April 2007

From the editors of CCH’s Banking and Finance publications, this update describes significant developments covered in our products in recent reports, as well as product enhancements.

If you have questions or comments concerning the information provided below, please contact the Banking and Finance Update editor at Serena.Lynn@ wolterskluwer.com.

Federal Banking Law Reporter

GSE Bill Introduced in House; Reform Urged by Bernanke
Bipartisan legislation to overhaul the regulatory oversight of the government sponsored enterprises (GSEs) was introduced on March 9. H.R. 1427, the "Federal Housing Finance Reform Act of 2007," would create a new, independent regulator, called the Federal Housing Finance Agency (FHFA), with broad powers similar to those of existing bank regulators. The FHFA would regulate Fannie Mae, Freddie Mac and the Federal Home Loan Banks and would assume the current authority of the Office of Federal Housing Enterprise Oversight and Federal Housing Finance Board. In a March 6 speech, Federal Reserve Board Chairman Ben S. Bernanke said legislation to strengthen the regulation and supervision of GSEs is "highly desirable" in order to ensure that these companies pose fewer risks to the financial system and direct them toward activities that provide important social benefits. Financial safety and soundness could be enhanced by giving the GSE regulator capital powers comparable to those of bank supervisors, Bernanke said, and by creating a "clear and credible receivership process that leads debt holders to recognize that they would suffer financial losses should a GSE fail." This story is in the March 15 Report Letter, No. 2208.

Agencies Propose Subprime Mortgage Lending Statement
The federal bank, thrift and credit union regulatory agencies are seeking comment on a proposed Statement on Subprime Mortgage Lending. The agencies developed the proposed statement to address risks and other issues relating to subprime mortgage lending. The statement discusses the criteria and factors that an institution should consider when determining a borrower's ability to repay a subprime loan. It also covers consumer protection issues and practices and the need for policies, procedures and systems to assure that an institution's subprime mortgage lending is conducted in a safe and sound manner. The statement outlines what the agencies consider to be fundamental consumer protection principles relevant to the marketing and underwriting of mortgage loans. These principles include approving loans based on the borrower's ability to repay the loan and providing information that enables consumers to understand the terms, costs and risks of loan products at a time that will help the consumer select products and choose among payment options. The proposed statement is at ¶94-838.

FDIC Advocates National Anti-Predatory Lending Standard
Federal Deposit Insurance Corp. Chairman Sheila C. Bair said a national anti-predatory lending standard would help assure basic uniform protections for all borrowers as well as create a more level competitive playing field for regulated entities. Bair, appearing before the House Subcommittee on Financial Institutions and Consumer Credit on March 27, said that a statutory approach to establishing a national anti-predatory lending standard could draw from current and proposed federal regulatory guidelines as well as existing state anti-predatory lending statutes. She said that such a statute should address two important areas: the ability of borrowers to repay the loan; and misleading marketing and disclosures that prevent borrowers from fully understanding the terms of the loan products. A statutory national predatory lending standard should require that underwriting be based on the borrower's ability to repay the true cost of the loan, Bair said, rather than on the borrower's ability to make payments at an artificially low introductory interest rate. "This requirement would go a long way toward helping borrowers avoid loans that they cannot repay, and would improve the quality of lender portfolios and mortgage backed securities," Bair told the subcommittee. She added that it would also help balance the role of mortgage brokers by limiting their incentives to steer customers toward high-cost products that they cannot afford. This story can be found in the March 29 Report Letter, No. 2210.

Wal-Mart Abandons Plans for ILC Charter
Wal-Mart said it has decided to withdraw its July 2005 application to establish an Industrial Loan Company (ILC) charter. Wal-Mart said that with the approval process likely to take years rather than months, it has decided to "better focus on other ways to serve customers." Jane Thompson, President of Wal-Mart Financial Services, said the company's application had been surrounded by "manufactured controversy." She added that at no stage did Wal-Mart intend to use the ILC to establish branch banking, noting "we simply sought to reduce credit and debit card transaction costs." Thompson said Wal-Mart will continue to introduce new products and services "that champion those who deserve convenient, lower priced financial services." Federal Deposit Insurance Corporation Chairman Sheila C. Bair said Wal-Mart made a "wise choice." Bair added that the decision will "remove the controversy surrounding their intentions. They don't need an ILC to play an important role in expanding access to financial services; they can do so by partnering with banks and others. We look forward to working with Wal-Mart in meeting the need for low-cost financial services across all populations." This story can be found in the March 22 Report Letter, No. 2209.

OTS Guides on Gift Card Programs
Guidance on gift card programs for savings associations has been issued by the Office of Thrift Supervision. The purpose of the guidance is to assist the thrift industry with issues stemming from the increasing popularity of gift cards. Approximately 20 percent of OTS-regulated institutions offer gift card programs and, for some of those thrifts, gift cards have become a significant line of business with increasing levels of income. The guidance is intended to: ensure adequate account administration, marketing and consumer disclosure practices for gift card programs; encourage more uniform practices among institutions that offer gift card programs; and promote consumer protection as well as product innovation. The OTS guidance indicates that the agency expects supervised institutions to ensure that consumers receive appropriate and pertinent information about gift card products, such as principal features, fees and expiration dates. The agency also expects savings associations to follow safe and sound practices and ensure appropriate levels of consumer protection when issuing gift cards. CEO Letter 254 is reproduced at ¶49-976.

Product Enhancements

Explanations Revised to Reflect Deposit Insurance Reform
Explanations discussing deposit insurance assessments have been updated to reflect a series of regulatory amendments made by the FDIC to implement the Federal Deposit Insurance Reform Act of 2005. The explanations are reproduced beginning at ¶55-201. Also, explanations on FDIC risk-based assessments and required certified statements were moved from the “Accounting; Reporting; Audits” division to the “Deposit Insurance” division for an improved topical presentation.

Consumer Credit Guide

Court Determines What Must Be Disclosed to Consumer Under FCRA
The U.S. Court of Appeals for the Seventh Circuit has ruled that a consumer reporting agency did not violate the federal Fair Credit Reporting Act (FCRA) when it provided two consumers with their consumer reports but did not disclose any additional, internal information that it maintained. The FCRA provides that, when so requested, a consumer reporting agency must clearly and accurately disclose to the consumer "all information in the consumer's file" at the time of the request. When the consumers requested their respective credit histories from the consumer reporting agency, the agency responded by providing the consumers with conventional consumer reports. The consumer reports indicated delinquent account information but did not indicate any internal "purge date," the date on which the consumer reporting agency, as a standard practice, designated as the date to remove pertinent information from the file to comply with the FCRA's seven-year limit for disclosure of negative information. Although the two consumers claimed that the reporting agency had violated the FCRA because it had not disclosed to them everything in their respective files, the consumer reporting agency argued that it was only required to disclose to the consumers the same information that would be included in a consumer report to any third party. The Seventh Circuit acknowledged there was support for the consumers' view that the use of the word "file" in the FCRA might signal a more expansive definition. However, in holding that only information included in a consumer's credit report must be disclosed to a consumer by a consumer reporting agency, the court noted that the legislative history of the provision and commentary adopted by the Federal Trade Commission supported that view. Gillespie and Cinson v. Trans Union Corporation (7thCir) is at ¶52,093.

Debt Collector’s Procedures to Avoid Collection of Discharged Debt “Reasonable”
The internal procedures that a debt collector followed to avoid sending a collection letter to a debtor for a debt discharged in bankruptcy proceedings were deemed "reasonable" under the federal Fair Debt Collection Practices Act (FDCPA). The debt collector received back from its affiliate company a collection matter, but the affiliate failed to inform the debt collector not only that the debtor "Lisa Ross" had been involved in bankruptcy proceedings but also that the debtor was known as "Delisa Ross" in those proceedings. After the debt collector then sent two collection letters to the debtor concerning a $575 retail store debt that had been discharged in bankruptcy, the debtor filed a lawsuit against the debt collector. The debtor alleged that the debt collector had violated the FDCPA provision prohibiting a debt collector from making "a false representation of the character, amount, or legal status of any debt" because the debt had been discharged. In response, the debt collector raised an FDCPA defense that any violation was not intentional and resulted from a bona fide error despite "the maintenance of procedures reasonably adapted to avoid any such error." While the debt collector had conducted a computerized search of bankruptcies for "Lisa Ross" before sending the two collection letters, that search did not reveal the "Delisa Ross" bankruptcy. In ruling that the debt collector had not violated the FDCPA because it had established a valid defense, the U.S. Court of Appeals for the Seventh Circuit noted several factors. First, even though the debt collector's computer program may not have been "state of the art," it was "reasonable" under the FDCPA. Second, in typical agreements with companies doing business with it, the debt collector customarily received assurances that such companies would not knowingly sell a discharged debt and would notify the debt collector if they discovered a discharged or uncollectible debt. Third, the debt collector promptly ceased any collection activities upon learning that the debt had been previously discharged in bankruptcy. Ross v. RJM Acquisitions Funding LLC (7thCir), ¶52,092.

Recoverability of Attorney’s Fees Under TILA Examined
In determining whether attorney's fees were recoverable under the federal Truth in Lending Act (TILA), the U.S. Court of Appeals for the Fourth Circuit analyzed whether a consumer's action was "successful" for each stage of the litigation. After protracted litigation between a car dealership and a consumer resulted in a U.S. Supreme Court ruling that the maximum amount of statutory damages allowable under TILA is $1,000, the parties continued to litigate the amount of attorney's fees that may be recovered by the consumer from the car dealership. The Fourth Circuit determined that the baseline rule for analyzing whether attorney's fees are recoverable for each stage of the litigation—trial, appeals, and remand proceedings—is governed by the TILA provision providing that costs and reasonable attorney's fees, as determined by the court, must be awarded to a plaintiff in a "successful action." While the court noted that TILA itself does not define an "action," the court concluded that an "action" is a lawsuit encompassing each stage of the litigation—from the filing of a complaint to the final disposition of the case. Ultimately, the car dealership was required to pay the consumer costs and reasonable attorney's fees for some portion of work performed at all stages. The court commented that the TILA provision governing costs and attorney's fees "does not differentiate between appeals to contest liability and appeals taken to contest damage awards." In connection with the appeal to the U.S. Supreme Court, the car dealership argued that it wasn't required to pay the consumer's attorney's fees incurred at that phase because the consumer's position that it should recover more than $1,000 in damages did not ultimately prevail. However, the Fourth Circuit disagreed and concluded that, while the Supreme Court had capped the consumer's damages at $1,000, the consumer's action was "successful" because the car dealership was still liable under TILA and was still required to pay the maximum amount of damages. Nigh v. Koons Buick Pontiac GMC, Inc. (4thCir), ¶52,090.

State Law Update

Arkansas: Arkansas joins the growing list of states imposing restrictions on gift card expiration and fees. The Fair Gift Card Act prohibits gift cards and certificates from having an expiration date earlier than two years from the card's issuance or sale. Service charges or inactivity fees are prohibited during this two-year period. Fees may be charged following the two-year period if clearly and conspicuously disclosed on the card or certificate, or included on a written statement under certain circumstances. The Act does not apply to: cards that are usable with multiple, unaffiliated sellers of goods or services and are issued by a financial institution; cards distributed under an award, loyalty or promotional program; and cards that expire within a 30-day period and that are sold below face value to an employer or to a nonprofit or charitable organization for fund-raising purposes. The law (Act 304) was approved March 16, 2007, and is effective 90 days after adjournment of the legislature. The law appears beginning at Arkansas ¶6198.

Nebraska: A financial services measure, enacted at the request of the Department of Banking and Finance (DBF), revises and updates a number of laws governing institutions under the DBF's jurisdiction. Significant provisions include: (1) Annual Assessments, Examination Costs and Fees: Updates laws and procedures relating to the levying of an annual assessment on financial institutions and creates the Financial Institution Assessment Cash Fund. The DBF also is authorized to, among other things, bill examination costs immediately after examinations, provide for the pro-rating of assessments in certain situations, allow for administrative action if amounts owed are unpaid, and to allow institutions to make installment payments. (2) Installment Sales Act: Provides as a condition of new renewal licensing that sales finance companies must have and maintain a minimum net capital requirement of $100,000 and provide a surety bond of $50,000 to cover any losses resulting from violations of law. Current licensees will have until Oct. 1, 2008, to meet these new requirements. (3) Installment Loan Act: Establishes requirements for the relocation of a licensed office that includes the filing of an application, payment of a fee of $150, and the publication of a notice in the county where the licensee wishes to relocate. If a substantive objection is filed to the proposed relocation, the director is required to conduct an administrative hearing. (4) Loan Brokers: Requires that any e-mail and Internet address of a loan broker be included on a loan brokerage agreement and on the disclosure statement required to be given to a borrower prior to execution of an agreement. The law (L.B. 124) was approved and became effective March 19, 2007. Provisions are operative three months after adjournment of the legislature. The new laws appear beginning at Nebraska ¶6001, ¶6286, ¶6520 and ¶7013.

South Dakota: An amendment to the money lending licensing law limits to $500 the total outstanding principal balances of all payday loans made by a lender to one borrower at any time. Currently, a lender is prohibited from making a payday loan that exceeds $500 but is not prohibited from making multiple loans to the same borrower that, in the aggregate, exceed $500. The measure (H.B. 1172) originally included a three-day "cooling-off" period that would have prohibited a lender from initiating a new payday loan with a borrower within three business days of the borrower's partial or full payment of a previous payday loan or title loan with that lender. The restriction was removed by the House Commerce Committee after opponents, including the Pierre Community Financial Services Association and the South Dakota Short Term Lending Association, agreed to support the $500 loan cap clarification in exchange for removal of the cooling-off period limitation. House Bill 1172 was approved Feb. 28, 2007, and is effective July 1, 2007. The law appears at South Dakota ¶7066.

Utah: Recently enacted legislation aimed at enhancing consumer protections will give the Department of Financial Institutions (DFI) increased oversight of payday and title lenders. The legislation: (i) expands contract requirements for payday and title loans; (ii) adds operational requirements for payday loans that allow borrowers to make partial payments without incurring additional charges and that restrict loan rollovers under certain circumstances; (iii) establishes administrative fines against lenders for failing to be registered with the DFI; and (iv) limits dishonored check remedies available to a payday lender against a borrower. The law (Ch. 87) was approved March 8, 2007, and is effective April 30, 2007. Amendments made by the law appear beginning at Utah ¶6153, ¶6391 and ¶7201.

Product Enhancements

New Consumer Credit Legislative Developments Smart Chart Available on IRN
The Consumer Credit Guide on the CCH Internet Research NetWork is enhanced with a new type of Smart Chart at the beginning of April. The Consumer Credit Legislative Developments Smart Chart allows users to quickly find and track consumer credit laws enacted within a given year and reported in the CCH Consumer Credit Guide for all 50 states and the District of Columbia. For each enacted law users can link to a CCH Consumer Credit Guide Legislative Summary, and to laws as amended, added or repealed by the legislation. The Legislative Summary provides users with a concise description and analysis of the legislation. A Chart Note for each state provides current legislative session and general effective-date information. The Chart can be exported to Word or Excel. Recent changes can be highlighted in yellow. The Consumer Credit Legislative Developments Smart Chart supplements the three previously issued Consumer Credit Topics Smart Charts (interest-usury, retail installment sales and home solicitation sales) and four Consumer Credit Quick Reference Smart Charts (predatory lending, payday lending, title loans and refund anticipation loans).

Secured Transactions Guide

Agricultural Supplier’s Lien Valid Despite Prior Security Interest
A supplier of beet seeds had a valid agricultural supplier's lien in a debtor farm's beet crop despite a perfected security interest held by a bank that had loaned money to the farm. The court rejected the bank's contention that the seed supplier had not strictly complied with the filing and notice requirements of the statute enabling agricultural supplier's liens by holding that substantial compliance with the statutory requirements was sufficient to establish the lien. The seed supplier's failure to strictly comply by filing a statement of intent to file a lien in the county recorder's office was excused by the court because the statute does not require notice to third parties such as the bank and because the debtor had actually encouraged the seed supplier to file the lien. Stockman Bank of Montana v. AGSCO (NDSCt), ¶56,107.

Buyers in Ordinary Course Defeat Valid Security Interest
A bank that loaned money to a debtor to purchase timber and that properly filed its UCC financing statements in accordance with Article 9 of the Arkansas UCC was unable to collect on the loan. The debtor sold the timber to lumber mills and then failed to remit the sale proceeds to the bank to repay the loan. The bank sued the debtor and the limber mills, but the court held that the mills were buyers in the ordinary course of business not subject to the bank's security interest. As buyers in the ordinary course of business, the lumber mills had no duty to conduct lien searches to determine if there was an existing security interest, and they took free of a security interest created by the bank even though the interest was perfected and the debtor knew of its existence. The business practices of the lumber mills were "usual or ordinary" in the lumber business, and it is not customary to conduct title searches. Fordyce Bank & Trust Co. v. Bean Timberland, Inc. (ArkSCt), ¶56,108.

Artisan’s Lien Had Priority Over Blanket Security Interest
An artisan's lien in a bankrupt debtor's farm equipment created by virtue of repairs to the equipment had priority over a lender's blanket security interest in all of the debtor's personal property, including the farm equipment, despite the lender's filed UCC financing statement. Although the equipment was in the artisan's possession at the time the debtor filed his bankruptcy petition, the debtor took the equipment to use in his farming operations and later returned the equipment to the artisan. The bankruptcy appellate panel concluded that the artisan did not lose its artisan's lien in the equipment when the debtor took the equipment without the artisan's knowledge or consent. Such involuntary loss of possession does not defeat the artisan's lien. Nebraska law recognizes that artisan's liens, which are not required to be recorded, usually occur after a lender's interest is perfected but, because they enhance the value of the lender's collateral, they are entitled to payment for their services and may retain the property until receipt of payment. On the petition date, the artisan was in possession of the equipment and had an artisan's lien with priority over the lender's security interest. In re Borden (BAP 8thCir), ¶56,110.

State Law Update

Arkansas: The requirement that an owner of a motor vehicle in Arkansas sign the certificate of title on the reverse side of the certificate has been revised to require that the owner sign the certificate in a space provided on the front side. The provision has also been amended to provide for "his or her" signatures, rather than only "his" signature. The law (Act 171) was signed by the Governor on Feb. 28, 2007. It will take effect 90 days after adjournment of the state legislature. The law appears at Arkansas ¶1055.

Illinois: The electronic registration and titling program in Illinois for motor vehicles that authorizes vendors to transmit applications for titles and registration of motor vehicles, to create and remove liens from motor vehicle records, to apply for salvage or junk certificates, and to issue registration plates and stickers, has been amended to include "retail merchants" in the list of authorized vendors. The regulation further provides, however, that retail merchants are only authorized to issue registration renewal stickers. The amended regulation was effective Jan. 29, 2007, and it appears at Illinois ¶1375.

North Dakota: The law governing agricultural processor's liens in North Dakota has been amended to specify that the law does not limit the sale, assignment, or transfer of an agricultural processor's lien. However, the priority of an effective agricultural processor's lien is not transferable. After sale, assignment, or transfer, the priority of an effective agricultural processor's lien is to be determined as of the date the lien was filed and in accordance with the UCC Article 9 rules regarding perfection without filing. At the same time, the law governing agricultural supplier's liens has been similarly amended. The law (H.B. 1338) was approved March 9, 2007, and it takes effect Aug. 1, 2007. The law is reflected at North Dakota ¶1194 and ¶1201.

Wyoming: The state statutes governing vehicle certificates of title and vehicle licensing have been amended to include multipurpose vehicles within their scope. For purposes of the vehicle title law, "multipurpose vehicle" means a motor vehicle that is designed to travel on at least four wheels in contact with the ground, has an unladen weight of at least 300 pounds but less than 3,000 pounds, has a permanent upright seat or saddle for the driver which is mounted at least 24 inches from the ground and has an identifying number. The term includes off-road recreational vehicles, electric powered vehicles, golf carts under certain circumstances and any motor vehicle meeting these criteria. The definition of a motorcycle has also been revised to reflect the new multipurpose vehicles. The law (Ch. 34) was approved Feb. 15, 2007. It is scheduled to take effect Jan. 1, 2008. The law appears at Wyoming ¶1101 and ¶1141.

Product Enhancements

New Secured Transactions Smart Charts for UCC Filings Available on IRN
Beginning in April, the Secured Transactions Guide on the CCH Internet Research NetWork is enhanced with Smart Charts, which provide a quick reference, time-saving tool for multi-jurisdictional research. The two new Smart Charts, UCC Filing Fees and UCC Administrators, provide information on filing fee requirements under Article 9 of the Uniform Commercial Code and list state office and website information. Official citations and links to the full text of underlying laws, regulations and CCH explanations are provided. The researcher is able to select the topics and jurisdictions and Smart Charts will retrieve the information in a chart or matrix format.

The UCC Filing Fees Smart Chart describes the fees that secured parties are required to submit along with their financing statements to complete the filing process to secure their interests and the fees that must be paid for information requests when attempting to determine whether there is already a lien on a particular piece of property. The Smart Chart covers filing fees for financing statements, continuation statements, assignments, amendments, partial releases, correction statements, termination statements and electronic filing. In addition, fees are provided for searches, copies, expedited handling, additional charges, and electronic requests.

The UCC Administrators Smart Chart focuses on the state agencies or offices responsible for accepting or rejecting attempts by creditors to secure their interests by filing financing statements. The Smart Chart details the central filing location for each state, any exceptions to that requirement, and provides links to those filing offices or agencies. The state agency, location and website are specified.

Financial Privacy Guide

Safe Harbor Model Privacy Form Proposed
The federal financial regulators are seeking comments on a proposed model form that is succinct and comprehensible to consumers, allows consumers easily to compare privacy practices of financial institutions and uses easily readable type font. The proposed model privacy form is the “prototype privacy notice” developed by the agencies after a year-long consumer testing process. Under the proposed rule, a financial institution that chooses to use the model form would satisfy the disclosure requirements for the notices, allowing it to take advantage of a legal “safe harbor.” The proposal also would remove, after a transition period, the sample clauses now included in some of the agencies’ privacy rules. The interagency proposal appeared at 72 Federal Register 14940 on March 29, 2007, and will be reproduced in an upcoming Report.

Private Right of Action Allowed for Credit Card Receipt Truncation Restriction
A district judge has refused to dismiss a putative class action suit alleging violation of the prohibition against printing credit and debit card information on receipts, rejecting retailers' arguments that 15 the Fair Credit Reporting Act (FCRA) does not create a private right of action. Effective Dec. 4, 2006, electronically printed receipts may show only the last five digits of account numbers or the expiration date of credit or debit cards. In a matter of first impression, the United States District Court for the Central District of California noted that the FCRA provides a right to sue for violation of any requirement that is imposed with respect to any consumer. The retailers argued that this right does not apply to the provision in question because it refers to “cardholders” rather than “consumers” and that cardholders may be entities or individuals. However, the court stated, “there can be no doubt that [the provision] creates requirements with respect to consumers because many of the cardholders are in fact individual consumers. A story on Eskandari v. IKEA U.S. Inc. (CDCalif) is included in the March 30 Privacy Extra report letter.

Bankruptcy Law Reporter

Supreme Court Allows Contract-Based Attorneys’ Fees; Overrules Fobian
The U.S. Supreme Court has concluded that the Bankruptcy Code does not disallow contract-based claims for attorneys' fees based solely on the fact that the fees at issue were incurred litigating issues of bankruptcy law. The Ninth Circuit erred when it determined that, under the so-called Fobian rule, such fees are categorically prohibited—even when the contractual allocation of attorneys' fees would be enforceable under applicable nonbankruptcy law—to the extent the litigation involves issues of federal bankruptcy law. No basis for such a rule was found in the Bankruptcy Code. A story on Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co. appears in Report No. 722 (April 3, 2007), and the full text of the decision will be included in an upcoming Report.

Trustee May Not Sell Debtor’s Home to Pay Debts Owed to Support Creditor
The new bankruptcy reform amendments did not create a valid basis for an objection to a Chapter 7 debtor’s claimed exemptions by the bankruptcy trustee or a support creditor. Moreover, bankruptcy reform did not permit the bankruptcy trustee to administer the debtor’s exempt property for the benefit of the support creditor. The debtor’s home could not be sold by the trustee for the benefit of the estate since administration of totally exempt property fell outside the scope of the trustee’s authority. In re Quezada is reported at ¶80,856.

Small Business Filing Deadline Limited to Debtors
In an issue of first impression for small business Chapter 11 cases administered under the bankruptcy reform provisions, a Florida bankruptcy court concluded that the 300-day deadline for filing a reorganization plan in a small business bankruptcy applies only to plans filed by the debtor. There is no statutory deadline for the filing of such a reorganization plan by any party in interest other than the debtor. Florida Coastal Airlines, Inc. can be found at ¶80,862.

Debtors May Surrender 910 Vehicles in Full Satisfaction of Secured Creditors’ Claims
Following the majority of courts to grapple with the issue, the Bankruptcy Appellate Panel for the Eighth Circuit has concluded that, under the so-called hanging paragraph of Sec. 1325(a), debtors may surrender 910 vehicles in full satisfaction of a secured creditor’s claim. Once the debtor surrenders such a vehicle, the secured creditor is not entitled to pursue a deficiency claim even if the collateral is sold for less than the amount of the debt. In re Osborn is at ¶80,858.

Dollar Amounts Automatically Adjusted in Bankruptcy Code and Forms
Automatic adjustments to the dollar amounts stated in various provisions of the Bankruptcy Code, Official Forms, and one provision of Title 28 of the United States Code will become effective for cases filed on or after April 1, 2007. The adjustments occur in three-year intervals and will affect, among other things, property exemptions, priority claims, the means test calculation, the duration of a Chapter 13 plan, small business debtors, involuntary bankruptcies, and nondischargeable luxury goods and services. A story on the automatic adjustments appears in Report 722 (April 3, 2007).