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NADA Included in Historic Bankruptcy Signing Ceremony: Dealer Provisions Part of the Bill
WASHINGTON, D.C. (April 21, 2005) - Yesterday, President Bush signed into law major reform legislation that will curb abuses in the bankruptcy system. NADA's President Phil Brady and Ivette Rivera, Executive Director for Legislative Affairs, were both among the small group who were invited to the White House signing ceremony. The ceremony marked the culmination of NADA's successful efforts to correct two specific problems faced by dealers.
The first change would extend the federal timeframe (from 20 to 30 days) that dealers have to protect their interest in a vehicle if a consumer files for bankruptcy. The second would crackdown on "cramdown" procedures that debtors have used to keep a vehicle while paying only the market value of the vehicle at the time of bankruptcy, not what is owed. The new law ensures that debtors must pay the contract amount of the loan if a car was purchased within 30 months of bankruptcy.
"NADA is extremely pleased that Congress passed these important dealer provisions that will help automobile dealers protect their interest in a motor vehicle when a customer files for bankruptcy," said NADA Chairman Jack Kain. "The provision to extend the lien perfection period to 30 days will be particularly helpful to dealers with trade-ins since there are often delays beyond the control of dealers because of customers' misplaced titles and out-of-state titlework," he added.
President Bush said, "This practical reform will help ensure that debtors make a good-faith effort to repay as much as they can afford. This new law will help make credit more affordable, because when bankruptcy is less common, credit can be extended to more people at better rates." The law will take effect in six months.