A couple of years have passed since the consumer bankruptcy changes of 2005. A glance at my Bankruptcy
category page shows that this is a topic on which I've spent a pretty fair amount of time.
Thanks to Elizabeth Warren's blog
, tonight I stumbled across an interesting document from Henry Sommer, the President of the National Association of Consumer Bankruptcy Attorneys. The PDF of his testimony
relates his opinion on just how things have gone for consumers since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect.
Quotes I found interesting:
Bankruptcy has gone from being a relatively low-priced proceeding that could be handled quickly and efficiently to being an expensive minefield of new requirements, tricks and traps that can catch the innocent and unsuspecting debtor.
Huh. Wasn't that the idea? I mean, banks were behind this thing from the get-go, right?
...the problems of consumer debtors are only exacerbated by the aggressive anti-consumer stance of the United States trustee program. We have seen in that part of the Justice Department the same kinds of things we have seen with the United States Attorneys and with other administrative offices. The independent decisions of career personnel and local offices have been subordinated to central directives from a politicized central office dedicated to serving the political interests of the administration – in this case by effectively becoming an arm of the administration’s corporate backers in the financial services industry and trying to make bankruptcy as difficult and unattractive as possible.
Wait ... didn't I just say that?
While spending enormous resources on going after minor document defects in papers filed by consumer debtors, the program has done virtually nothing to address the widespread fraudulent claims and charges of mortgage companies in bankruptcy, the practice of some creditor attorneys who have filed false documents on a regular basis, and other creditor abuses.
But wouldn't that involve "consumer protection?" I don't see where that was ever intended to have anything
to do with this. Oh, wait — those words were in the title
of the legislation. Silly me. Sounds like somebody made an oopsie.
Unlike any other secured debts, most home mortgages are protected from changes in their interest rates, payments, and other terms in chapter 13 cases.
See, I didn't know this. But it sure doesn't bode well for ARM-holding households if the terms of their mortgages can't be modified in BK proceedings, does it?
In any case, Sommer's description of all the paperwork and effort now required on the part of petioners and attorneys alike (see pages 4 through 6) is pretty enlightening. I recommend reading that much, if nothing else.
You can read more related testimony at: Hearing on the Second Anniversary of the Enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005: Are Consumers Really Being Protected Under the Act?
Oh yes — I still think BK reform was necessary.