News
Car Loan Delinquencies Surge To Highest Point Since 2010
Car Loan Delinquencies Surge To Highest Point Since 2010, reports Credit & Collection e-newsletter of 2/27/19 Borrowers are behind in their auto loan payments in numbers not seen since delinquencies peaked at the end of 2010, according to the Federal Reserve Bank of New York. More than 7 million Americans were 90 or more days behind on their car loans at the end of last year, 1 million more than eight years ago, according to a report from the bank. That’s a potential sign of trouble for the auto industry and perhaps the broader economy. The New York Fed reported…
The US Government Consumer Financial Protection Bureau May Scrap Underwriting Requirements For Payday Loans
The Consumer Financial Protection Bureau (CFPB) may scrap some underwriting requirements for payday loans, which would make it easier for payday lenders to provide the loans and easier for some borrowers to procure them. The underwriting requirements in question are part of the CFPB’s payday lending rule, which the bureau spent five years working on and which the last director and the current one, Mick Mulvaney and Kathy Kraninger respectively, seek to backtrack. This part of the rule requires payday lenders to underwrite loans for borrowers who obtain more than six payday loans in a year. Lenders must verify the…
New California Debt Collection Laws Take Effect Jan. 1, 2019
Three new CA state laws take effect on 1/1/2019, and these laws all favor debtors, and disfavor debt collectors. The three bills are A.B. 1526, which amends sections 1788.14 and 337 of the California civil code adding requirements for time-barred debts; A.B. 38, which clarifies the definition of a “student loan servicer”; and A.B. 1974, which provides parameters for collecting debts owed to public schools, ACA International’s Compliance Analyst Laura Dadd reports. Just like several other states, the amendments to sections 1788.14 and 337 of the California civil code will require debt collectors to provide consumers with a notice that…
Judge Tells Government Debt Collectors They Can’t Collect From A Broke 58-Year-Old Woman
In 1991, Vicky Jo Metz borrowed $16,613 to pay for tuition; now she’s 59, and has paid back 90% of that money – and she still owes $67,277. Metz is broke and has filed for bankruptcy. But thanks to a law signed by Bill Clinton, it’s almost impossible to discharge your student debt through bankruptcy. That’s why the US government sent their most notorious knuckle-breaking debt-collectors, the Educational Credit Management Corporation to argue against Metz’s debt being forgiven. ECMC had a counteroffer: Metz could pay $203 per month for 25 years – until she was 84 years old – and…
9th Circuit Upholds Record $1.27 Billion Judgement Against Payday Lender
FEDERAL TRADE COMMISSION, Plaintiff-Appellee, v. AMG CAPITAL MANAGEMENT, LLC; BLACK CREEK CAPITAL CORPORATION; BROADMOOR CAPITAL PARTNERS, LLC; LEVEL 5 MOTORSPORTS, LLC; SCOTT A. TUCKER; PARK 269 LLC; KIM C. TUCKER, Defendants-Appellants, Ninth Circuit Court of appeals decision on December 3, 2018, case number No. 16-17197 The Ninth Circuit recently upheld a $1.27 billion award against a former professional racecar driver’s loan companies, finding that the companies had violated Section 5 of the FTC Act by deceiving consumers and illegally charging them undisclosed and inflated fees. The $1.27 billion judgement represents the largest litigated judgement ever obtained by the FTC. The…
Held: Late-Filed State Tax Return as Invalid
HELD: LATE-FILED STATE TAX RETURN AS INVALID; and because late-filed tax return was invalid, the taxes were not dischargeable, by debtor, in debtor’s bankruptcy case Kline v. Internal Revenue Service and Arkansas Department of Finance & Administration, 581 B.R. 597 (Bankr. W.D. Ark., 2018) In this case what has become known as the “McCoy rule” rearsits head again, and, like McCoy, it involves state income taxes, in particular taxes assessed by the Arkansas Department of Finance and Administration. The debtor filed his state tax returns years after they were due. The State challenged the dischargeability of the liabilities because the…
Supreme Court Approves Amendments to Bankruptcy Rules
Supreme Court Approves Amendments to Bankruptcy Rules; Those Amendments will go into effect on 12/1/18, unless (very unlikely to happen) the US Congress disapproves those Amendments. The U.S. Supreme Court earlier this year approved amendments to the Federal Rules of Bankruptcy Procedure that are expected to become effective on December 1, 2018. Many of the amendments are technical and are intended to conform the Bankruptcy Rules to recently amended rules of appellate and civil procedure. Bankruptcy Rules affected by the amendments include Rules 3002.1, 5005, 7004, 7062, 8002, 8006, 8007, 8010, 8011, 8013, 8015, 8016, 8017, 8021, 8022, 9025, and…
Cresta Technology Corporation
What date controls when a check is delivered before the debtor files bankruptcy, but is not cashed (honored) until after the debtor files bankruptcy: In In re Cresta Technology Corporation, 583 B.R. 224 (9th Cir. BAP 2018) the Bankruptcy Appellate Panel of the Ninth Circuit found, among other things, that a bankruptcy court did not err in finding that a check delivered pre-petition, but honored postpetition, constituted an unauthorized postpetition transfer recoverable by a chapter 7 trustee pursuant to 11 § USC 549. On March 16, 2016, appellant Matthew Lewis (“Appellant”), in his role as Chief Financial Officer (“CFO”) of…
Courts Split on Denying a Chapter 13 Discharge for Failure to Make Direct Payments
Bankruptcy Judges are Split on Whether or Not a Chapter 13 debtor should be denied a Chapter 13 discharge for debtor failing to pay mortgage/DOT payments that are to be paid direct to the secured lender, even though debtor has paid all the payments that were required to be paid through the debtor’s confirmed Chapter 13 plan. Issue is whether the “direct pay” payments are payments owed “under the chapter 13 plan” or not. Two bankruptcy judge decisions from Illinois illustrate the split among bankruptcy judges on whether or not a chapter 13 debtor who fails to make all direct…
Ninth and Fourth Circuits Issue Important Rulings on Sanctions and Exemptions
Ninth Circuit opinion is prime for Supreme Court review regarding the extent of a bankruptcy court’s contempt powers. The Ninth Circuit refused to rehear an appeal, setting up an opportunity for the Supreme Court to decide whether bankruptcy judges have constitutional power to impose sanctions as robust as Article III judges. Meanwhile, the Fourth Circuit aligned itself with the Fifth by holding that events after a chapter 7 filing cannot undermine a homestead exemption. In the Ninth Circuit case, a debtor defied a turnover order by refusing to cough up $1.4 million belonging to the estate. The bankruptcy judge imposed…