News
American Bankruptcy Institute (“ABI”) 5/23/24 e-newsletter reports that Borrowers, especially the young, struggle with credit card debt in potentially bad sign for economy
NEW YORK (AP) — Consumers are increasingly struggling to pay their credit card bills, raising concerns about severe delinquencies spiraling and sapping consumer spending. The share of credit card debt that’s more than 90 days overdue rose to 10.7% during the first quarter, a 14-year high, according to the Federal Reserve Bank of New York’s report on first-quarter household debt. A year ago severe delinquencies totaled only 8.2% of credit card debt. The first-quarter jump in severe delinquencies was the biggest since 2011. Meanwhile total credit card debt rose to $1.12 trillion from just under $1 trillion a year ago.…
American Bankruptcy Institute (“ABI”) Task Force on Subchapter V Chapter 11 cases, issues its Final Report on 4/23/24
Following is a summary of the Report: Overall The Task Force undertook an in-depth study of Subchapter V statutes and case law, analyzed empirical data, and heard from major bankruptcy constituents. Overall, the Task Force finds that: Subchapter V is working as Congress intended, allowing smaller companies to reorganize and pay creditors; and Subchapter V statutes and practices could benefit from refinement or statutory amendment. Background Smaller businesses are the core of the U.S. economy: U.S. has 33.2 million small businesses, employing over 61 million people and 46% of all private sector employees; but 50% of small businesses fail in…
Americans Are Falling Behind On Their Payments
[reports Credit & Collection 4/25/24 e-newletter, repeating what CNN said] America’s relentless spending has kept the economy motoring. But it’s starting to worry some observers. Chicago Federal Reserve President Austan Goolsbee said Friday that while consumer debt levels aren’t yet “especially” high, the Fed is concerned about the rate of consumer delinquencies, or missed or late payments on expenses such as auto loans, credit card bills and rent. “If the delinquency rate of consumer loans starts rising, that is often a leading indicator for, ‘things are about to get worse,’” he said at a moderated panel hosted by the Society…
RE: CHAPTER 13 FEES Case RARA (“no look”) fees for attorneys representing debtors in Chapter 13 cases Increase effective 5/1/24
RE: CHAPTER 13 FEES Case RARA (“no look”) fees for attorneys representing debtors in Chapter 13 cases Increase effective 5/1/24 The US Bankruptcy Court for the Central District of California has approved increases, effective 5/1/24, in the amounts attorneys for chapter 13 debtors may charge if they execute and file a Rights and Responsibilities Agreement Between Chapter 13 Debtors and Their Attorneys, LBR Form 3015-1.RARA (RARA). For chapter 13 cases filed on or after May 1, 2024, the maximum no-look RARA fees have increased from $6,000 to $8,500 for cases involving a business. For chapter 13 cases involving non-business debtors,…
American Bankruptcy Institute (“ABI”) on 4/11/24 reports Credit Card Delinquency Rates Were Worst on Record in Fed Study
A Federal Reserve Bank of Philadelphia report found that U.S. credit card delinquency rates were the highest on record in the fourth quarter, Reuters reported. Almost 3.5% of card balances were at least 30 days past due as of the end of December, the Philadelphia Fed said. That’s the highest figure in the data series going back to 2012, and up by about 30 basis points from the previous quarter. The share of debts that are 60 and 90 days late also climbed. “Stress among cardholders was further underscored in payment behavior, as the share of accounts making minimum payments…
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…
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…