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Category: Bankruptcy

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Now Playing in a Bankruptcy Court Near You

Imagine that, for the past several years, you’ve worked diligently and dutifully as a bankruptcy judge. Unlike your Article III colleagues on the federal bench, you don’t have lifetime tenure or salary protection. But that doesn’t really bother you all that much because you care about what you do and you feel you make a difference. What’s more, you love the substance of your work—applying the Bankruptcy Code day in and day out. Sure, it has its share of inconsistencies and ambiguities that present some interpretive difficulties, as any statute would, but, at the end of the day, it’s elegant and workable. And then, BAM! Your life as a judge as you know it comes to a screeching halt.

On April 20, 2005, President Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) into law, thus becoming Congress’s willing accomplice in committing statutory massacre. And when I say statutory massacre, I’m not even thinking about how BAPCPA substantively changes the Bankruptcy Code. Rather, I’m focusing on BAPCPA’s inartful drafting. As recently blogged by Bob Lawless over at Credit Slips: “Regardless of one’s views about the substance of the amendments, most everyone seems to agree that the legislative drafting left something to be desired.” And that’s putting it quite mildly. A quick glimpse at some of the statements from members of the bankruptcy bench during the past year gives the impression that some of the judges are not too happy with Congress.

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Bankruptcy in the Wake of Katrina

katrina.jpgI’ve recently been thinking about the difficulty researchers will face in studying Hurricane Katrina’s effects on bankruptcy filing rates in New Orleans. A couple of weeks ago, over at Credit Slips, Bob Lawless (University of Illinois) discussed the importance of extending credit relief to natural-disaster victims. Lawless’s empirical work on bankruptcy filing rates after a major hurricane has found “that for every two new bankruptcies that occur in areas unaffected by the hurricane, there are three new bankruptcies in the judicial district where the hurricane made landfall.” The study focused on hurricanes from 1980 – 2004, so I’m curious to see whether in the case of Katrina this finding will hold to be true for the Eastern District of Louisiana (E.D. La.), within which New Orleans is located. My hunch is that it won’t. Since the New Orleans diaspora involved hundreds of thousands of individuals, many of whom would be likely candidates for bankruptcy but have not returned (and may never return) to the city, the increased volume of bankruptcy filings will not materialize in E.D. La. A preliminary look at recent bankruptcy-filing data from the district suggests as much.

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