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88 Tul. L. Rev. 21 (2013-2014)

handle is hein.journals/tulr88 and id is 33 raw text is: ARTICLES The Debtor Class Kara Bruce* h recent years, in&viduals seeang bankruptcy protection have encountered an unexpected harm: their lenders have misrepresented the amounts they owe, lost or misapplied their loan payments, and violated clearequirments of bankruptcy law and procedure. Recent investigations ofconsumer bankruptcy cases reveal widespread abuse of the Bankruptcy Code, raging from the filig of unsupported or overinflated proofs of clain to violations of the automatic stay and discharge ijunction. Such pactices undemne consumer bankruptcys cental goals to provide consumer debtors a fresh fimancial start and to achieve the fair treatment ofand Astrbution ofassets to credtors Because many debtors affected by lender misconduct may not have the resources or the fImancial incentives to fight back individually class actions may serve a valuable remedial role. Class litigation addionally may create a deterrent effect that institutional checks have failed to provide. But debtor class actions face twopiimarynpediments: The fist isjunsdictional The concept of a debtor class appears to conflict with fundamental principles of bankruptcy jurisdiction. The second emanates from the class device itselfand the Supreme Courth apparent dive to limit the availability ofclass litigation. This is the first ofa seres examining these hurdles. This Article addresses the threshold jurisdictional challenges facing the debtor class. It reconciles the divergent case law and presents a fiamework for approaching class action proceedgs in bankruptcy It concludes that courts generally should nothesitate to exereise juris&ction over nation wide classes ofconsumer debtors asserting violations ofbankruptcylaw Stil, the debtor class action is no panacea. Class relief may be unavailable in many cases, and additional law reform efforts will be needed to fully remedy the dsconnect between bankruptcy law and creditor action A forthcoming article will consider these issues. I. INTRODUCTION....................................... 22 II. THE GAP BETWEEN BANKRUPTCY LAW AND CREDITOR ACTION IN CONSUMER BANKRUPTCY CASES... ................25 A. CreditorAction and Inactionhm Bankruptcy Cases........ 25 B. The Impact of Creditor Overreaching on the Bankmuptcy Process. ......................... 31 * C 2013 Kara Bruce. Associate Professor, University of Toledo College of Law. My thanks to Ralph Brubaker, Jason Kilborn, Matthew Bruckner, Michael Blankenheim, Rebecca Zietlow, Susan Martyn, Geoffrey Rapp, Greg Gilchrist, and Bill Richman for their helpful edits and comments and to Margaret Reynolds, Philip Stovall, Laura Dettinger, and Rebecca House for their research assistance. I also thank the Faculties at the University of Akron School of Law and the University of Toledo College of Law, as well as participants at the National Business Law Scholars Conference and the Ohio Legal Scholars Workshop in June 2013, the Valparaiso University Law School Regional Faculty Workshop in February 2013, and the Central States Law School Association Annual Meeting in October 2012, where prior drafts of this Article were presented. Finally, I thank the University of Toledo College of Law for providing a summer research grant to fund this project. 21

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