NACBA Analysis of More than 60,000 Consumers Processed Under New Law Asks:
'Where Are the Deadbeats ' Congress Expected to Find
and Stop With Onerous Rule Changes?

WASHINGTON , The first analysis of tens of
thousands of consumers seeking protection since a new federal bankruptcy law
went into effect last October concludes that the changes put in place by
Congress are not working as intended. Even though the process is now more
cumbersome, time consuming and expensive than before, consumers who need help
should still seek out a bankruptcy attorney to explore their options and
figure out how to navigate this trickier and more confusing process.) as predicting the bill would
stop "billions of dollars in losses associated with profligate and abusive
bankruptcy filings.
Kathleen Keest, a lawyer for CRL, will tell the legislators that predatory
payday lending costs Americans over $3.
Soldiers can also be jailed or discharged for not repaying debt , and
payday lenders have threatened to report soldiers who fall behind to their
commanding officers .flagg@responsiblelending.

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"
John Rao, attorney, National Consumer Law Center, said: "Bankruptcy
judges, attorneys, academic researchers and others warned Congress that the
bankruptcy filing rate was a 'symptom' and not the 'disease' itself. The highest
estimate of consumers being able to make repayments under a credit counseling
DMP was 5 percent, with the low being in the 1-2 percent range. Estimates of
the number of Americans seeking help for financial circumstances beyond their
control ranged from a high of 95 percent to a low of 65 percent. (R-Wis.org.

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"
Leslie E.3 percent ) were candidates
for paying off what they owe under a debt management plan (DMP), with the
remaining 96. Brad
Miller (NC), New Mexico Chief Deputy Attorney General Stuart M. Robert Tillman
said New Jersey's law both protected consumers and preserved the marketplace
for subprime mortgages, where people with imperfect credit borrow and where
most predatory lenders operate: "Our well-balanced law significantly reduces
predatory lending ..4 billion in excessive fees and that
military personnel are prime targets for this abusive product. "What is less obvious, but even more
compelling, is the difficulty of escaping the debt cycle once the soldier is
in it.

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S."
The following are key findings from a National Association of Consumer
Bankruptcy Attorneys survey of six major credit counseling agencies that have
dealt with a total of 61,335 consumers under the new federal bankruptcy law:

* Almost none of those seeking bankruptcy protection are able to repay
their debts . Another bill,
sponsored by Rep. 1182) is based on the State of North Carolina's
predatory lending statute, widely considered the model for preventing abusive
lending while preserving access to credit ."
New Jersey Department of Banking and Insurance Director H.

Center for Responsible Lending Testifies Before a House Subcommittee on How Payday Lenders Prey on Service Members

The Subcommittee on Rural Enterprise, Agriculture and Technology meets in
Kansas City, Missouri amid newspaper reports on service members victimized by
payday lenders, who often get their customers trapped in loans running into
more than 400 percent interest.
"It is easy to see how soldiers would find a need for quick cash in these
circumstances," Keest will testify before the subcommittee , chaired by Sam
Graves, a Missouri Republican.

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The credit counseling firms responding to the NACBA survey were:
Money Management International (Houston, TX), GreenPath Inc. So long
as people lose their jobs, have uninsured medical problems, and face other
catastrophic circumstances, they will need the protection of the bankruptcy
system. As the NACBA
report notes: "Thus, the credit counseling requirement under the new law,
designed to steer debtors who could repay their debts into a debt management
plan, simply imposes new costs and time burdens on individuals who can ill
afford either -- and clearly are not the people for whom a DMP is feasible. Both are based in Durham, N.

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economy with 'billions of
dollars in losses associated with profligate and abusive bankruptcy filings,'
the federal bankruptcy law changes that went into effect on October 17, 2005
are doing no measurable good whatsoever. The NACBA
executive director said: "Credit counseling organizations now know what
bankruptcy lawyers and other experts said all along: Congress got it dead
wrong when it passed the bankruptcy law., loss of a job, medical expenses, death, divorce or other change in
marital status , increased minimum payments on credit cards, predatory lending,
and so on).

Letting Predatory Lending Back Out of Its Cage: Federal State Officials Warn That Federal Bill Would Weaken Protections in States

John F. It appears that our state banks and licensed lenders
have prepared for the new law and have helped create a more competitive
market.
Since North Carolina's landmark anti-predatory lending law was enacted,
the state has seen a dramatic reduction in abusive lending.
Keest will tell legislators that Congress should bar payday lenders from
repeatedly rolling over loans , collecting interest again and again on the same
amount. The loans should have 90-day terms, not the usual two weeks, and
payday lenders would be required to consider whether borrowers actually can
repay their loans, among other solutions.

About the Center for Responsible Lending
The Center for Responsible Lending is a nonprofit, nonpartisan research
and policy organization dedicated to protecting homeownership and family
wealth by working to eliminate abusive financial practices.

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Where the credit counseling industry has the ability to truly serve these
clients is assisting them in the creation of family budgets, providing
information on available social services and educating these clients in sound
financial management.
The Ney-Kanjorski bill pending in Congress and supported by much of the
lending industry would gut the strong laws in these states .
Chief Deputy Attorney General Mr.

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Fewer than one out of 20 consumers (3.S.

ABOUT CRL
The Center for Responsible Lending (http://www. CRL is affiliated with the Center for Community Self-
Help, one of the nation's largest community development financial
institutions.

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Linfield , executive director of the Institute for Financial
Literacy, which is a credit counseling organization , said: "The clients
receiving credit counseling under the new bankruptcy law are at their most
vulnerable . The officials are U. Bluestone of New Mexico said: "Two
years ago, New Mexico passed a progressive Home Loan Protection Act in
response to an alarming rise in abusive mortgage lending practices and home
foreclosures.

worshippers effected

The report by the National Association
of Consumer Bankruptcy Attorneys (NACBA ) finds that of the 61,355 consumers
seen so far by credit counseling firms -- the required first stop under the
new bankruptcy law -- nearly all (97 percent) are unable to repay any debts
and that four out of five would-be filers (79 percent) were forced into dire
financial straits by circumstances beyond their control, such as the loss of a
job, catastrophic medical expenses or the death of a spouse.S.g. The end date for
the consumer-based information provided by the credit counseling firms ranged
from January 31, 2006 to the first two weeks of February 2006. Quinn (Dartmouth) and New Jersey Department of
Banking Director H.
"Military families are the ideal targets," Keest will testify . Many
military families are young, typically without much experience in managing
finances and without a cushion of savings to help them through emergencies. CRL is affiliated
with Self-Help, one of the nation's largest community development financial
institutions.

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S."
Massachusetts Rep.

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This data is evidence of that. Credit counseling agency respondents
explain that this number includes all of those who did not deliberately seek
out to get in over their heads financially but did not fully understand how
fees and finance charges associated with credit cards put them deeper and
deeper into a hole from which they could not escape, except through
bankruptcy.

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Trustees to provide bankruptcy
screening. Bankruptcy for most is their only option and a
bankruptcy alternative, such as a debt management plan, is inappropriate. Four out of five consumers (79 percent ) seen by credit counseling
agencies are suffering from debt "caused by circumstances beyond their control
(e...

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Brad Botes, executive director, National Association of Consumer
Bankruptcy Attorneys, said: "Contrary to the claims of proponents of
bankruptcy law changes that they would zero in on the alleged legions of
'deadbeats' who supposedly were crippling the U.

That bill would gut our new effective law, install in
its place a weak federal standard and prevent us from adequately protecting
our residents from lending abuses. Quinn warned: "The passage of the Ney-
Kanjorski bill would do irreparable damage to the protections afforded to
consumers under the newly enacted anti-predatory lending law in Massachusetts. CRL helped write the North
Carolina predatory lending statute, the first such law in the nation.

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Instead, they have put new hurdles
in the path of people who are already flat on their back due to financial
crises over which they have no control, such as the loss of a job,
catastrophic health care bills, and so on."
Botes noted that bankruptcy filings are down because many Americans may
mistakenly believe that the courthouse doors are barred to them. Rep.

effected megalomaniacs

Entitled "Bankruptcy Reform's Impact: Where Are All the Deadbeats? ," the
NACBA analysis is based on data provided by a cross-section of six large and
small credit counseling firms that have been authorized by the U. All Congress has succeeded in doing
with the new law is to delay and drive up the cost of bankruptcy protection
for those who desperately need it.R. This is a bad deal for consumers, who
would be the real losers here.

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Of those
believed to be seeking protection for financial problems within their own
control, the range was from a high of 35 percent to a low of 5 percent.. The Association's twin missions are to help
consumer bankruptcy attorneys more effectively represent their clients and
ensure that the voices of consumer debtors and their attorneys are heard in
the halls of Congress, the Judiciary, and in other arenas where consumer
debtors are affected. Robert Tillman. New Mexico's new law stops these abuses, but now
Congress proposes in the Ney-Kanjorski bill to usurp our state's ability to
protect our homeowners .responsiblelending."
Payday lenders typically take a postdated check from a borrower for the
amount borrowed plus a fee, payable on the next payday.

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As the NACBA report concludes: "Thus, the masses of expected
deadbeats who were supposed to be identified under the new law and forced into
debt management plans have not materialized. Officials From MA, NM, NC and NJ Caution Ney-Kanjorski Bill Would
Roll Back State Protections for Consumers, Spur New Abuses

WASHINGTON , State and federal officials from four
states warned today that a bill in Congress would weaken laws against
predatory mortgage lending in 36 states, especially the 24 states with major
anti -predatory lending laws on their books. Miller of North Carolina and supported by consumers and
civil rights groups, would let states keep strong laws and protect their
consumers.
This bill is bad public policy and would weaken the ability of the states to
protect consumers from unscrupulous lenders .
These laws ensure homeowners' rights are more than symbolic by providing
for meaningful damages and allowing homeowners to defend their homes against
foreclosure even after their loans have been sold to another lender. House of Representatives' Committee on Small Business on how payday
lenders prey on military personnel.
These fixes will help all payday borrowers, not just service people , avoid
sinking into a cycle of debt from which they may not be able to escape.

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worshippers escaping

" Senator Charles Grassley (R-Iowa) said the bankruptcy
changes would clean up "a convenient financial planning tool where deadbeats
can get out of paying their debt scott-free . Bluestone,
Massachusetts Rep. The Prohibit Predatory
Lending Act of 2005 (H. Miller said: "This bill protects
vulnerable consumers without cutting off credit for lower income borrowers. Arkansas, Georgia, Massachusetts, North Carolina , New
York, New Jersey, New Mexico and South Carolina are among those states
considered to have the strongest laws. Iowa and Kansas are just two examples of states with prior
laws that help protect borrowers. DURHAM, N., A lawyer at the Center for
Responsible Lending (CRL) will testify tomorrow before a subcommittee of the
U.

escaping cults

"

* The vast majority of Americans seeking bankruptcy protection are victims
of unfortunate circumstances, not reckless spenders seeking to shirk their
debts.

Credit counseling firms ranged in size from small (with 100 consumers
seen) to quite large (with nearly 23,000 consumers seen). The report quotes House Judiciary Committee
Chairman F. James Sensenbrenner, Jr. "

ABOUT NACBA
Established in 1992, the National Association of Consumer Bankruptcy
Attorneys is the only organization dedicated to serving the interests of
consumer bankruptcy attorneys and protecting the rights of consumer debtors in
need of bankruptcy relief.

John F."
Predatory lending encompasses a wide range of abusive practices by lenders
who take advantage of uninformed borrowers. Other states with predatory lending
laws include: California , Colorado, Connecticut, Florida, Illinois, Kentucky,
Maine, Maryland, Nevada, Ohio, Oklahoma, Pennsylvania , Texas, Utah, Wisconsin,
and West Virginia.org) is
a national nonprofit, nonpartisan research and policy organization dedicated
to protecting homeownership and family wealth by working to eliminate abusive
financial practices.C.

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7 percent requiring the same bankruptcy filing that they would
have needed before the new bankruptcy law went into effect. Too many homeowners were losing home equity because dishonest
lenders rolled points and fees into mortgage loans and did so repeatedly
through abusive refinances."
Reps. Brad Miller (NC) and Mel Watt (NC) and the ranking member on the
House Financial Services Committee, Barney Frank of Massachusetts, have
introduced a bill that prohibits abusive lending practices and ensures that
everybody who can afford a home loan will get one." Said Executive Vice President Debbie Goldstein of the Center for
Responsible Lending, a nonprofit that combats predatory lenders: "Rather than
preserve and strengthen state and federal protections for homeowners, the Ney-
Kanjorski bill wipes out state anti-predatory lending laws proven effective at
preventing abusive practices, and significantly weakens some protections
available under the federal law today.

For more information: Michael Flagg at 202 349-1862 or
mike.C.

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Study: Controversial Bankruptcy Law Reforms Not Working - 97 Percent Unable to Repay Debts Most Pushed to Brink by Crisis

The NACBA report contrasts the pre-passage comments of opponents of the
legislation , who warned that the bankruptcy law changes would not work, and
proponents who argued that the new hurdles in the law would slow down or stop
abusers of the bankruptcy system. Such practices include charging
excessive fees and points, repeatedly refinancing home loans while stealing
the homeowner 's equity, steering consumers into more expensive loans and
tacking on unnecessary and expensive extras like single premium credit
insurance. A recent study by
the University of North Carolina at Chapel Hill found that after passage of
North Carolina legislation, "there was a reduction of loans with predatory
terms without a restriction in access to or increase in the cost of loans to
borrowers ."
According to the Center for Responsible Lending, 24 states have passed
anti-predatory lending laws. At least 12 more have statutes that provide
meaningful protections to borrowers but were not enacted as part of an anti-
predatory lending law.

cesnur unmasking

Justice
Department's Executive Office for U ." Only about one in five of the
respondents (21 percent) were identified as suffering from debt due to
"circumstances within their control".
It's time that all American consumers have the protection that North Carolina
consumers now have.S. Borrowers can get
caught in a cycle of debt in which they continue to make huge interest
payments on the same debt.

worshippers escaping

(Farmington
Hills, MI), Springboard Nonprofit Consumer Credit Management (Riverside, CA),
Hummingbird (Raleigh, NC), Institute for Financial Literacy (Portland, ME) and
ByDesign Financial Solutions (Los Angeles, CA). Many of them are at risk of foreclosure, wage garnishments or
other pending legal actions. The
reasons: The typical private first class makes less than $17,000 a year.

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- - kjjkjk

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