Santa Fe Springs, CA ? Operations representatives from a wide spectrum of consumer creditors from financial institutions, consumer finance, credit card, and telco companies, along with collection vendors and attorney firms gathered in Dallas on Thursday, June 2 to hear about the details and impacts of the Bankruptcy Abuse and Consumer Protection Act of 2005.
The response was overwhelmingly positive, with many attendees voicing surprise at how complicated it will be to accommodate the new legislation. The resulting dialogue will continue as creditors and vendors format their operational strategies to meet the new requirements.
The expectation is that some of the less clearly written sections of the new law will be corrected with future legislation. These corrections and clarifications may not be completed in the near future and the operational impacts of some aspects will require review of how the courts interpret the changes.
The forum, sponsored by Resource Management Services, Inc., featured an introduction and legislative background of the Act from Sam Gerdano, then details of the new Bankruptcy Law from Henry Hildebrand, Chapter 13 Trustee from the Middle District of Tennessee and Richardo Kilpatrick, from the Law Firm of Kilpatrick and Associates, P.C. This session explored the changes to Chapter 7 and Chapter 13, with detailed specifics of the Bankruptcy Code. An afternoon session for secured creditors with Hilary Bonial, Chief Bankruptcy Counsel and Director of Bankruptcy Quality Assurance with Brice, Vander Linden & Wernick, P.C., focused on the operational impacts to the secured creditors and highlighted some of the operational business decisions they will need to make. The unsecured creditor?s afternoon session was presented by William Weinstein, of Weinstein & Riley, P.S. and explored impacts on the operations of credit card issuers and other unsecured creditors. Specific focus was given to documentation requirements and PMSI.
Some of the highlights of the changes from the new Bankruptcy Law from Sam Gerdano, Executive Director of the American Bankruptcy Institute include:
“Means Test for Chapter 7 Eligibility ? The Trustee or any creditor can bring a motion to dismiss under §707(b) if the debtor’s income is greater than the state median income. Abuse is presumed if the debtor’s currently monthly income (as determined by an average of the previous 6 months) less secured payments divided by 60, less priority debts divided by 60, less the allowed expenses permitted by the IRS, less certain other allowed expenses, is greater than $100 per month of a Chapter 13 plan. Debtors who meet this new standard would be shifted to 5 year repayment plan in Chapter 13.”
“Limit on Auto Lien Stripping in Chapter 13 – A Chapter 13 plan must provide that a secured creditor retain its lien until the payment of the entire debt, not just the secured portion, where the creditor holds a security interest in a motor vehicle purchased within 910 days of the filing.”
“Notice to Creditors – Notice to be given by a debtor to creditors must be to the address designated by the creditor, either in communications to the debtor or by the creditors preferred address as provided to the court. Such notice to creditors must include account numbers.”
This was the first of three scheduled forums taking place between now and the end of July. For additional Bankruptcy Educational Forums for Creditors: http://www.resourcemanagement.com/bkedforums/.
For additional information on the new bankruptcy law, see Sam Gerdano’s article at http://abiworld.net/bankbill/changes.html.
