Stites & Harbison, PLLC

On April 20, 2005, President Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.  With a few exceptions, these amendments became effective on Oct. 17, 2005.  One significant and welcomed change for financial institutions is the extended time to perfect a lien in order to escape the debtor's bankrtupcy estate's avoidance powers.

The time of transfer, in essence, relates back to the time that the funds/value actually changed hands from the lender to the debtor.  Lenders must perfect their interests in the debtor's property in a timely manner, according to Bankruptcy Code Section 547(e)(2).

Thanks to the Amendments, the deadline will be 30 days after the closing for all security interests.  The old time period was just 20 days for purchase money security interests, and 10 days for non-purchase money security interests.

The current deadline for perfecting security interests is still 10 or 20 days after funds change hands from the lender to the debtor.  This shorter deadline will still apply for bankrtupcy cases filed before Oct. 17, 2005, the effective date of this Amendment.  Mark your calendars accordingly!

For more information on the Bankruptcy Abuse Prevention and Consumer Protection Act, contact Madison L. Martin in Stites & Harbison's Nashville office at (615) 782-2243 or madison.martin@stites.com.