NACBA (National Association of Consumer Bankruptcy Attorneys) recently distributed a letter from Senators Chuck Grassley and Jeff Sessions to Justice John Roberts, the Chief Justice of the United States. The Chief Justice is the head of the Committee on Practice and Procedure of the Judicial Conference. This Committee is the organization that drafts and revises the official bankruptcy forms that must be used in the nation’s bankruptcy courts.
In this letter, Senators Grassley and Sessions express dismay that the forms created after the enactment of the new law do not require low income debtors to complete extensive financial disclosures.
Currently, debtors whose incomes fall below the average income for their State of residence do not need to fill out around 10 pages of forms – presumably if their income is below the State average, they are not abusing the process.
As a practicing lawyer who sees struggling debtors on a regular basis, I find this mean spirited letter by Senators Grassley and Sessions disturbing. In my view, the only impact that these proposed rule changes would have would be to drive up the cost of bankruptcy. We have already seen the filing fee jump from $194 to $299 in Chapter 7. Attorneys fees charged by most debtor’s lawyers have gone up dramatically because the new law imposes significant and burdensome filing requirements. And the credit counseling requirements of the new law require cash strapped debtors to spend at least an extra $100 to get their two certificates.
Fifteen years ago, I was charging $600 total for a Chapter 7, including the filing fee. Now, if you want a decent lawyer, you are looking at close to $2,000 for the same service.
I wonder if Senators Grassley or Sessions have ever spent a day with a debtor’s lawyer talking to the distraught families who have made the difficult decision to file for bankruptcy. Or have they spent a day in the 341 hearing room listening to debtor after debtor testify about financial hardship brought about by job loss, divorce or illness. Or have they watched a Motion for Relief calendar where bankruptcy judges have had to tell mothers and fathers that they will be losing their homes.
Every responsible lawyer and citizen should want honesty and integrity in the bankruptcy process. Study after study has shown that most bankruptcy debtors are not abusing the system. It strikes me as the epitome of hypocrisy that a Congress who squanders billions of our tax dollars would take such an interest in solving a problem that does not exist when its own house is not clean.
Interestingly, the Citizens Against Government Waste awarded Senator Grassley its Porker of the Month in May, 2005 for adding $11 billion to a transportation bill.