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Bankruptcy Watchdogs Push Congress for a Raise - ABI

The legal professionals who ensure people going through bankruptcy aren’t hiding assets are pushing lawmakers for their first pay raise since 1994, saying the robust oversight of the country’s personal-bankruptcy system is at stake, the Wall Street Journal reported. In a hearing yesterday before the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law, consumer-bankruptcy experts said the pay for the watchdogs, called bankruptcy trustees, should be doubled to $120 per case. The experts said trustees play a vital role in the bankruptcy process, but for most bankruptcy cases, they get only a flat fee, currently $60 — far less than what they could earn for other legal work. Roughly 1,100 trustees monitor chapter 7 cases, the most widely used form of bankruptcy for individuals. But during the hearing, experts testified that they worried that the stagnant pay would lead to fewer competent, honest applicants. Last year, 20 candidates applied for every open chapter 7 trustee position, down from 58 in 2010, according to the Justice Department, which runs the program. At the hearing, Rep. Tom Marino (R-Pa.) agreed with witnesses, calling trustees “vitally important” to the bankruptcy system. Co-sponsor of a bipartisan bill that would raise trustees’ pay, Rep. Marino said that lawmakers agree the increase is necessary but they have “different paths to getting there,” referring to who should pay for it. Ariane Holtschlag of the Law Office of William J. Factor, Ltd. (Chicago), a member of ABI’s Commission on Consumer Bankruptcy, was among those who testified.

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