The American Bankruptcy Institute’s Commission on Consumer Bankruptcy released its Final Report and recommendations on April 12, 2019. The commission was created in 2016 to research

and develop recommendations to improve the consumer bankruptcy system. During its review, the commission focused on new trends regarding how Americans are incurring debt. At the conclusion of its review, the commission created a Final Report which includes recommendations for amendments to the Bankruptcy Code and Rules to make the bankruptcy system more approachable and efficient.

Some of the issues addressed in the Final Report include:

  • Remedies for discharge violation: Most courts only allow motions to enforce a discharge through a contempt proceeding. Therefore, in an effort to make it easier to seek relief, the commission recommends that a statutory private right of action be created for violations of the discharge. For example, a private right of action would be created for violations of the automatic stay, which would include sanctions consisting of costs, attorneys’ fees, and punitive damages. The commission further recommends amendments to the Bankruptcy Code that would allow motions to determine which creditor violated the discharge.
  • Protection of Interests in Collateral Repossessed Prepetition: Circuit courts are currently divided as to whether collateral seized prepetition must be returned to the party entitled to possession afterward. To balance the competing interests of the debtor and creditor, the commission recommends that § 362(a)(3) be amended to provide that a creditor’s retention of estate property violates the automatic stay, but only if proof of insurance or other security is provided for the property subject to loss of value.
  • Credit Counseling and Financial Management Course: The commission recommends amending the Fair Credit Reporting Act to mandate that consumer reporting agencies report the debtor’s successful completion of a financial management course, so that the impact of the course may be measured by changes in the debtor’s credit score.