News
American Bankruptcy Institute reports that a Bill has been introduced in the US Senate on 3/14/22, called “Bankruptcy Threshold Adjustment and Technical Corrections Act”
Introduced by Senator Charles Grassley (R-Iowa). The Bill, S. 3823, if it was passed by Senate, and by House, and if signed into law by President Biden, would permanently set the debt limit at $7.5 million for small businesses electing to file for bankruptcy under subchapter V of chapter 11. Consistent with the recommendations of ABI’s Commission on Consumer Bankruptcy, the bill also would raise the debt limit for individual chapter 13 filings to $2.75 million and remove the distinction between secured and unsecured debt for that calculation.
ABI Analysis: The $1.7 Billion Student Loan Deal that Was Too Good to Be True
ABI Analysis: The $1.7 Billion Student Loan Deal that Was Too Good to Be True, because hundreds of thousands of borrowers still have to pay back the predatory, high interest rate, educational loans: Even though prosecutors said Navient had made predatory loans to hundreds of thousands of borrowers it knew couldn’t afford them, the $1.7 billion settlement the lender made last month with 39 states covered only about 66,000 who were in default. Those who managed to make the payments on their deceptive, high-interest debt — mostly to attend for-profit schools that left them with worthless degrees — would just…
Article reports Landlords finding ways to evict tenants, after the landlord receives government rental aid
A day before she was due to be evicted in November 2021 from her Atlanta home, Shanelle King heard that she had been awarded about $15,000 in rental assistance. She could breathe again. But then the 43-year-old hairdresser got a letter last month from her landlord saying the company was canceling her lease in March —- seven months early — without any explanation. “I’m really pissed about it. I thought I would be comfortable again back in my home,” said King, whose work dried up during the pandemic and who now worries about finding another apartment she can afford. “Here…
California Adopts New Debt Collection Regulations (as reported in 2/11/22 Credit & Collection E-Newsletter)
New regulations from the California Department of Financial Protection and Innovation (Department) affecting licensure of debt collectors became effective as of January 1, 2022. The regulations provide the process and requirements to apply for a license as a debt collector, including application through the NMLS, and specify the acts that constitute grounds for license denial. The California Debt Collection Licensing Act (the Act) prohibits any person from engaging in the business of consumer debt collection without a license from the Department and authorizes the Department to adopt rules to administer the Act. Among other provisions, the recently effective rules require…
Senate Judiciary Subcommittee Hearing, held in February 2022, Takes Aim at “Texas Two-Step” Strategy to Shift Liabilities in Bankruptcy
American Bankruptcy Institute Reports that US Senate Judiciary Subcommittee Hearing, held in February 2022, Takes Aim at “Texas Two-Step” Strategy to Shift Liabilities in Bankruptcy: The Senate Judiciary Subcommittee on Federal Courts, Oversight, Agency Action and Federal Rights held a hearing last week titled, “Abusing Chapter 11: Corporate Efforts to Side-Step Accountability Through Bankruptcy.” The “abuse” being discussed in corporations, setting up a new corporation, putting product liability claims into the new corporation, and then having the new corporation file bankruptcy, to try to use bankruptcy to stay product liability litigation (like the J& J talc cancer litigation) and to…
Provisions in the CARES Act
On March 28, 2022, certain provisions in the CARES Act expire. Importantly for insolvency practitioners, the amount of eligible debt permissible for a debtor to file under Subchapter V of Chapter 11-the simpler, faster, less expensive, better for debtors kind of chapter 11 bankruptcy case–decreases from $7,500,000, back to the original amount of $2,725,625. It is uncertain whether Congress will extend this provision before it expires. If Congress does not pass legislation extending the $7,500,000 amount, or President Biden does not sign such legislation passed by Congress into law, before March 28, 2022, then the maximum allowable debt amount, for…
California’s Debt Collection Licensing Act Creates Uncertainty
California’s new Debt Collection Licensing Act, Cal. Fin. Code § 100000 et seq., took effect on January 1, 2022. However, the legislature’s inartful and inconsistent draftsmanship has resulted in a great deal of uncertainty over who exactly must be licensed. Section 100001(a) provides that “no person shall engage in the business of debt collection in this state without first obtaining a license . . .”. Section 100005 authorizes the Commissioner of Financial Protection & Innovation to take specified enforcement actions if in her opinion ” a person who is required to be licensed under this division is engaged in business…
US Solicitor General Urges US Supreme Court to Review Constitutionality of the 2018 Increase in U.S. Trustee Fees
On 12/08/21, the U.S. Solicitor General urged the Supreme Court to grant certiorari, resolve a circuit split and decide whether the increase in fees payable to the U.S. Trustee system in 2018 violated the uniformity aspect of the Bankruptcy Clause of the Constitution because it was not immediately applicable in the two states that have bankruptcy administrators rather than U.S. Trustees.
Key Provisions in the Federal CARES Act
A key provisions in the federal CARES Act expires on March 28, 2022. Specifically, the maximum amount of debt a debtor can owe, and still be eligible to file bankruptcy in Subchapter V of Chapter 11, will decrease from $7.5 million, back to the original maximum debt amount of $2,725,625. It is uncertain whether Congress will extend this provision before it expires. The opportunity for a person or entity to file Subchapter V Chapter 11 (the simpler, faster, cheaper, more favorable for debtors kind of Chapter 11 bankruptcy case), where the debtor owes up to 7.5 million dollars of debt,…
In re Moore
As discussed in In re Moore, a recent Bankruptcy Court decision, cases and bankruptcy treatises are split on the question of whether or not a debtor who proposes a Chapter 13 plan which provides to pay 100% of what debtor owes to general unsecured creditors, is NOT entitled to have the Bankruptcy Judge confirm (aka approve) the Chapter 13 Plan, so it goes into effect, binding debtor and creditors, unless the Plan provides to pay general unsecured creditors interest, on their general unsecured claims, over the life of the Chapter 13 Plan,where the Debot is not devoting all the debtor’s…