For the past three years, I have had the privilege to serve two Attorneys General and our President as the director of the Executive Office for U.S. Trustees. It has been my true honor to work with the U.S. Trustees, my colleagues at the Executive Office and program employees in the field who work so hard to maintain the integrity of the bankruptcy system. Together, we have transformed the program into a litigating component of the Department of Justice dedicated to combating bankruptcy fraud and abuse, while protecting the rights of consumers and creditors alike. At the same time, we have forged stronger relationships with the courts, law enforcement and practitioners.

Our nation's bankruptcy system is on the verge of dramatic change. Bankruptcy legislation pending in various forms since 1997 has been adopted by the U.S. Senate and, at the time of this writing, awaits action in the U.S. House of Representatives and signing by the President.

Over the past eight years, bankruptcy professionals have been divided in their views about the pending legislation. But as the bill's adoption appears ever more certain, we should look ahead and embrace the opportunity to further improve our bankruptcy system.

I entered the field of bankruptcy practice 17 years ago. Since then, bankruptcy judges, officials and professionals have taken enormous strides to improve the integrity and effectiveness of the system. During my tenure as director of the Executive Office for U.S. Trustees, I have witnessed firsthand significant accomplishments in restoring confidence in the bankruptcy system, particularly from the program's perspective. We have carefully followed a balanced and fair approach to administering cases and enforcing the Bankruptcy Code. Bankruptcy fraud and abuse have been targeted through civil and criminal enforcement, resulting in hundreds of millions of dollars potentially returned to creditors, and certainly deterring potential abuses. If legislation is enacted, it will result in many changes. Foremost among them are the following:

• The bill seeks to reduce abusive bankruptcy filings primarily through two methods. First, it institutes a "means test" to determine whether a debtor is eligible for chapter 7 relief or must file under chapter 13. Second, it provides for audits, both targeted and random, to determine whether a chapter 7 debtor's petition and schedules contain inaccuracies arising either from intent to defraud or mislead, or from careless preparation.
• The bill seeks to ensure that consumers obtain credit counseling before they file bankruptcy, and to ensure that debtors obtain basic financial education before exiting the bankruptcy process.

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  The legislation should be considered a clarion call to action.

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• The bill seeks to raise the level of professionalism within the bankruptcy bar. It requires attorneys representing debtors to certify the accuracy of debtor submissions. Greater accuracy enhances consumer protection and benefits parties in this process.
• The bill seeks to improve chapter 11 case administration by requiring specific oversight activities in small-business cases, where creditors traditionally have played a less active role.

Should the bill become law, the six-month effective date will present a variety of reform implementation challenges. Together, we can—and will—forge ahead to implement successfully all provisions of the bill. As bankruptcy professionals, we need to avoid becoming insular in our thinking. We must be mindful that diverse and wider public interests are at stake.

Accordingly, legislative changes are not the end of the story. Instead, they open a new chapter in the history of bankruptcy. Reforms should be viewed as opportunities. If implemented appropriately, these changes to the bankruptcy system can provide the foundation for many additional improvements to promote system integrity, performance and fairness. Among the opportunities likely to emerge are the following:

Enhanced system integrity. We can continue using proven civil and criminal enforcement tools to fight fraud and abuse. In recent years, we have seen how very effective civil actions can be in remedying many forms of abuse in the system. We also can continue referring criminal conduct to law enforcement officials.

Increased efficiencies. Reforms and system improvements that accompany them should spur technological innovations that will permit more efficient reviews of petitions and schedules, including identifying possible abuse. It is expected that technologies such as "data tags" will facilitate the sharing of information between the courts and the U.S. Trustee program for purposes of case processing, planning, evaluation and enforcement. Improvements such as these will promote public confidence and system fairness. They also save resources and promote better business practices within our organizations.

Heightened professional competency. We can foster greater professionalism in the bankruptcy system by expecting practicing attorneys to be knowledgeable about the requirements of the Code and to meet the highest standards in carrying out obligations to clients. We can act affirmatively when we see attorneys whose conduct does not meet standards of excellence. Too often, as part of our civil enforcement activities, U.S. Trustee program personnel see debtors harmed by counsel's negligent acts. In one recent case, an attorney obtained dismissal of the wrong bankruptcy case, which would have resulted in foreclosure of the debtor's property even though the debtor was not the attorney's client! Thankfully, intervention by a chapter 13 trustee saved the debtor from losing his home. This kind of lawyering should not be tolerated if we are to protect consumers and ensure the integrity of our bankruptcy system.

Improved accuracy of information. Audits can help reduce the incidence of errors in petitions and schedules. We must insist that clients provide, so far as possible, complete and verifiable information. I am very pleased that members of the Advisory Committee on Bankruptcy Rules recently voiced support for reasonable and sound practices to verify the accuracy of filings by adopting amendments to Bankruptcy Rule 4002, which will require document production at §341 meetings.

Efficiency in business reorganizations. We can work in partnership toward attaining successful, timely and cost-effective business reorganizations, rather than allowing cases to languish in the system and consume estate assets through administrative costs.

New prevention initiatives. We can encourage financial education to teach students and consumers the principles of money management, which can help them avoid the serious financial straits that can lead to bankruptcy. With the explosion in financial products and technologies now available to consumers, an understanding of basic money management is critical. The growing convenience and availability of credit increases the need for prudent purchasing practices. Those of us in the bankruptcy community are in a unique position to reach out through volunteer education programs in our schools and communities. We see every day the consequences of a lack of financial acumen, and we can speak from experience about the dangers and hardships associated with financial failures. Leaders in this effort include Chief Judge John C. Ninfo II of Rochester, N.Y., who developed the Credit Abuse Resistance Education (CARE) program. The CARE program reaches out to high school and college students in communities across America. I had the privilege of participating in an educational session with Judge Ninfo and education professionals. The program has demonstrated to me and to others the rewards of volunteerism and the benefits for students and consumers.

New research opportunities. The legislation includes a number of mandated studies and evaluations to provide us with a better understanding of the bankruptcy system. In addition to the studies mandated by the legislation, the U.S. Trustee program is funding and facilitating other research and evaluation activities. These studies include a major project now being organized to examine what is known about the prevalence and magnitude of bankruptcy fraud, abuse and errors—and what future responses should be studied and considered. The study will be led by the National Institute of Justice, a component of the Justice Department. It will include scholars, practitioners and representatives of organizations and entities responsible for ensuring accountability and integrity. We anticipate that the study will address such important topics as the dynamics of bankruptcy fraud, abuse and errors; the potential benefits of enhancing the program's audits; the identification of promising approaches to estimate the prevalence and magnitude of fraud, abuse and errors; and recommendations regarding options and priorities for the U.S. Trustee program to meet future needs for preventing and combating fraud, abuse and errors.

I urge everyone involved in the bankruptcy system, including participants from all branches of government and the private sector, to assist in efforts to raise the levels of integrity, effectiveness and efficiency in our nation's bankruptcy system. The legislation should be considered a clarion call to action. The fact that we have often done things a certain way is no excuse for failing to pursue new and better ways of conducting our business, and implementing promising reforms.

While I will no longer be leading the U.S. Trustee program, I hope to be active in a different capacity within the bankruptcy community. I am sincerely grateful for the ideas shared and the support given to me while I served as director, and I am confident the bankruptcy community will continue to work in partnership with the program to improve our bankruptcy system. Together, we can meet the many challenges that we will undoubtedly encounter. I am convinced that our bankruptcy system can serve as a model of integrity, effectiveness and fairness throughout the world.