Report of American Bankruptcy Institute’s Commission on Consumer Bankruptcy
William Houston Brown, U.S. Bankruptcy Judge, Retired and Co-Chair of the Commission
On April 11, 2019, the American Bankruptcy Institute (“ABI”) released the Final Report of its Commission on Consumer Bankruptcy (“Commission”), and that Report is available at www.abi.org/Consumercommission. The
Commission was created in December 2016 to research and recommend improvements to the consumer bankruptcy system. ABI’s charge to the Consumer Commission was to make recommendations that could be implemented within the Bankruptcy Code’s existing structure. Therefore, the Commission did not undertake wholesale changes to the Bankruptcy Code, but the Commission’s Final Report does include some recommendations for amendments to both the Code and the Bankruptcy Rules designed to make the consumer bankruptcy system more accessible and efficient for both financially struggling Americans and the professionals who serve them. After soliciting public feedback, Commission members identified nearly 50 discrete issues for study and divided these issues among three advisory committees: Chapter 7, Chapter 13, and Case Administration and Estate.
The commissioners and committee members were composed of 52 bankruptcy professionals, representing all diverse stakeholders in the bankruptcy system. The Commission’s membership included several Fellows of the American College of Bankruptcy, including its co-chairs, retired Bankruptcy Judges Elizabeth L. Perris and William Houston Brown. Other Fellows on the Commission are Retired Bankruptcy Judges Eugene Wedoff and David W. Houston III, Rudy J. Cerone, Samuel J. Gerdano, Henry E. Hildebrand, III, Richardo I. Kilpatrick, Professor Bruce A. Markell, Ronald L. Peterson, and John Rao. The Commission’s Reporter, Professor Robert M. Lawless is also a Fellow, and some of the three committees’ members are also Fellows. A full listing of the Commissioners and committee members is part of the Commission’s Final Report.
Some of the significant issues addressed in the Final Report include:
• Racial justice in bankruptcy
• Student loans in bankruptcy
• Bankruptcy rule improvements
• Chapter 7 trustee compensation
• Remedies for discharge violation
• Protection of interests in collateral repossessed pre-petition
• Chapter 7 and 13 attorneys’ fees
• Attorney competency and remedying lawyer misconduct
• Credit counseling and the financial management course
• Means test revisions and interpretations
• Chapter 13 debt limits
• Reserve fund in chapter 13 cases
As examples from the Report, the student loan recommendations included legislative revisions, best interpretation of current law by the courts, and administrative improvements by the Department of Education and servicers of student loans. Because the Department of Education requested public comment on possible changes to its administrative procedures before the Commission’s Report was final, the Commission decided to submit its recommendations for administrative improvements prior to the release of the full Report. Illustrations of the scope of the issues related to student loans include the Commission’s recommendation that the current undue hardship test for potential discharge of student loans be construed by the courts asdations included that section 523(a)(8) of the Bankruptcy Code should only apply to student loans made, guaranteed or insured by a governmental unit, with nongovernmental loans given no protection from discharge.
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