Temporary Stay Granted for Katrina Victims from Provision of Bankruptcy Reform Law
WASHINGTON-The U.S. Trustees announced last week a temporary waiver of the statutory requirements for credit counseling under the new bankruptcy reform law for victims of Hurricane Katrina. Under the Bankruptcy Abuse Prevention and Consumer Protection Act, which takes effect Oct. 17, bankruptcy filers are required to undergo credit counseling within six months before filing for bankruptcy protection. However, the Trustees, a division of the Department of Justice, announced that this would be waived for those in Louisiana and Southern Mississippi who were victims of Hurricane Katrina. DOJ has not yet established a timeframe for discontinuing the waiver. "This underscores what CUNA's been saying for a while now: that the law has more than adequate flexibility built into it," CUNA Senior Vice President John McKechnie commented. He said the action taken by DOJ was entirely "reasonable." McKechnie added that some who have always opposed the bill may try to use this to roll back provisions more broadly, but he said they will not be successful. In addition, the Trustees announced that 41 credit counselors had been approved to satisfy the provision of the law. All appeared to be counseling agencies; no credit unions were on the list.