Bankruptcy Law News and Developments
April 4, 2008
Durbin’s Bankruptcy Amendment Gets Tabled
U.S. Senator Dick Durbin’s legislation that would have given bankruptcy judges the power to modify the terms of mortgages under strictly limited circumstances in an effort to help avert foreclosure was defeated in the Senate this week. Durbin’s amendment that would have changed bankruptcy law and affected only mortgages already in place upon enactment had been heavily opposed by the banking industry and many Republicans. Following the 58-36 vote in opposition of the amendment, Durbin (D-IL) defended his legislation, saying that it would have helped more than a half million Americans facing foreclosure. He also criticized the bankruptcy industry and its alleged “powerful friends in the Bush administration and the Senate” for the bill’s failure.
Bankruptcy Filings up in February from January
Earlier this week, National Bankruptcy Research Center (NBKRC) data as analyzed by the American Bankruptcy Institute (ABI) revealed that bankruptcy filings were up 15.2 percent in February as compared to January 2008.
More specifically, February 2008 witnessed 76,120 consumer bankruptcy filings as compared to 66,050 filings the month before. In comparison to February of last year, February 2008 bankruptcy filings were up 37.3 percent.
Chapter 13 bankruptcy filings accounted for 36.4 percent of all consumer bankruptcy filings in February (a testimony to the current foreclosure crisis) but were slightly down from this past January.
Rate of Consumer Loan Delinquencies at Highest Levels since 1992
In related news, the American Bankruptcy Association just announced in a quarterly study released this week that more Americans have fallen behind on consumer loans that at any time in nearly 16 years.
According to the study, the percentage of loans at least 30 days past due rose from 2.44 percent in the third quarter of 2007 to 2.65 percent in the fourth quarter. For comparison’s sake, the percentage of loans at least 30 days past due in the fourth quarter of 2006 was at 2.24 percent.
Way back in the first quarter of 1992, consumer loan delinquencies were at 2.75 percent, the highest level seen in relation to the recent fourth quarter findings.
In addition to the housing crisis, other culprits attributed for this high fourth quarter delinquency rate included less consumer purchasing power and problems with “indirect” auto loans made through dealerships.
April 19, 2007 - The final order has been entered in one of the earliest cases challenging the Constitutionality of BAPCPA's restraints on attorney speech and the classification of attorneys as debt relief agencies under the statute. The Minnesota court held both un-Constitutional as to Minnesota attorneys. Read the Summary Judgment Order here: Portions of BAPCPA Un-Constitutional.
For additional discussion of the order and the Constitutional challenges to BAPCPA, visit the Bankruptcy Lawyers Blog at:
February 21, 2007 - The United States Supreme Court upheld the determination that the right to convert from a Chapter 13 to a Chapter 7 bankruptcy plan is not absolute, agreeing that a petitioner who acted in bad faith could be denied the right of conversion. Read the full Supreme Court opinion here: MARRAMA v. CITIZENS BANK OF MASSACHUSETTS et al.
For a summary of the Court's opinion, visit the Bankruptcy Lawyers Blog at: