The Bankruptcy Law Firm, Prof. Corp.
In re Piskiel, ___BR___ (Bankr. D.N.Mex 2-10-23), bky case no. 21-10717, discusses that Survivor’s Benefits Under a Pension Plan Might Not Become Property of the Bankruptcy Debtor’s “bankruptcy estate”
Unlike Clark v. Rameker, where an inherited IRA wasn’t exempt, the inheritance of benefits under a pension plan might not become estate property under Section 541(c)(2). Although the Supreme Court held in Clark v. Rameker, 573 U.S. 122 (2014), that an inherited individual retirement account is not exempt, the inheritance of survivor’s benefits under a pension plan can be excluded from a debtor’s bankrupt estate, for reasons explained by Bankruptcy Judge David T. Thuma of Albuquerque, N.M. In his February 10 opinion, Judge Thuma wasn’t required to decide whether the debtor’s survivor’s benefit was exempt. The debtor’s father worked for…
CFPB: 18% Drop Since 2020 in People with Reported Medical Debt
The number of people with medical debt on their credit reports fell by 8.2 million — or 17.9% — between 2020 and 2022, according to a report Tuesday from the U.S. Consumer Financial Protection Bureau (CFPB), the Associated Press reported. White House officials said in a separate draft report that the two-year drop likely stems from their policies. Among the programs they say contributed to less debt was an expansion of the Obama-era health care law that added 4.2 million people with some form of health insurance. In addition, local governments are leveraging $16 million in coronavirus relief funds to…
United States Federal Reserve reports that U.S. Household Debt Jumps to $16.90 Trillion in 4th Quarter of 2022
U.S. household debt jumped to a record $16.90 trillion from October through December last year, the largest quarterly increase in 20 years, as mortgage and credit card balances surged amid high inflation and rising interest rates, a Federal Reserve report showed on Thursday, Reuters reported. Household debt, which rose by $394 billion last quarter, is now $2.75 trillion higher than just before the COVID-19 pandemic began while the increase in credit card balances last December from one year prior was the largest since records began in 1999, the New York Fed’s quarterly household debt report also said. Mortgage debt increased…
Credit Card Debt Reaches A Record High Among U.S. Consumers reports 1/9/23 Credit & Collection E-Newsletter
Personal loans and credit card debt reached record levels in 2022 due to financial pressures brought on by high inflation and climbing interest rates, according to third-quarter data from a consumer credit reporting agency. Credit balances reached a record-setting $866 billion in the third quarter of last year – and they are expected to keep climbing, the report from TransUnion said. Meanwhile, personal loan originations are expected to return to pre-pandemic levels in 2023, after experiencing record growth in the last 12 months. Michele Raneri, vice president of research and consulting at TransUnion, said that despite mounting financial pressures, there’s…
Harris v. Creditmax Collection Agency Inc. (In re Warsco), ___F4th___(7th Cir. Jan. 9, 2023) appeal 22-1733
Date of a Garnishment Order Doesn’t Matter for Preferences, Seventh Circuit Says; Its date of payment that determines whether payment is made in more than or less than 90 days before bky filed Circuit Judge Frank Easterbrook tersely held that the Supreme Court’s Barnhill opinion overruled prior Seventh Circuit precedent. Overruling the Seventh Circuit’s own 1984 precedent in deference to the later-decided Barnhill v. Johnson, 503 U.S. 393 (1992), Circuit Judge Frank H. Easterbrook held that a judgment creditor is liable for a preference if the creditor collects on a garnishment within the 90-day preference window. Even though the garnishment…
Unlike in the Eleventh Circuit, Barton doctrine Is Alive and Well in the Fifth Circuit
In a case irreconcilable with two recent opinions from the Eleventh Circuit, the Fifth Circuit invokes Barton to bar a lawsuit against a trustee after the bankruptcy case had been closed. A stalwart defender of the Barton doctrine (that bankruptcy trustees cannot be sued without permission of bankruptcy court that appointed the trustee), the US Fifth Circuit Court of Appeal parted company with the US Eleventh Circuit Court of Appeal, by permitting a bankruptcy trustee to invoke Barton v. Barbour, 104 U.S. 126 (1881), and prevail on the bankruptcy court to dismiss a suit brought against the trustee in state…
American Bankruptcy Institute (“ABI”) reports that as of 1/1/23, 3 different lower level Courts have ordered the Office of US Trustee to Refund, to Bankruptcy Debtors, Increased US Trustee Fees that the Office of US Trustee charged debtors, but which the US Supreme Court held to be illegal in Siegel v. Fitzgerald (2022 decision)
All three courts to confront the question have now ordered the government to refund overpayments of U.S. Trustee fees. Last term, the Supreme Court held in Siegel v. Fitzgerald, 142 S. Ct. 1770 (Sup. Ct. June 6, 2022), that the 2018 increase in fees paid by chapter 11 debtors to the U.S. Trustee System was unconstitutional because it was not immediately applicable in the two states with Bankruptcy Administrators rather than U.S. Trustees. The Supreme Court left open the question of whether debtors are entitled to refunds. Id. at 1783. To read ABI’s report on Siegel, click here. Now, three…
LTA Claimholders Group v. LATAM Airlines Group S.A. (In re LATAM Airlines Group S.A.), ___F.4th___ (2d Cir. Dec. 14, 2022)
LTA Claimholders Group v. LATAM Airlines Group S.A. (In re LATAM Airlines Group S.A.), ___F.4th___ (2d Cir. Dec. 14, 2022), appeal 22-1940: Second Circuit Court of Appeal agrees with Ninth, Fifth and Third Circuits, that a claim is only “impaired” if a bankruptcy 13 or 11 plan changes that claims rights; and that an unsecured creditor of an insolvent debtor is not entitled to be paid post-petition interest by the debtor’s plan, where the plan treatment of that unsecured creditor’s claim is “unimpaired” Unimpaired, Unsecured Creditors Don’t Get Post-Petition Interest No “Circuit Split” occurred, because, because the Second Circuit agrees…
The New Report of the Consumer Financial Protection Bureau (“CFPB”), a US Government Agency, Finds Household Financial Health Is Declining After Several Years Of Increased Savings
In December 2022, a US federal agency, the Consumer Financial Protection Bureau (CFPB) released a new Making Ends Meet report that reports on the financial health of American households. Since 2019, the annual Making Ends Meet consumer surveys showed improvement in financial health during the first few years of the COVID-19 pandemic, due in part to a tight labor market, reductions in consumer spending, and access to pandemic-related relief programs. However, data from early 2022 revealed a decline in several key measures, as well as a rapid deterioration in financial health for Hispanic consumers, consumers under the age of 40,…
Federal Trade Commission (FTC) Halts Debt Relief Scheme That Bilked Millions From Consumers While Leaving Many Deeper In Debt
Credit & Collection 12/1/22 e-newsletter reports that the FTC has temporarily shut down a credit card debt relief scheme operated by Sean Austin, John Steven Huffman, and John Preston Thompson and their affiliated companies that allegedly took millions from people by falsely promising to eliminate or substantially reduce their credit card debt. “These defendants preyed on older Americans already struggling with credit card debt and caused them to fall into even worse debt, with lasting harm to their credit,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue going after companies that take advantage of…