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Congressman Cohen Chairs Hearing On Need For Bankruptcy Judge Reforms

June 17, 2009

“We’ve been hearing for some time that the country is facing the greatest economic crisis since the Great Depression, and an increasing bankruptcy filing rate in Tennessee is a stark reminder of that assertion,” Chairman Cohen said. “A well-functioning bankruptcy system is absolutely critical to helping individuals and businesses weather this economic storm, and having a sufficient number of bankruptcy judges is key to making that system work.”

According to the Administrative Office of the U.S. Courts, there were over one million bankruptcy filings nationwide for the 12-month period ending March 31, 2009, representing a 33.3 percent increase over the 12-month period ending March 31, 2008. On a per capita basis, Tennessee had the most bankruptcy filings over the last year, with 8.1 per 1,000 population, followed by Nevada with 8.07 per 1,000. According to published reports, Tennessee's ratio is high because of laws that make it easier for creditors to attach a debtor's wages. California was 17th and Florida 18th. Moreover, the sharpest increase in filings nationwide was in Chapter 11 cases, where there was a nearly 70 percent increase in filings over the previous year, and bankruptcies involving primarily business debts were up almost 60 percent in that same time period.

During today’s hearing, the committee heard testimony from a number of witnesses, including David Kennedy, Chief Judge Western District of Tennessee. The Judicial Conference recommends
the authorization of 9 new bankruptcy judgeships, the conversion of 22 temporary judgeships to permanent status, and the extension of 1 temporary judgeship for another five years. In total, the recommendations affect 21 judicial districts in 9 of the 12 geographically based federal judicial circuits.

“Bankruptcies had been steadily on the rise since October 2006, well before the current economic downturn. With the significant recession that the country is currently experiencing – particularly when combined with the related foreclosure, consumer credit, and health care crises - this trend has been exacerbated significantly,” Chairman Cohen said. “It is well past time that we revisit the critical issue of bankruptcy judgeship needs, and I am gratified that we are able to do so today.”

The Judicial Conference’s recommendations are based on its comprehensive study of bankruptcy judgeship needs. The last time Congress authorized or even addressed the issue of bankruptcy judgeships was almost four years ago, when it authorized 28 temporary judgeships in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that are now about to expire.

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________________________
Steven Broderick
Communications Director
Congressman Steve Cohen (TN-9)
1005 Longworth House Office Building
Washington, DC 20515
Direct: 202-226-7916
Main: 202-225-3265
steven.broderick@mail.house.gov