American Bankruptcy Institute Update

March 24, 2005

In This Issue

Highlights

Legislation Update

Calculating the Means Test Under the Coming Law

The coming new bankruptcy law will require that consumer debtors meet a means test before being eligible for chapter 7 relief. ABI Resident Scholar Jeffrey Morris provides an explanation of the means test at ABI’s special section on the bankruptcy bill. The summary and a list of external sources, including links to Census Bureau median income figures and Internal Revenue Service living-expense allowances, are available in the right-hand column of the bankruptcy bill news page.

Bipartisan Predatory Lending Measure Faces Dim Future

A bipartisan bill to protect consumers from predatory lending in the subprime mortgage market is gaining momentum in the House, but many stakeholders said the prospects for enacting it this year appear dim, CongressDaily reported. Lobbying sources said they expect several House Financial Services subcommittees to hold hearings this spring, but said it is too early to predict whether Financial Services Chairman Michael Oxley (R–Ohio) will move the bill through the full committee. They also note that Senate Banking Chairman Richard Shelby (R–Ala.) has not listed predatory lending legislation among the committee’s priorities for the 109th Congress. “Barring some event, I don’t think the [Banking Committee] will hold a hearing this year on predatory lending,” one lobbyist said, the newswire reported. A spokeswoman for Shelby said the committee is “extremely busy with a number of other important issues,” but added Shelby will “certainly be mindful of the legislation as it moves in the House.” The bill, introduced last week by Financial Services Housing Subcommittee Chairman Bob Ney (R–Ohio) and Financial Services Capital Markets ranking member Paul Kanjorski (D–Pa.), would create uniform national standards that would pre-empt state predatory lending laws.

Minimums Due on Credit Cards Are on the Increase

A Wall Street Journal article reports that credit-card issuers are bumping up monthly minimum payments in response to regulators’ concerns that liberal credit policies are hurting consumers. The article notes that MBNA Corp. said it plans to increase the required minimum monthly payments for new credit card accounts beginning in the third quarter, according to its 10-K filing to the Securities and Exchange Commission. Existing accounts will see an increase during the fourth quarter. Also, according to the Journal, in recent weeks Citigroup Inc. said it would change the minimum payments for its credit card accounts this year, while J.P. Morgan Chase & Co. notified some cardholders this year that it plans to boost minimum payments during the third quarter. Bank of America Corp. and Morgan Stanley’s Discover card unit raised minimum payments on many of their cards last year. The moves by credit card issuers are in response to guidelines issued in 2003 by federal bank regulators, who expressed concerns that competitive pressures have led to an easing of minimum-payment requirements in order to keep cardholders’ balances high, according to Barbara Grunkemeyer, deputy comptroller for credit risk at the Office of the Comptroller of the Currency, which helped develop the guidelines, the paper reported. As a result, consumers increasingly were caught in a spiral of seeing balances increase, even while making on-time payments. Read the full article.

April Edition of ABI Journal to Hit Desks Soon

The latest edition of the ABI Journal will reach you in the coming weeks. The April issue provides information on the coming new bankruptcy law and articles on D&O claims, ramifications of taking actions against former committee members, consumer debt collection, an update on the credit counseling “storm,” electronic discovery, credit markets, two articles on “critical vendors” and much more.

Audioconference to Address Strategies for Prosecuting and Defending Preferences, March 30

The first of the “Best of ABI” audioconference series will be held next week. The series brings the highest-rated sessions from each ABI conference right to your office. The original speakers will present the highly acclaimed session again, complete with the original educational materials. CLE/CPE credit will be available in certain states.

The Best of the 2005 Rocky Mountain Bankruptcy Conference live audioconference, “Strategies for Prosecuting and Defending Preferences: ‘Pouring Salt or Salve on the Wound’” will be held on March 30, 2005, at 3 pm (ET). Issues, strategies and practice tips on prosecuting and defending preference actions will be presented from various viewpoints, including those of the debtor-in-possession, the trustee and creditors. Visit ABI World for more information about the program or to register.

Register for the Annual Spring Meeting Today and Save $30

Register by Friday, April 1, for the Annual Spring Meeting in Washington, D.C., April 28–May 1, and save $30 off the late registration rate. Leading bankruptcy judges and nationally acclaimed practitioners will convene in the Nation’s Capital for four days of networking, CLE/CPE programming and top-notch entertainment. The coming new bankruptcy law will be featured. George Will of ABC’s This Week and Newsweek will keynote the Friday Luncheon. Comedian Richard Jeni and ABI’s house band, the Indubitable Equivalents, are highlights of the Final Night Gala Dinner. Register online today.

Special Legislative Edition of Professional Compensation Committee e-Newsletter Now Online

A special edition of the Professional Compensation Committee e-Newsletter addresses the new bankruptcy bill and implications for professional compensation issues. The newsletter also includes recent court of appeal decisions interpreting 11 U.S.C. §§328, 330 and 331.

Read the newsletter today.

Latest Job Postings at ABI Career Center

Check out the ABI Career Center. The Center is a one-stop site for job seekers and employers in the insolvency community. Career Center resources are available free to both employers and job seekers. New positions are featured daily. The latest listings include: