With this recommendation, the Commission does not write on a clean slate. Section 522 (f) of the Bankruptcy Act already reflects Congress` understanding that many consumer credits, guaranteed in nominal terms, have only “hostage value.” This provision allows the debtor to avoid non-purchase interest and non-financial interest to the extent that they affect exemptions from these items. The Commission`s recommendation would not compromise the current application of this provision. A Federal Trade Commission rule, adopted several years after the passage of Section 522 (f), extends the same protection to non-bankrupt debtors by making the acquisition of monetary security interests of household goods an illegal practice. (390) An individual debtor who receives a Chapter 7 dismissal is exempt from personal liability for advance claims. A debtor who attempts to repair debt defaults and repay chapter 13 provision debts. This division is fundamental to the current structure of the consumer bankruptcy system. The Code is currently a very important exception that blurs the boundaries of this two-way system: Chapter 7 can legally compel debtors to pay anticipated debts, while they lighten all others, if they “validate” those debts by entering into agreements that meet certain basic requirements. 378 See In re Hardage, 99 B.R. 738 (Bankr. N.D. Tex. 1989) (safety agreement established in the consumer goods sales bulletin where notes indicated that Sears retained a safety interest); In re Ziluck, 139 B.R.
44 (S.D. Fla. 1992) (credit card application and language agreement to grant security interests, establishes a security agreement; “all invoiced products,” a sufficient description of warranties; In re Hance, 181 B.R. 184 (Bankr.M.D. dad. 1993) (the sales voucher, which grants security interests on purchased products, was a safety agreement); In re Anderson, 23 B.R. 130 (Bankr. D. Neb.
1982) (safety interest for consumer products retained by the retailer through a renewable royalty agreement and sales vouchers); In re Martinez, 179 B.R. 90 (Bankr. N.D. II. 1994) (security contract in force for consumer electronics, where the debtor signed a credit contract containing a clause stating that “all invoiced goods” were guarantees). Going back to the text, I have a credit card that I had since 1992, and every time I call to make a payment, they always say to me, “Thank you for being a customer for a number of x years, and I`m like” Oh, wow, OK. The proposal is not based on a subjective determination of the usefulness of leases. Leasing contracts have been attacked outside of bankruptcy, with different results. (394) Consumer advocates argue that these leases are an attempt to avoid the various government laws governing interest rates and lending practices.
(395) The question of whether consumer protection legislation should prohibit such contracts is beyond the scope of the Commission`s work. But what is necessary in the event of bankruptcy is a characterization of these transactions to determine priority and rights. The courts do not agree on the appropriate treatment of leases. Some courts characterize leases as temperamental sales that create eligible guaranteed rights, while others treat contracts as leases that must be executed or violated in full. (396) Here too, the parties are treated differently on the same site than the parties with the same contracts elsewhere. More consistent guidelines on the role of these transactions in the bankruptcy priority system are needed to prevent wasted litigation and ensure the application of a uniform legal standard. This is a dispute over a bankruptcy issue that must be dealt with uniformly in bankruptcy courts, which differ from the province of state legislators in regulating such agreements for other purposes. The Commission was informed of substantial evidence of the cancellation of further relief.