The dissemination of requests and confirmation agreements has generated reactions within the system. Some judges now monitor business cases and issue orders to file cases and hearings when available information indicates that confirmed debts would exceed the debtor`s income or result in an incredible financial burden. (299) A number of districts across the country have adopted local rules that provide for additional reporting obligations on the required assertions. (300) When the Commission re-examined this approach and decided to approve limited assertion rights for certain secured claims, it became logical to reverse its position on the passage and recommend that the code not provide for an independent right of ownership. Creditors whose claims are guaranteed by personal pleasure claims held by the debtor are protected both by “dingrechtsals” and by the personal liability of the debtor to the extent of the value of the security. The compromise of this agreement for a creditor is that the value of the guarantee may be less than the amount remaining in the contract. The unsecured portion would be treated and relieved like all other unsecured debts. Therefore, the passage could have provided a higher return to creditors, albeit with the risk of a loss of value and without recourse to the debtor himself. Debtors` incentives must also be taken into account.
Currently, well-informed debtors can structure a very advantageous bankruptcy with a combination of Chapter 7 and debt assertion. The incentive of a debtor to apply under Chapter 13 is reduced by the ability to repeat certain claims in Chapter 7. Any debtor who sees an advantage in the repayment of certain creditors has little reason to present Chapter 13 if this benefit can be obtained by discharge under Chapter 7, in connection with one or two privately negotiated confirmation agreements. The impact of these recommendations on credit unions. Many groups of creditors have expressed concern about a more restrictive re-inclusion policy, including a group of creditors that stands out in its approach to consumer credit: non-profit credit unions. Credit unions generally seem to check the creditworthiness of their members before extending credit, and they work closely with their members who are experiencing financial difficulties. The results of their practices pay off: credit union levies represent only a tiny fraction of the losses of most credit card issuers. Although the percentage of bankruptcy levies has increased (372), their overall default rate is extremely low, particularly in relation to the industry`s default rates. (373) When a debtor has declared bankruptcy, credit unions, like other creditors, use affirmation agreements to reduce their losses on riskier consolidation loans, but also as an instrument in their cooperative efforts with bankrupt members. (374) Since the Commission`s recommendations confirm certain secured debts, some of the initial concerns of credit unions were taken into account. With regard to unsecured debts, this proposal does not prevent debtors from voluntarily repaying unsecured debt when cooperating with their credit unions.