News
U.S. Weekly Jobless Claims Fall; But a Record 32.9 Million People are receiving Unemployment
Benefits, reports American Bankruptcy Institute’s 7/9/20 e-newsletter: New applications for U.S. jobless benefits fell last week, but a record 32.9 million Americans were collecting unemployment checks in the third week of June, Reuters reported. Economists cautioned against reading too much into the drop in weekly jobless claims reported by the Labor Department on Thursday, noting that the period included the July 4 Independence Day. Claims data are volatile around holidays. Large parts of the country, including densely populated states like Florida, Texas and California, are dealing with record spikes of new COVID-19 cases, which have forced a scaling back or…
Analysis: Retail, Energy Set Grim Bankruptcy Milestones
More U.S. retail companies sought bankruptcy protection in the first half of 2020 than in any other comparable period. Energy filings piled up at the fastest pace since oil prices plunged in 2016, data compiled by Bloomberg show. There have been 75 filings among all companies with liabilities of at least $50 million in the last three months, matching the same period of 2009, the second-worst quarter ever. Signaling more trouble ahead, the universe of issuers with bonds trading at distressed levels expanded for the first time since April. Three retailers filed last week, including Grupo Famsa SAB de CV,…
Seila Law LLC V. Consumer Financial Protection Bureau
The US Supreme Court, on 6/29/20, issues decision that to be constitutional, the President of the United States must be able to fire the Director of the Consumer Financial Protection Bureau (“CFPB”), and that therefore, the CFPB’s present structure is unconstitutional, because under the CFPBs present structure, the President cannot fire the CFPB director. The US Supreme Court rejected the argument that the dodd-Frank Act prohibited the President from firing the CFPB’s director. Overall, this decision is a win for the CFPB, because the decision upholds the rest of the CFPB.
US Home-Mortgage Delinquencies Surge To The Highest Level In 9 Years
The number of US home mortgage delinquencies has surged to the highest level in nine years as the coronavirus pandemic continues to hit family finances. Total borrowers more than 30 days late surged to 4.3 million in May after a record jump to 3.4 million in April, according to a Monday report from Black Knight. In addition, more than 8% of all US mortgages were either past due or in foreclosure, the report showed. The report also included homeowners that missed payments even though they had forbearance agreements in place, which allow six months of deferral without penalty. Many borrowers…
Small Businesses Tackle New PPP Puzzle: Forgiveness
Small businesses that received government-backed loans to ease the pain of the coronavirus pandemic are beginning to turn to a process some say is as complex as getting the money: figuring out whether they have to pay it back, the Wall Street Journal reported. Some small-business owners have spent dozens of hours wading through the 11-page forgiveness application for Paycheck Protection Program loans. Others are trying to determine how or whether legislation President Trump signed earlier this month changes the math. Some lenders say that the government is putting them in a difficult spot by making them responsible for determining…
Millions Of Americans Skipping Payments As Tidal Wave Of Defaults, Evictions Looms
reports 6/4/20 Credit & Collection e-newsletter Americans are skipping payments on mortgages, auto loans and other bills. Normally, that could mean massive foreclosures, evictions, cars repossessions and people’s credit getting destroyed. But much of that’s been put on pause. Help from Congress and leniency from lenders have kept impending financial disaster at bay for millions of people. But that may not last for long. The problem is, these efforts aim to create a financial bridge to the future for people who’ve lost their income in the pandemic — but the bridge is only half built. For one thing, the help…
California and additional States Sue US Governement over New Payday Lending Rule
California and additional States Sue US Governement over New Payday Lending Rule (adopted by US Government on 6/2/20) that Makes Payday Lenders NOT subject to “cap” on the (extremely high) interest rates the Payday Lenders can charge consumers on unsecured loans, so Long as the Payday Lender “partners” with a Bank: Trying to stop the cycle of unsophisticated borrowers getting trapped in a recurring cycle of debt, multiple states have imposed regulations on payday lenders in recent years – regulations that will no longer apply to some lenders under a new Trump administration rule. California, Illinois and New York sued…
Big Bankruptcies Sweep the U.S. in Fastest Pace Since May 2009
In the first few weeks of the pandemic, it was just a trickle: Companies like Alaskan airline Ravn Air pushed into bankruptcy as travel came to a halt and markets collapsed. But the financial distress wrought by the shutdowns only deepened, producing what is now a wave of insolvencies washing through America’s corporations. In May alone, some 27 companies reporting at least $50 million in liabilities sought court protection from creditors — the highest number since the Great Recession. They range from well-known U.S. mainstays such as J.C. Penney Co. and J. Crew Group Inc. to air carriers Latam Airlines…
US Senate Bill Would Ban Garnishment Of Relief Funds By Debt Collectors
A bipartisan group of senators have introduced legislation to prevent debt collectors from garnishing coronavirus relief payments from consumers. Sens. Sherrod Brown, D-Ohio, Ron Wyden, D-Ore., Chuck Grassley, R-Iowa, and Tim Scott, R-S.C., have sponsored legislation that would bar private debt collectors from garnishing the “recovery rebates” that were provided to consumers through the Coronavirus Aid, Relief, and Economic Security Act. “Congress came together to pass the CARES Act, which provided money to help working families pay for food, medicine, and other basic necessities — it’s not for debt collectors,” Brown, the top Demcorat on the Senate Banking Committee, said…
Potential Wave of U.S. Bankruptcies Draws Nearer as Corporate Distress Spreads
For many troubled companies, like luxury retailer Neiman Marcus Group Inc., which filed today, the lockdown to blunt the COVID-19 coronavirus super-charged the effects of pre-existing problems like debt overloads and the inability to please fickle consumers. For others, the debt they rack up while the pandemic rages may prove insurmountable once the health threat is over, Bloomberg News reported. “Everyone’s distressed watch list has become so big that it doesn’t even make sense to call it a watch list — it’s everyone,” said Derek Pitts, head of debt advisory and restructuring at PJ Solomon, which tracks the financial well-being…