The Bankruptcy Law Firm, Prof. Corp.
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…
Ryan v. Branko Prpa MD, LLC, 55 F.4th 1108 (7th Cir. 2022)
Ryan v. Branko Prpa MD, LLC, 55 F.4th 1108 (7th Cir. 2022): The US Seventh Circuit Court of Appeals (the Court) recently held that an order, which arose from a workers’ compensation action, directing a debtor’s employer to deposit funds in debtor’s lawyer’s trust account for payments to medical creditors created an express trust such that the funds were excluded from the debtor’s chapter 7 bankruptcy estate and he was not entitled to claim an exemption in them. FACTS Debtor Rodney Ryan (Ryan) was injured on the job and sought worker’s compensation in Wisconsin for his injuries. He settled the…
American Bankruptcy Institute 3/21/23 e-article reports that Anxiety Strikes $8 Trillion Mortgage-Debt Market After Silicon Valley Bank (“SVB”) Collapse Last Week
Strains in the banking sector are roiling a roughly $8 trillion bond market considered almost as safe as U.S. government bonds, the Wall Street Journal reported. So-called agency mortgage bonds are widely held by banks, insurers and bond funds because they are backed by the mortgage loans from government-owned lenders Fannie Mae and Freddie Mac. The bonds are far less likely to default than most debt and are easy to buy and sell quickly, a crucial reason they were Silicon Valley Bank’s biggest investment before it foundered. But agency mortgage-backed securities, like all long-term bonds, are vulnerable to rising interest…
Summerlin v. Turnage, a 3/14/23 USDC, WDNC, District Court decision in a bky appeal, in which US District Ct affirms refusal of Bky Judge to allow a (nasty) trustee tactic, by which Trustee sought, by a deal with a junior secured lender, to achieve a sale of debtor’s home, but Eradicate debtor’s Homestead Exemption
District Court decision holds that subordinated lenders can’t take a ‘haircut,’ give a ‘tip’ to the trustee, sell a home and eradicate the debtor’s homestead exemption. Employing the most vituperative language employed so far to nix the strategy, a district judge in North Carolina affirmed Bankruptcy Judge Laura T. Beyer, who had barred secured creditors from taking haircuts so the trustee could pay his commission and make a small distribution to general creditors while cheating the debtor out of her homestead exemption. In his March 13 opinion, Statesville, N.C.’s District Judge Kenneth D. Bell called the proposal a “backroom deal,”…
Harrington v. Mayer (In re Mayer), 20-56340 (9th Cir. Ct of Appeals, issued March 8, 2022), and Harrington v. Mayer (In re Mayer), 20-56340 (9th Cir. Ct. of Appeals, issued March 8, 2022)
Denial of Stay Modification Without Prejudice Can Be Final, Ninth Circuit Says In a 3/8/22 decision, the Ninth Circuit Court of Appeals answered a question left open by the Supreme Court in Ritzen. Reaching an issue the Supreme Court left undecided in Ritzen, the Ninth Circuit held that denial of a stay-relief motion without prejudice can still be a final, appealable order. The appeals court looked beyond the “without prejudice” label placed on the order by the bankruptcy court to decide whether denial of the motion meant that the creditor would not have stay relief for the purpose sought by…
In re Mack, ___BR___, 2023 WL 2397345
In re Mack, ___BR___, 2023 WL 2397345 (B.A.P. 9th Cir. Mar. 7, 2023), that demonstrates the dangers of trying to use a state court default judgment as basis for nondischargeability. Practice pointer: Be sure the default judgment says everything it needs to say, to prove up all elements you need to prove, to prove whichever kind of nondischargeability you are trying to prove via the state court default judgment. If the default judgment does NOT have everything you need, your nondischargeability complaint needs to request for trial in bky ct. In Mack, the state court default judgment did NOT say…
Department of Justice and Department of Education Released New Guidance for Stipulating to the Discharge of Federal Student Loans in Bankruptcy
NACBA (National Association of Consumer Bankruptcy Attorneys) reports that in November of 2022, the Department of Justice and Department of Education released new guidance for stipulating to the discharge of federal student loans in bankruptcy. These new guidelines direct DOJ attorneys to stipulate to the facts demonstrating that a debt would impose an undue hardship and recommend to the court that a debtor’s student loans be discharged under certain circumstances under a much less draconian standard and on a much more predictable basis. Comment of The Bankruptcy Law Firm, PC on 3/5/23: Attorneys who predict what the US Supreme Court…
Fidelity & Deposit Co. of Maryland v. TRG Venture Two LLC (In re Kimball Hill Inc.),___F4th___ (7th Cir. March 3, 2023), appeal 22-1724
Fidelity & Deposit Co. of Maryland v. TRG Venture Two LLC (In re Kimball Hill Inc.),___F4th___ (7th Cir. March 3, 2023), appeal 22-1724: US Court of Appeals for the Seventh Circuit Upholds Bankruptcy Court Order that orders a creditor to pay $9.5 Million in Sanctions, for creditor knowingly and intentionally violating the Plan Injunction in a confirmed Chapter 11 bankruptcy plan. The bonding company creditor was sanctioned $9.5 million dollars because it “ignored the confirmation order, which, by its terms, extinguished any rights to seek to recover, outside of the bankruptcy proceedings, the liabilities that the bankruptcy debtor owed the…