Keep Calm and Carry On – Observations Regarding CBRA

By Henry E. Hildebrand, III

First, breathe deep and try to relax.

The Antitrust, Commercial and Administrative House Subcommittee of the House Judiciary Committee, with minimal notice, set an oversight hearing for September 29, 2022. The subcommittee is charged to deal with matters relating to bankruptcy. The subject of the hearing was to be the “Oversight of the Bankruptcy Code, Part 2: Ensuring a Fresh Start for Consumers.” This was an apparent continuation of the prior Congress’ consideration of the Consumer Bankruptcy Reform Act of 2020 (“CBRA”).

Hours prior to the hearing, Senator Elizabeth Warren introduced legislation entitled The Consumer Bankruptcy Reform Act of 2022. TheBill, S.4980, is markedly similar to the Consumer Bankruptcy Reform Act of 2020 which did not move when it was introduced in the waning days of the prior Congress.

Minutes before convening the Subcommittee hearing, it was postponed. No rescheduled date was set.

The Subcommittee anticipated hearing from three panels. First, members of Congress to speak on the overview of the bankruptcy system (Senator Warren and Representative Marjorie Taylor Greene were expected to testify). A second panel would be composed of law professors (some of whichactually drafted the Consumer Bankruptcy Reform Act) and several practitioners.

It is interesting to note that as of press time (10/7) the text of the bill remains unavailable at TheBill is 194 pages long and makes substantial changes to the current bankruptcy system. It repeals Chapter 13 and seeks to replace the two-chapter framework of consumer bankruptcy to a single chapter, Chapter 10. Were it enacted, the law would take effect one year after enactment. Just as in prior major modifications of the bankruptcy system, the end product will bear little resemblance to the original draft.

The legislation has been endorsed according to Senator Warren, by a number of consumer advocacy groups, including the Action Center on Race and the Economy, the American Federation of State, County, and Municipal Employees (AFSCME), Americans for Financial Reform, the AFL-CIO, the Consumer Federation of America, the National Consumer Law Center, Service Employees International, and the Center for Responsible Lending. Senator Warren’s website indicates that 86 law professors who specialize in bankruptcy and consumer law have sent a letter in support of this legislation.

Although it is somewhat mystifying that all of these endorsements would be generated by a nearly 200-page bill that has not been publicly released, except by Senator Warren about 24 hours before the oversight hearing. Assuming the original legislation is the framework of this legislation, bankruptcy professionals should take careful note of the provisions of the bill.

There are miles to go before the CBRA has any chance of becoming law.

It is interesting to note that, rather than referring this legislation to the Senate Judiciary Committee, the Bill was referred to the Senate Finance Committee, a committee in which Senator Warren is a member.

Please pay attention to the Academy updates as this legislation works its way through this soon to be erstwhile Congress.


HHildebrand150v2Henry E. Hildebrand, III has served as Standing Trustee for Chapter 13 matters in the Middle District of Tennessee since 1982 and as Standing Chapter 12 Trustee for that district since 1986. He also is of counsel to the Nashville law firm of Belcher Sykes Harrington, PLLC. Mr. Hildebrand graduated from Vanderbilt University and received his J.D. from the National Law Center of George Washington University. He is a fellow of the American College of Bankruptcy and the Nashville Bar Foundation. He is Board Certified in consumer bankruptcy law by the American Board of Certification and serves on its faculty committee. He is Chairman of the Legislative and Legal Affairs Committee for the National Association of Chapter 13 Trustees (NACTT). He is on the Board of Directors for the NACTT Academy for Consumer Bankruptcy Education, Inc. and is an adjunct faculty member for the Nashville School of Law and St. Johns University School of Law. In addition, he served as a commissioner to the American Bankruptcy Institute’s Commission on Consumer Bankruptcy.

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