Bankers worried by a rapid increase in the number of consumer bankruptcies created a task force yesterday to assess the impact of the new bankruptcy law which went into effect last October.
The American Bankers Association task force will meet here on Oct. 3 under the chairmanship of Walter W. Vaughn, senior vice president of the Community Bankers Division of Washington's American Security Bank.
"We want to measure how the growing number of consumer bankruptcies affect both the banking industry and our customers," Vaughn said yesterday.
The Bankruptcy Act of 1978 improved the position of debtors who file for bankruptcy in several ways.
One important change was the granting of more favorable exemptions governing the possessions which a bankrupt individual may keep. Another was the introduction of a code, Chapter 13, which allows people to reorganize their debts, paying some of them off under a court-approved plan, without incurring all the stigma of straightforward bankruptcy.
Bankers, finance associations and other credit bodies have complained that the changes have contributed to soaring bankruptcies over recent months. These worries were "the motivating force" behind setting up the task force, according to an American Bankers Association spokesman yesterday.
He said that he would except the task force to meet about once a quarter but not to last for more than about a year. It will attempt to determine whether the jump in bankruptcies "is due to start up problems with the new law, the economy, or substantive problems with the law," the ABA spokesman said.
"We hope to establish a course of action, legislative and/or otherwise, for the Bankruptcy Task Force and for the ABA," Vaughn said in a statement released yesterday. The ABA was not "set on" changes in the law, the spokesman said.
Another spokesman said that the bankers will consider whether the pool of consumer credit could dry up, as the increase in bankruptcies make creditors more wary. There are no signs as yet that the supply of consumer credit has been affected.
The National Consumer Finance Association also has set up a task force to consider the effects of the new bankruptcy law. The ABA hopes to work with the NCFA if it moves ahead with suggestions for legislation, the spokesman said.
Other bankers on the task force include Robert J. Grimmig, senior vice president of Chemical Bank, New York; Ted Howard, vice president in the credit division of Citibank, New York; Gary Jewel of Memphis Bank and Trust; and other bankers from across the nation.