A measure allowing bankruptcy judges to rewrite certain high-interest loans would be difficult for credit unions to comply with, CUNA President/CEO Dan Mica wrote members of the Senate Judiciary Committee.
The panel could consider S. 257 this week that would allow a creditor in a "high-cost consumer credit transaction" to have their claim subordinated to all other claims in the bankruptcy case. Any debtor who filed bankruptcy as a result of a high cost consumer credit transaction would be exempt from the means test that determines eligibility for chapter 7 bankruptcy.
A high-cost transaction would be defined as 15% plus the 30-year Treasury bond rate (a calculation that currently stands at 22.4%) or 36%, whichever amount is less.
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