Brett Weiss Testifies On Changes to Bankruptcy Claim Procedure

04 Feb Brett Weiss Testifies On Changes to Bankruptcy Claim Procedure

On February 4, 2011, I was honored to have been asked to testify on behalf of the National Association of Consumer Bankruptcy Attorneys (NACBA) before the Advisory Committee on Bankruptcy Rules. The Committee proposes changes to the Federal Rules of Bankruptcy Procedure, and submits them to the U.S. Supreme Court for adoption. Once adopted, they govern bankruptcy cases throughout the United States. Because of the importance and scope of the Rules, this is a lengthy and detailed process, typically taking two to three years from proposal to adoption.

My testimony dealt with proposed changes to Rule 3001, which governs Proofs of Claims by creditors, and Official Form 10, the Proof of Claim form itself. The Committee had proposed several changes to Rule 3001, most of which would affect debt buyers. If adopted, the Rule would require debt buyers to file with the Proof of Claim the name of the original creditor, the name of the entity from whom the debt was bought, the date of the last transaction, the date of the last payment, and the date the account was charged off. Additionally, on written request, it would have to provide the writing on which the debt is based.

While these changes are certainly an improvement, there remain areas that should be enhanced. Proof of the chain of title of ownership, that is, the documents showing that the debt buyer has the legal ownership of the account, should also be provided. Penalties for failing to provide the writing on which the debt is based should be added, as well as the timeframe for response.

The changes to Official Form 10, the Proof of Claim form, are more dramatic. Home mortgage lenders would be required to break out a number of elements in the claim, including the principal, interest (and whether the rate is fixed or adjustable), fees, expenses, and charges owed as of the filing date. Pre-petition arrearages must also be itemized, and an escrow account statement must be provided. As far as debt buyers are concerned, the current use of the “summary page” would be insufficient; actual documentation of the claim must be provided.

Finally, the person who signs the claim form must declare that the information in it is true and correct to the best of the signer’s knowledge, information and belief. I questioned whether this would really change anything; looking at a computer screen summary of the account and signing would seem to be sufficient. I urged the adoption of a “personal knowledge” standard or at least some reference in the Official Comment that something more than looking at the summary numbers was required.

If adopted by the Committee, the proposed Rules will be submitted to the U.S. Supreme Court for approval.

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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