National Association of
Consumer Bankruptcy Attorneys
NACBA is the only national organization dedicated to
serving the needs of consumer bankruptcy attorneys and protecting the
rights of consumer debtors in bankruptcy. Formed in 1992,
NACBA now has more than 3000 members located in all 50 states
and Puerto Rico.
NACBA has also played a critical role in
many important court cases affecting the rights of consumer bankruptcy
debtors by filing amicus briefs in U.S. Courts of Appeal and the
Supreme Court, with many of those case decisions influenced by NACBA's
participation. In addition, NACBA provides the most comprehensive
educational programs in the country for consumer bankruptcy attorneys
with its annual conventions and workshops.
Capitol Hill Meeting 2009
Data Shows "Foreclosure Prevention" Fixes Fail to Work
Posted: December 18, 2008
PRESS RELEASE: Near Half of Homeowners in “Loan Modification” Programs Face Higher Monthly Payments; Failure of Voluntary Industry Efforts Hikes Pressure on Incoming Obama Administration, New Congress to Clear Way for Court-Supervised Modifications.
WASHINGTON, D.C.//December 19, 2008//Much hyped “foreclosure prevention programs” relying on voluntary loan modifications are failing to reach a significant number of troubled homeowners and are often backfiring when they do so, according to newly updated research released today by the National Association of Consumer Bankruptcy Attorneys (NACBA). The across-the-board failure of these much ballyhooed “fixes” for the foreclosure crisis are expected to result in the new President and Congress facing considerable new pressure to clear the way for court-supervised loan modifications that will prove more beneficial for homeowners. The findings released today by NACBA come on the heels of a dire new projection from Credit Suisse that “over 8 million foreclosures (are now) expected” over the next four years in the U.S. That astounding level accounts for 16 percent of all mortgages –- including 59 percent of all subprime mortgages and more than 11 percent of all other mortgages, including Alt-A, options ARMS and even those in the prime category. This new forecast from Credit Suisse is up sharply from the two to six million foreclosure range cited in previous estimates from industry sources.
John Rao Testifies Before Senate Judiciary Committee
Posted: December 09, 2008
NACBA Member John Rao testified before the full Senate Judiciary Committee on December 4, 2008 at a hearing on "Credit Cards and Bankruptcy: Opportunities for Reform."
Before adjourning, both the House and Senate approved with unanimous support S. 3197, the "National Guard and Reservists Debt Relief Act." The bill now goes to the President for his signature. The legislation would exempt certain qualifying reserve component members of the Armed Services and National Guard members form the means test's presumption of abuse if a petition is filed within 540 days after they complete active duty. The bill responds to the fact that some who serve in the National Guard and the Reserves encounter financial difficulties and that they should not be subject to the additional proof requirements of the means test.
Katherine Porter, a law professor at the University of Iowa and frequent speaker at NACBA programs, recently published an article about the credit solicitations that debtors receive after bankruptcy. Bankrupt Profits: The Credit Industry's Business Model for Postbankruptcy Lending reports Consumer Bankruptcy Project data that show that chapter 7 debtors are inundated with offers for both secured and unsecured credit after bankruptcy. The article was just published in volume 93 of the Iowa Law Review. It may be downloaded at no charge at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1004276.
On October 2, NACBA member Paul Uyehara testified on behalf of NACBA atrnthe House Judiciary Subcommittee on Administrative and Commercial Law hearing on "The United States Trustee Program: Watch Dog or Attack Dog?? Here's Paul's report:
"My testimony, much of which was prepared by NACBA president Henry Sommer, explained NACBA's criticisms of the UST program policies and practicesrn- the apparent anti-debtor bias, burdensome document requests, complaints about insignificant or non-existent defects in filings, UST attendance at 341 meetings together with insignificant, irrelevant or just plain nasty questioning of debtors, failure to consider costs and benefits of demands made of debtors, overbearing auditors, erroneous filing of material misstatement notices, and overly aggressive litigation practices. In addition, I highlighted EOUST's ongoing failure to provide interpreters for limited English proficient debtors at meetings of creditors and their half hearted attempts to have the bankruptcy counseling agencies be accessible to these debtors.
In In re Sanders, No. 08-1201 (6th Cir. 12/29/2008), the Sixth Circuit addressed the requirement in 11 U.S.C. § 1328(f)(1) that a debtor wait four years before initiating a Chapter 13 proceeding after having received a Chapter 7 discharge, finding that the four-year period begins to run at the time of filing the Chapter 7 action rather than from the date of the issuance of the discharge.Acknowledging that its reading of the statute created certain complications with respect to § 1328(f)(2), which limits the filing of consecutive Chapter 13 cases, the court declined to attempt to unravel Congress’ intent, and instead relied on the plain grammatical meaning of the language of the statute.
BAPCPA Gag Rule Found Constitutional by Fifth Circuit
Posted: December 19, 2008
In In re Hersh, No. 07-10226, (5th Cir. 12/18/2008) the Fifth Circuit addressed the constitutionality of 11 U.S.C. § 526(a)(4) and § 527(b). After finding that bankruptcy attorneys qualify as ‘debt relief agencies’ under 11 U.S.C. § 101(12A), the court affirmed the district court’s holding that § 527(b), which compels that certain information regarding bankruptcy proceedings be conveyed by the “debt relief agency” to “assisted persons,” does not violate the First Amendment. The court reversed the district court’s finding that § 526(a)(4), which prohibits an attorney from advising his or her client to incur debt in contemplation of filing for bankruptcy, is facially unconstitutional.
Debtors Score Important Car Ownership Allowance Victory in 7th Circuit
Posted: December 17, 2008
The Seventh Circuit Court of Appeals has adopted NACBA's position that a debtor is entitled to claim the car ownership allowance in the section 707(b) means test regardless of whether the debtor is currently making payments on a car loan. The decision in In re Ross-Tousey was the first circuit court opinion on the issue, and it adopted many of the arguments made in the amicus brief filed by NACBA. The court ruled that its result was dictated by the plain language of the statute, legislative history, and the underlying policies of the means test to use objective standards rather than actual expenses where the Code dose not specifically state that actual expenses should be used. The same issue is being litigated elsewhere and NACBA is participating in many of those cases. NACBA will shortly be filing an amicus brief in the Third Circuit.
The Supreme Judicial Court of Massachusetts has upheld a preliminary injunction against Fremont Investment & Loan that limits its ability to foreclose on certain loans without review by the Massachusetts Attorney General or a court order. In Commonwealth v. Fremont Investment & Loan, 2008 WL 5122699 (Mass. Dec. 9, 2008), the Court affirmed the injunctive relief in favor of the Massachusetts Attorney General based on finding that Fremont’s lending practices were unfair under Mass. Gen. Law c. 93A, §2. NACBA joined several other consumer groups in filing an amicus brief supporting the Attorney General’s position.
Pyrrhic Victory for the Debtor in 6th Circuit BAP Case
Posted: December 07, 2008
The Bankruptcy Appellate Panel of the Sixth Circuit recently issued an opinion in In re Thomas, 395 B.R. 914 (B.A.P. 6th Cir. 2008), a case in which NACBA assisted debtor’s counsel in writing a brief. The issue raised on appeal by the Chapter 13 trustee was whether the bankruptcy court erred in holding that above-median-income debtors could claim secured debt expense deductions for collateral they intended to surrender through their Chapter 13 plans. The court agreed with the debtor that in calculating “disposable income” above-median-income Chapter 13 debtors were entitled to deduct payments that they were contractually obligated to make on the petition date to secured creditors, even though debtors intended to surrender collateral securing this indebtedness.
Ninth Circuit Supports NACBA Position In Kagenveama
Posted: July 31, 2008
Consumer debtors, ably represented by NACBA member Andrew Nemeth (Phoenix, AZ), scored an important victory in the Ninth Circuit Court of Appeals.
In Maney v. Kagenveama, the appellate court held that under the plain language of section 1325(b) disposable income for over median income debtors is determined by the section 707(b) formula incorporated in section 1325(b)(3). The court rejected the trustees' arguments that disposable income should be determined by Schedules I and J, that the formula is a "starting point", and that it is a "forward looking concept."
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