Schechter, Dan

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Introduction—Symposium on Bankruptcy Reform

Loyola Marymount University

Loyola Marymount University and Loyola Law SchoolDigital Commons at Loyola MarymountUniversity and Loyola Law SchoolLoyola of Los Angeles Law Review Law Reviews6-1-1999Introduction—Symposium on BankruptcyReformDan SchechterThis Symposium is brought to you for free and open access by the Law Reviews at Digital Commons @ Loyola Marymount University and Loyola LawSchool. It has been accepted for inclusion in Loyola of Los Angeles Law Review by an authorized administrator of Digital Commons@LoyolaMarymount University and Loyola Law School. For more information, please contact digitalcommons@lmu.edu.Recommended CitationDan Schechter, Introduction—Symposium on Bankruptcy Reform, 32 Loy. L.A. L. Rev. 941 (1999).Available at: https://digitalcommons.lmu.edu/llr/vol32/iss4/1SYMPOSIUM ON BANKRUPTCY REFORMINTRODUCTIONDan Schechter*As this issue of the Loyola of Los Angeles Law Review goes topress, Congress is again in the throes of amending the BankruptcyCode. The lobbyists for every conceivable interest group-except,perhaps, debtors-have descended upon Washington, wallets bulgingwith carefully-reasoned arguments both for and against various leg-islative proposals.This Symposium attempts to provide some relatively neutralguidance to the legislators. First, Steven Walt examines a recently-enacted amendment to the Code that was designed to insulate somecharitable contributions from attack as fraudulent transfers. He criti-cally discusses the drafting of the new law to see whether it is likelyto achieve the goals Congress articulated; he concludes that the lawis flawed and may give rise to unintended consequences.!Turning to the currently-pending Bankruptcy Reform Act, Pam-ela Kohlman Webster vigorously attacks the bill's treatment ofhealth-care bankruptcy, arguing that the legislation is poorly draftedand will skew the balance of priorities in bankruptcy. Further, thealleged "reforms" will be very costly to administer, while providinginadequate funding to cover those costs.2Mechele Dickerson is very critical of the bill's controversial re-quirement that debtors attend "credit education" classes in connec-tion with their bankruptcy filings. She demonstrates that the credit* Professor of Law, Loyola Law School, Los Angeles. A special thanksto Joanne Davies and Robert McArthur for their efforts in organizing this sym-posium, and the entire Loyola ofLos Angeles Law Review for their hard work.1. See Steven Walt, Generosity in Bankruptcy: The New Place of Charita-ble Contributions in Fraudulent Conveyance Law, 32 LOY. L.A. L. REv. 1029(1999).2. See Pamela Kohlman Webster, The Malpractice of Health Care Bank-ruptcy Reform, 32 Loy. L.A. L. REv. 1045 (1999).LOYOLA OF LOS ANGELES LAWREVIEW [Vol. 32:941schools would be useless and costly and would, at best, provide su-perficial and untimely help to those debtors who do not know how tomanage their finances.3Maureen Tighe and Emily Rosenblum examine the problem of"identity theft," the fraudulent and unauthorized filing of bankruptcypetitions in the name of innocent third parties. In their article, theydiscuss the current legislation on point, describe its shortcomings,and propose additional legislative solutions.4Eric Posner offers qualified support for one aspect of the cur-rently pending bill, which would force upper-income debtors intoChapter 13 and away from Chapter 7. Chapter 7 provides for liqui-dation of the debtor's non-exempt assets, while Chapter 13 providesfor a partial payout of the debtor's obligations over time. In his arti-cle, he demonstrates that it would be economically efficient to com-pel some upper-income debtors to file Chapter 13 plans, thereby re-ducing the cost of credit overall. 5By contrast, my Article argues that the "gatekeeper" aspect ofthe pending bill sets the bar too low, sweeping too many middle-income debtors into Chapter 13 plans destined for failure. I proposea higher standard. In addition, my Article offers other amendmentsto the bill.6The Symposium ends with the Final Report of the BankruptcyForeclosure Scam Task Force, a project of the Bankruptcy Court forthe Central District of California chaired by Judge Lisa Hill Fen-ning. The Task Force conducted a statistical analysis of pendingbankruptcies and determined that many millions of dollars' worth ofreal property are affected by "foreclosure fraud," in which debtorsfile serial bad-faith bankruptcies to thwart foreclosure. The Task3. See A. Mechele Dickerson, Can Shame, Guilt, or Stigma Be Taught?Why Credit-Focused Debtor Education May Not Work, 32 LoY. L.A. L. REV.945 (1999).4. See Maureen A. Tighe & Emily Rosenblum, "What Do You Mean, IFiled Bankruptcy? "-Or How the Law Allows a Perfect Stranger to Purchasean Automatic Stay in Your Name, 32 LOY. L.A. L. REV. 1009 (1999).5. See Eric A. Posner, Should Debtors Be Forced into Chapter 13?, 32Loy. L.A. L. REV. 965 (1999).6. See Dan Schechter, Comments on the Pending Bankruptcy Reform, 32LOY. L.A. L. REV. 977 (1999).7. See Final Report of the Bankruptcy Foreclosure Scam Task Force, 32Loy. L.A. L. REV. 1063 (1999).June 1999] INTRODUCTION 943Force drafted legislation to combat the problem by empowering thebankruptcy courts to issue "in rem" relief binding upon debtors andtheir transferees. I am pleased to report that the current bill containsprovisions remarkably similar to the Task Force's language. Perhapsthe publication of the Task Force Report in this Symposium will helpto encourage Congress to enact that portion of the bill, even if otherparts of the legislation do not survive.944 LOYOLA OFLOSANGELESLAWREVIEW [Vol. 32:941

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