A History of the Automobile Lender Provisions of BAPCPA

In BAPCPA, the automobile lenders won a dramatic curtailment of lien stripping of auto loans in chapter 13 proceedings. After reviewing this and other BAPCPA provisions affecting auto lenders, the author con-cludes that automobile lenders probably will benefit from BAPCPA more than most other creditor groups, including the credit card interests who played such a substantial role in securing enactment of the legislation.The author then provides a political and legislative history of BAPCPA provisions affecting automobile lenders, drawing on numerous sources, including interviews with participants in the process. When new bank-ruptcy legislation was first considered by the National Bankruptcy Re-view Commission, automobile lender interests did not seek restriction of lien stripping in chapter 13, nor was such a proposal contained in the first bills introduced in Congress. The idea was added to the legislation in May 1998, by adoption of an amendment offered by Senator Spencer Abraham of Michigan during Senate Judiciary Subcommittee proceed-ings. The author speculated that other creditor groups were surprised by this amendment, which was not in their interest, but decided not to op-pose it in order to maintain the apparent unity of a broad creditor coali-tion supporting the legislation. Later in the legislative process the limitations of lien stripping that had been proposed by Senator Abraham were scaled back modestly, but at the behest of debtor interests and without the active support of creditor interests whose interests are compromised by the limitations of lien stripping.The article concludes with speculation about why the various interests lobbying for the legislation acted as they did, whether the content of BAPCPA would be different if these interests had acted differently, and what the future might bear. Finally the author offers a few comments about the lessons of this experience for how bankruptcy policy should be made.

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