We Can Work It Out: Entertaining a Dispute Resolution System Design for Bankruptcy Court

On October 2, 2009, dispute resolution scholars and bankruptcy court jurists courageously began the difficult conversation about the feasibility of an expanded dispute resolution system design for bankruptcy court. This commentary distills that conversation through a dispute resolution system design lens. Dispute resolution system design offers a framework for organizations to more effectively manage and resolve recurring conflicts. The design of a dispute resolution system requires clarifying ideas, elucidating values, prioritizing goals, considering options and incorporating that information into a more workable process to respond to conflict. All the while, the stakeholders and dispute resolution designers work together to clarify, prioritize and mediate which values will shape the design of the dispute resolution process. For those inevitable times when doubts emerge and commitment waivers, participants might be inspired by the supportive mantra, “We Can Work It Out.

Forward: Symposium on Interdisciplinary Perspectives on Bankruptcy Reform

In 2003, over 1.6 million consumers filed for bankruptcy protection, surpassing the previous record of 1.5 million bankruptcy filings set just one year earlier. In an effort to reverse the spiraling upward trend of consumer bankruptcies, and to prevent abusive debtors from using the bankruptcy system to avoid paying their debts, in April, 2005, Congress voted overwhelmingly in favor of passing the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Widely heralded as the most sweeping bankruptcy reform legislation in over a quarter of a century, BAPCPA was designed in large part to force debtors with the ability to pay their debts out of Chapter 7 liquidation bankruptcy and into Chapter 13, the Bankruptcy Code\u27s rehabilitation provision. In addition, the Act sought to prevent certain abusive bankruptcy practices, such as the unfettered use of serial filings and debtors\u27 abuse of Chapter 13\u27s cramdown provisions to strip down secured debts incurred shortly before filing for bankruptcy protection

Foreword

With the tumultuous period after the enactment of BAPCPA as our backdrop, hundreds of academics, practitioners, and judges gathered together for a two-day symposium to explore the positive and negative aspects of bankruptcy reform from a variety of interdisciplinary perspectives. This volume of the Missouri Law Review is devoted almost exclusively to that symposium. Not only does it include the ten participants\u27 written scholarship that emerged from that extraordinary setting, during which we all benefitted tremendously from the input of others who had thought about, written about, and worked with the provisions of BAPCPA, but it also contains a fascinating roundtable discussion entitled The Future of Bankruptcy, during which the panelists, bankruptcy judges, and scholars debate the thorny subject of how to create a better bankruptcy system

Comsumer Bankruptcy\u27s New Clothes: an Empirical Study of Discharge and Debt Collection in Chapter 13

Consumer bankruptcy filings hit another record high in 1998, with nearly 1.4 million consumers filing for bankruptcy relief. This trend sparked a debate in Congress about means-testing chapter 7 bankruptcy filings. Proponents of reform argued that it would curtail fraud and abuse. Opponents believed that consumer debt was swamping income growth, and that the deregulation of the consumer credit market had led to overgenerous lending and hence to more bankruptcies. This is an empirical study of whether filers for chapter 13 bankruptcy cases are abusing the system, or whether debtors are truly being swamped by debt in excess of their incomes. It finds that a large percentage of chapter 13 filers had previously filed for bankruptcy, indicating the potential for abuse of the system\u27s provision of an automatic stay of collections. It also finds, however, that the vast majority of debtors were in desperate need of debt relief, and that most had most incomes or lived in poverty. This study also challenges the basic premises of the Bankruptcy Code by concluding that unsecured creditors are collecting a small percentage of their claims in chapter 13, so that chapter 13 may not be an effective procedure for the collection of unsecured debt as contemplated by the Code. Most debtors are using chapter 13 to deal with secured creditors, who collected 90% of all chapter 13 payments in the study. Perhaps the most striking finding is that successful debtors owed more secured debt than failed debtors