American Bankruptcy Institute Update

July 26, 2005

In This Issue


Legislation Update

House Judiciary Committee Hears Testimony on New Bankruptcy Law

The House Judiciary Committee’s Subcommittee on Commercial and Administrative Law today held hearings on the implementation of the new law. Witnesses included Clifford J. White III, acting director, Executive Office for United States Trustees; Honorable A. Thomas Small, United States Bankruptcy Judge for the Eastern District of North Carolina (on behalf of Judicial Conference of the United States); Travis B. Plunkett, Consumer Federation of America, National Consumer Law Center, U.S. Public Interest Research Group; and George Wallace, Esq., Coalition for the Implementation of Bankruptcy Reform.

The witnesses made short statements, after which questions from committee members were entertained. The credit counseling provision of the law dominated the testimony, which covered such issues as certification of credit counseling organizations, ensuring the integrity and quality of credit counseling firms, the efficacy of credit counseling to prevent bankruptcies, and the handling and disposition of consumer tax returns, which can be requested by creditors who show cause of need of such information.

Judge Small said that permanent bankruptcy rules are expected to be finalized on Dec. 1, 2008, after a rigorous schedule of hearings and public comment periods. He said that the interim rules are expected to be approved in mid August.

The witnesses also discussed the cost of implementing the new law, which all said would be covered by the increased filing fees called for in the law. Copies of the prepared statements and other documentation were not available at press time, but are expected to be made available to the public later in the week.

Senate Pension Bill Markedly Different from House Version

The Senate Finance Committee moved today to overhaul private pension, CongressDaily reported. The bill was passed by voice vote and sent to the Senate floor. Senate Finance Chairman Charles Grassley (R–Iowa) said the bill is not likely to be taken up until late September and might be rolled into a budget reconciliation package to account in part for probable premium increases charged to companies sponsoring pension plans. Though the bill appeared to have strong bipartisan support in the committee, it contains several provisions that could create problems in a conference with the House. Furthermore, it contains a “yield curve” formula for calculating corporate contributions to plans that has drawn criticism from the Bush administration. While the bill does not provide for a complete bailout of the financially troubled airline industry, it does set up a process that enables the carriers to improve their pension funds over a 14-year period. Like a few other provisions, this feature of the Senate bill is not in the House bill. Incidentally, the latter is still a work in progress as House leaders strive to include its reform bill in an omnibus “retirement security” measure that includes Social Security overhaul. Read Grassley’s statement released today.

Debtor Relief or Grief? The Bankruptcy Act of 2005

When did Americans become so blasé about paying their debts? In less enlightened times, chronic debtors found themselves in prison until their accounts could be paid. Eighteenth– and nineteenth-century literature is crammed with lurid tales of the shame and stigma associated with debt, poverty and insolvency. Read the DC Bar Journal’s analysis of the history of cultural attitudes about bankruptcy.

Read Prof. Todd Zywicki’s response.

Consumer Confidence Slips

U.S. consumer confidence slid unexpectedly in July amid a mixed view of the jobs market, as optimism over the outlook also lost ground, according to a report released today. The Conference Board, a private research group, said that its index of consumer confidence waned for the current month, slipping to 103.2, from the revised 106.2 seen the month before. It had been expected to do better: The median expectation of a survey of economists conducted by Dow Jones Newswires had been for a reading of 106.0.

Despite the softening state of consumers’ economic assessments, the Conference Board cautioned against reading too much into the current drop. ”This month’s decline in consumer confidence is no cause for concern,“ said Lynn Franco, an economist with the group. “The overall state of the economy remains healthy and consumers’ outlook suggest no storm clouds on the short-term horizon,“ she added. Read the full report.

Federal Reserve Board Launches Secondary School Project

The Federal Reserve Board on Tuesday launched a new online project with USA Today that teaches middle school and high school students about economics and personal finances by challenging them to construct a newspaper front page. Students are provided with instructions and a template of the front page of The Fed Today. Over four weeks, they are expected to consult the Federal Reserve’s recently redesigned education web site for information needed to complete all of the elements of the page, including headlines, photos, captions, graphs and statistics. The project helps teachers meet national and state academic content standards for high school economics and personal finance courses. Browse the project’s web site.

Webinar Series on New Bankruptcy Law Available Online

ABI’s popular Webinar series on the new law is now available online 24/7/365! The first five programs, which covered all aspects of the new law, can be accessed in the convenience of your office. Registrants will receive a copy of the Code and electronic copies of the materials. The archived sessions include:

Don’t miss your chance to participate in the two remaining Webinars:

Click on each one to register.

Health Care Committee Newsletter Now Available Online

The latest issue of the newsletter features “Sales of Not-for-profit Assets after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. (BAPCPA).” BAPCPA, signed into law by President Bush on April 20, 2005, will have an immediate impact on sales of not-for-profit (NPF) debtor assets.

ABI World Tutorial Highlights Search Engine

Do You Know?

A new online tutorial focuses on the capability of ABI’s search engine. The tutorial features a visual demonstration of how to use the online search engine and locate documents quickly and easily on a particular bankruptcy topic within the thousands of articles, reports, publications, court documents and many other sources available at the ABI World web site. This is the third in a series of tutorials that will highlight the many resources and services available at ABI World.

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: