Credit unions provided the only testimony from a financial institution in hearings on bankruptcy reform before the commercial and administrative law subcommittee of the House Judiciary Committee last week.
Lucile Beckwith, president and CEO of Palmetto Trust Federal Credit Union of Columbia, S.C., who was testifying on behalf of CUNA, told the subcommittee that CUs "strongly urge the 108th Congress to pass this compromise bill as soon as possible." Beckwith also expressed similar sentiments in an opinion piece in the Feb. 24 issue of The Credit Union Journal.
Noting credit union support for the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2003" (H.R. 975), Beckwith pointed out that 46% of all credit union losses in 2002 were bankruptcy related, and those losses totaled approximately $775 million.
She also pointed to public support for reform, citing a January 2003 survey conducted for CUNA by Voter/Consumer Research that found that "64% of the public feels strongly that it should be made more difficult to declare bankruptcy," Beckwith told the subcommittee. She added that credit union leaders feel similarly: A separate survey found that 68% of credit union CEOs and volunteer board members believe that bankruptcy abuse reform would provide the greatest legislative benefit to their credit union of all the issues under consideration. She pointed out that is an increase of 17% from the previous year.
Beckwith added, however, that credit unions believe bankruptcy must be preserved as an option for those who really need it. "We could not endorse a bill that denies people necessary bankruptcy protection. We all know of situations where a member is the victim of unforeseen financial calamity, often associated with the loss of a job, a divorce, or illness. But we can support this bill because it does provide that protection, it does improve the position of filers from current law in a number of areas, and it does discourage the abuse that has come to characterize the bankruptcy system."
Support For Reaffirmation
Regarding reaffirmation, she also said "CUNA could not have supported bankruptcy reform legislation if the bill would have undermined the ability of credit unions and their members to work out reaffirmation agreements." She noted that H.R. 975 preserves this tool for credit unions, and contains disclosure statements intended to assure that debtors entering into a reaffirmation agreement understand all aspects of signing that contract. "CUNA appreciates that the bill modifies these forms in recognition of the unique relationships that credit unions have with their members."
She also pointed to CUNA's support for the "needs test" included in the bill.