News
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…
Americans’ Credit Card Balances Hit New Peak
Credit & Collection e-newsletter of 8/28/23 reports that Americans’ credit card balances rose briskly in the second quarter of 2023, hitting a sobering milestone of more than $1 trillion, the Federal Reserve Bank of New York reported this month. Credit cards are the most prevalent type of household debt, New York Fed researchers wrote in a blog post, and saw the biggest increase of all debt types. More than two-thirds of Americans had a credit card in the second quarter, up from 59% roughly a decade earlier, the researchers found. And, they noted, card balances were more than 16% higher…
Credit Card And Car Loan Delinquencies Surpass Pre-Pandemic Levels
Credit & Collection e-newsletter of 8/15/23 reports that Credit Card And Car Loan Delinquencies Surpass Pre-Pandemic Levels More Americans are falling behind on their credit card payments. Driving the news: The rate of new credit card delinquencies has surpassed its pre-COVID level, clocking in at 7.2% in the second quarter, per a report out this month from the New York Fed. Auto loan delinquencies were at 7.3% in Q2, also higher than pre-pandemic levels. Meanwhile, mortgage delinquencies remain very low. Why it matters: Even as inflation declines, Americans are increasingly relying on credit cards to make their budgets work —…
On 8/10/23 the U.S. Supreme Court announced it will review confirmation of the Purdue Pharma LP chapter 11 plan and decide
“Whether the Bankruptcy Code authorizes a court to approve, as part of a plan of reorganization under Chapter 11 of the Bankruptcy Code, a release that extinguishes claims held by nondebtors against nondebtor third parties, without the claimants’ consent.” This issue does not only affect the Purdue Pharma Ch11 plan, where the non-debtor Sackler family members received non-consensual releases in exchange for contributing several billion dollars to fund the Purdue Pharma Ch11 plan. Cases where a subsidiary is created and the subsidiary files bankruptcy (like J&J, which twice set up, and had a subsidiary file bankruptcy, to seek to discharge…
RS Air LLC v. NetJets Aviation Inc. 9th Circ BAP
An Alter Ego Suit Doesn’t Violate the Discharge Injunction, BAP Says At least where nondebtor releases are prohibited, and if Delaware law controls, a suit against an alter ego doesn’t violate the discharge injunction, the Ninth Circuit BAP says. At least when Delaware law controls, suing an alter ego does not violate the discharge injunction protecting a corporate debtor, according to the Ninth Circuit Bankruptcy Appellate Panel. The corporate debtor owned a partial interest in aircraft. The corporation filed a petition under Subchapter V of chapter 11. The entity that sold the aircraft to the corporate debtor had a claim…
Debt Owed by America’s Consumers Hits New Record Of More Than $17 Trillion
As Americans dealt with high inflation and recession fears, they also faced record debt, according to the latest data by the New York Fed. Total household debt increased to $17.05 trillion in the first quarter of 2023, the NY Fed reported. That marked an increase of $148 billion quarter-over-quarter. Overall, America’s debt balance now stands about $2.9 trillion above where it was at the close of 2019, right before the COVID-19 recession. Credit card balances remained flat at $986 billion, the NY Fed said. Nonetheless, credit card debt remains at record highs, according to the Consumer Financial Protection Bureau (CFPB).…