Not all life-changing events are so welcomed, of course. Many changes are mere brutal reminders of how unprepared we often are to have our routines altered without much warning. Some years ago, when I was being confronted with one of those routine-altering life events, a friend of mine pithily commented with a shrug of his shoulders, "things change." Sometimes, that's all you can say—and all that really needs to be said.
Maybe Congress will pass this bankruptcy bill. If so, things will change. Unlike the birth of my son, I doubt that I will welcome this change. A bill that proposes to make lawyers the guarantors of their clients' veracity is not a bill that any lawyer (or judge) will welcome. No other area of practice that I can think of (not even criminal law) imposes such an extraordinarily unrealistic burden on a lawyer. The real effect is to drive lawyers out of the consumer bankruptcy business, leaving the field to the unregulated (and often incompetent or dishonest) petition preparers. As a judge who takes seriously the obligation to police the integrity of the system, I do not welcome the prospect of presiding over a docket plagued with petition preparers and a mass exodus of competent lawyers.
Oh well, things change.
Creditors who now welcome the proposed changes in bankruptcy law may soon come to regret those changes. Or perhaps not. Some say that the dramatic increase in the ratio of chapter 7 filings to chapter 13 filings will be a good thing. (By the way, that's not a typo. If the proposed bankruptcy legislation is enacted, most bankruptcy judges, chapter 13 trustees and practitioners already realize that, because of the onerous obligations then imposed on debtors under chapter 13, the only real option for most consumers will be chapter 7 liquidation—and the so-called "means test" is only window dressing that will not prevent the vast majority of consumers from choosing chapter 7.) Credit card companies will not benefit from that change, but they never intended to anyway. They securitize their portfolios, then service them for the investors who bought the packages of debt. What do they really care if the debtors don't ultimately pay? They already have their money as a result of the sale of their portfolios.
Then again, things may further change. The securitization market may become saturated as more investors become increasingly chary about buying these portfolios. Credit card companies may find themselves having to face larger repurchase obligations, forcing them to look, after all, to the underlying borrowers for payment—most of whom, when they file, will file chapter 7, discharging the debt.
Car finance companies will certainly welcome a new bankruptcy bill. They, unlike their credit card colleagues, will actually prefer debtors to file chapter 7. No revaluations, no extending the length of the note repayment, just a nice clean mandatory reaffirmation and their debtors still on the hook for the car payments without the protection of an automatic stay. Life is good.
Little wonder that the major car lenders are some of the biggest backers of the proposed bankruptcy legislation. They have poured millions into the lobbying effort, expecting to reap billions as a result of the changes. Perhaps they will be rewarded. But when a debtor loses her job and can't make her payments, all the mandatory reaffirmation in the world won't make a difference; if she doesn't have the money, she doesn't have the money. Come pick up the car, Mr. Lender.
When Congress first took up bankruptcy reform in 1997, the economy was booming, the stock market was on a tear, the federal government was enjoying a budget surplus for the first time in decades, and jobs were being created at the fastest clip since after World War II. Congress is still considering essentially the same bankruptcy reform, only now the economy is faltering, the stock market is down 3,000 points, the federal government is once again running up budget deficits, and the job market is once again filled with layoffs. Congressional debate on the topic of bankruptcy reform sounds as though the members of Congress think that nothing has changed since 1997. Of course, we know how silly that is. After all, things do change.
Oh well. At least business is booming for business bankruptcy lawyers. That's a welcome change from the 1990s. The airline industry is contracting, hospital enterprises are reeling from the double whammy of managed care and tightening Medicare and Medicaid regulation, and the steel industry seems poised on the edge of a meltdown.
There is even good news on the venue front. Chicago has emerged as another favored venue for large corporate bankruptcies, in addition to Wilmington, Del., and New York City. As the circuit courts shape precedents, they also shape venues. Sure enough, things change.
Most of the big glut of reappointments that hit the circuit courts beginning in 1998 have now moved through the system. Some districts are decidedly different places in which to practice bankruptcy law now, though others remain largely unchanged. There are some welcome new lights on the bankruptcy bench now, brilliant minds with many years of solid bankruptcy practice experience. I think the system is better for those new additions; we are already enjoying the fruit of their well-written opinions.
Things change, sometimes for the better.
ABI itself has changed too—a larger membership, a larger staff, an even more respected voice on Capitol Hill, and now a force for change in its own right, thanks to the work of ABI's Endowment Fund. Good changes.
As for me, this is a year of great change. I leave the ABI Board of Directors after many years, a bittersweet change to be sure. But I remain on the bench, still hearing cases, enjoying the skill of good lawyers doing their job, sometimes being fortunate enough to have the opportunity to do some real good for some real people. And then there is this new blessing in my life—this new little child, Harrison. This new responsibility, this new joy. So many of you have known that moment when you hold your new son or new daughter in your arms, look into that small face, and see the future and know that it is good.
Things change indeed. Sometimes, that is a very good thing.