bankruptcy's had been steadily on the rise since october two thousand and six 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 accordingly the administrative office of the us courts there were there were over one million bankruptcy filings nationwide for the twelve month period ending march thirty one two thousand and nine representing a thirty three percent increase over the twelve month period ending march thirty one two thousand and eight moreover the sharpest increase in filings was in chapter eleven cases where there are new nearly seventy percent increase over the previous year and bankruptcies involving primarily business that's right almost sixty percent and that same period of time we've had some hearings in this committee on chapter eleven and problems associated there with we've been hearing for some time the country is facing the greatest economic crisis since the great depression and these numbers are stark evidence of that assertion 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 bankruptcies are extremely high in my district and western district of tennessee and one of my predecessors walter chandler had a lot to do with drafting the bankruptcy laws back in the l today we consider the recommendations of the judicial conference of the united states with respect to bankruptcy judge ships the judicial conference recommends the authorization of thirteen new bankruptcy judge ships the conversion of twenty two temporary judgeships to permanent status and the extension of two temporary judgeships for another five years in total the recommendation of facts twenty five judicial districts in nine of the twelve geographically based federal judicial  judicial conferences recommendations are based on as comprehensive study of bankruptcy judge it needs last time congress authorized or even addressed the issue of bankruptcy judge ship was almost four years ago when it authorized twenty eight temporary judgeships in the bankruptcy abuse prevention and consumer protection act of two thousand and five that are now about to expire unfortunately that's not all this about to expire but that's all is well past time that we revise and revisit the critical issue of bankruptcy judge ships needs and i'm gratified that we're able to do so today accordingly i look forward to hearing testimony this morning and i would now like to recognize mr jordan who is the ranking member once removed  two all of the house has passed on more than one occasion legislation authorizing additional permanent bankruptcy judges since since that one thousand nine hundred eighty seven unfortunate is not acted on this legislation obviously judges are crucial to the bankruptcy process today with the help of bankruptcy trustees ensure that the work is completed creditors are paid assets are probably dispersed distilled workloads become overburden it prevents bankruptcy cases from advancing as they should the see to prolong the bankruptcy process or subtracts from the amount of time judges can dedicate to each of the cases on their dockets as consumers and businesses seek to use bankruptcy as a means to receiving a fresh start on the economic stress that the current recession is called is important that we have a sufficient number of judges to make the system work properly the need for additional judges is premised on a comprehensive study of judicial resource needs conducted by the additional conference with the expertise of our witnesses today's hearing should provide a useful opportunity for us to obtain a greater understanding of how the judicial conference assesses the nation's bankruptcy judge it needs and assures  currently authorize usual resources are maximized i do want to note that i have some concerns that the one thousand and one case weights that are the basis for the current study a bankruptcy judge ship needs are woefully out of date there are understandable reasons as to why the study is so out of date nonetheless i'll be interested in witness's testimony regarding the current study whether it can be relied on and what the cost of the bankruptcy system will be of waiting until now updated survey and study which i understand is currently in the works is in fact completed i for taking this subject up as rapidly as you have with the committee and i am very proud of the witnesses that are joined us for this discussion  and i don't think it's tipping off anybody to anything but we have a roughly bipartisan agreement a consensus on the need for more judges will say that that's elementary because nothing in the congress is elementary you may think it's elementary but  it's it's very important and i hope with the distinguished group that you've gathered here today for this discussion that we go underneath the call the need for more numbers i mean that's i don't know how you can argue that but what else to  so we don't want to just have a superficial discussion about how many numbers we need how fast we need and how we need permanent all the temporaries that are about to expire but what about what about the bankruptcy court and the procedures and rules and conduct in which it operates and the tragedy that millions of people are now being forced into this as a way out this is a relief it's no longer an embarrassment it used to be a disgrace nobody would ever want to talk about it that's that period of time in our cultures gone hoping you can get into bankruptcy another problem is there's long lines you can't even get there in a timely fashion so a lot of damage goes on in the meantime while you're processing thank you appreciate your statement likewise i reciprocate i'm proud to be on your committee that objection other members opening statements will be included in the record i'm now placed introduce the witness the first witness and we introduce our witnesses because prior to they speak and this hearing today i want to thank everybody here for their appearing in their testimony without objection your written statement to be placed in the record to ask you limit your remarks to five minutes there's a lighting system shows that if the green light means you started you've got anywhere from five to one minute left when you're in your last minute and when it goes to read you should have the concluding promptly  of like when you're going on the airplane on that clear deal our first witness is barbara lynn judge len took the oath of office as united states district judge for the northern district of texas on valentine's day two thousand judgment as chair of the committee on the administration better good morning chairman cohen chairman conyers and members of the subcommittee as chairman cohen has told you i am a district judge in dallas texas i am also the chair of the administration of the bankruptcy system committee of the judicial conference and it is in that capacity that i appear before you today i am pleased to testify in support of the recommendations for bankruptcy judges sufficient judicial resources are essential to ensure that our bankruptcy courts can effectively and efficiently determine the rights and responsibilities of parties in cases before them in performing its statutory duty to advise congress on the need for bankruptcy judge ship our judicial conference makes biennial recommendations for the authorization of additional bankruptcy judge ships the continuing need for existing bankruptcy judge ships and other judgeship actions an exercise of that duty as the chairman has advised we recommend the congress authorized following thirteen new permanent bankruptcy judge ships the conversion of twenty two temporary  judgeships to permanent status and the extension of two temporary bankruptcy judge ships for five years the need for these judge dips is critical our filings are approaching near record levels just as the bankruptcy courts are in peril losing of their judicial resources specifically the temporary judgeships which were created or extended by congress in connection with the passage of the bankruptcy abuse prevention and consumer protection act which we in the field but today i urge your assistance in passing the judgeship legislation which will alleviate these overcrowded dockets and ensure that the bankruptcy system can satisfy its vital mission which is much in the minds of the public in our current economic circumstances these judgeships are i submit to you essential to the administration of justice although the judicial conference ought forty seven additional permanent intemperate judgeships in early two thousand and five the year one babsy bill was passed only twenty eight temporary judgeships were authorized and most of those were based on an outdated one nine hundred ninety nine judicial conference recommendation all the temporary jobs ships authorized or extended by babs are now approaching their lapse date after which the next vacancies in those districts cannot be filled at the same time the workload of bankruptcy judges has substantially and steadily increased since the first full year after babsy but took effect and filings are nearing three babsy bill levels without congressional action on the judicial resources recommended by the conference bankruptcy courts could simultaneously face record filings and a reduction in judicial resources needed to handle them both business and non business case filings are increasing dramatically pros say filings which require additional judicial time to equitably adjudicate are among these increased violence moreover the provisions of baps have added to the particular work required of bang judges in each case to be specific about the p bankruptcy over the last several years i note the bankruptcy case filings have increased steadily the chairman mentioned these numbers so i will not repeat them but i will simply say that as of the year ending march thirty first two thousand and nine the number of filings from two thousand and six had doubled we are now at one point two million as of that time frame without even accounting for seasonal adjustments and that is nearly sixty percent higher than it was during the first year following  that passage the judicial conference fully understands the current budget climate and its recommendation for authorization of additional judgeships is not undertaken lightly the districts that require additional resources have shown a sustained need for additional judgeships and they remain overburdened by crushing caseload outside the eastern district of michigan as an example and we have requested additional resources there since one nine hundred ninety three in the western district of tennessee where my colleague judge david kennedy sits and representative cone of course is your district a permanent judgeship has been recommended since one nine hundred ninety seven if the temperature judgeship authorized expires with the next vacancy in or after july two thousand and eleven that district will revert to the number of judges it had in one thousand nine hundred two before it experienced a dramatically increased workload the conference take seriously its role as a steward of taxpayer dollars and i assure you that we have requested judgeship vacancies be filled only where there is a workload need after exploring all alternatives to filling the need for additional it is our view that bankruptcy judge ship legislation is the necessary solution to cure the problem of inadequate resources to fill these needs the survey the we conducted was mentioned i will be happy in the question period if you like to detail all of the factors that we consider in addition to the weighted caseload and mr jordan i will happily entertain any questions you might choose to ask me about the weighted caseload and how that works but we believe we have sufficient data to fully justify that each of these judgeships be filled we believe that to ensure that the bankruptcy court system operates as good as congress has intended that we need all of these resources to fill a critical void in our system i thank you very much for your kind attention and i will be happy to answer any questions you might choose to ask thank you judge lane and we appreciate your testimony your willingness to participate are second witnesses judge david kennedy chief judge kennedy was appointed to the bankruptcy town in the western district of tennessee and it's my honor to have you here we begin your testimony judge kennedy thank you mr chairman good morning members of the subcommittee my name is david kennedy i've had the honor of serving as a united states bankruptcy judge for about twenty eight and a half years in the western district of the tennessee at memphis where i live and primarily whole court over the years all court in jackson tennessee from time to time on an as needed basis chairman cohen you're right about memphis having some deep roots in the field of bankruptcy with the owner walter chandler having had the one hundred thirty eight amendments and nine after him that actually created to rehabilitate or features of the bankruptcy code that we now know is chapter eleven chapter thirteen a congressional policy that he tested in america since nineteen thirty eight favoring repayment plans over liquidation where possible without emphasize where possible not all individuals who are unemployed would qualify to be eligible for a leaf in chapter thirteen but i greatly thank you in the subcommittee for this opportunity and pleasure to testify before you to discuss the bankruptcy judge ship needs ophir before you today as a representative of the national conference of bankruptcy judges i strongly agree with everything that judge lynn has said regarding the judgeship needs and also the standard used by the additional co its thoughtful deliberate reality based process i also support strongly the judicial conference is recommendations regarding the thirteen requested new judgeships converting the a twenty two temporary conversions to permanent status in the extension of the two temporaries and it's my understanding that my friend mr william jenkins of this panel will testify in a moment regarding the methodology used by the judicial conference in in these matters so i will not step on his turf either and since i have previously submitted a prepared written statement that really speaks for itself i thought my oral statements instead might focus  more now on how this current workload impacts the day to day labs of bankruptcy judges their staffs to court security officers and bankruptcy trustees debtors creditors  and other litigants in the system and also the public as a whole when time allows the just briefly discuss how very carefully the a judicial conference evaluates a district request for new judgeship and related needs the work of the bankruptcy judges today is same lee more complex and time consuming than ever before no doubt the attorneys and trustees are more sophisticated today they're more pro s month period ending march thirty one two thousand and nine were up thirty three point three percent over bankruptcy filings for that same twelve year period ending march thirty one two thousand and eight many are predicting that calendar year two thousand and nine will result in in approximately one point five million bankruptcy cases being filed in fact last week i heard the singer economist at the annual bankruptcy judges provision division make that prediction and others have is well and that is significant for a number of reasons but it's further significant because that's almost the same level that existed the year before the enactment of this controversy over two thousand and five bankruptcy act although the two thousand and five bankruptcy acts certainly has positive provisions even historic provisions nonetheless it also has many provisions that are very complicated in a very time consuming approximately thirty five new motions have been created by the two thousand and five act and many of them are extremely time sensitive actually there are  times in days when i feel like the bankruptcy court today is more a de facto emergency room for a financially distressed consumer and commercial debtors cost under the two thousand and five act have increased resulting in the more individual debtors and small creditors representing themselves that is acting pro se and pro se litigants and debtors just ordinarily are more time consuming and usually it's a judge nightmare to have both parties pro se and that is happening more and more real dilemma but that we just have to work our way through it because of these factors and others the judge's workload within the cases have increased judges faced with overcrowded dockets or having to work late hours requiring court staff court security officers who also work late the attorneys that debtors and creditors avenue stay late and of course their families at least they're not there but they are affected by all this and as judges i know that sometimes we could just get too busy and i believe that the perception of justice is important perhaps sometimes more important than the reality itself but it is critical that debtors and creditors feel that they've had their full day in court people sometimes just need an outlet they want to hear before judge and be heard and then have a inattentive judge hear them so i think there's a public confidence consideration involved in all this too and it goes without saying that the overcrowded dockets sometimes may result in different kinds of problems for example the cause of the lack of judges hearings may be delayed continued or postponed or fast tracked or judicial decisions may be delayed although creditor distribution under chapter eleven twelve and thirteen confirmed plans and an asset to chapter seven cases may be delayed last calendar year in the western district tennessee i'm very pleased to report that over two hundred sixty million dollars  distributed to creditors under chapter thirteen planes so it could be said they delayed distribution to creditors is in essence a denial of lost opportunity cost in today's creditor may be tomorrow's debtor not a very briefly discuss how carefully the judicial conference evaluates the district requests for a judgeship i have served on many judicial conference judgeship survey committees and i can personally attest to have very carefully the conference evaluates these judgeship request and related needs based on this personal knowledge and as noted a moment ago it is a well conceived implemented in reality based process is set forth much more in detail that in my written comment and in summary the need for these additional judgeships the conversion of the temporary and permanent status the enlargement of the two temporary positions is real  and simply put we asked for your help but need to exist in a please know that we greatly appreciate your time and attention and i also would be happy to try to attempt to answer questions that you may have later thank you judge kennedy appreciate our third witness is william jenkins mr jenkins join the government accountability office and one hundred seventy nine as a faculty fellow since february two thousand and three service director of homeland security and justice issues with the opportunity to be here today to discuss our work reviewing the workload majors at the judicial conference uses to assess the need for additional bankruptcy judges these workload majors called weighted case filings are now eighteen years old their accuracy has almost certainly been affected by changes in the intervening years such as changes in the nature of the workload case management practices and the many new requirements of the bankruptcy abuse and prevention and consumer protection act some of which judge kennedy discussed some of these changes may have increased judge workload and some decreased it to the extent that the current case weights under state are overstate the time demands on judges the wait could potentially result in the judicial conference understating are overstating the need for new bankruptcy judges the federal judicial center has a study now underway to revise and update the current case with the time demands on bankruptcy judges are largely a function of the number and complexity of the cases on their dockets some cases taking time more time than others to measure these differences the judicial conference uses weighted case filings by statistical measure of the average estimated judge time that specific types of cases are expected to take a wait is assigned each case filed in a bankruptcy court and the sum of those weights divided by the number of arthritis judgeships in the court results in the number of weighted filings per judgeship for that court the judicial conference considers fifteen hundred annual weighted filings per judge ip an indicator and only an indicator of the need for additional judgeships in that court thus and assessing the need for do judgeships that just a conference relies on the weighted filings to be a reasonably accurate measure by judges case related workload whether they are in fact reasonably accurate depends in turn on the soundness of the methodology used to develop the weights the current weights were developed using data judges recorded on the actual amount of time they were spending on cases filed in their courts over a ten week period in two thousand and three we reported that we found first that the methodology was reasonable and second that the resulting case weights as approved by the g a o conference in one nine hundred ninety one in one nine hundred ninety six were likely to be reasonably accurate at the time they were developed the federal judicial center began a study in two thousand and five to revise the current case weights but suspended it after the enactment of the bankruptcy reform act this was prudent given the fact that the act was expected to have an impact on bankruptcy filings at least in the short term and that the act included many new provisions whose effect on judges workload could not be  known in fact personal bankruptcy filing surged to more than two million in two thousand and five due to surge in filings prior to the october two thousand and five affected data report act and calendar year two thousand and six filings dropped to six hundred thousand filings since grown steadily as mentioned and reached about one point two million filings for the end year ending in march two thousand and nine are roughly the same level as calendar year two thousand and four yes j c began a new study in two thousand and eight to revise the current case weights study is designed to collect data on the time bankruptcy judges spend on cases filed during five ten week data collection periods from may two thousand and eight you may two thousand and nine and recall bankruptcy judges participate in the study during one of these five reporting periods this study design permits the development of new case weights based on the same type of objective time data as the current weights which we found to be reasonably accurate and portly it permits a calculation of this it's difficult to estimate of the error associated with each case we finally have the accuracy of case weights as i measure judicial workload is dependent upon accurately assigning each case filed to the appropriate case weight category in two thousand and three we identified the steps in the history of office takes to ensure case filings but we did not evaluate how effectively these measures may be ensuring data accuracy and we have not reviewed the current judgeship request that concludes my statement mr chairman of the please respond to any questions you or other members of may have thank you mr jenkins our final witness is kerry she's a partner in the fort worth law firm of our losses focusing on consumer and small business bankruptcies she was president of the national association for became president national association of consumer bankruptcy attorneys this january first two thousand and nine she chirped to charles previously is vice president and serves as a panel trustee in the northern district of texas so we have three of our four witnesses  or natca on whose be happy appear today is the only national organization dedicated to serving the needs of consumer bankruptcy attorneys and protecting the rights of consumer debtors and bankruptcy formed in one thousand nine hundred two natca has more than four thousand members located in all fifty states and puerto rico before i begin my statement in support of additional bankruptcy judge ships i want to take just a minute to thank this subcommittee the full judiciary committee and indeed the entire house of representatives for your tire efforts on behalf of homeowners facing foreclosures perhaps the single most effective thing this congress could do to stem the rising tide of foreclosures would be to give bankruptcy judges the ability to modify mortgages on primary residences in chapter thirteen as currently can be done for vacation homes yachts family farms and investment property the house of representatives pass legislation that makes this common sense change to the bankruptcy code in instances where homeowners were unsuccessful in getting a sustainable loan modification from their lender regrettably that provision was killed in the senate i understand there is some belief that foreclosure crisis is behind us based on what i see everyday in my practice i can assure you that it is not and i suspect we will be taking up this issue again in the near future and thank you for allowing this digression natca supports the two thousand and nine recommendation of the judicial conference of the united states for additional bankruptcy judges we agree that additional judgeships are critical to ensure that the bankruptcy courts have sufficient judicial resources to effectively and efficiently adjudicate the rights and responsibilities of parties in bankruptcy cases and proceedings there have been no permanent judgeships authorized by congress since hundred two despite a surge in concern or and business case loads and the increased complexity of cases since the october two thousand and five implementation of the bankruptcy abuse prevention and consumer protection act of two thousand and five that a although bankruptcy filings initially declined in the wake of that c b s implementation there had been a tremendous increase in recent years it is estimated that filings this year will again exceed the one million mark with an increase of twenty seven percent in two thousand and nine to more than one point two million cases the state of the economy particularly as it impacts home foreclosures rising unemployment and credit availability a major factor in the rising number of personal bankruptcies which traditionally constitute the majority of bankruptcy cases the economic downturn is causing an increase in small business and corporate bankruptcy some of which are very large and complex chapter eleven cases but the number of filings alone is not the sole indicator of the overall workload judiciary or those involved with the bankruptcy process perhaps the biggest impact of the two thousand and five law has been the enormous increased in the cost and burdens of filing an individual bankruptcy case while it may not have been the intention of some of those who voted for the bill that c p a has increased documentation requirements bureaucratic paperwork and other costs so much that the honest low income and working family not the high rollers at whom the amendments were supposedly aimed are deterred are prevented from obtaining the bankruptcy relief that they need consider some of the the new requirements as a result of the two thousand and five law changes before a debtor can even file their petition for bankruptcy that debtor must obtain all bice's for the sixty days prior to filing four years of their most recent tax returns or transcripts provide their attorney with information detailing every penny of their income for the past six months provide bank statements to the trustee and evidence of current income attend a preposition credit counsel briefing no matter how hopeless their situation and regardless of whether their problems were caused by imprudent credit decisions or unavoidable medical catastrophes attend a financial management course in order to receive  discharge and the attorney must complete numerous additional forms including a six page means test form that requires calculations about which there are many different legal interpretations as such bankruptcy has gone from being a low priced proceeding that could be handled quickly and efficiently to an expensive minefield of new requirements and traps and tricks that can catch the innocent and unsuspecting debtor all of these provisions add to the work load of bankruptcy judges and if there are disputes as to whether debtors have complied with many of these new requirements this will often result in additional court hearings to judicial oversight in summary bad c b i has created new docketing noticing and hearing requirements that make addressing the petitions far more complex and time consuming for bankruptcy judges while the has implemented a number of cost containment measures and continue to identify and explore new initiatives to further streamline operations to reduce costs the bulging case loads demand that additional judgeships be approved thank you thank you judge we will now have away with the counseling provisions in the two thousand and five law chairman cohen i think that the pre protection counseling requirement that has been imposed on debtors is an utter waste respectfully punt on your question mr chairman from my perspective i'm a district judge only hear bankruptcy matters on appeal as a matter of policy the judicial conference comes to this seems has been said is a waste of time waste of money it's done i was a telephone but you are an individual or group session the last thirty minutes to an hour i'm told the charge is fifty dollars to one hundred dollars and it's just not serving the purpose intended in fact is a virtue organization has done some private study and is talk with these credit counseling agencies and they come back and say they're probably ninety seven percent of the chapter seven debtors are unable to under their plans and it's a waste of their time is there is there another type of counseling at the end of the bankruptcy that might be worthwhile or might be worthwhile or is not worthwhile instructional course concerning the debtors personal financial management but i would hope that the provision could be fine tuning a little bit to give the bankruptcy judge some discretion as to whether or not to order that specific individual debtor to undergo post petition instructional course training as a precondition of a grant granting the discharge up at ph d s in economics that if filed bankruptcy cases very highly literate people and i asked them to pay the fifty dollars one hundred dollar fee and then go said into a course that they ought to be teaching in anything i think is a little insulting on a case by case basis i'm odd response that yes i do support strongly support financial literacy and i think the post petition instructional course concert meaningful purpose but i'd like to see the bankruptcy judges have some discretion rushing as to whether or not management course many of my clients who have felt they have really obtained something that was a benefit to them and it has helped them hopefully not to be back in my office in the future and the paper titian counseling briefing session that judge kennedy referred to serves no purpose when when they are already unemployed facing foreclosure and they are they've already tried all the other options that were available to them thank you judge kennedy let me ask you question the issue of venue is important in our area we border mississippi in arkansas do you believe the venue laws ought to be changed in bankruptcy i strongly urge congress to at least really examine the case then you issues i think that issues exist within bankruptcy cases where venue is technically improper also think that venue issues exist in cases that are technically property currently the issue whether a bankruptcy judge upon the filing of a timely motion can dismiss a case or transfer it for another district or can retain this improperly venue if it's for the interest of justice or for the convenience of the parties has resulted in a split of authority in the lower court since nineteen eighty four the answer is not being clear but that way a very very brief background the one nine hundred seventy eight codes accompanying title twenty eight the new provisions expressly and clearly provided that a bankruptcy court could retain jurisdiction over a technically improperly venue gays if it were for the convenience of the parties or the interests of justice or it could transfer that case to another district for the convenience of the parties or the interest of justice that was former section fourteen seventy seven of title twenty eight that is entitled cure or waiver defects what the nineteen seventy eight code then you provisions did was really to rely upon its transfer provisions more so than its technical venue provision to assure a fair place to administer a bankruptcy case or a proceeding however as a result the nineteen eighty four restructuring that occurred the bankruptcy court system section fourteen seventy seven the one entitled cure or waiver defects was just deleted in it's not clear whether or not the deletion was by design or whether or not it was intentional i have not thought about it but since nineteen eighty four this split of authority has developed in the lower courts i took to get to the view and i generally don't talk about cases i get reversed in but i'll get there in a moment but i took the view that since there was no express statutory twenty eight provision or an express title eleven provision or an express that a rule of bankruptcy procedure expressed provision prohibiting the from retaining technically improperly venue case for the convenience of the parties or the interest of justice must have the inherent authority on a case by case basis considering the convenience of the parties or the interest of justice  so called bedroom community of memphis i could put not right foot in memphis in the north western district of tennessee but dead or in my case actually lived in mississippi he worked in memphis had a bank account in memphis had two creditors in memphis had eight national creditors know mississippi creditors the united states trustee for agent kentucky and tennessee thousand motion to dismiss or to transfer the case to another district because of the technically improperly venue case i looked at it i struggled with it word with it because it was a split of the story and i gained the conclusion that there was no express prohibition that i had the inherent authority and i was reversed but at least when the six circuit reversed it urged congress to fix the problem six circuits added that enry thompson case the cited cases five zero seven said third four sixteen nineteen ninety seven that fixing any perceived bankruptcy case the new problem is a job for congress and not the courts an arch congress to accept the invitation of the six circuit in legislatively fix this problem and thereby eliminate this unfortunate split of authority which is time consuming it's expensive and also frustrates the bankruptcy goal of bankruptcy rule one thousand and one about securing the just speedy and inexpensive determination of all these bankruptcy cases in proceedings i would hope that congress would go back to the ben you concept that existed in one thousand seventy eight where the emphasis was on the transfer provisions and not technical traditional venue provision that could be a real easy legislative fix just re number in reintroduce former section fourteen seventy five the cure a waiver of the facts and that would take care of it this hearing stirs some sad memories what happened four years ago in this committee and in this congress in terms of the bankruptcy  and i don't know much will probably counsel remembers the credit the credit card people love it us for eight or nine years before they finally persuaded enough people to come in and do what we did that carefully nurtured with the k street lobbyists to help get us into this fix it's terrible congress we we put the american people in the heart for generations trillions of dollars and when you say let's hel something about health care reform the number of individual bankruptcy filings keep going in terms of what brings you to the court in the said i i agree that the that the reason many many individuals are filing for bankruptcy are due to either under insured or have no medical insurance and they end up in bankruptcy because they have expended all of their resources trying to pay their medical bills or they have to use credit cards pay for their health care costs and without some form of relief obviously health care being a relief for many many people in this country who have no health insurance or under insured i hope that this congress will continue to fight for those people and allow them relief through bankruptcy that they are to continue to push for them to save the only thing that they have which is their home not only are they filing bankruptcy but they're having to walk away from a home that they simply can no longer afford because they were victimized by mortgage lenders brokers and unscrupulous realtors attempting to make a sale on a home that they never could have afforded by selling them a product that was simply not not financially feasible and i am certain that based on the numbers that i've seen there's been several reports that the second wave of foreclosures that will be coming through between two thousand and nine and two thousand and eleven will be just as many as there were in the last two years this is not over and we will need to revisit this again and i hope that this into them now they've lost their jobs and they can't pay for the mortgage now they've lost their job now they've lost their health insurance as well that in bankruptcy laws or a safety net and talking about the there's a little catch going on the pendulum swings back and forth this debtor creditor and they are going through their exercises but i must talk about this whole mortgage modification the matter that i was particularly struck by the letter written back in january of two thousand and nine to the late congressional leadership from the attorney generals from the twenty two states and the district of columbia whereby they thought and they supported the mortgage modification provision somewhat of an independent voice that supported the legislation and in their opinion in their collective opinion  and their independent view that such legislation would actually stabilize the housing market the financial markets and also state and local tax base and that could be done without without any taxpayer expense the bankruptcy court is already in place with personnel no need to create a new agency create new personnel got courthouses already got the facilities for it would have to build any new buildings with no cost to the taxpayer support mr conyers may or may i not sure if i'm going to be able to make you feel better about the past but i would like to address some of the comments you made particularly as it effects the requests that we have made very much respect dr jenkins comments on the case wade said i'd like to comment on that as it relates to your question as has been mentioned  case ways which are in part the basis for our request our nine hundred ninety one case where we considered doing a study much earlier than we did but for the same reasons that you mention in that long eight or nine year particular caused us to think that we should stop this i believe dr jenkins and his common indicated that that was prudent and i feel that it was to wait and see what would happen under there was a time shortly after bad bill was passed when we came over here with some technical amendments that we were pursuing and i take your comments representative conyers as an indication that perhaps we should do so again we still have that book of technical amendments and i think that you may be talking about more than technical amendments but at the least you would want the statute to read in a way that makes sense on its face and frankly there are some deficiencies there so we are at your service and assisting you if you would like to hear from us on that with respect to baptise and its impact not only on consumers but on businesses those who come to the bankruptcy court for justice and disposition of their cases they want to achieve that within a reasonable time frame and at the least they should be able to achieve that and if we have overloaded courts such as for three and we believe that these nine hundred ninety one case ways i appreciate from an academic perspective they could either be or were they could be under but in reality we know that they are what we had to make a decision whether to come to you now and seek judgeships where there was a critical need and then come back to you again when the case study is fully completed and analyzed and that's what we will do we are here now for urgent critical need we took a peek at the forty percent study that was done immediately before the statute we've taken a peek at the numbers we've gotten in the new waiting study and i feel completely confident in telling you that we come to you with a very conservative approach these numbers have to be babsy but require certain five new motions that were not even present before the workload of bankruptcy judges in these court where we see permanent positions and new positions is critical it's terribly overloaded we cannot achieve the paradigm of justice to which i know we all aspire and i urge you congressman conyers and all members of the committee to consider that we can achieve new chairman some tremendously important hearings that we hope will impress the other body as well we need for closure relief we can't walk away they told us that it was hopeless we couldn't get in the housing bill we've got to go back over to the senate house is in good shape on that but it's a disgrace that the same body their votes out trillions of dollars tells that's losing is that we can't do that we don't have enough senators to do sorry when we know they're good people but how do we know that everybody's on the up and up i mean the whole thing so and now we're passing it on to generations whether this bailout works or not and the guy that loses his home he's never going to there's no return in an economy like this what the system is down to him and then what the congress has done to the homeowner after that so i welcome any ideas from this hearing that you could sentiment that you must have found yourself in a very difficult position trying to do what we normally do with these hearings having served as a ranking member of this subcommittee and some other subcommittees on judiciary and now serving as a chair of some subcommittee a subcommittee and own financial services i always try to follow a policy of having both a pro and con at a hearing i'd almost be willing to bet that there was probably nobody you could find to give bear she changed the subject hearing taking only one of her minutes to talk about the subject hearing whether we need some additional judges and taking the other think the fair answer to your question is in part we would pay for new bankruptcy judges and staff associated with out of filing fees but not in  how can we get it self sustaining financially savvy sustaining without imposing this cost on taxpayers and without being unfair to people who really question in our view it is inappropriate to raise bankruptcy filing fees every time there is a financial need within the bankruptcy  side i don't think that we have made an effort to necessarily equate all aspects of the judiciary budget filing to see what percentage of judges salaries and staff hours is paid for out i was simply making the limited point that with respect to temperate judgeships making them permanent does not add to the pot of money that we would be all right my time actually has expired and i'm a great admirer of the because there is a school of thought that the bankruptcy system ought to be based on user fee system i mean you know the people who use it ought to pay for it the taxpayer  i'm not subscribing to that notion don't get me wrong i actually think there is some public benefit to having a bankruptcy  may be going to reorganization as opposed to people who are doing regular falling out you know i don't i don't know what that would be well if i if i might let me just close by saying that requesting i believe that we can almost completely fund out of what we have in our resources there may be some additional supplementals that we would have to come back to congress about but i think they're quite limited so without even raising  positions that were authorized i mentioned in connection with the two thousand and five statute congress acted on an old judgeship request and there were i believe it was five judgeships that were authorized that we had not requested and those have not been filled because there was in fact not a need for them and before we come to congress with a request for additional judgeships we make sure that the circuits understand that they should only come if there is a significant need and there are many examples that i could give you of circumstances where there was an authorized that had not been filled or even where there might be a technical need that they have met in other fairly routine how accurate is case waiting formula and how do we know that fifteen hundred is too high or too low well the case weighting study takes take the same amount of time and the case take that into account all of the functions that a bankruptcy judge would perform in connection with different kinds of bankruptcy matters that's why we have surveyed all of the bankruptcy judges because of what has happened since and because many of the needs long predate we had needs that were not related to the current economic climate we've looked at that historically that's definitely true in the eastern district of michigan  trust the functions that are before being performed by judges should be performed by judges we need trustees i'm certainly not speaking negatively about that but i don't think that these functions can be passed addressed to perform question representative scott i do not have that except sort of stories i am told we have not worked those numbers that's a sophisticated analysis to do about from talking to bankruptcy judges i believe this position time has increased rather than decrease judges are working as hard as they can they can't process things as quickly and as efficiently as they used to because they have more work to do and that's part of what requires bankruptcy come out real quick when they're prepared but if you have ten thousand creditors spread across the country in a medium sized bankruptcy you may not be able to resolve it that quickly i don't think this is a one size fits all  removed it from tennessee to mississippi under eleven u s c section three zero seven the united states trustee has very broad standing you can raise a pier and be heard on any issues it was the united states trustee that filed a motion to just to dismiss or to transfer the west and see case to the northern district of mississippi and your suggestion would be for a good cause shown you could keep it where it is if it's for the convenience of the parties or the interest of justice absolutely and that's exactly congressman what what the former section fourteen seventy seven provided for it was styled cure or waiver of the facts and it expressly provided its bankruptcy court could retain jurisdiction over a technically improperly then you case if it were for the convenience of the parties or the interest of justice or the court could transfer it to another district if it were for the convenience of the parties or the interest of justice again relying more on these transfer or these flexible transfer provisions to promote a fair place to administer a bankruptcy case or to try an adversarial proceeding ok as one doesn't like to reinvent the wheel is there anything wrong with just sounds like something right up my alley judge cannady according to a recently updated harvard study sixty two percent of bank the debtor's could trace the cause of their bankruptcy the medical debt  if this congress is successful in passing up fordable health care for all people in this country how much would that do you believe would relieve bankruptcy courts of the cases that they see of course can't give you a definite answer of right but my answer would be i think you would it would reduce the number of filings as you know currently medical problems are major contribution to to a bankruptcy filings and if they were to be substantially lemonade yes indeed i think the case filings would would decrease the job losses is another is another problem of marital problems domestic problems so i'm people are financially illiterate i mean there are other colleges bankruptcy medical problems but medical problems is one of the major if not the major contributor and yes my answer is it would reduce the filings but i don't know to what extent yeah i was just saying if that happened there  replications and if you didn't have the medical debt other debt some people wouldn't go into bankruptcy and other debts they have they could handle and so the medical the fordable health care down helps the folks with their health care but it helps a lot of creditors out there who otherwise would be paid yes do you think that the bankruptcy judges are capable of handling if we had the so called cram down provision passed that the president bankruptcy judges could handle the that case load increase i think bankruptcy judges are well qualified mr chairman to do that after all is someone noted we have been doing this for years with family farms some even say it might result in a slight reduction of cases some drawl the analogy being what happened in the mid one nine hundred eighty s regarding regarding family farms you will recall that the family farm being left lost left and right in america due to foreclosures commodity prices were falling congress stepped in and responded to allow for the cram down yes bankruptcy judges tr few valuation hearings word travels real quick at the bar once the predictability factor kicks in for a bankruptcy judge after a short period of time the lawyers started settling many of these valuation hearings and after a while they got together and said well why case we know pretty much all these judges are going to rule anyway let's just settle it and don't have to file it all the money to be paid for something else so yes the response if you question and a thing bankruptcy judges are very well qualified and  again the home mortgage secured only by the debtors principal residence is the only home that can't the subject being modified thank you judge land the conference recommended the thirteen new judges and the conversion of the twenty two to permanent status in the extension of temporary judges so that's a total of thirty seven is there in fact a need for more judges do you believe when the results of the new case waiting study are completed in analyzed my informed judgment is that there will be some additional need shown but we don't feel that at this moment in time we have a legitimate basis to ask you to authorize those so we have elected to go forward with those that we think are critical and crucial and if the numbers and the other factors that we consider support judgeship requests in the future then we will come to you with those thank you if  i believe that finish our questioning the second round of spanish and thank all the witnesses for their testimony today without objection members of the five legislative days has so many additional written questions which will power to the witnesses and as you probably answer them will be made part of the record without objection the record will remain open for five legislative days the submission of any other digital materials again i thank everyone for their time their patience their contribution i believe that this hearing will result in legislation soon introduced in a bipartisan fashion that will result in action taken by this congress to help improve the remedy the problems to some extent that we've heard about so this hearing of the subcommittee on commercial ministry of law is therefore adjourned thank you