WASHINGTON-Bankruptcy attorney Charles Williams, with Blalack & Williams, told a very crowded break out session during CUNA's Governmental Affairs Conference that the bankruptcy reform law is a pretty good deal. "It's a very good piece of law," Williams stated. "It's working very good here in early 2006." He pointed out that Navy Federal Credit Union reported reaffirmations up around 153%. One of the key plusses he pointed out that is working to credit unions' advantage is the provision ensuring that lenders receive proper notice of a bankruptcy petition. He explained that previously someone walking down the hallway could just say a person is filing and you were considered notified. Now, you provide an address and contact person and the specifications have to be followed or it is not considered notification. Filers also only have 30 days to file for a stay; if that deadline is missed, the lender can take action like repossessing a car, Williams outlined. Additionally, stricter caps have been placed on `luxury goods' at $500 within 90-days of filing and $750 on cash advances for open-end credit within 90 days of filing. Student loans-including `educational purpose loans'-are non-dischargeable. `Cram-downs' are not permitted on vehicles less than 910 days old. The new law clarified that debtors only have three alternatives: reaffirmation, redemption, or surrender. There was some confusion under the previous law. However, the homestead provisions present some problems. The law sets a $125,000 limit on protecting a home in bankruptcy if it was purchased within less than three-and-a-half years of filing for bankruptcy. There is also a 730-day residency requirement. The issue is that the states are able to opt-out of this provision and 38 have. Another problem, Williams said, is that the reaffirmation agreement is actually incorrect. If your district does not require the form, he suggested that credit unions just tweak it to make the correction. For the districts that are requiring the form, it has been assumed that the reaffirmation agreement will still stand, despite the drafting error. -

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