<p>WASHINGTON-Major credit union trade associations have written letters to the bankruptcy reform legislation conference committee prodding them to step on the gas. Conferees on the legislation responded favorably by arriving at a compromise on the homestead exemption during the two-and-a-half hour meeting last Tuesday. However, lawmakers are still working to come to an agreement regarding the clinic violence amendment. Bankruptcy reform legislation (H.R. 333 and S. 420) has sat stagnant in a conference committee since last congressional session. Credit union and other financial institution groups are anxiously awaiting its passage and it becoming law. In just the second formal meeting of the bankruptcy reform legislation conference, the conferees created a compromise on the homestead exemption, according to NAFCU Senior Lobbyist Murray Chanow, which now includes a $125,000 cap with a 40-month residency exception. That means that bankruptcy filers can retain up to $125,000 of the equity in their homes if they have lived there less than 40 months. Beyond that the state laws apply, which in some instances, like the president's home state of Texas, leave no cap on the equity that can be protected in bankruptcy procedures. Now only the clinic violence amendment, added by Senator Charles Schumer (D-N.Y.), remains a contentious issue in the bill. The New York Credit Union League visited Schumer's office last week to "encourage him to keep [his] eyes on the prize," CUNA Senior Vice President of Governmental Affairs John McKechnie said. The so-called Schumer amendment would prevent those convicted of violent acts against abortion clinics from getting out of paying their fines by filing bankruptcy. McKechnie said that conferees are working very diligently on this provision as well. Following the meeting, Conference Chairman James Sensenbrenner (R-Wis.) told McKechnie "the ball is on the one-yard line." After Sensenbrenner announced the meeting on the floor of the House while debating the farm bankruptcy bill, CUNA and NAFCU both wrote letters to the conferees urging quick action on the long-awaited legislation. "As mentioned to you in my recent letter," CUNA President and CEO Dan Mica wrote, "the need for this legislation is greater than ever. The number of bankruptcy filings in the United States continues to increase, and reached record growth in 2001. Additionally, the number of bankruptcies of credit union members continues to climb." "Enactment of responsible bankruptcy reform will help ensure that the bankruptcy system is fair for debtors, creditors and consumers," NAFCU President and CEO Fred Becker stated in the organization's letter. He asserted that because of the growth in bankruptcy filings, credit unions and others have to tighten their lending policies, which pushes "borrowers of small means or those with imperfect credit records farther from mainstream financial institutions and closer toward fringe lenders such as pawnbrokers and loan sharks." According to CUNA data, credit union bankruptcy filings grew by approximately 19% in 2000, the second fastest growth rate on record. NAFCU's letter noted that in 2001 bankruptcy filings hit a record of 1.49 million, up 19.2% from 1.25 million the previous year. Credit union member filings are up also, but not quite as high at 17.6%, or approximately 226,000 in 2001. CUNA and NAFCU both found credit union charge-offs related to bankruptcy last year landed at approximately $700 million, up $87 million from 2000. Since 1998, total charge-offs related to bankruptcy in credit unions have reached nearly $3 billion, CUNA said. CUNA is taking the issue one step further. As it has done in the past, the lobby group will also be running advertisements in two Capitol Hill newspapers Roll Call and CQ Daily Monitor, as well as the electronic publication Roll Call Daily. They also pumped up the volume on grassroots work. In addition to the New York League hiking the Hill to Senator Schumer's office, CUNA also had constituents from the Wisconsin Credit Union League who met with Chairman Sensenbrenner, as well as Senator Herb Kohl (D-Wis.) who is also on the conference committee. Additionally, every league with a conferee was encouraged to call and e-mail or fax letters to their representatives for relief from abuse of the current bankruptcy system. "There is a great will and want to get bankruptcy reform back on the House and Senate floor and to the president's desk," Chanow said. He observed that nearly all the conferees were present during the debate. The credit union community's three main concerns-means testing, mandatory financial education for filers, and voluntary reaffirmations for credit union members-have survived unscathed. [email protected]</p>