Fighting Fraud in Bankruptcy Act 2011: Protecting Homeowners from Fraud
Lending institutions have had to resort to questionable methods as millions of Americans filed for bankruptcy protection this past year. In response, the Fighting Fraud in Bankruptcy Act 2011 was proposed to clarify the Trustee's powers in sanctioning creditors and protecting consumers.

November 10, 2011 /24-7PressRelease/ -- Fighting Fraud in Bankruptcy Act 2011: Protecting Homeowners from Fraud

According to the American Bankruptcy Institute, California residents filed over 69,000 bankruptcy petitions in 2007. This number alone seems unusually high, but it pales in comparison to the nearly 260,000 petitions that were filed in 2010.

This same trend was seen nationwide, so with an economy fighting to rebound after one of the worst recessions in U.S. history, as well as an increasingly lackluster job market, the government realized more needed to be done to protect consumers from predatory collections efforts and suspicious creditor actions.

Creditors Abusing the Bankruptcy Process

According to the Department of Justice, America founded a U.S. Trustee Program in 1978 designed to "promote the efficiency and protect the integrity of the Federal bankruptcy system." This program -- created by the Bankruptcy Reform Act of 1978 -- gives trustees the responsibility of monitoring parties' conduct, as well as taking action when a creditor abuses a debtor or the bankruptcy process.

The DOJ reports the Executive Office for U.S. Trustees -- the program's governing body -- recently assessed thousands of proof of claims filed by mortgage lenders. The EOUST discovered alarming amounts of illegitimate fees, unjustified foreclosure actions, as well as other tactics designed to hurt homeowners.

Fighting Fraud in Bankruptcy Act 2011

In response to these findings, Sen. Patrick Leahy proposed the Fighting Fraud in Bankruptcy Act 2011 to Congress on May 24, 2011. The bill is currently in committee and is designed to clarify a Trustee's role in resolving violations, disputes or manipulation of the bankruptcysystem.

Lending companies had been challenging the Trustee's authority to impose sanctions for incorrect or fraudulent claims, thus slowing down the process from extensive litigation. However, this bill, if passed, will strengthen the Trustee's power to fight against creditor fraud, impose sanctions to deter future misconduct, as well as provide remedies for the consumer.

Millions of Americans have gone through the bankruptcy process, and millions more can benefit from the protections and assistance it provides. Anyone considering bankruptcy should speak with an experienced attorney immediately to discuss their eligibility and determine whether bankruptcy is appropriate for their situation.

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