The Bankruptcy Law Firm, Prof. Corp.
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).…
Texxon Petrochemicals LLC v. Getty Leasing Inc. (In re Texxon Petrochemicals LLC), ___F.4th___ (5th Cir. May 3, 2023), appeal 22-40537
US 5th Circuit Court of Appeals holds, in an appeal in a bankruptcy case, that federal appellate Courts May Bypass Equitable Mootness to Rule on the Merits Even if an appeal is equitably moot, the appellate court nonetheless has appellate jurisdiction. Equitable mootness is prudential, not jurisdictional. When equitable mootness is a close question on appeal, the Fifth Circuit has ruled that an appellate court can bypass a motion to dismiss for equitable mootness and address the appeal on the merits. Why is that so? Because an appellate court does not lack constitutional or Article III jurisdiction, even if the…
Student Loans Didn’t Qualify as Commercial Debt for Sub V Eligibility
To be eligible to file a “SubV” Chapter 11 bankruptcy case, that “not less than 50% of the total debt” of the debtor must be “business debt”. But what constitutes “business debt”? In re Reis, – BR – (Bankruptcy Court, D. Idaho 5/2/23) discusses that question, and ruled two things: The business debt necessary to qualify for Subchapter V need not to have arisen from the debtor’s business at the time of filing, Bankruptcy Judge Meier says. Debtor’s student loan debt did NOT constitute business debt. Educational loans obtained to earn a professional degree will not qualify as arising from…
IRS Plans To Resume Collection Notices
As of April 29, 2023, the IRS said it had 3.8 million unprocessed individual returns. These include tax year 2022 returns, 2021 returns that need review or correction, and late filed prior-year returns. Of these, 2.4 million returns require special handling such as correcting errors. The agency has another 1.4 million paper returns to review and process. It takes the IRS over 21 days to issue a refund in these cases because they require special handling although an employee typically does not have to contact the taxpayer, the agency said. The General Accounting Office said in a report issued in…
US Supreme Court 4/19/23 decision
US Supreme Court 4/19/23 decision, in MOAC Mall Holdings LLC v. Transform Holdco LLC, ___ US ___, 2023 WL 2992693, at ∗1 (U.S. Apr. 19, 2023) holds that Bankruptcy Code section 11 U.S.C. § 363(m) is not jurisdictional, reversing the Second Circuit Court of Appeals and resolving a Circuit split over whether section § 363(m) limits appellate jurisdiction over § 363 sale orders or instead just limits the appellant’s remedies on appeal in the event there is a sale or lease to a good-faith purchaser or lessee. 11 USC 363(m) is the bankruptcy code section where the bankruptcy court makes…
CashCall, Inc. loses in 9th Circuit Court of Appeals decision
After years of litigation, lender “CashCall, Inc.” loses in 9th Circuit Court of Appeals decision, in case where Consumer Financial Protection Bureau (“CFPB”) wins, with result CashCall is Fined $167 Million For CFPA Violations [as reported in Credit & Collection e-newsletter of 4/13/23] This litigation between CFPB and CashCall, Inc. goes back to 2016, when a US District Court, Central District of California, granted judgment in favor of the Consumer Financial Protection Bureau (CFPB) in its long-running challenge to CashCall, Inc.’s tribal-lending operation. Specifically, the court found that CashCall engaged in unfair, deceptive, and abusive acts or practices in violation…
Credit & Collection e-newsletter reports that all sides could be losers in the litigation about the legality/lack of legality of how the federal agency, the Consumer Protection Financial Bureau (“CFPB”) is funded
The Consumer Financial Protection Bureau (CFPB) is at a crossroads. Rather than live up to its “independent” promise, the agency has been nothing short of a political football. There is plenty of blame to go around on both sides of the CFPB battle, but the legal maneuvering and the race to the Supreme Court is not the solution. Rather, now is the time for Congress to act like adults and find the remedy for the CFPB that will allow the agency to be true to its mission of protecting consumers while at the same time ensuring a robust and compliant…
Mazloom v Navient Solutions, LLC (In re Mazloom)
Mazloom v Navient Solutions, LLC (In re Mazloom), 648 B.R. 1 (Bankr. N.D.N.Y. 2023) is a 2023 bankruptcy case dealing with the question of whether private student loans made by Navient Credit Finance Corporation (Navient) are nondischargeable under Bankruptcy Code 11 USC § 523(a)(8). On cross summary judgment motions, by debtor and Navient, the Bankruptcy Court for the Northern District of New York (the Court) ruled (1) for the debtor that the loans were not “part of a program funded in part by the government” as required for nondischargeability under § 523(a)(8)(A)(i) but (2) for the creditor that the debtor’s…
Consumer Financial Protection Bureau (CFPB) has taken action against one of the largest debt collectors in the United States
Credit & Collection e-newsletter of 3/30/23 reports: On March 23, 2023, the Consumer Financial Protection Bureau (CFPB) has taken action against one of the largest debt collectors in the United States, Portfolio Recovery Associates (PRA), for various violations of law, including a 2015 CFPB order. In the complaint, the CFPB accused Portfolio Recovery Associates of violating numerous requirements of the 2015 order as well as engaging in deceptive conduct in violation of the Fair Debt Collection Practices Act and the Consumer Financial Protection Act, and violating the Fair Credit Reporting Act and its implementing Regulation V. The CFPB filed a…
Did One, or More than One, of the Many regulators–DFPI, FRB, FDIC, CFPB, FINRA and Nasdaq—which each had some responsibility for supervising/regulating the now failed Silicon Valley Bank, fall down on the job?
Silicon Valley Bank was chartered by the State of California and was subject to the supervision of the California Department of Financial Protection & Innovation. The DFPI was not the bank’s regulator. The bank had adopted a bank holding company structure and elected financial holding company status. Thus, the bank’s holding company, SVB Financial Group, was subject to primary regulation, supervision, and examination by the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended. The bank was subject to supervision and examination by the Federal Reserve and the DFPI. But wait, there’s more. The bank was…