms. Voltz-Miller writes to Sen. Hyde: "Although I understand that the insurance companies are in business and base their decisions upon various risk factors, the ability of insurers to deny coverage simply for filing of bankruptcy is patently unfair. I respectfully request that, if possible, you consider this issue in any further recommendations you may make concerning modifications to the Bankruptcy Code."
NBRC-
0532
Arthur J. Spector U.S. Bankruptcy Judge, Eastern District of Michigan


Author raises several issues without in-depth discussion or proposals, such as to "carefully consider the entire concept of property of a chapter 13 estate and what it means for the prpoperty to revest in the debtor" and "consider the question about whether confirmation hearings should occur before the deadline for filing proofs of claim." "To accomodate the legitimate demand that payments to creditors commence as early as possible, the Commission should give serious consideration to shortening the time within which to file proofs of claim in chapter 13 to something like 30 days after the meeting of creditors. And governments should be given either no additional time or a very short extension."
NBRC-
0541
Dean S. Cooper Associate General Counsel, Federal Home Loan Mortgage Corporation ("Freddie Mac")


"While deficiencies cannot be sought against debtors who receive discharges, our servicers need to be able to call the debtors to determine why they did not make their monthly mortgage payments." "Freddie Mac approves of the Working Group's proposal to keep mortgage loans which are not delinquent outside of the bankruptcy, allowing mortgage lenders to deal directly with those debtors. Freddie Mac recommends that the scope of the discharge injunction should not be so broad as to prevent servicers from telephoning debtors when they fall behind in their home mortgage payments."
NBRC-
0541
Dean S. Cooper Associate General Counsel, Federal Home Loan Mortgage Corporation ("Freddie Mac")


There are instances in which there is a legitimate dispute over valuation or defaults on mortgages, and it is not appropriate to penalize the secured creditor in the event the dispute is resolved against him. There is already suffient authority in Bankruptcy Rule 9011 for the court to impose fees and costs on a party or attorney which files a meritless or unjustified pleading. "Freddie Mac disagrees with the Working Group's proposal to award the debtor or trustee reasonable attorneys fees and costs against the secured creditor whenever the court finds ther is equity in the collateral or that there was no prepetition default.
NBRC-
0550
Charles D. Bixby II Collections Officer, AB&W Credit Union


Attorneys do not always act in debtors' best interests because they file bankruptcy and are no better off several months later. People should be made aware of the consequences of bankruptcy and of available alternatives. "I suggest the consideration of something along the lines of a "Bankruptcy Disclosure Act". This would require disclosure of all possible repercussions of a bankruptcy filing and allow people to make a more educated decision in regards to bankruptcy." Debtors also need to be made aware of the option to reaffirm their debt.
NBRC-
0562
Kenneth J. Doran Attorney


"There is no persuasive evidence that a bankruptcy court can award a better credit rating." The benefit which the proposal seeks to confer is illusory, and should not be used to lure debtors into Chapter 13.
NBRC-
0564
James P. Caher Attorney, Author


Author notes problems raised by recent cases in which attorneys were found in contempt for violating the discharge injunction for cashing post dated checks post-petition. Chapter 7 should be made more accessible.
NBRC-
0565
Gerard A Nieters Bankruptcy Chairman, NLA; House Counsel, American General Finance


Author notes that he writes in his own capacity, not as representative of National Lawyers Association or American General Finance. Author is generally unhappy with the working of Chapter 13. He points out his objections to 15 subheadings in the March 15, 1997 memo of the NBRC.
NBRC-
0572
Don R. Athearn President, SunState Federal Credit Union A second letter of the same date by the same author addressing Proposed Changes on Federal Exemptions.
11 Author gives his comments on various proposed changes to Chapters 7 & 13 of the United States Bankruptcy Code. These are random, short observations with little or no discussion. Some have more specific suggestions, others merely comment on proposals. "Random audits will deter fraud." Debtor education programs should not be mandatory, but should offer benefits for successful completion. "Super Discharge" helps reduce the length and misunderstanding of the discharge process. Ten years should be the minimum amount of time before an individual can re-file for bankruptcy, except under extreme circumstances. A debtor shoul not be allowed to voluntarily dismiss a plan under Chapter 13. Creditor should retain all his contractual rights to collateral if debtor is unable to make payments on the plan. Valuation of the property should be the median point between wholesale and retail. All unsecured creditors should receive prorata distribution in a Chapter 13 plan using established consistent guidelines. An internal review of debtor's income is an appropriate measure to determine condition of financial situation. Incentives such as reducing period to include bankruptcy on credit report will most certainly encourage filings. Debtor should be allowed to reaffirm. Purchase money loans on an individual residence should be treated like other secured debt.
NBRC-
0590
Brion Boyce Accounts Control Manager, King County Credit Union


Author feels that bankruptcy "is just another form of legalized theft." "I truly hope you will revise the Bankruptcy Code to be more fair for the credit grantor and not make it so orientated for the debtor."
NBRC-
0597
Murray S. Lubitz and Louis Levine President and Chair, Consumer Subcommittee, of the Commercial Law League of American


A Chapter 13 debtor who has paid all or a substantial protion of his unsecured debt deserves more favorable treatment in his credit report than a Chapter 7 debtor who made no repayment. CLLA favors the enactment of legislation which would ensure successful Chapter 13 debtors more favorable treatment in their credit reports.
NBRC-
0598
William R. Mapother Attorney Chart of Mapother's Comments on Draft #1 Proposals; Memorandum on Draft #1 of Consumer Bankruptcy Working Group by author.

Author states that, while stated goal of Bankruptcy law is a balancing of rights of creditors and debtors, the current laws, and the proposed changes by the Commission, is unbalanced in favor of debtors. The "fresh start" for the debtor is in reality a "forgiveness" rather than a "rehabilitation." The law should reconcile the interests of protection of creditors and rehabilitation (not forgiveness) of the debtors.
NBRC-
0605
Kenneth L. Robinson President, National Association of Federal Credit Unions (NAFCU)


Audits are important to help detect fraud and abuse and can determine whether debtor's plan can withstand objections. NAFCU and members believe that the Commission's proposal of random audits "is a positive step toward preventing debtors from defrauding the bankruptcy system."
NBRC-
0606
National Consumer Bankruptcy Coalition "The Coalition is comprised of trade associations and other organizations representing virtually every component of the consumer lending industry."


The Coalition submits a 9-page Memorandum responding to the Consumer Bankruptcy Draft No.1 dated March 5, 1997 and Uniform Exemption Draft dated February 12, 1997. The Coalition feels that "The Draft is not a workable framework for discussion of Bankruptcy Reform" and discusses various objections to it.
NBRC-
0631
Geoffrey L. Giles, Esq. Attorney


Author read memorandum on contingent claims. Author feels that contingent claims are an issue in only a very limited number of cases, while the vast majority of cases are consumer chapter 7s, which seem to be where most of the real problems lie. Also, the meetings of the Commission seem to be patronized by a number of special interest groups.. While Congress has proclaimed loudly in legislative history that people should be in chapter 13 rather than chapter 7, it has cut back the rights of chapter 13 debtors and not enhanced them. Perhaps the NBRC should devote more time to the vast majority of cases, which are consumer chapter 7s, and less on esoteric issues like contingent claims. The NBRC should pay less attention to special interest groups, and more to practitioners in the field.
NBRC-
0649
Elizabeth S. Petersen Attorney


Author is concerned about how bankruptcy proceedings are reported. Often creditors will take the position that they are reporting against a debt and therefore they can report against the co-debtor as well as against the debtor. Also, many creditors maintain the account as an open account during the time of the Chapter 13 payment plan, and then report it to the credit bureau when the plan is completed after 4 or 5 years. This blindsides the debtor when, at the end of the plan, he gets a new bad mark. Nothing should be reported on the co-debtor at all, and if a charge off is the result of a bankruptcy, it should occur at the time that the bankruptcy is filed and not be allowed to be reported later on.
NBRC-
0650
Samuel L. Bufford Bankruptcy Judge, Central District of California


Author likes the idea of credit rehabilitation for chapter 13 debtors who complete their plan payments. "Apparently the credit reporting agencies are unwilling to change their practice of refusing to distinguish between a completed chapter 13 and any other bankruptcy case, unless compelled by law."
NBRC-
0651
frank E. Berrish President/CEO, Visions Federal Credit Union


Author makes random comments on proposed changes. He is in favor of random audits to detect fraud and abuse, and suggests increasing the petition filing fees to help fund this expense. Debtor education or counseling should be mandatory for those filing for bankruptcy. The minimum time before refiling should be at least ten (10) years. A creditor should be able to retain all of its normal contractual rights with respect to collateral which has been pledged in good faith. Finally, re-affirmation agreements should be utilized for all debts under a Chapter 7 plan for a debtor who is continuing to pay.
NBRC-
0656
Celia Woodham Director of Compliance, Chartway Federal Credit Union


Author writes about the credit union's likes and dislikes about the consumer bankruptcy proposals. They like random audits. Six years is acceptable before a refiling, but 10 would be better. They support financial education programs. They like the proposed provisions relating to the automatic stay. They are in favor of the annual review of a debtor's income by the trustee. They support incentives to debtors to file Chapter 13 instead of Chapter 7, such as reducing the period of time the bankruptcy stays on their credit report. They do not agree with not allowing reaffirmations. For the sake of uniformity, valuation of property in Chapter 13 should be the median between wholesale and retail. Unsecured creditors who knowingly extend credit when they know that the consumer is already overextended should not be afforded pro rata distribution in a Chapter 13 plan. Non-purchase money liens should have the same protection as other secured debts in bankruptcy.
NBRC-
0657
John D. Leahy Chief Executive Officer, Cinfed Employees Federal Credit Union


Author writes about the credit union's likes and dislikes about the consumer bankruptcy proposals. Same issues and views as in NBRC-0656
NBRC-
0661
Marilyn Shea-Stonum US Bankruptcy Judge Memorandum dated May 5, 1997 re: Response to Draft #1 Of Consumer Bankruptcy Issues Group

Author encloses an initial draft memorandum of her responses to the March 5 consumer working group memorandum. The author's memorandum parallels that of the working group in its comments.
NBRC-
0694
James H. Cossitt Attorney


Author fully agrees that uniformity is a desirable goal. "The adoption of uniform standards for federal exemptions, repayment templates, "ride through" of secured debt and valuation disputes will be welcome changes." "In addition to the areas identified in the draft proposal, the Commission might also consider increased uniformity in the: 1) standards for hte willful and malicious exception to discharge under § 523(a)(6); 2) legal standards applicable to prebankruptcy planning, such as the conversion of nonexempt into exempt property."
NBRC-
0697
Jo White Law Clerk to Judge John C. Akard, U.S. Bankruptcy Court, Northern Distric of Texas


Author expresses doubts about the ability to achieve uniformity in the bankruptcy system - judges will all interpret the law differently. None
NBRC-
0697
Jo White Law Clerk to Judge John C. Akard, U.S. Bankruptcy Court, Northern Distric of Texas


Author makes observations as to how costs could be reduced.
NBRC-
0698
John K. Justin Attorney


Author makes random observations on various aspects of Draft No. 1 dated March 5, 1997. Author's basic attitude is summed up as "I find your proposals unsound, improper, ill-advised and bad law." He does, however, like the proposal for an accelerated discharge in Chapter 13, but doesn't know how it could be accomplished. "I would suggest further review as to minor refinements rather than the substantial changes you are currently proposing."
NBRC-
0699
Edith H. Jones Bankruptcy Judge


Judge Jones faxed these observations on the May 5 draft of the Proposed Consumer Bankruptcy Framework. In some cases these are merely questions, in some observations, in some concrete suggestions.
NBRC-
0700
Edgar M. Rothschild, III Attorney


Author comments on following aspects of consumer bankruptcy: need for successive filing; superdischarge; automatic stay; the template idea; incentives to file Chapter 13; abusive creditors; and , finally, regulation of the "rent-to-own" industry.
NBRC-
0712
Daniel H. Brunner Chapter 13 Trustee, Eastern District of Washington
507(a)(7), 523(a)(7) 1322(a)(2) In the 1994 amendments, Congress added child support as a §507(a)(7) priority. In doing so, Congress lifted the language out of §523(a)(5), but left out the parenthetical exception to the exception dealing with assignments to a state or political subdivision. This has permitted debtors whose back child support has been assigned to a state child support collection agency to claim and argue that to the extent the child support has been assigned, it is not entitled to priority status. Consequently, in Chapter 13 the debtor is not required to pay that child support in full during the life of the plan as required by U.S.C. 1322(a)(2). "My suggestion is to amend §507(a)(7) to include the parenthetical language of §523(a)(5)(A), which is the exception to the exception. This will mean that assignment of a child support claim to a state agency will not cause that claim to lose its priority status.
NBRC-
0725
Jennie Deden Behles Attorney; Chairman of the Consumer Focus Group of the American College of Bankruptcy. Copy of Position Paper on Consumer Bankruptcy - Fellows.
10 The American College of Bankruptcy is concerned that the voice of debtors and their representatives are not being heard in the debate over changes in consumer bankruptcy. They also are concerned that they have not yet seen specific proposals for changes in consumer bankruptcy law which they can comment on. Author asks that the American College of Bankruptcy be kept informed and be provided with proposals by the Consumer Working Group by fax or e-mail.
NBRC-
0726
Ken Crone, Saul Eisen, Hank Hildebrand, Ike Shulman American Bankruptcy Institute Consumer Bankruptcy Reform Forum


Reform in the way credit bureaus report bankruptcies could provide incentives for debtors to choose Chapter 13 over Chapter 7. Chapter 13 debtors who complete their plans should get a more favorable credit report. 1) Bankruptcies must be reported by Chapter; 2) Completed Chapter 13 plans must be reported by the percentage of the unsecured debt which was repaid; 3) If the debtor completes a Chapter 13 and the credti reporting on all the debts included in the bankruptcy plan has expxired, the credit bureau should delete the reporting on various debts and delet the Chapter 13 bankruptcy as well; and, 4) Completion of a consumer finance education program would also be recorded int he credit bureau history.
NBRC-
0727
Wendell J. Sherk Attorney, Eric Taylor & Associates, P.C.


Author discusses incentives for debtors to file Chapter 13 instead of Chapter 7. He is upset that debtor's attorneys are criticized for recommending that their clients file Chapter 7, but it is often the best deal for their clients, and that is their job. Author sees the incentives for Chapter 13 as being the ability to deaccelerate and cure defaults and the superdischarge. "Positive markings on a credit report would help some marginal cases choose Chapter 13 but the best offer you could make to them is that the bankruptcy notation would come off their report completely upon completion of a plan or very shortly thereafter. The creditor community may want you to push Chapter 13 but not that much, I suspect." "One last note on incentives: Judge Jones indicated that the Draft Proposal #1 envisioned the revised Chapter 13 plan curing mortgages and paying secured claims over the life of the plan, no front-loading so those claims are saatisfied come what may. This is an absolutely incredible disincentive." "Chapter 13 is actually very well designed right now to have reasonable incentives." Change the requirements on credit reporting so that Chapter 13 cases get a better report, or so that their report is wiped clean. Do not change Chapter 13 plans so that their is no front-loading.
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.

"Just as there is come disparity between judges as to the percentage which must be paid to general unsecured creditors in a Chapter 13 plan, ther is a dispaarity between judges as to whether plans should be three or five years." "In order to provide a greater distribution to general unsecured creditors, it would be appropriate to consider a method to encourage five year plans particularly in view of the fact that car loans last 60 months." See attached letter from Judge Akard dated 3/26/97 concerning length of Chapter 13 plans.
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.

As presently drafted, Chapter 13 is flexible enough to meet the particular problems of each individual debtor. Each debtor has different financial and different emotional problems. Thus, each plana needs to be tailored to the situation of the particular debtor. As the parameters of Chapteer 13 are narrowed, the number of people who can receive relief under it and the number of creditors who can be benefited by it are reduced. Great care should be taken before placing any restriction on Chapter 13.
NBRC-
0730
Thomas C. Leduc Director of Regulatory Issues, Michigan Credit Union League


"The Code currently allows only the bankruptcy judge or the U.S. Trustee to raise objections to Chapter 7 filings based on the debtor's substantial abuse of the Code." "We suggest the Code be amended to allow Creditors the right to (within reason) raise substantial abuse objections."
NBRC-
0730
Thomas C. Leduc Director of Regulatory Issues, Michigan Credit Union League


"Not all creditors should be given the same priority in a Chapter 13 bankruptcy, because certain creditors, in a manner of speaking, play a larger role in contributing to the debtor's financial condition than others." "The Task Force proposes that creditors should somehow be ranked in relation to the extent to which their loans contributed to the debtor's insolvency. The Taks Force had no concrete formula for this ranking, however it was agreed that interest rate should be one of the factors (for example, within the class of unsecured creditors, those creditors charging higher interest rates would receive a smaller percentage of repayment than those charging lower interest rates). Other factors include annual fees, grace periods, and perhaps the age of the debt. If it is possible to quantify, the exten to which the credit application was scrutinized prior to granting credit should also be considered (i.e., an unsolicited offer of pre-approved credit should receive a lower ranking than credit that was granted as a result of the consumer's completion of a credit application)."
NBRC-
0730
Thomas C. Leduc Director of Regulatory Issues, Michigan Credit Union League Copy of In re Thena, Inc., U.S. District Court, District of Oregon. No. 95-6226-HO. October 6, 1995. Copied from Bankruptcy Law Reports, Commerce Clearing House, Inc., 1996, New Developments - Court Decisions.

"We note with concern language in the case of In re Thena, Inc. (copy enclosed) whereby a governmental unit ws allowed to retain forfeited property which, had it not been forfeited, could well have been available for distribution to the creditors in a bankruptcy proceeding. While the propriety of forfeiture laws in general is not our concern, we do believe it to be a wrong result when a governmental entity is allowed to retain what is in essence a windfall, while creditors in a bankruptcy who would otherwise have access to the proceeds of the assets involved are forced to bear an increased loss as a result of the forfeiture." "We recommend that the Code be amended to change this result; the real burden of a forfeiture should not fall on innocent creditors."
NBRC-
0732
Janet E. Hinrichs CEO, Des Moines Metro Credit Union


"Collateral valuations are a normal market risk in everyone's life. Why should bankrupts beceive special consideration in this area, putting all of the risk on the creditor" Do not permit cramdowns on non-purchase mortgage loans under Chapter 13.
NBRC-
0732
Janet E. Hinrichs CEO, Des Moines Metro Credit Union


"When creditors lose money because of someone's misfortunes or mistakes, they should have a right to historical information so that they con't help those same people to make the same mistakes again. Bankruptcy should have some negative consequences for those who use the system!" Do not legislate the removal of bankruptcy filings from credit reports after repayment of Chapter 13.
NBRC-
0757
National Association of Consumer Bankruptcy Attorneys (NACBA)



Written record of Proposals For Improving the Consumer Provisions of the Bankruptcy Code presented to the NBRC on May 14, 1997 by the NACBA. "NACBA believes that the existing consumer bankruptcy system is fundamentally sound..." The Proposal discusses various aspects of Chapter 13, Chapter 7, and the March 5, 1997 NBRC Draft Consumer Bankruptcy Proposals. In summary, the NACBA feels that the present system is functioning well, that minor improvements can be made, but that no major restructuring of consumer bankruptcy is warranted. The document contains proposals in its different sections.
NBRC-
0759
Peter Fessenden Standing Chapter 13 trustee for the United States Bankruptcy Court for the District of Maine


Written Testimony of Peter C. Fessenden to the NBRC on May 14, 1997. Speaker addresses three issues: 1) Should the "disposable income test" of § 1325(b)(2) be abolished in favor of a "template" approach; 2) Should § 1322(b)(2) be amended to permit the modification of junior non-purchase money mortgages securing real estate which is the debtor's principal residence; and, 3) Should § 109 and/or § 362 be amended to address problems of abusive filings 1) No; 2) Yes; and, 3) The amendment of § 362(d) to allow for in rem orders should be considered.
NBRC-
0788
Kathleen A. McDonald President, National Association of Chapter 13 Trustees (NACTT) Copy of a Memorandum prepared fromthe comments of the NACTT membership on Draft #1 proposal of the Consumer Bankruptcy Working Group, with 3 exhibits attached relating to the creation of budget guideline templates.

Author is forwarding a memorandum prepared from the comments of NACTT members on various aspects of the Consumer Bankruptcy Working Group Proposals. These deal with a variety of issues. Author's letter mentions that a majority of Chapter 13 trustees oppose the template proposal. Most responses indicated that no threshhold distribution was required, but the most common minimum for those who had one is 10%. This is basically commentary on NBRC Consumer Working Group proposals.
NBRC-
0790
Ed McKee Senior Loan Officer/Vice President, Whatcom Education Credit Union


"Chapter 13 plans seem confusing and take a long time in some cases to actually reach confirmation." Streamline Chapter 13 cases.
NBRC-
0791
Mallory B. Cuncan Vice President, General Counsel, National Retail Federation


The National Retail Federation desires to increase the share of Chapter 13 plans filed versus the Chapter 7 liquidations. To help do this, author proposes that those plans which have a higher success rate be studied, and transfer their procedures and ideas to other jurisdictions. Author categorizes the reasons for failure, and notes that not all cases where a plan is not completed are failures. In many instances, the purpose of the debtor will have been met. Author gives ten (10) suggestions for improving the success rate of Chapter 13 plans: 1) mandatory consumer education; 2) review budget under BLS standards; 3) annual review of income; 4) wage deduction; 5) allow higher attorney fees for Chapter 13; 6) teach legal community the preference for and benefits of Chapter 13 plans; 7) note chapter 13 plans and consumer education completed on credit reports; 8) offer credit rehabilitation to those who complete high percentage chapter 13 plans; 9) allow abatements for emergency situations; and, 10) have a needs based bankruptcy test and gatekeeper to determine who is eligible for Chapter 7 and Chapter 13.
NBRC-
0806
Jill M. Sturtevant Assistant General Counsel, Bank of America


Bank of America questions the necessity of the "false claim" provision of the consumer bankruptcy proposal as it is unclear what type of abuse this provision seeks to remedy and it is extremely punitive to creditors. If creditors are required to pay debtors' attorneys' fees for mistaken or "false claims, then debtors should be similarly required to pay creditor's fees when creditors are forced to defend their claims and win.
NBRC-
0806
Jill M. Sturtevant Assistant General Counsel, Bank of America


"Bank of America urges the full Commission to give serious consideration to the proposals contained in Judge Jones's May 23rd Memorandum on the Consumer framework." "The Bank of America stongly supports these proposals."
NBRC-
0807
Richard T. Wargo, Jr., Esq. Director, Compliance & Information, Pennsylvania Credit Union League & Pacul Services, Inc.


PACUL was not pleased with the March 5 draft from the Consumer Working Group. "The May 6th draft contains some encouraging proposals." However, author feels that the balance between debtor and creditor tips decidedly in favor of debtors, and that the new proposal increases the debtor's incentive to walk away from the debt through the super discharge granted at confirmation. "Meaningful bankruptcy reform permits a debtor a fresh start while instilling responsibility." "[W]hen the debtor applies for and obtains the privildege of a fresh start, his or her responsibility to complete the plan or honor the reaffirmation agreement must be stressed. In addition, creditors must be provided expedited relief where a debtor defaults."
NBRC-
0807
Richard T. Wargo, Jr., Esq. Director, Compliance & Information, Pennsylvania Credit Union League & Pacul Services, Inc.


"The proposal states that it shall be an unlawful practice for a creditor to engage in postpetition collection efforts or collect on a debt that has been discharged." "This language should be clarified such that credit unions will not violate federal law by enforcing the statutory lien on shares granted by the Federal Credit Union Act or the Pennsylvania Credit Union Code."
NBRC-
0831
David T. Sykes Attorney, Duane, Morris & Hecksher LLP Six summaries of bankruptcy cases filed in forma pauperis in Philadelphia under a pilot project showing the effectiveness and importance of having in forma pauperis filing status.

Authro writes to urge the Commission to consider in forma pauperis status for deserving individual chapter 7 debtors.
NBRC-
0844
David C. Andersen Attorney


Chapter 13 strikes a balance between payment of debts and ability to pay and should be the most attractive of options for all employed debtors. "By changing the law in the correct manner, Chapter 13 cases will become much more popular and will result in much more money being paid on past debts." "FAVORABLE TREATMENT ON CREDIT REPORTING IS THE MOST IMPORTANT OF ALL SUGGESTIONS TO ENCOURAGE CHAPTER 13 OVER CHAPTER 7." "1) Report Chapter 13 for only 3 years from the date of filing on credit reports; 2) Eliminate the requirement that a Chapter 13 debtor obtain permission of the Court or Trustee in order to obtain financing for automobiles when the debtor is represented by counsel.
NBRC-
0846
Paula E. Langguth Author, Bounce Back From Bankruptcy, Pellingham Casper Communications, LLC.


Author is against the establishment of a national filing system. "Such a system could be used by creditors to unfairly apply higher interest rates to people who have filed bankruptcy in the past. Such a system could wind up causing undue hardship and pain to people attempting to file, when the database shows them ineligible to file due to clerical errors or fraud from people using erroneous Social Security numbers." "A simpler approach would be to pull a person's credit report prior to discharging. Any previous bankruptcy would be listed, eliminating the need for a national registry."
NBRC-
0856
Ronald C. Sykstus Attorney, Bond, Botes, Sykstus & Larsen, P.C.

11 "...if it is thegoal of the commissin to increase chapter 13 filings, we believe that an amendment to the credit reporting act such as the following would go a long way to ensure successful chapter 13 filings, rather than chapter 7 filings." "The credit reporting act should be amended to completely erase negative credit, to include the bankruptcy filing, from a debtor's credit report upon completion of a sixty month chapter 13 plan. The commission could require a certain minimum percentage to be paid back under the chapter 13 plan on the order of 25%-50% of the unsecured debt, which would greatly increase what unsecured creditors would receive as compared to a chapter 7."
NBRC-
0860
Melvin J. Kaplan Attorney


"Both Congress and the Commission have made it clear that Chapter 13s are to be encouraged." "To increase Chapter 13 filings, all debts should be made dischargeable, confirmation standards should be relaxed, reasonable attorneys' fees must be allowed (comparable to what attorneys practicing in non-bankruptcy areas are paid) and attorneys' fees must be paid on a priority basis, before distribution to other creditors."
NBRC-
0884
Norma Hammes President, National Association of Consumer Bankruptcy Attorneys NACBA Review of NBRC Consumer Bankruptcy Working Group May 6 Draft Proposal

Author is forwarding copy of NACBA Review of NBRC Consumer Bankruptcy Working Group Draft of May 6, 1997. N/A
NBRC-
0908
Randy Osherow Editor, Minutes, San Antonio Bankruptcy Bar Association


Author sent copy of minutes of meeting of San Antonio Bankruptcy Bar Association which contained random comments in an open letter to the NBRC. Keep what works and improve it; Keep it simple; Privatize, Privatize, Privatize.
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. Author agrees with the proposal on different credit reports for those who choose Chapter 13 payment plans and those who complete them.
NBRC-
0933
Wendell J. Sherk Attorney


Author's thoughts on various consumer bankruptcy working group proposals while he recovers from back surgery at home. See letter
NBRC-
0934
Jean Braucher Professor of Law, University of Cincinnati College of Law Jean Braucher, "Counseling Consumer Debtors to Make Their Own Informed Choices--A Question of Professional Responsibility", 5 Am. Bankr. Inst. L. Rev. 165 (1997).


Author supports the proposed automatic conversion from chapter 13 to chapter 7 upon plan failure because it would save many debtors the expense of paying a new attorney's fee.
NBRC-
0937
Frank Hallum, Jr. Sr. Vice President, Community Educators Credit Union
11
Author believes that debtors should receive mandatory counseling before filing bankruptcy, that they should have the ability to reaffirm debts, that debtors having the ability to repay part of their debt be required to file chapter 13 instead of chapter 7, that cramdowns of second mortgages should not be permitted, and that debtors should not be permitted to retain collateral without a reaffirmation.
NBRC-
0955
ABI Consumer Bankruptcy Reform Forum American Bankruptcy Institute Letter 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-
0959
Norma Hammes Attorney; President, National Association of Consumer Banakruptcy Attorneys Copy of letter dated July 18, 1997 to The Hon. Orrin G. Hatch from the NACBA.

Author is forwarding copy of letter sent to all members of the Senate and House Judiciary and Banking Committees in response to the letter from the National Consumer Bankruptcy Coalition letter of July 14, 1997. The letter makes two main points: 1) NACBA wants to point out misleading statements made by the credit industry; and, 2) to point out several important elements of the Commission's tentatively-adopted Consumer Bankruptcy Framework about which NACBA has grave concerns. N/A
NBRC-
0961
Janice W. Welch Executive Vice President, Kimberly-Clark Credit Union


"I am against the approved changes to the bankruptcy laws recommended at your meeting in Detroit in June. Credit Unions do not need any recommendations made that will make filing bankruptcy more attractive." "Please consider an alternative that will help everyone involved instead of hurting other consumers and lending institutions."
NBRC-
0962
Eddie Gentry V.P. Loan Services, Educators Credit Union


"At a time when bankruptcy filings are increasing at an alarming rate, it would seem prudent to be conservative in any changes that would allow or encourage more people to file for bankruptcy protection." "We wish to appeal to you not to recommend such proposals as a ban on reaffirmations, 'cramdowns' of second mortgages in chapter 13 and the discontinuation of the 'needs-based test' to determine who can afford
 

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