Posts from the American Bankruptcy Institute

Debtors' Counsel beware: additional UST reporting requirements

“The Violence against Women and Department of Justice Reauthorization Act of 2005” (P.L. 109-162) requires the UST to report on criminal referrals for bankruptcy cases in addition to the fraud and abuse information required by the New Law. UST will also report on higher-risk frauds such as the debtors’ failure to disclose assets. Statutory changes have been made to assure uniform treatment of discharges with regard to signing bonuses and re-enlistment incentives for the military services. New amendments in the National Defense Authorization Act for Fiscal Year 2006 (P.L. 109-163) provide that a discharge in bankruptcy will not relieve individuals from their liability to repay the United States for signing bonuses and similar benefits if a member of the military fails to satisfy the requirements and conditions for receipt of the benefit. This new standard will apply to discharges entered less than 5 years after termination of the agreement or contract or the service on which the debt is based. In the absence of an agreement or contract the standard will apply based on date of termination of the service on which the debt is based. Compliance will probably not be required until late spring or early summer this year. Rise in Household Obligations Attributable to Changes in the Credit Card Market The current issue of the Federal Reserve Bulletin suggests that 3 developments in the credit card market likely account for much of the rise in household financial obligations over the past 15 years: 1. expansion in prevalence of credit cards among lower-income households 2. widespread adoption of variable-rate cards 3. greater willingness of households to use credit cards for day-to-day purchases New cardholders may be less adept at managing credit than existing cardholders, and easy access to credit may make them more prone to taking on unmanageable obligations -- however, this ready access to credit may also help them maintain their consumption during temporary income disruptions, which could help smooth macroeconomic fluctuations.