WASHINGTON-Bankruptcy filings are reaching new heights as Congress yet again failed to pass a bankruptcy abuse reform bill. According to the Administrative Office of the U.S. Courts, more bankruptcies were filed during the 12-month period ending September 30 than ever before. Bankruptcy filings jumped 7.7% in fiscal year 2002, from 1,437,354 in fiscal year 2001 to 1,547,669. This number is up from the previous 12-month record set June 30 of 1,505,306. Personal filings rose 7.8% to a record 1,508,578 from the FY 2001 data, while business filings totaled 39,091, up 1.6% in the same period. All bankruptcy chapters' filings rose: 6.9% in Chapter 7 (permits filers to keep exempt property while remainder sold to pay creditors) to nearly 1.1 million cases; 9.5% in Chapter 13 (creditors may be repaid in installments, in full or in part, over a 3- to 5-year period) to 451,258 filings; and 10.9% in Chapter 11 (allows business to continue operations while developing repayment plan) to 11,669. Chapter 12 filings for family farm bankruptcies dropped 15% to 322. Bankruptcy judges' caseloads have increased 59% over the past decade from 2,998 cases per judge in 1992-the last time new federal bankruptcy judges were installed-to 4,777 in 2002. Congress' current long-term continuing resolution further hamstrings the bankruptcy courts, because throughout its duration, the courts must run at no more than 95% of their FY 2002 budget level. Filings each quarter over the last 12 months demonstrated a steady increase: *First quarter of FY 2002 (October 1, 2001 -December 31, 2001) totaled 364,921; *Second quarter (January 1, 2002-March 31, 2002) totaled 379,012; *Third quarter (April 1, 2002-June 30, 2002) totaled 400,686; and *Fourth quarter (July 1, 2002 – September 30, 2002) totaled 401,306. NAFCU Senior Lobbyist Murray Chanow said it is difficult to detect whether bankruptcies are rising on their own due to a weak economy or other reasons or if the potential passage of the reform bill looming large spurred filers on. However, he did comment that, "The reason Congress brought bankruptcy reform up in the first place was the escalating number in the late 90s." Additionally, he pointed out, bankruptcy lawyers are advertising for consumers considering filing to get in while the getting is good. CUNA Vice President and Senior Legislative Counsel Gary Kohn remarked that the latest numbers highlight the growing problem with the system. "They demonstrate that the problem is not going away," he said. "What impact, if any, this is going to have on future legislation, we don't know." Even though Congress has been very close to passing a bill for the last few years, every election year, the bill must be reintroduced and start all over again. Chanow said he expects several issues to be resurrected, including the infamous Schumer amendment to block violent protesters, which credit unions were not much interested in. However, the means test procedures, which credit unions have been supporting, may come into play if a member of Congress does not like the way it works, he added. Additionally, Congressman George Gekas (R-Pa.), who introduced the bill, lost his reelection bid, so someone else will have to introduce the bill in the House. Kohn said CUNA lobbyists are talking to all the "appropriate" people in the House to find someone to introduce the bill next year. Credit union support will also determine credit union trade associations' efforts for the bill next year. Both CUNA and NAFCU reported that they hear a constant drumbeat from members on the subject, generally in support of the bill. For right now, the trades are taking a breather from bankruptcy reform in an effort to decide their next move. Kohn said the state of the economy will not be a factor in the pursuit of reform, because the bill is aimed at stopping abuses of the system while still allowing those who need it to get bankruptcy protection. [email protected]
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.