Seven BAPCPA-Related Working Papers Available for Downloading from SSRN

The following seven BAPCPA-related working papers can be downloaded from the Social Science Research Network:

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University of Arizona Law School's Jean Braucher, Rash and Ride-Through Redux: The Terms for Holding on to Cars, Homes and Other Collateral under the 2005 Bankruptcy Act

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University of Arizona Law School's Jean Braucher, Theories of Over-Indebtedness: Interaction of Structure and Culture

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New England School of Law's Russell Engler, And Justice for All-Including the Unrepresented Poor: Revisiting the Roles of the Judges, Mediators and Clerks

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FDIC's Michael Krimminger, Adjusting the Rules: What Bankruptcy Reform Will Mean for Financial Market Contracts

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Univ. of Illinois Law School's Charles Jordan Tabb, The Brave New World of Bankruptcy Preferences

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Univ. of Illinois Law School's Charles Jordan Tabb, Consumer Bankruptcy After the Fall: United States Law Under S.256

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Georgia State Law School's Jack F. Williams and St. John's Univ. Law School's Jacob L. Todres, Tax Consequences of Postpetition Income as Property of the Estate in an Individual Debtor Chapter 11 Case and Tax Disclosure in Chapter 11

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Abstracts for each of these working papers follow:


Jean Braucher, Rash and Ride-Through Redux: The Terms for Holding on to Cars, Homes and Other Collateral under the 2005 Bankruptcy Act:

The 2005 bankruptcy legislation makes a number of changes in the treatment of collateral in individuals' bankruptcies in chapters 7 and 13. In a case study of what can go wrong when an interest group (here the credit industry) blocks an expert drafting process, this article takes a close look at the actual statutory language in two areas and in both finds some good remaining arguments for debtors, despite certain creditors' best-laid plans. Specifically, when it comes to valuation of collateral, the 2005 Act leaves room for the argument that chapter 13 cramdown to wholesale value is appropriate for recently acquired cars and other collateral. On the question of "ride-through" of collateral in chapter 7 (meaning the debtor continues to pay the debt, without redeeming or reaffirming), the 2005 legislation strengthens the case for ride-through of cars and other personal property by creditor acquiescence and, as to homes, arguably adopts the majority approach of the circuits in favor of court-protected ride-through. In both of the areas examined, as on other matters, the 2005 Act increases the complexity and lack of clarity of bankruptcy law. When Congress again gets around to "reforming" bankruptcy law, the lesson of the 2005 Act should be that simplification is key to achieving policy goals predictably.

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Jean Braucher, Theories of Over-Indebtedness: Interaction of Structure and Culture:

Consumer bankruptcy scholars typically stress either a structural or a cultural account of individuals' problems with debt. Drawing on the history of poverty research, this article argues that research on consumer over-indebtedness and bankruptcy should avoid the pitfall of seeing structural and cultural factors as opposing explanations. Deregulation of the credit industry and an incomplete social safety net are key structural conditions that lead to a culture hospitable to over-indebtedness. Furthermore, the interaction of structure and culture has practical policy implications. Structural changes such as interest-rate deregulation inevitably change both business and consumer culture. Policies designed to create a different consumer culture will have a hard time when pitted against strong structural causes of over-indebtedness. At a minimum, efforts to create a culture of personal financial responsibility need a strong structural base, such as in public education starting at a young age, and could easily require a generation or more to take hold.

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Russell Engler, And Justice for All-Including the Unrepresented Poor: Revisiting the Roles of the Judges, Mediators and Clerks:

In this article, the author argues that the proper roles not only should permit, but should require, those actors to provide extensive assistance to unrepresented litigants, particularly the unrepresented poor. The article first examines the traditional limits on the judges, mediators and clerks, showing that the limits effectively bar those actors from providing the assistance necessary to allow unrepresented litigants to participate meaningfully in court. Recognizing that the roles of the judges, mediators and clerks are interrelated, the article next identifies basic concepts that should inform the reshaping of the particular roles; it then proposes revisions to our traditional understanding of the proper roles of judges, mediators and clerks. The article ends with an examination of some of the current discussions of the problems facing unrepresented litigants in the contexts of family courts, bankruptcy courts and housing courts. The final section shows that the details of the roles must be tailored to particular contexts and that the discussions continue to ignore the need for a fundamental revision of the roles of the critical actors in the system.

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Michael Krimminger, Adjusting the Rules: What Bankruptcy Reform Will Mean for Financial Market Contracts:

Most of the commentary written on the recent Bankruptcy Reform Act (The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) has focused on provisions that will make bankruptcy less appealing for individuals. However, the Bankruptcy Act also contains important provisions that determine how financial market contracts are handled when a market participant goes into bankruptcy. These provisions, designed to update, clarify and strengthen the existing laws pertaining to financial contracts, will have far reaching implications for a wide variety of financial market participants, including banks and the Federal Deposit Insurance Corporation (FDIC) itself.

The 2005 Bankruptcy Act promises to significantly improve the efficiency of the business bankruptcy process by harmonizing the treatment of financial contracts across the spectrum of bank and non-bank market participants and instruments. It does so by revising and amending a number of previous statutes (including the Bankruptcy Code, FIRREA (1989) and FDICIA (1991)) that currently govern these matters. The most important result of these changes is an improved ability of creditors under certain financial contracts to quickly resolve claims against bankrupt debtors by employing what is known as close-out netting. This ability to terminate financial contracts, determine a net amount due, and liquidate any pledged collateral is a valuable tool in minimizing losses in receivership and reducing the disruptions that result from the bankruptcy process. An equally important feature of the changes is that it clarifies and strengthens the FDIC's ability to resolve a failing bank involved in the financial markets.

The past twenty-five years have been marked by a proliferation of new institutional players and ever-increasing complexity in financial instruments. These changes have led to a growing recognition that legal structures governing the disposition of financial market contracts in bankruptcy also needed to be updated. In the past, changes in how such contracts were handled were made in different statutes at different times creating inconsistencies, as well as persistent uncertainties as to how a given instrument might be handled in bankruptcy. By bringing more consistency and certainty to this process, the Bankruptcy Reform Act promises to reduce the risk that a bankruptcy will create systemic instability, which could affect individuals as well as financial institutions. To the extent that these changes allow financial market participants to more effectively manage market risks, they will also help to promote greater efficiency in the operation of U.S. financial markets.

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Charles Jordan Tabb, The Brave New World of Bankruptcy Preferences:

This article examines in detail the amendments made to the bankruptcy preference laws by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The author was Reporter for a nationwide survey of the preference laws conducted in the late 1990s by the American Bankruptcy Institute, and which recommended several amendments that eventually did become law in the 2005 Act. The article first examines the genesis of the 2005 amendments in that earlier study, and in the Report of the National Bankruptcy Review Commission, which relied heavily on the ABI Report. Then the article analyzes in depth the specific amendments to the preference law, namely: (1) the creation of a safe harbor for small preferences; (2) changes to the venue rules for preference actions; (3) modification of the defense for "ordinary course of business" transfers; (4) changes to the enabling loan safe harbor; (5) amendments to the timing rules regarding liens; (6) the exclusion of payments pursuant to alternative repayment plans; and (7) an attempt by Congress, again, to fix problems relating to recovery from non-insider parties, as against whom the transfer was not avoidable, as first made notorious in the Deprizio case.

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Charles Jordan Tabb, Consumer Bankruptcy After the Fall: United States Law Under S.256:

This paper examines the consumer bankruptcy system in the United States after the enactment in April 2005 of S. 256, the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005." The paper was prepared for a workshop on comparative commercial and consumer law at the University of Toronto in the fall of 2005. The bulk of the paper is devoted to a detailed examination of the workings of the "means test," the Byzantine new gate-keeping provision that tests whether an individual consumer debtor may proceed with a liquidation bankruptcy case under chapter 7 of the U.S. Bankruptcy Code. The paper also examines more briefly four other aspects of the revisions to the U.S. consumer bankruptcy system: (1) the creation of entry barriers for a consumer debtor to obtain bankruptcy relief; (2) the weakening of the discharge available to consumer debtors; (3) windfalls to secured creditors; and (4) limitations to the homestead exemption. An Appendix includes a letter that 92 law professors sent to the United States Senate prior to enactment of the bill and which opposed the bill; the author was one of the signatories.

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Jack F. Williams and Jacob L. Todres, Tax Consequences of Postpetition Income as Property of the Estate in an Individual Debtor Chapter 11 Case and Tax Disclosure in Chapter 11:

This paper examines the consumer bankruptcy system in the United States after the enactment in April 2005 of S. 256, the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005." The paper was prepared for a workshop on comparative commercial and consumer law at the University of Toronto in the fall of 2005. The bulk of the paper is devoted to a detailed examination of the workings of the "means test," the Byzantine new gate-keeping provision that tests whether an individual consumer debtor may proceed with a liquidation bankruptcy case under chapter 7 of the U.S. Bankruptcy Code. The paper also examines more briefly four other aspects of the revisions to the U.S. consumer bankruptcy system: (1) the creation of entry barriers for a consumer debtor to obtain bankruptcy relief; (2) the weakening of the discharge available to consumer debtors; (3) windfalls to secured creditors; and (4) limitations to the homestead exemption. An Appendix includes a letter that 92 law professors sent to the United States Senate prior to enactment of the bill and which opposed the bill; the author was one of the signatories.

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© Steve Jakubowski 2006


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