News
BankBeat, a digital publication whose audience is mainly banks and other credit card issuer, on 3/14/24 reports, in an article by BankBeat’s digital managing editor, Sam Wilmes, that the Consumer Financial Protection Bureau’s (“CFPB”) newly adopted rule forbidding credit card late fees of more than $8 “Ignores Reality”
The Consumer Financial Protection Bureau’s recent capping of credit card late fees at $8 continues the bureau’s erroneous view of the expense as an unnecessary “junk fee.” The rule also ignores two foreseeable unintended consequences: A rise in instantly declined transactions and reduced customer access to credit lines and credit card reward programs. Finalized March 5, the rule reduces the typical credit card late fee 75 percent from the usual $32 for credit card issuers with more than 1 million open accounts. The CFPB claims limiting late fees will save American families more than $14 billion annually. Alluding to the…
American Bankruptcy Institute Reports that SPAC Companies Accounted for at Least 21 Bankruptcies this Year (2023) and $46 Billion in Lost Investor Value
Wall Street’s affair with blank-check firms, the finance fad that pushed companies onto the stock market during the COVID-19 pandemic, ended this year with a string of big bankruptcies and even bigger losses for shareholders, Fortune reported. At least 21 firms that went public by merging with special purpose acquisition companies, or SPACs, went bankrupt this year, according to data compiled by Bloomberg. Measured from their peak market capitalizations, the insolvencies bookend the loss of more than $46 billion of total equity value. The failures span money-losing electric vehicle startups and forward-thinking farming companies. Blank-check firms were good at propelling…
“National Guard and Reservists Debt Relief Extension Act of 2023” Signed into Law
The “National Guard and Reservists Debt Relief Extension Act of 2023” (H.R. 3315) was signed into law yesterday by President Biden after passing the Senate on Monday and the House of Representatives on Dec. 11.
Supreme Court Seems Dubious About Purdue’s Nonconsensual, Nondebtor Releases
At oral argument, by the US Supreme Court, on 12/4/23, of the Harrington v. Purdue Pharma LP appeal, which is an appeal about whether nonconsensual, releases of non-debtors, are allowed to be contained in a Chapter 11 plan, the Supreme Court justices seemed skeptical. The justices were focused on whether the word “appropriate” in Section 1123(b)(6) allows chapter 11 plans to include nonconsensual, nondebtor third-party releases. The justices were not unreceptive to the argument that creditors with claims related to opioid addiction may receive nothing if the Court reverses the Second Circuit and sets aside confirmation of Purdue’s chapter 11…
ABI Releases Preliminary Report Recommending Congress Maintain the $7.5 Million Debt Eligibility Limit for Small Businesses Looking to Reorganize Under Subchapter V
The American Bankruptcy Institute (ABI) Subchapter V Task Force today released its “Preliminary Report of ABI’s Subchapter V Task Force on Maintaining the $7,500,000 Debt Cap for Subchapter V Eligibility” with findings to support permanently maintaining the eligibility limit of $7.5 million in aggregate noncontingent, liquidated debt for small businesses looking to reorganize under subchapter V.
Amendments to Federal Bankruptcy Rules and Forms Effective 12/1/22
The following amended and new Bankruptcy Rules and Forms became effective on 12/1/22, in bankruptcy cases, motions, and adversary proceedings, nationwide: Bankruptcy Rules 1007, 1020, 2009, 2012, 2015, 3002, 3010, 3011, 3014, 3016, 3017.1, 3018, 3019, 5005, 7004 and 8023; new Rule 3017.2; and Official Forms 101, 309E1 and 309E2. The Judicial Conference of the United States on Sept. 28, 2021, approved the proposed amendments to the Federal Rules of Bankruptcy Procedure Bankruptcy Rules and official Bankruptcy Forms. The proposed amendments were transmitted to the Supreme Court on October 18, 2021. The Supreme Court adopted these proposed amendments and transmitted…
It Is Very Difficult to Discharge Student Loans In Bankruptcy
Credit & Collection e-newsletter reports that on 11/16/22, the Biden administration on Thursday unveiled unprecedented policy changes designed to make it easier for federal student loan borrowers to discharge their student debt in bankruptcy. Here are the details, as reported in the Article: It Is Very Difficult to Discharge Student Loans In Bankruptcy While it is by no means impossible for borrowers to discharge their student loans in bankruptcy, it can be quite difficult. Student loans are treated differently in bankruptcy from other consumer debts, like medical bills and credit card debts. Under the bankruptcy code, student loan borrowers generally…
US Supreme Court on 10/3/23 heard argument regarding whether the way the federal Consumer Financial Protection Bureau (“CFPB”) is funded is unconstitutional
Credit & Collection e-newsletter of 10/3/23 reports: The fate of the CFPB, and other agencies that are similarly funded, is now “under submission” to the U.S. Supreme Court. If you have a mortgage or a loan or a credit card, you likely have more protection from deceptive practices in the financial services industry today than you did at the time of the 2008 financial crash. Now, however, those protections could be in doubt. On Tuesday, the U.S. Supreme Court hears arguments in a major case that could threaten the very existence of the Consumer Financial Protection Bureau and potentially numerous…
American Bankruptcy Institute (“ABI”) 9/28/23 Article reports that in some SubV Chapter 11 cases, the SubV Trustees are NOT getting their fees paid
A relatively new bankruptcy law, frequently used by mom-and-pop businesses during the pandemic, has largely been considered a success—but not always for some of the lawyers supervising these job-saving cases. Los Angeles bankruptcy lawyer Susan Seflin has served as trustee in more than 40 reorganization cases filed under subchapter V, otherwise known as the Small Business Reorganization Act, since it took effect. Seflin said at a recent American Bankruptcy Institute, or ABI, discussion that, in roughly a quarter of those bankruptcies, “I haven’t gotten paid and I don’t think I will get paid.” “That’s a pretty big loss,” she said,…
Auto Loans Pass Student Loans in Consumer Debt Load, Fed Data Shows
Auto loans have moved past student loans this year as the second-largest debt burden for consumers, at $1.582 trillion compared with $1.569 trillion for student loans, according to Federal Reserve Bank of New York data, WSJ Pro Bankruptcy reported. At $12 trillion, mortgages are the largest debt for consumers. Consumers had owed more in student loans than auto loans since early 2010, when a surge of college students, some of whom lost jobs in the financial crisis and sought education and new training, led to big student loan borrowing. But the U.S. government froze payments and interest on federal student…