News
$5.8 Billion in Automatic Federal Student Loan Forgiveness
American Bankruptcy Institute article reports that the Biden administration on 8/19/21 announced it would line up more than 323,000 borrowers with a total and permanent disability (TPD) for $5.8 billion in automatic federal student loan forgiveness. The Education Department announced that it would no longer make those classified as totally and permanently disabled by the Social Security Administration (SSA) apply for their federal student loans to be discharged. Instead, borrowers with TPDs will be able to receive automatic forgiveness thanks to a new rule allowing student loan servicers to match customer data with the SSA. “Today’s action removes a major…
American Bankruptcy Institute 8/12/21 e-newsletter reports that: With Tenants Who Won’t Pay or Leave, Small Landlords Face Struggles of Their Own
Advocates for renters celebrated last week when the Biden administration effectively extended a Centers for Disease Control and Prevention ban on most evictions. But for some small landlords — struggling to pay mortgages and taxes — it was the last straw, the Washington Post reported. The CDC’s ban legally protects only renters who have suffered financially because of the pandemic, who are at risk of homelessness and who meet other criteria. But landlords say some tenants are abusing the eviction ban to live rent-free. Others cannot be evicted for any reason because of state and local rules enacted in response…
Nondebtor Release Prohibition Act of 2021
On July 28, 2021, democrats introduced bicameral legislation in the US Congress, titled the Nondebtor Release Prohibition Act of 2021, in an effort to ensure bad actors in bankruptcy cases—including Purdue Pharma, Boy Scouts of America, USA Gymnastics, and others—are held accountable. The legislation proposes to amend the Bankruptcy Code by adding a section that would essentially prohibit courts from approving the discharge, release, termination, or modification of claims or causes of action belonging to third parties that are not property of the estate. The bill also proposes to prohibit courts from permanently enjoining the commencement or continuation of such…
Biden Administration Issues New Eviction Moratorium
The previous federal moratorium on residential evictions (of tenants not paying their rent to the tenants’ landlords ended on July 31, 2021. But on Aug. 3, 2021 7:14 pm ET, President Biden announced a new federal moratorium on residential evictions to last through October 3, 2021. President Biden did this even though he admitted that this additional 60 day moratorium would likely be held to be unconstitutional by the US Supreme Court, when the US Supreme Court ruled on the constitutionality/unconstitutionality of this additional 60 days extension of moratorium on residential evictions. The new moratorium applies to over 80% of…
Date for Debt Collection Final Rules
Consumer Financial Protection Bureau (“CFPB”), which is a US Government Agency, Confirms November 30, 2021 is Effective Date for Debt Collection Final Rules which include that debt collectors cannot threaten to sue consumers, or sue consumers, on time-barred debt. This is a BIG Change, because debt collectors have been suing consumers on time-barred debts for decades. The CFPB recently announced that its two final debt collection rules implementing the Fair Debt Collection Practices Act (FDCPA) will take effect as planned on November 30. 2021. The first rule, issued in October 2020, involves debt collection communications and clarifies restrictions on harassment…
Recommend Improvements to the Consumer Bankruptcy System
The ABI Commission on Consumer Bankruptcy was created in December 2016 to research and recommend improvements to the consumer bankruptcy system that can be implemented within its existing structure. The Commission’s Final Report contains recommendations for amendments to the Bankruptcy Code, and to the Federal Rules of Bankruptcy Procedure, designed to make the consumer bankruptcy system more accessible and efficient for both financially struggling Americans and the professionals who serve them. After soliciting public feedback, Commission members identified nearly 50 discrete issues for study and divided these issues among three advisory committees composed of 52 bankruptcy professionals. The Comissions’ NUMBER…
New Form Motion
8/1/21 The Bankruptcy Court, CD CA, has just created a new, easy to use, form motion, for consumer debtors to use to seek an order compelling a creditor which has seized an item of debtor’s property, before debtor files bankruptcy, to immediately return that item of property to debtor, after debtor files bankruptcy. Most often, the seized item is debtor’s car/truck/other vehicle, which the secured lender on the vehicle repossessed prepetition, usually because debtor defaulted in making make monthly vehicle payments the debtor owed the secured lender, to repay the secured car loan. The Central District Consumer Bankruptcy Attorneys Association…
What Is an “Executory Contract” Pursuant to 11 USC 365
ABI (American Bankruptcy Institute) Article on What is an “Executory Contract” pursuant to 11 USC §365 : The bankruptcy community needs a better definition of what’s an executory contract, and Prof. Jay Westbrook has it. A decision–In re Financial Oversight and Management Board for Puerto Rico, 17- 3283 (D. P.R. June 29, 2021)–by the district court in restructuring Puerto Rico’s debt demonstrates the gyrations a court must sometimes undertake to conclude that a contract is capable of assumption under the “Countryman” definition of an executory contract. Rather than decide whether a contract is executory under the dueling “Countryman” and “functional”…
As Forbearance Protections End, Nonbank Mortgage Lenders Face High-Volume Processing Tests, Ginnie Mae Risks
Tech-savvy millennials fled to the suburbs during the coronavirus pandemic, fueling a hot housing market that enabled nonbank and fintech mortgage companies to grab a big piece of the growing market share, churning out loans at a faster pace than more traditional bank lenders, according to a Morning Consult report. That booming market has so far shielded a vulnerability. Homeowners had multiple options to buoy their finances, from refinancing opportunities to extra unemployment insurance and stimulus checks. As those programs come to a close this year, most homeowners that took advantage of coronavirus-era policies to delay their loans have now…
Moratorium on Residential Evictions
On 6/29/21 the US Supreme Court refused to overturn the CDC’s (federal Center for Disease Control) nationwide moratorium on residential evictions, which continues to be in effect until the end of July 2021. The petitioners were a coalition of landlords and realtors. The vote against the landlords and realtors was 5-4, with Chief Justice John Roberts Jr. and Justice Brett Kavanaugh joining the liberal members of the court to form a majority. The CDC had said that this is the last moratorium on residential evictions that the CDC will order. But that CDC representation is likely NOT enforceable. In their…