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BANKRUPTCY JUDGESHIP NEEDS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COMMERCIAL AND ADMINISTRATIVE LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JUNE 16, 2009 

Serial No. 111–42 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

DANIEL MAFFEI, New York 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Majority Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

STEVE COHEN, Tennessee, Chairman 

WILLIAM D. DELAHUNT, Massachusetts 

MELVIN L. WATT, North Carolina 

BRAD SHERMAN, California 

DANIEL MAFFEI, New York 

ZOE LOFGREN, California 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

JOHN CONYERS, JR., Michigan 

TRENT FRANKS, Arizona 

JIM JORDAN, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

HOWARD COBLE, North Carolina 

STEVE KING, Iowa 

MICHONE JOHNSON, Chief Counsel 

DANIEL FLORES, Minority Counsel 

(III) 

C O N T E N T S 

JUNE 16, 2009 

Page 

OPENING STATEMENTS 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee, and Chairman, Subcommittee on Commercial and Administrative Law ........................................................................................................... 1 

The Honorable Jim Jordan, a Representative in Congress from the State 

of Ohio, and Member, Subcommittee on Commercial and Administrative 

Law ........................................................................................................................ 2 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Commercial and Administrative Law .................................. 3 

WITNESSES 

The Honorable Barbara M.G. Lynn, United States District Court for the 

Northern District of Texas, on behalf of the Judicial Conference of the 

United States 

Oral Testimony ..................................................................................................... 5 

Prepared Statement ............................................................................................. 7 

The Honorable David S. Kennedy, United States Bankruptcy Court for the 

Western District of Tennessee, on behalf of the National Conference of 

Bankruptcy Judges 

Oral Testimony ..................................................................................................... 55 

Prepared Statement ............................................................................................. 58 

Mr. William Jenkins, Jr., Ph.D., United States Government Accountability 

Office 

Oral Testimony ..................................................................................................... 74 

Prepared Statement ............................................................................................. 76 

Ms. Carey D. Ebert, Ebert Law Offices, P.C., on behalf of the National 

Association of Consumer Bankruptcy Attorneys 

Oral Testimony ..................................................................................................... 94 

Prepared Statement ............................................................................................. 96 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress from the State of Georgia, and Member, Subcommittee on Commercial and Administrative LawNames here ..................... 4 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Post-Hearing Questions from the Honorable Barbara M.G. Lynn, 

United States District Court for the Northern District of Texas ..................... 118 

Prepared Statement of the Financial Counseling Research Roundtable ............ 124 

(1) 

BANKRUPTCY JUDGESHIP NEEDS 

TUESDAY, JUNE 16, 2009 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCIAL

AND ADMINISTRATIVE LAW, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 11:14 a.m., in 

room 2141, Rayburn House Office Building, the Honorable Steve 

Cohen (Chairman of the Subcommittee) presiding. 

Present: Representatives Cohen, Conyers, Watt, Scott, and Jordan. 

Staff present: (Majority) James Park, Counsel; Adam Russell, 

Professional Staff; and (Minority) Zachary Somers, Counsel. 

Mr. COHEN. This hearing of the Committee on the Judiciary, 

Subcommittee on Commercial and Administrative Law, will now 

come to order. 

Without objection, the Chair will be authorized to declare a recess of the hearing. I will now recognize myself for a short statement. 

Bankruptcies have 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. 

According to the Administrative Office of the U.S. Courts—there 

were over 1 million bankruptcy filings nationwide for the 12-month 

period ending March 31, 2009, representing a 33 percent increase 

over the 12-month period ending March 31, 2008. 

Moreover, the sharpest increase in filings was in Chapter 11 

cases, where there were—nearly 70 percent increase over the previous year. And bankruptcies involving primarily business debts 

were up almost 60 percent in that same period of time. 

We have had some hearings in this Committee on Chapter 11 

and problems associated therewith. We have been hearing for some 

time that 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. 

2 

Bankruptcies are extremely high in my district, in the Western 

District of Tennessee, and one of my predecessors, Walter Chandler, had a lot to do with drafting the bankruptcy laws back in the 

late 1930’s. 

Today we consider the recommendations of the Judicial Conference of the United States with respect to bankruptcy judgeships. 

The Judicial Conference recommends the authorization of 13 new 

bankruptcy judgeships, the conversion of 22 temporary judgeships 

to permanent status, and the extension of two temporary judgeships for another 5 years. 

In total, the recommendation affects 25 judicial districts in nine 

of the 12 geographically based Federal judicial circuits. 

The Judicial Conference’s recommendations are based on its comprehensive study of bankruptcy judgeship needs. 

Last time Congress authorized or even addressed the issue of 

bankruptcy judgeships was almost 4 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. 

Unfortunately, that is not all that is about to expire, but that is 

all. 

It is well past time that we revise and revisit the critical issue 

of bankruptcy judgeships needs and I am gratified that we are 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, for his opening remarks. 

Mr. JORDAN. Thank the Chair for recognizing—for that nice title. 

Mr. Chairman, I, too, want to begin by thanking you for holding 

this hearing and thank our witnesses who are here today for taking 

time out of their schedule. 

As some of you know, additional permanent bankruptcy judges 

have not been authorized since 1992. Although the House has 

passed on more than one occasion legislation authorizing additional 

permanent bankruptcy judges since—since that 1992 date, the Senate, unfortunately, has not acted on this legislation. 

Obviously, judges are crucial to the bankruptcy process. They, 

with the help of bankruptcy trustees, ensure that the work is completed, creditors are paid, assets are properly disbursed. 

If judicial workloads become overburdened, it prevents bankruptcy cases from advancing as they should. This either prolongs 

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 from the economic stress they—the current recession has caused, it 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 Judicial 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 judgeship needs and assures that all currently authorized judicial resources are maximized. 

3 

I do want to note that I have some concerns that the 1991 case 

weights that are the basis for the current study of bankruptcy 

judgeship needs are woefully out of date. There are understandable 

reasons as to why the study is so out of date. 

Nonetheless, I will be interested in the witnesses’ testimony regarding the current study, whether it can be relied on, and what 

the cost to the bankruptcy system will be of waiting until an updated survey and study—which I understand is currently in the 

works—is, in fact, completed. 

I look forward to our witnesses’ testimony. Of course, I do have 

to leave here in about a half an hour, so—look forward to the— 

their testimony nonetheless, and yield back my time. 

Mr. COHEN. I thank the gentleman for his statement. 

And I now recognize Mr. Conyers, the most distinguished Member of the Subcommittee, from the great city of Detroit, which is 

having some interaction with the bankruptcy courts, I believe, for 

an opening statement and welcome him. 

Mr. CONYERS. Thank you, Mr. Chairman. 

I am here to commend you for taking this subject up as rapidly 

as you have with the Committee. I am very proud of the witnesses 

that have joined us for this discussion. 

And I don’t think it is tipping off anybody to anything, but we 

have a roughly bipartisan agreement, a consensus, on the need for 

more judges. Now, I won’t say that that is elementary, because 

nothing in the Congress is elementary. You may think it is elementary, but it is very important. 

And I hope with the distinguished group that you have gathered 

here today for this discussion that we go underneath the—call a 

need for more numbers. I mean, that is—I don’t know how you 

could argue that. 

But what else do we need to look at in—in this whole unique 

part of the Federal judiciary? What else needs to be examined? 

This is the Committee that has that jurisdiction. 

So we don’t want to just have a superficial discussion about how 

many numbers we need, how fast we need them, how we need to 

make permanent all the temporaries that are about to expire, but 

what—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 valve. It is no longer an embarrassment. It used 

to be a disgrace. Nobody would ever want to talk about it. That period of time in our culture is gone. You are hoping you can get into 

bankruptcy. 

And now the problem is there is long lines. You can’t even get 

there in a timely fashion. So a lot of damage goes on in the meantime, while you are processing a person, a family, a small business 

for this economic circumstance that has befallen them. 

So I am proud to be on your Committee. 

Mr. COHEN. Thank you. Appreciate your statement. Likewise, I 

reciprocate. I am proud to be on your Committee. 

Without objection, other Members’ opening statements will be included in the record. 

[The prepared statement of Mr. Johnson follows:] 

4 

PREPARED STATEMENT OF THE HONORABLE HENRY C. ‘‘HANK’’ JOHNSON, JR., A REP- RESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA, AND MEMBER, SUB- COMMITTEE ON COMMERCIAL AND ADMINISTRATIVE LAW

Mr. COHEN. I am now pleased to introduce the witness—the first 

witness, and we introduce our witnesses just prior to their speaking in this hearing today. 

I want to thank everybody here for their appearing and their testimony. Without objection, your written statements will be placed 

in the record. We ask you limit your oral remarks to 5 minutes. 

There is a lighting system. It shows that if you—green light 

means you have started and you have got anywhere from 5 to 1 

minute left. When it hits yellow, you are in your last minute. And 

when it goes to red, you should have—be concluding promptly. 

After each witness has presented his or her testimony, Subcommittee Members will be permitted to ask questions, also subject 

to the 5-minute limitation. And you have got a button there when 

you do start to push to turn on your microphone. 

Our first witness is Ms. Barbara Lynn—it is to your right hand, 

your index finger, kind of like when you are going on the airplane 

on that clear deal. 

Our first witness is Barbara Lynn. Judge Lynn took the oath of 

office as United States district judge for the Northern District of 

Texas on Valentine’s Day 2000. 


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Judge Lynn is chair of the committee on the administration of 

bankruptcy systems, the Judicial Conference of the United States, 

and been very involved in different ABA activities. And we appreciate Judge Lynn for being here. 

And you can begin your testimony. 

Judge LYNN. Good morning. 

Mr. COHEN. Good morning. 

Is she on? 

Are you on? 

TESTIMONY OF THE HONORABLE BARBARA M.G. LYNN, 

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, ON BEHALF OF THE JUDICIAL CONFERENCE OF THE UNITED STATES 

Judge LYNN. Better? Yes. All right. 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 the responsibilities of parties in cases before 

them. 

In performing its statutory duty to advise Congress on the need 

for bankruptcy judgeships, our Judicial Conference makes biennial 

recommendations for the authorization of additional bankruptcy 

judgeships, the continuing need for existing bankruptcy judgeships 

and other judgeship actions. 

In exercise of that duty, as the chairman has advised, we recommend that Congress authorize the following: 13 new permanent 

bankruptcy judgeships, the conversion of 22 existing temporary 

judgeships to permanent status, and the extension of two temporary bankruptcy judgeships for 5 years. 

The need for these judgeships is critical. Our filings are approaching near-record levels, just as the bankruptcy courts are in 

peril of losing many 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 call BAPCPA. 

Today I urge your assistance in passing the judgeship legislation 

which will alleviate these overcrowded dockets and assure 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 sought 47 additional permanent and temporary judgeships in early 2005, the year 

when BAPCPA was passed, only 28 temporary judgeships were authorized, and most of those were based on an outdated 1999 judicial conference recommendation. 

All of the temporary judgeships authorized or extended by 

BAPCPA are now approaching their lapse dates, after which the 

next vacancies in those districts cannot be filled. 

6 

At the same time, the workload of bankruptcy judges has substantially and steadily increased since the first full year after 

BAPCPA took effect, and filings are nearing pre-BAPCPA 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. Pro se filings, which require additional judicial time to 

equitably adjudicate, are among these increased filings. 

Moreover, the provisions of BAPCPA have added to the particular work required of bankruptcy judges in each case. 

To be specific about the picture of bankruptcy over the last several years, I note that 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 

31, 2009, the number of filings from 2006 had doubled. 

We are now at 1.2 million as of that time frame, without even 

accounting for seasonal adjustments. And that is nearly 60 percent 

higher than it was during the first year following BAPCPA’s 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 caseloads. 

I will cite the Eastern District of Michigan as an example, and 

we have requested additional resources there since 1993. 

In the Western District of Tennessee, where my colleague Judge 

David Kennedy sits and Representative Cohen, of course—is your 

district, a permanent judgeship has been recommended since 1997. 

If the temporary judgeship authorized by BAPCPA expires with 

the next vacancy in or after July 2011, that district will revert to 

the number of judges it had in 1992 before it experienced a dramatically increased workload. 

The conference takes 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 resources. 

It is our view that bankruptcy judgeship legislation is the necessary solution to cure the problem of inadequate resources to fill 

these needs. 

The survey that 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 case load 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 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 me. 

7 

[The prepared statement of Judge Lynn follows:] 

PREPARED STATEMENT OF THE HONORABLE BARBARA M.G. LYNN


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Mr. COHEN. Thank you, Judge Lynn, and we appreciate your testimony and your willingness to participate. 

Our second witness is Judge David Kennedy. Chief Judge Kennedy was appointed to the bankruptcy bench for the Western District of Tennessee in November 1980, became chief judge in 1988. 

He has served the United States Judicial Conference in the 

bankruptcy area for quite a few years, and he is an esteemed memVerDate Aug 31 2005 15:41 Jan 19, 2010 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6601 H:\WORK\COMM\061609\50452.000 HJUD1 PsN: DOUGA

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ber of the bench in my home town and the Western District of Tennessee, and it is my honor to have you here. 

Will you begin your testimony, Judge Kennedy? 

TESTIMONY OF THE HONORABLE DAVID S. KENNEDY, UNITED 

STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT 

OF TENNESSEE, ON BEHALF OF THE NATIONAL CONFERENCE OF BANKRUPTCY JUDGES 

Judge KENNEDY. Thank you, Mr. Chairman—good morning—and 

Members of the Subcommittee. 

My name is David Kennedy. I have had the honor of serving as 

a United States bankruptcy judge for about 28-1/2 years in the 

Western District of Tennessee at Memphis, where I live and primarily hold court. Over the years, I hold court in Jackson, Tennessee from time to time on an as-needed basis. 

Chairman Cohen, you are right about Memphis having some 

deep roots in the field of bankruptcy with the Honorable Walter 

Chandler having had the 1938 amendments named after him and 

actually created the rehabilitory features of the bankruptcy code 

that we now know as Chapter 11—Chapter 13, a congressional policy that has existed in America since 1938, favoring repayment 

plans over liquidation where possible, and I emphasize where possible, because not all individuals who are unemployed would qualify to be eligible for relief in Chapter 13. 

But I greatly thank you and the Subcommittee for this opportunity and pleasure to testify before you to discuss the bankruptcy 

judgeship needs. 

I appear before you today as a representative of the National 

Conference of Bankruptcy Judges. I strongly agree with everything 

that Judge Lynn has said regarding judgeship needs and also the 

standards used by the Judicial Conference in its thoughtful, deliberate, reality-based process. 

I also support strongly the Judicial Conference’s recommendations regarding the 13 requested new judgeships, converting the 22 

temporary conversions to permanent status, and the extension of 

the two temporaries. 

And it is 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 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 lives of bankruptcy judges, their staffs, the court security officers, the bankruptcy trustees, debtors, creditors and other 

litigants in the system, and also the public as a whole and, if time 

allows, to just briefly discuss how very carefully the Judicial Conference evaluates a district’s request for a new judgeship and—and 

related needs. 

The work of the bankruptcy judges today is seemingly more complex and time-consuming than ever before. No doubt the attorneys 

and trustees are more sophisticated today. There are more pro se 

litigants, more pro se debtors. Additionally, case filings are increasVerDate Aug 31 2005 15:41 Jan 19, 2010 Jkt 000000 PO 00000 Frm 00059 Fmt 6633 Sfmt 6601 H:\WORK\COMM\061609\50452.000 HJUD1 PsN: DOUGA
56 

ing at, I think, an alarming rate, which makes a bad situation even 

worse. 

As you, Chairman Cohen, mentioned a moment ago, the filings 

for the 12-month period ending March 31, 2009 were up 33.3 percent over bankruptcy filings for that same 12-year period ending 

March 31, 2008. 

Many are predicting that calendar year 2009 will result in approximately 1.5 million bankruptcy cases being filed. In fact, last 

week I heard the senior economist at the A.O. Bankruptcy Judges 

Division make that prediction, and others have as well. 

And that is significant for a number of reasons, but it is further 

significant because that is almost the same level that existed the 

year before the enactment of this controversial 2005 bankruptcy 

act. 

Although the 2005 bankruptcy act certainly has positive provisions, even historic provisions, nonetheless it also has many provisions that are very complicated and are very time-consuming. Approximately 35 new motions have been created by the 2005 act, 

and many of them are extremely time-sensitive. 

Actually, there are times and days when I feel like the bankruptcy court today is more a de facto emergency room for financially distressed consumer and commercial debtors. 

Costs under the 2005 act have increased, resulting in more individuals 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 is a judge nightmare to 

have both parties pro se, and that is happening more and more— 

a real dilemma, but we just have to work our way through it. 

Because of these factors and others, the judges’ workload within 

the cases have increased. Judges faced with overcrowded dockets 

are having to work late hours, requiring court staff, court security 

officers to also work late. The attorneys, the debtors, the creditors 

are having to stay late. And of course, their families—at least they 

are not there, but they are affected by all this. 

And as judges, I note that sometimes we can 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 have had their full day in 

court. 

People sometimes just need an outlet. They want to appear before a judge and be heard and have an attentive judge hear them. 

So I think there is 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, because 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 11, 12 and 13 confirmed plans and in asset Chapter 7 cases may be delayed, last calendar year in the Western District of Tennessee I am very pleased 

to report that over $260 million were distributed to creditors under 

Chapter 13 plans. 

57 

So it could be said that a delayed distribution to creditors is, in 

essence, a denial of lost opportunity cost. And today’s creditor may 

be tomorrow’s debtor. 

Now to very briefly discuss how carefully the Judicial Conference 

evaluates a district request for a judgeship, I have served on many 

Judicial Conference judgeship survey committees, and I can personally attest to how very carefully the conference evaluates these 

judgeship requests and related needs based on this personal knowledge. 

And as noted a moment ago, it is a well conceived, implemented 

and reality-based process. That is set forth much more in detail in 

my written comment. 

And in summary, the need for these additional judgeships, the 

conversion of the temporaries to permanent status, the enlargement of the two temporary positions is real and acute. And simply 

put, we ask for your help. The needs exist. 

And 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. 

[The prepared statement of Judge Kennedy follows:] 

58 

PREPARED STATEMENT OF THE HONORABLE DAVID S. KENNEDY


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Mr. COHEN. Thank you, Judge Kennedy. I appreciate it. 

Our third witness is William Jenkins. Mr. Jenkins joined the 

Government Accountability Office in 1979 as a faculty fellow. Since 

February 2003 he has served as director of homeland security and 

justice issues, with a portfolio that includes emergency preparedness and response, elections and the judiciary. 

And we appreciate your testimony today, Mr. Jenkins. Will you 

proceed? 

TESTIMONY OF WILLIAM JENKINS, JR., Ph.D., UNITED STATES 

GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. JENKINS. Chairman Conyers and Chairman Cohen, Members 

of the Committee, I appreciate the opportunity to be here today to 

discuss our work reviewing the workload measures that the Judicial Conference uses to assess the need for additional bankruptcy 

judgeships. 

These workload measures, called weighted case filings, are now 

18 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 judges’ workload and 

some decreased it. To the extent that the current case weights understate or overstate the time demands on judges, the weights 

could potentially result in the Judicial Conference understating or 

overstating the need for new bankruptcy judgeships. 

The Federal Judicial Center has a study now under way to revise 

and update the current case weights. The time demands on bankruptcy judges are largely a function of the number and complexity 

of the cases on their dockets, with some cases taking time—more 

time than others. 

To measure these differences, the Judicial Conference uses 

weighted case filings, a statistical measure of the average estimated judge time that specific types of cases are expected to take. 

A weight is assigned to each case filed in a bankruptcy court, 

and the sum of those weights divided by the number of authorized 

judgeships in the court results in the number of weighted filings 

per judgeship for that court. 

The Judicial Conference considers 1,500 annual weighted filings 

per judgeship an indicator, and only an indicator, of the need for 

additional judgeships in that court. 

Thus, in assessing the need for judgeships, the Judicial Conference relies on the weighted filings to be a reasonably accurate 

measure of a judge’s 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 10-week period. 

In 2003, we reported that we found first that the methodology 

was reasonable and, second, that the resulting case weights, as approved by the Judicial Conference in 1991 and 1996, were likely to 

be reasonably accurate at the time they were developed. 

75 

The Federal Judicial Center began a study in 2005 to review 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 immediately known. 

And in fact, personal bankruptcy filings surged to more than 2 

million in 2005 due to the surge in filings prior to the October 2005 

effective date of the reform act. In calendar year 2006, filings 

dropped to 600,000. Filings have since grown steadily, as mentioned, and reached about 1.2 million filings for the year ending in 

March 2009, at roughly the same level as calendar year 2004. 

The FJC began a new study in 2008 to review the current case 

weights. The study is designed to collect data on the time bankruptcy judges spend on cases filed during five 10-week data collection periods from May 2008 through May 2009. 

Active and recalled 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. 

Importantly, it permits the calculation of a statistical estimate of 

the error associated with each case weight. 

Finally, the accuracy of case weights as a measure of judicial 

workload is dependent upon accurately assigning each case file to 

the appropriate case weight category. 

In 2003, we identified the steps the Administrative Office takes 

to ensure the accurate categorization of case filings, but we did not 

evaluate how effectively these measures may be in ensuring data 

accuracy, and we have not reviewed the current judgeship request. 

That concludes my statement, Mr. Chairman. I would be pleased 

to respond to any questions you or other Members of the Subcommittee may have. 

[The prepared statement of Mr. Jenkins follows:] 

76 

PREPARED STATEMENT OF WILLIAM JENKINS, JR. 


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Mr. COHEN. Thank you, Mr. Jenkins. Appreciate it. 

Our final witness is Carey Ebert. She is a partner in the Fort 

Worth law firm of Ebert Law Offices, focusing on consumer and 

small business bankruptcies. She was president of the National Association—or became president of the National Association of Consumer Bankruptcy Attorneys this January 1, 2009. 

She served two terms previously as vice president and serves as 

a panel trustee in the Northern District of Texas. So three of our 


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four witnesses are from Conference USA, more or less—once removed, I guess, with CCU. 

Thank you, Ms. Ebert, and if we can proceed with your testimony. 

TESTIMONY OF CAREY D. EBERT, EBERT LAW OFFICES, P.C., 

on behalf of the NATIONAL ASSOCIATION OF CONSUMER 

BANKRUPTCY ATTORNEYS 

Ms. EBERT. Thank you. Thank you. Thank you, Mr. Chairman. 

Good morning. By way of background, the National Association 

of Bankruptcy Attorneys, or NACBA, on whose behalf I appear 

today, is the only national organization dedicated to serving the 

needs of consumer bankruptcy attorneys and protecting the rights 

of consumer debtors in bankruptcy. 

Formed in 1992, NACBA has more than 4,000 members located 

in all 50 states and Puerto Rico. 

Before I begin my statement in support of additional bankruptcy 

judgeships, I want to take just a minute to thank this Subcommittee, the full Judiciary Committee and, indeed, the entire 

House of Representatives for your tireless 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 13, as currently can be done for vacation homes, yachts, 

family farms and investment property. 

The House of Representatives passed 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 the foreclosure crisis is behind 

us. Based on what I see every day 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. 

NACBA supports the 2009 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 1992, despite a surge in consumer and business case 

loads and the increased complexity of cases since the October 2005 

implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, BAPCPA. 

Although bankruptcy filings initially declined in the wake of 

BAPCPA’s implementation, there has been a tremendous increase 

in recent years. It is estimated that filings this year will again exceed the 1 million mark, with an increase of 27 percent in 2009, 

to more than 1.2 million cases. 

The state of the economy, particularly as it impacts home foreclosures, rising unemployment and credit availability, is a major 

95 

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 bankruptcies, some of which are very large and complex Chapter 11 cases. 

But the number of filings alone is not the sole indicator of the 

overall workload of the judiciary or those involved with the bankruptcy process. Perhaps the biggest impact of the 2005 law has 

been the enormous increase 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, BAPCPA 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 new requirements as a result of the 2005 

law changes. Before a debtor can even file their petition for bankruptcy, that debtor must obtain all payment advices for the 60 days 

prior to filing, 4 years of their most recent tax returns or transcripts, provide their attorney with information detailing every 

penny of their income for the past 6 months, provide bank statements to the trustee and evidence of current income, attend a prepetition credit counseling 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 a discharge. 

And the attorney must complete numerous additional forms, including a six-page means-test form that requires arcane 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 workload 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 and judicial oversight. 

In summary, BAPCPA has created new docketing, noticing and 

hearing requirements that make addressing the petitions far more 

complex and time-consuming for bankruptcy judges. 

While the Federal judiciary has implemented a number of costcontainment measures and continued 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. 

[The prepared statement of Ms. Ebert follows:] 

96 

PREPARED STATEMENT OF CAREY D. EBERT


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Mr. COHEN. Thank you, Judge Lynn. 

We will now have questioning, and I will begin by recognizing 

myself. 

First, Judge Lynn, I take it that if you could be king for a day— 

or queen, excuse me—you could be king; it is just all imaginary— 

would you do away with the counseling provisions in the 2005 law? 


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Ms. EBERT. Chairman Cohen, I think that the pre-petition counseling requirement that has been imposed on debtors is an utter 

waste of time and an—— 

Mr. COHEN. An utter waste of time. 

Ms. EBERT. Utter waste of time, yes. 

Mr. COHEN. Does anybody on the panel think that it is getting 

within—that it is within the frame of—margin of error, but at least 

somewhere around there? Do you all agree with that? 

Judge LYNN. Well, since you asked the question of Judge Lynn, 

but Ms. Ebert, I think, you were intending to—— 

Mr. COHEN. It was a trick question. 

Judge LYNN [continuing]. Have comment on it—— 

Mr. COHEN. But I appreciate the—— [Laughter.] 

Judge LYNN. I got it. I got the trick, and so I am going to respond—Judge Lynn now speaking—and respectfully punt on your 

question, Mr. Chairman. 

From my perspective—I am a district judge, so I only hear bankruptcy matters on appeal—as a matter of policy, the Judicial Conference comes to this Committee asking for additional judgeships 

when there is a need based on whatever law you in your wisdom 

deem to be appropriate. 

I do not have a personal view—— 

Mr. COHEN. So you don’t have an opinion, but Ms. Ebert has a 

definite opinion. 

Ms. EBERT. Absolutely. 

Mr. COHEN. And, Judge Kennedy, do you have an opinion on 

that? 

Judge KENNEDY. I do, and I think it is important to note exactly 

what this pre-petition credit counseling is. It is really a mere briefing that outlines the opportunities for credit counseling and, if desired, a detailed budget analysis. 

But if somebody is unemployed, it serves no purpose. In fact, I 

don’t think I have—I go to various CLE seminars, and I don’t think 

I have heard anybody praise this pre-petition credit counseling. It 

has been said—is a waste of time, waste of money. 

It is done over the telephone by either an individual or a group 

session. It lasts 30 minutes to an hour, I am told. The charge is 

$50 to $100. And it is just not serving the purpose intended. 

In fact, I think Ms. Ebert’s organization has done some private 

studies and has talked with these credit counseling agencies, and 

they come back and say that approximately 97 percent of the Chapter 7 debtors are unable to pay any debts under their plans. 

I think it is a waste of their time. 

Mr. COHEN. Is there another type of counseling at the end of the 

bankruptcy that might be—is worthwhile or might be worthwhile, 

or is not worthwhile? 

Judge KENNEDY. I like what I call the post-petition instructional 

course better. I mean, we all support financial literacy. I have gone 

into schools in Memphis for many years trying to teach financial 

literacy and how to avoid abusive use of credit cards and the like. 

So I have no great opposition to the—to the debtor completing a 

post-petition instructional course concerning the debtor’s personal 

financial management, but I would hope, Chairman Cohen, that 

the provision could be fine-tuned a little bit to give the bankruptcy 

103 

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 granting the discharge. 

I have had Ph.D.s in economics that have filed bankruptcy cases, very highly literate people. And to ask them to pay a $50 or $100 

fee and then go sit in to a course that they ought to be teaching, 

if anything, I think is a little insulting on a case-by-case basis. 

So my response to that—yes, I do support—strongly support financial literacy, and I think the post-petition instructional course 

can serve some meaningful purpose, but I would like to see the 

bankruptcy judges have some—— 

Mr. COHEN. Discretion. 

Judge KENNEDY [continuing]. Discretion as to whether or not to 

order a particular debtor to undergo that program or not. 

Mr. COHEN. Thank you, Judge Kennedy. 

Ms. Ebert, do you concur? 

Ms. EBERT. I do, Mr. Chairman. I think that the debtor education, the post-filing—what we call the financial management 

course—many of my clients have felt they have really obtained 

something that was of a benefit to them. And it has helped them 

hopefully not to be back in my office in the future. 

And the pre-petition counseling briefing session that Judge Kennedy referred to serves no purpose when—when they are already 

unemployed, facing foreclosure and they are—they have already 

tried all the other options that were available to them. 

Mr. COHEN. Thank you. 

Judge Kennedy, let me ask you a question. The issue of venue 

is important in our area where we border Mississippi and Arkansas. Do you believe the venue laws ought to be changed in bankruptcy? 

Judge KENNEDY. Chairman Cohen, I strongly urge Congress to at 

least reexamine the case venue issues. I think that issues exist 

within bankruptcy cases where venue is technically improper. I 

also think that venue issues exist in cases that are technically 

proper. 

Currently the issue of 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 venued case, if it is for the 

interest of justice or for the convenience of the parties, has resulted 

in a split of authority in the lower courts. 

Since 1984, the answer has not been clear. But by way of very, 

very brief background, the 1978 codes accompanying Title 28 venue 

provisions expressly and clearly provided that a bankruptcy court 

could retain jurisdiction over a technically improperly venued case 

if it were for the convenience of the parties or the interest 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 1477 of Title 28 that is entitled ‘‘Cure or Waiver of Defects.’’ 

What the 1978 code’s venue provisions did was really to rely 

upon its transfer provisions, more so than its technical venue provisions, to assure a fair place to administer a bankruptcy case or a 

proceeding. 

However, as a result of the 1984 restructuring that occurred of 

the bankruptcy court system, Section 1477, the one entitled ‘‘Cure 

104 

or Waiver of Defects,’’ was just deleted, and it is not clear whether 

or not the deletion was by design or whether or not it was intentional. I have my thoughts about it. 

But since 1984, this split of authority has developed in the lower 

courts. I took the view, and I generally don’t talk about cases that 

I get reversed in, but I will get there in a moment. 

But I took the view that since there was no express statutory 28 

provision, or an express Title 11 provision, or an express Federal 

Rule of Bankruptcy Procedure express provision prohibiting me 

from retaining a technically improperly venued case for the convenience of the parties or the interest of justice, I must have the inherent authority on a case-by-case basis of considering the convenience 

of the parties or the interest of justice. I was reversed by the Sixth 

Circuit Court of Appeals. 

Other courts have held—the other split of authority has held 

that the—that since there is no express prohibition that nonetheless the per se rule must exist that the bankruptcy court can’t retain these cases that are filed technically in an improper district. 

In Hurley, the case that you talk about—as you know, Chairman 

Cohen, I could put my left foot in Southaven, Mississippi, a socalled bedroom community of Memphis. I could put my right foot 

in Memphis in the Western District of Tennessee. 

The debtor 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, no Mississippi creditors. 

The United States trustee for Region 8, Kentucky and Tennessee, 

filed a motion to dismiss or to transfer the case to another district 

because of the technically improperly venued case. 

I looked at it. I struggled with it, and I worried with it, because 

there was a split of authority. And I came to the conclusion that 

there was no express prohibition that I had the inherent authority, 

and I was reversed. 

But at least when the Sixth Circuit reversed, it urged Congress 

to fix the problem. The Sixth Circuit said in that In re Thompson 

case, the cited case at 507 F.3d 416, 1997, that fixing any perceived 

bankruptcy case venue problem is a job for Congress and not the 

courts. 

And I urge Congress to accept the invitation of the Sixth Circuit 

and legislatively fix this problem and thereby eliminate this unfortunate split of authority which is time-consuming, it is expensive, 

and it also frustrates the bankruptcy goal of Bankruptcy Rule 1001 

about securing the just, speedy and inexpensive determination of 

all these bankruptcy cases and proceedings. 

I would hope that Congress would go back to the venue concept 

that existed in 1978 where the emphasis was on the transfer provisions and not technical traditional venue provisions. 

It could be a real easy legislative fix just re-number and re-introduce former Section 1475, the ‘‘Cure or Waiver of Defects,’’ and 

that would take care of it. 

Mr. COHEN. Thank you, Judge Kennedy. 

And now, and most appropriate, as the Supreme Court—or the 

Sixth Circuit has urged a congressional fix, the man who can fix 

that, the Chairman of the Judiciary Committee. 

105 

Judge KENNEDY. Well, can I repeat my statements—— [Laughter.] 

Mr. CONYERS. You don’t have to. I have been listening to them. 

Mr. COHEN. The Honorable John Conyers, you are recognized 

for—Mr. Jordan had to leave. 

Mr. CONYERS. Oh, okay. I was hoping we could continue our 

great relationship with him during this hearing. 

But this hearing stirs up some sad memories of what happened 

4 years ago in this Committee and in this Congress in terms of the 

bankruptcy act, and I don’t know how much—well, probably counsel remembers. 

The credit card people lobbied us for 8 or 9 years before they 

could finally persuade enough people to come in and do what we 

did. And that is part of the problem right now. 

Much of that is the fallout from all that horrible antidebtor bias 

that they carefully nurtured with the K Street lobbyists to help get 

us into this fix. It is terrible. Counsel has gone over some of it. It 

is not all of it. 

And then there is the problem of foreclosure relief. Now, here is 

a Congress—we have put the American people in hock for generations, trillions of dollars. 

And when you say, ‘‘Let’s help out a poor schlub who is losing 

his house, and he is under water, let’s open it up and lower the 

rate, and lengthen the terms,’’ what did they say in the other body? 

They said, ‘‘Well, how do you know these people are in good 

faith? Didn’t they read their contract? I mean, why do—why do I 

have to’’—as she points out, everybody—the judge can do it for everything else except a home, the one last thing that most people 

have—the only thing that many people have. So this really gets me 

off to a very unhappy set of remembrances. 

And then, as the President has commanded that we do something about health care reform, the number of individual bankruptcy filings keep going up in terms of what it is that brings you 

to the court in the first place. 

Well, I would like each of you, starting with the lawyer, to either 

make me feel better or worse about my point of view of things. 

Ms. EBERT. Mr. Conyers, I agree that the reason many, many individuals are filing for bankruptcy are due to either underinsured 

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 to 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 underinsured—I hope that this Congress will continue 

to fight for those people and allow them relief through bankruptcy 

that their—and to continue to push. 

For them to say the only thing that they have, which is their 

home—not only are they filing bankruptcy but they are 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 financially feasible. 

106 

And I am certain that based on the numbers that I have been— 

there has been several reports done—that the second wave of foreclosures that will be coming through between 2009 and 2011 will 

be just as many as there were in the last 2 years. 

This is not over, and we will need to revisit this again, and I 

hope that this Committee will take up our cause. 

Mr. CONYERS. Your Honor, Judge Kennedy? 

Judge KENNEDY. I will say the second wave—I think that is the 

wave it is contemplated will be not of subprime mortgages, that 

these have been traditionally sound, solid mortgages for years, 30- 

year mortgages. 

Some people are 20 years into them, and now they have lost 

their jobs and they can’t pay for the mortgage. Now they have lost 

their job, now they have lost their health insurance as well—that 

indeed, these bankruptcy laws are a safety net. 

In talking about the home, one thing that I was really struck 

by—I know over the—since the 1800 bankruptcy act, and 1841, 

1867, 1898, and 1978 code and amendments in between, it seems 

like there is a little ‘‘catch me if you can’’ going on, and the pendulum swings back and forth, this debtor, creditor, and they—going 

through their exercises. 

But I must say, talking about this home mortgage modification, 

the matter—that I was particularly struck by the letter written 

back in January of 2009 to the congressional leadership from the 

attorney generals from the 22 states and the District of Columbia, 

whereby they thought—and they supported the mortgage modification provision—somewhat of an independent voice, I thought, that 

supported the legislation. 

And in their opinion, in their collective opinion, in their independent view—that such legislation would actually stabilize the 

housing market, the financial market and also state and local tax 

bases, and it could be done without—without any taxpayer expense. 

The bankruptcy court is already in place with personnel. There 

would be no need to create a new agency, create new personnel. We 

got courthouses, already got the facilities for it, wouldn’t have to 

build any new buildings—with no cost to the taxpayer. 

I support that. 

Judge LYNN. Mr. Conyers, may I? I am not sure if I am 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 affects the request that we have made. 

I very much respect Dr. Jenkins’ comments on the case weights, 

and I would like to comment on that as it relates to your question. 

As has been mentioned, the case weights, which are in part the 

basis for our request, are 1991 case weights. 

We considered doing a study much earlier than we did, but for 

the same reasons that you have mentioned—that long 8-or 9-year 

period when we were hearing that there might be an amendment 

to the bankruptcy statute—we waited, and we waited, and we waited and we concluded we couldn’t wait any more, so we began the 

study. 

107 

It is like watering your lawn. And of course, thereafter it rained. 

So we were 40 percent through our new study in 2005 when 

BAPCPA was passed. 

I think prudent administration of our Judicial Conference and of 

our Committee in particular caused us to think that we should stop 

the study, and I believe Dr. Jenkins in his comment indicated that 

that was prudent, and I feel that it was, to wait and see what 

would happen under BAPCPA. 

There was a time shortly after BAPCPA 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 in assisting you if you would like to 

hear from us on that. 

With respect to BAPCPA and its impact not only on consumers 

but on businesses, those who come to the bankruptcy courts 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 in Michigan, where the 

case weights are 3,032 when they should be 1,500—we could come 

here and legitimately on those numbers ask for five new bankruptcy judgeships. We are not. We are asking for three. 

And we believe that these 1991 case weighs—I appreciate from 

an academic perspective they could either be over—they could be 

under. But in reality, we know that they are low. 

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 weight study is fully completed and analyzed, and that is what we will do. 

We are here now for urgent, critical need. We took a peek at the 

40 percent study that was done immediately before the statute. We 

have taken a peek at the numbers we have gotten in the new case 

weighting study. And I feel completely confident in telling you that 

we come to you with a very conservative approach. 

These numbers have to be low. BAPCPA requires 35 new motions that were not even present before. The workload of bankruptcy judges in these courts where we seek permanent positions 

and new positions is critical. It is 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 justice, even in the face 

of some provisions of BAPCPA that you think do not achieve that, 

if we allow people to enter our courts and get a fair disposition 

within a reasonable time frame. Thank you. 

Mr. CONYERS. We need a considerable number of additional good 

bankruptcy judges. And we are tasked—our Committee is tasked to 

that. We need to go back to this incredible piece of so-called legislaVerDate Aug 31 2005 15:41 Jan 19, 2010 Jkt 000000 PO 00000 Frm 00111 Fmt 6633 Sfmt 6601 H:\WORK\COMM\061609\50452.000 HJUD1 PsN: DOUGA
108 

tion called the 2005 bankruptcy act. I mean, we need to really go 

through that again. 

We could hold, under our new Chairman, some tremendously important hearings that we hope will impress or impact the other 

body as well. 

We need foreclosure relief. We can’t walk away. They told us that 

it was hopeless, we couldn’t get it in the housing bill. We have got 

to go back over to the Senate. House is in good shape on that. 

But it is a disgrace that the same body that votes out trillions 

of dollars tells the little schlock that is losing his house that we 

can’t do that, we don’t have enough senators to do it, sorry. When 

we know there are a few good people—but how do we know that 

everybody is on the up and up? 

I mean, the whole thing is so outrageous, and now we are passing it on to generations. They are stuck whether this bailout works 

or not. And the guy that loses his home—he is never going to— 

there is no return in an economy like this from what the system 

has done to him and then what the Congress has done to the homeowner after that. 

So I welcome any ideas from this hearing on—that you could provide us with recommendations. We would love to continue this dialogue. 

And I thank you, Mr. Chairman. 

Mr. COHEN. Thank you, Mr. Chairman. 

I appreciate as well the responses. 

Now I would like to recognize the gentleman from North Carolina, Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman. 

And I am going to try to go back to the subject of the hearing 

itself and start by expressing a 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 Subcommittees—a Subcommittee and—on Financial 

Services, I always try to follow a policy of having both a pro and 

a con at a hearing. 

I would almost be willing to bet that there was probably nobody 

you could find to give a counter view of whether we need additional 

bankruptcy judges. You were in an unenviable position, I—no 

doubt. 

And so I was kind of glad when we got to Ms. Ebert that she 

changed the subject of the hearing, taking only 1 of her minutes 

to talk about the subject of this hearing, whether we need some additional judges, and taking the other 4 minutes to talk about other 

things. And I see that the hearing has wandered off in that direction. 

But I do want to ask a serious question, because on a number 

of different fronts, we could probably reach a fair amount of bipartisan consensus that things are needed. Where we run into real 

problems is trying to figure out how to pay for them. 

And so the question I want to ask is I know we need new judges, 

but—Ms. Lynn—Judge Lynn, I think you would probably be able— 

maybe Dr. Jenkins would probably be able to answer this question. 

109 

1 Judge Lynn appends: Let me provide a fuller explanation of how our judiciary budgeting and 

appropriations work. Funding for the bankruptcy system is not directly linked to bankruptcy 

filing fee revenue. We tally up and justify to Congress’ Appropriations Committees the total 

amount of money we need to operate the courts. We also tell them how much we collect in fees. 

They then subtract from the total amount that we need to operate the amount that we collect 

in fees. The difference is what they give us for our appropriation. Therefore, the amount we collect in fees offsets or lowers the amount that we need to get through our appropriation. Now, 

in the case of statutory bankruptcy filing fees, the judiciary does not keep the entire amount. 

The judiciary keeps a percentage, but a portion also goes to the U.S. Treasury, in part for deficit 

reduction as specified by the Deficit Reduction Act of 2005. Other portions go for other costs, 

including the U.S. Trustee system in the Department of Justice, and private Chapter 7 trustees. 

It’s therefore important to realize that when the appropriators are calculating the amount of 

our appropriation, only the portion of the statutory filing fees that are actually kept by the judiciary is available to offset our need for appropriations. So, to the extent that our appropriation 

can be partially offset by the portion of the statutory filing fee that is kept by the judiciary, 

one might view the fees as partially paying for bankruptcy judgeships (or, for that matter, other 

costs of operating the bankruptcy courts), but there is no direct relationship between the two. 2 Judge Lynn appends: We are covering those out of our current appropriation that Congress 

provides after taking into account the amount of fee revenue that the judiciary is projected to 

receive. 

Is the fee schedule that we set up for bankruptcies paying for 

judges? 

Is the system generating enough revenues that the taxpayers are 

not subsidizing the bankruptcy courts? Or do we know that? 

Judge LYNN. Representative Watt, I think the fair answer to 

your question is in part we would pay for new bankruptcy judges 

and staffs associated with them out of filing fees but not in full.1

Mr. WATT. Okay. 

Judge LYNN. And let me—— 

Mr. WATT. What about the existing number of bankruptcy 

judges? Are we paying for them in full? Are we—— 

Judge LYNN. We are covering those out of our current budget 

submission to Congress, and——2

Mr. WATT. Okay. So then my next question would be should this 

bankruptcy system be self-sustaining, I suppose, is it—and if it 

should be, how can we get it self-sustaining—financially self-sustaining without imposing this cost on taxpayers and without being 

unfair to people who really need to be going into bankruptcy? 

Who ought to be paying for this system? And I guess—— 

Judge LYNN. Well—— 

Mr. WATT [continuing]. That is the question I am asking. 

Judge LYNN [continuing]. That is the $64,000 question, or to 

bring it more to what you might be thinking of, that is probably 

the $64 million question. 

In our view, it is inappropriate to raise bankruptcy filing fees 

every time there is a financial need within the bankruptcy system. 

The taxpayers—— 

Mr. WATT. I happen to agree with you. And I am asking these 

questions genuinely, not as an adversary—— 

Judge LYNN. Right. 

Mr. WATT [continuing]. But just because since Mr. Jordan isn’t 

here, he can’t ask these questions. 

Judge LYNN. That is fine. 

Mr. WATT. So I have—— 

Judge LYNN. I appreciate the opportunity, and I—— 

Mr. WATT. I have to ask him—ask them for him so we can build 

the record here, because I know—I mean, I know Mr. Jordan. Probably nobody on the other side of the aisle is going to raise a question about the need for judges. 

110 

3 Judge Lynn appends: This is because the amount the judiciary gets in appropriations is reduced by the amount of the filing fees we are projected to receive. 

But I also know that every time we talk about a need, we also 

have to talk about a ‘‘pay for.’’ 

Judge LYNN. Right. Well, let me begin—of course, our—the temporary judgeship positions are already being paid for. That is not 

new expense that we would—— 

Mr. WATT. Paid for from what source? 

Judge LYNN. Well, we are paying for them now because they 

exist now, and—— 

Mr. WATT. From what source, though? 

Judge LYNN. From the—— 

Mr. WATT. Are taxpayers paying for it, or—— 

Judge LYNN. From the judiciary budget and in part from bankruptcy filing fees, which are on the revenue side.3 I don’t think that 

we have made an effort to necessarily equate all aspects of the judiciary budget to filing fees to see what percentage of judges’ salaries and staff salaries is paid for out of filing fees. 

But filing fees, in large part, support judgeships and their staffs, 

not in full. So part of the money for the judiciary budget, indeed, 

comes from the taxpayers. That is true now and will be true then. 

I was simply making the limited point that with respect to temporary judgeships, making them permanent does not add to the pot 

of money that we would be seeking. 

Mr. WATT. All right. My time actually has expired, and I am a 

great admirer of the 5-minute rule—— 

Judge LYNN. All right. 

Mr. WATT [continuing]. Until they apply it to me. 

I think the question I want to ask is maybe for you all to do some 

thinking about this and maybe give us some ideas, because there 

is a school of thought that the bankruptcy system ought to be a— 

based on a user fee system. I mean, you know, the people who use 

it ought to pay for it. 

I am not subscribing to that notion, don’t get me wrong. I actually think there is some public benefit to having a bankruptcy system and a bankruptcy court. 

There is probably public benefit to having any judicial system, 

but the people who never use it don’t always understand that public benefit, and they want it to pay for itself. 

So I guess what I am seeking is if you—if any of you have any 

good ingenious ideas about we might be able to generate some revenues and who ought to be paying them, people who are—who may 

be going through reorganizations as opposed to people who are 

doing regular filings. 

You know, I don’t know what would be—— 

Judge LYNN. Well, if I—— 

Mr. WATT [continuing]. What it would look like. 

Judge LYNN [continuing]. If I might, let me just close by saying 

that the only good news about the dramatic increase in bankruptcy 

filings is that we are generating substantial additional bankruptcy 

fees. And those do contribute to the budget of the judiciary. 

For the judgeships we are requesting, I believe that we can almost completely fund them out of what we have in our resources. 

111 

There may be some additional supplementals that we would have 

to come back to Congress about, but I think they are quite limited. 

So without even raising fees, these are increased, of course, by 

increased filings, and I think that does cover most of it. We in our 

Committee look very frequently at fees as a means of revenue generation, tempering that with administering justice to those who 

need it in the bankruptcy courts. 

Mr. WATT. Mr. Chairman, you have been generous with the time, 

and—as you were with your judge, I noticed. 

I told him—I said, ‘‘Don’t you dare cut your judge off.’’ [Laughter.] 

He might be practicing law before this judge again one of these 

days. [Laughter.] 

That is a no-no. I mean, you waive the rules for the—for your 

judge, especially your hometown judge. See, I am trying to educate 

him on some of these nuances of the rules here. [Laughter.] 

Mr. COHEN. Thank you. And I appreciate—— 

Mr. WATT. Thank you, Mr. Chairman. 

Mr. COHEN. Thank you for your questioning and for your advice. 

I learn much from you and other more senior Members, and I will 

be practicing law at some time in the future, but I will be very, 

very, very, very old. [Laughter.] 

I now recognize the distinguished Subcommittee Chairman from 

the State of Virginia, Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Judge Lynn, did I understand you to say that there was essentially no additional cost for converting a temporary judgeship to a 

permanent judgeship? 

Judge LYNN. Yes, Representative Scott. Of course, there are 

mandatory increases from year to year—cost of living—cost of living kinds of adjustments. But beyond that, that is correct. 

Mr. SCOTT. Now, there has been a question about whether or not 

the need for the additional judges will continue after the economic 

collapse—if the economy improves, we might not need additional 

judges. 

I know in Virginia, for our district court vacancies, we have a 

process that requires a certification—that is, if someone retires, we 

certify that the judgeship is still needed based on case loads, and 

if not, the judgeship is not filled. Is there such a thing for the 

bankruptcy judges? 

Judge LYNN. Yes, sir, there is, and we have a number of positions that were authorized—I mentioned in connection with the 

2005 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 those. 

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 judgeship that had not 

been filled, or even where there might be a technical need that 

they have met in other ways. 

112 

Mr. SCOTT. Now, we talk about need and weighted case load. Obviously, the different cases have different needs. Some individual 

cases could take a judge pretty much full time and others are fairly 

routine. 

How accurate is the case weighting formula? And how do we 

know that 1,500 is not too high or too low? 

Judge LYNN. Well, the case weighting study takes into account 

the different mix of cases and the workload required to administer 

them. We all know that since 1991, 1992 time frame, there have 

been many mega bankruptcies, very large Chapter 11s which really 

we did not have many of back under the old case weights. 

Mr. SCOTT. Well, is G.M. counted as one? 

Judge LYNN. Well, it counts as one, but the amount of time that 

it takes to administer it is obviously more significant than a routine Chapter 7 case. All of that comes into play in formulation of 

the case weights. 

Mr. SCOTT. Well, the formulation is whether it is a business or 

non-business, whether it is Chapter 7, 11 or 13. Is a G.M. bankruptcy the same as—— 

Judge LYNN. No. 

Mr. SCOTT [continuing]. John Doe, Incorporated? 

Judge LYNN. It doesn’t take the same amount of time, and the 

case weights take that into account. All of the functions that a 

bankruptcy judge would perform in connection with different kinds 

of bankruptcy matters—that is why we have surveyed all of the 

bankruptcy judges of the United States, handling small cases, large 

cases. These adjust for that. 

As I have indicated to you, it is our considered judgment that the 

case weights of 1991 are understated, not overstated, because of 

what has happened since and because many of these needs long 

pre-date BAPCPA. We had needs that were not related to the current economic climate. We have looked at that historically. 

That is definitely true in the Eastern District of Michigan. And 

I keep mentioning it not just because of Representative Conyers 

being here—because it is the most compelling of the needs we have 

and has remained so for more than a decade. 

Mr. SCOTT. Well, I haven’t looked at the numbers, but I assume 

that bankruptcy reform increased the number of Chapter 13s. Is 

that not right? And that would be—— 

Judge LYNN. Yes, that is true, but I—— 

Mr. SCOTT [continuing]. Which would be—— 

Judge LYNN [continuing]. Don’t have more detailed numbers. 

Mr. SCOTT [continuing]. Which would mean that more judicial 

work needed to be done. 

Judge LYNN. That is true. And BAPCPA itself requires more 

work on all of the matters that are handled after the reform act. 

Mr. SCOTT. Now, how much of the case load problem could be 

solved with more trustees rather than more judges? 

Judge LYNN. I am of the opinion that none of the need could be 

solved by more trustees. The functions that are before—being performed by judges should be performed by judges. 

We need trustees. I am certainly not speaking negatively about 

that. But I don’t think that these functions can be passed to trustees to perform. 

113 

Mr. SCOTT. Most of the kind of accounting work and getting the 

case together is not done by the trustees? 

Judge LYNN. The trustees do that work now, and they will do 

that work. What I am talking about judges doing are judicial functions. I don’t think you see many cases where the judges are doing 

routine kind of accounting work. 

Mr. SCOTT. Okay, and what effect does the lack of judges have 

on time it takes to resolve a case? 

Judge LYNN. That is a very good question, Representative Scott. 

I do not have that, except sort of stories I am told. We have not 

worked those numbers. That is a sophisticated analysis to do. 

But from talking to bankruptcy judges, I believe disposition time 

has increased rather than decreased. 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 is 

part of what requires us to come here and ask for additional—— 

Mr. SCOTT. As the representative from the ‘‘rocket docket’’ Eastern District of Virginia, is there a standard time after filing that 

these things ought to be resolved? 

Judge LYNN. I am not prepared to tell you that there should be 

a time from filing to disposition. I think the devil is in the details. 

For example, I am well familiar with the ‘‘rocket docket’’ as a 

former trial lawyer. But cases vary from one to one. 

I don’t think—you know, certain bankruptcies come out real 

quick when they are pre-packed. But if you have 10,000 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 onesize-fits-all problem. 

Mr. SCOTT. Thank you. 

And, Judge Kennedy, you mentioned venue. I thought there was 

a difference between venue and jurisdiction, that venue was permissible—if nobody complains, you could stay where you are. Who 

complained in the case that removed it from Tennessee to Mississippi? 

Judge KENNEDY. Under 11 USC Section 307, the United States 

trustee has very broad standing. It can raise and appear and be 

heard on any issue. It was the United States trustee that filed the 

motion to dismiss or to transfer the West Tennessee case to the 

Northern District of Mississippi. 

Mr. SCOTT. And your suggestion would be for good cause shown 

you could keep it where it is? 

Judge KENNEDY. If it is for the convenience of the parties or the 

interest of justice, absolutely. And that is exactly, Congressman, 

what the former Section 1477 provided for. 

It was styled ‘‘Cure or Waiver of Defects,’’ and it expressly provided that the bankruptcy court could retain jurisdiction over a 

technically improperly venued 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—these 

flexible transfer provisions to promote a fair place to administer a 

bankruptcy case or to try an adversary proceeding. 

Mr. SCOTT. Okay. As one that doesn’t like to reinvent the wheel, 

is there anything wrong with just recodifying the old language? 

114 

Judge KENNEDY. Not at all. It would have to be slightly remodified and renumbered and merely reintroduced and passed, and that 

is it. It would be a—it would be the simplest legislative fix I can 

think of. 

Mr. SCOTT. Thank, you, Mr. Chairman. 

Mr. COHEN. Thank you. Sounds like something right up my alley. 

[Laughter.] 

Judge Kennedy, according to a recently updated Harvard study, 

62 percent of bankruptcy debtors could trace the cause of their 

bankruptcy to medical debt. 

If this Congress is successful in passing affordable 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? 

Judge KENNEDY. I, of course, can’t give you a definite answer, 

but—— 

Mr. COHEN. Right. 

Judge KENNEDY [continuing]. But my answer would be I think it 

would reduce the number of filings. As you know, currently medical 

problems are a measure of contribution to bankruptcy filings, and 

if they were to be substantially eliminated, yes, indeed, I think the 

case filings would decrease. 

Now, job losses is another problem. Marital problems, domestic 

problems—some people are financially illiterate. I mean, there are 

other causes of bankruptcy besides 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. 

Mr. COHEN. Yeah. I was just thinking if that happened, there are 

so many repercussions, and if you didn’t have the medical debts— 

there are other debts, and people wouldn’t go into bankruptcy, and 

other debts they have they could handle, and so the medical—the 

affordable health care not only helps the folks with their health 

care but it helps a lot of creditors out there who otherwise would 

be paid. 

Judge KENNEDY. Yes. 

Mr. COHEN. Do you think that the bankruptcy judges are capable 

of handling—if we had the so-called cram-down provision pass, that 

the present bankruptcy—the judges could handle the—the case 

load increase? 

Judge KENNEDY. I think bankruptcy judges are well qualified, 

Mr. Chairman, to do that. After all, as someone noted, we have 

been doing this for years with family farms, second homes, vacation 

homes, rental properties, investment properties. 

Actually, I think if the mortgage modification legislation were to 

pass, some even say it might result in a slight reduction of cases. 

Some draw the analogy of being what happened in the mid 1980’s 

regarding family farms. 

You will recall that there were family farms being 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 tried a 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. 

115 

And after a while, they got together and said, ‘‘Well, why even 

file the case? We know pretty much how these judges are going to 

rule anyway. Let’s just settle it and don’t have to file at all, save 

the money to be paid for something else.’’ 

So yes, to be responsive to your question, I, indeed, think bankruptcy judges are very well qualified. And again, the home mortgage secured only by the debtor’s principal residence is the only 

home that can’t be subject to being modified. 

Mr. COHEN. Thank you. 

Judge Lynn, the conference recommended the 13 new judges and 

the conversion of the 22 to permanent status and the extension of 

two temporary judges, so that is a total of 37. Is there, in fact, a 

need for more judges, do you believe? 

Judge LYNN. When the results of the new case weighting study 

are completed and 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 additional judgeship requests in the future, 

then we will come to you with those. 

Mr. COHEN. Thank you. 

I believe that finishes our questioning. The second round is finished. I thank all the witnesses for their testimony today. 

Without objection, Members will have 5 legislative days to submit any additional written questions which we will forward to the 

witnesses and ask you promptly to answer them. They will be 

made part of the record. 

Without objection, the record will remain open for 5 legislative 

days for the submission of any other additional materials. Again, 

I thank you 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—and remedy the problems to 

some extent that we have heard about. 

So this hearing of the Subcommittee on Commercial and Administrative Law is therefore adjourned. 

[Whereupon, at 12:35 p.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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RESPONSE TO POST-HEARING QUESTIONS FROM THE HONORABLE BARBARA M.G. 

LYNN, UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS


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PREPARED STATEMENT OF THE FINANCIAL COUNSELING RESEARCH ROUNDTABLE


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ATTACHMENT 


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