ABA Statement for the Record: "Oversight of the Bankruptcy Code, Part 2: Ensuring a Fresh Start for Consumers.”

Chairman Cicilline and Ranking Member Buck, thank you for the opportunity to submit this statement for the record on behalf of the members of the American Bankers Association (ABA) for the hearing titled “Oversight of the Bankruptcy Code, Part 2:  Ensuring a Fresh Start for Consumers.”  As the Subcommittee considers bankruptcy law changes, the ABA would like to provide its views on proposals to change the bankruptcy code with respect to consumer bankruptcies.

I. Current Bankruptcy Law Provides Balanced Protections for Both Debtors and Creditors.   

Congress last made major changes to federal bankruptcy law in 2005 by enacting the Bankruptcy Abuse Prevention and Consumer Protection Act (Pub. L. No. 109-8) (BAPCPA). In the interim, there have been a few changes, such as an expedited procedure for small businesses, but overall the current bankruptcy system provides a balanced, carefully calibrated mechanism to allow borrowers a “fresh start” without unduly restricting the availability of consumer credit.  Many Americans rely on credit for emergency purchases and benefit from the flexibility of repayment terms. In the nearly two decades of jurisprudence since BAPCPA was enacted an efficient bankruptcy system has been put in place that supports lower credit costs for all borrowers.

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