Bankruptcy Reform Necessary, CUNA Witness Testifies

WASHINGTON-Shoreline Credit Union President and CEO Ken Beine told members of the Senate Judiciary Committee that bankruptcies hit his credit unions particularly hard and reform is necessary. In his testimony on behalf of CUNA Feb. 10, Beine told the lawmakers, “Credit unions recognize that many people legitimately need the option to declare bankruptcy. What concerns us, however, are the cases of abuse by those who file Chapter 7 and totally walk away from their debt, even though they clearly have the ability to pay all or part of that debt.” He emphasized that S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, is a solid compromise measure. He provided one example where a couple decided they wanted a “clean slate” for when they got married, so ran up their credit card debts then both filed for Chapter 7 bankruptcy. The credit union ended up losing $3,000, which is passed onto other members of the financial cooperative. But not all bankruptcies are abusive, he reiterated, and he told a story of a middle-aged couple hit with medical bills and loss of employment, who reaffirmed their car loans with Shoreline. “Needless to say, today they are members in good standing, and need only ask to be granted a loan,” Beine said. He stated that CUNA strongly supports three items in bankruptcy reform: a means-based bankruptcy code, financial education, and voluntary reaffirmations. A markup of S. 256 was expected shortly after press time.