ABA Supports Chapter 7 Bankruptcy Changes

Ahead of a House Judiciary Committee Hearing today on H.R. 3553, the Bankruptcy Administration Improvement Act, the American Bankers Association submitted a statement for the record supporting provisions in the bill that would increase the statutory fee paid to Chapter 7 trustees in so-called “no asset” bankruptcy cases.

ABA noted that bankruptcy disrupts the normal collections process and significantly affects lenders’ ability to recover losses. Chapter 7 trustees play a critical role in determining what assets should be made available to creditors, but in cases where there are no assets to recover, trustees receive only a statutory flat fee.

The association supported the increase of the fee “because it is necessary to compensate trustees for the work of examining these types of bankruptcy petitions to ensure appropriate repayment and because this fee has not been updated since 1997.” ABA added that it supports indexing the fee for inflation, which is also included as part of the bill.