Letter to Speaker J. Dennis Hastert Regarding S.256, the Bankruptcy Abuse and Prevention and Consumer Protection Act of 2005
April 1, 2005
The Honorable J. Dennis Hastert
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Speaker:
On behalf of the Credit Union National Association (CUNA) and America's nearly 86 million credit union members, I am writing to express our strong support for the passage of S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Credit unions have consistently had three top priorities for bankruptcy reform legislation: a needs-based formula; mandatory financial education; and maintenance of the ability of credit union members to voluntarily reaffirm their debts. As the product of extensive compromise, S. 256 does an excellent job of balancing these issues.
Credit unions recognize that many people legitimately need the option to declare bankruptcy. What greatly concerns us, however, are the Chapter 7 debtors who clearly have the ability to repay all or part of their debt but are able under current law to totally walk away from their debt.
Because credit unions are not-for-profit financial cooperatives, losses due to a single bankruptcy of a credit union member have a direct impact on the entire membership of that credit union. Typically, such losses will increase loan rates and/or decrease the interest on savings accounts for all the other members of that credit union.
We also strongly support the provision in this bill that would prohibit Chapter 7 or 13 debtors from receiving a discharge if the debtor does not complete a course in personal financial management. In anticipation of this provision, CUNA plans to develop face-to-face and/or on-line courses for our members.
Credit unions also strongly believe that reaffirmations are a benefit both to the credit union, which would avoid a loss, and to the member/debtor, who by reaffirming with the credit union continues to have access to financial services and to reasonably priced credit.
We strongly support the passage of S. 256 in its current form.
Daniel A. Mica
President & CEO
Credit Union National Association