The Bankruptcy Law Firm, Prof. Corp.
Commentary: The Aging Student Debtors of America
Americans aged 62 and older are the fastest-growing demographic of student borrowers, according to a commentary in the New Yorker. Of the 45 million Americans who hold student debt, one in five are more than 50 years old. Between 2004 and 2018, student loan balances for borrowers over 50 increased by 512 percent. Perhaps because policymakers have considered student debt as the burden of upwardly mobile young people, inaction has seemed a reasonable response, as if time itself will solve the problem. But in an era of declining wages and rising debt, Americans are not aging out of their student…
Stark v. Pryor (In re Stark), 20-4766 (E.D.N.Y. June 28, 2022): US District Court Judge Bars a “Short Sale”, Unless the bankruptcy debtor’s Homestead Exemption is paid in full
Reversing, a Long Island district judge credits value to a homeowner’s ability to delay foreclosure, taking a position contrary to a recent decision from a Ninth Circuit B.A.P. On an issue where the lower courts are split, a district judge on Long Island, N.Y., reversed the bankruptcy court by holding that a debtor is entitled to a homestead exemption in sale proceeds when the mortgage lender offers to buy the home and voluntarily takes a haircut designed to create an estate for unsecured creditors and the trustee’s commission. The debtor’s mortgage was long in default. After judgment of foreclosure, the…
MOAC Mall Holdings LLC v. Transform Holdco LLC (In re Sears Holdings Corp.) 20-1846 (US Supreme Court), and Bartenwerfer v. Buckley, 21-908 (US Supreme Court)
The US Supreme Court now has two bankruptcy cases on the calendar for argument in the term to begin in October, 2022. These are MOAC Mall Holdings LLC v. Transform Holdco LLC (In re Sears Holdings Corp.) 20-1846 (US Supreme Court), and Bartenwerfer v. Buckley, 21-908 (US Supreme Court). On 6/27/22, the US Supreme Court granted a petition for certiorari, ithe MOAC case, to decide whether the failure to obtain the stay of a sale approval order erects a jurisdictional bar to appeal under Section 363(m). The courts of appeals are split 6-2. Led by the Second Circuit, the minority…
President Biden Signed Into Law the Bill Raising the Debt Limit for Subchapter V of Chapter 11 and Chapter 13
On 6/21/22, President Biden signed into law the bill raising the debt limit for Subchapter V of Chapter 11 back to 7.5 million dollars, permanently, and raising the debt limit for ch13 to $2.75 million (total 2.75 million secured and unsecured debt, together). This is a beneficial and necessary change, including because the 2.75 million debt limit for Subchapter V of Chapter 11 was too low, and the debt limit for Chapter 13 (the individual wage earner repayment plan chapter of bankruptcy) was also too low, including because of high inflation.
In Older Americans, Rising Debt May Adversely Affect Health
The New York Times Newspaper reported on 6/5/22, updated 6/6/22, that research shows that debt has risen among older people, and those who owe are more likely to have multiple diagnosed illnesses. Denise Revel had a history of developing blood clots, so in 2011, when her leg grew painfully swollen and hot to the touch, she knew what to do. She headed for the emergency room. She recovered from the clot but could not pay the medical bill. Working as a fitness instructor, she had no health insurance. “I’ve always been financially challenged,” said Ms. Revel, 62, who lives with…
$5.8 Billion in Loans Will Be Forgiven for Corinthian Colleges Students
In its largest student loan forgiveness action ever, the Education Department said on Wednesday, 6/1/22, that it will wipe out $5.8 billion owed by 560,000 borrowers who attended Corinthian Colleges, one of the nation’s biggest for-profit college chains before Corinthian College collapsed in 2015, the New York Times reported.
Spark Factor Design Inc. v. Hjelmeset (In re Open Medicine Institute Inc.)
Spark Factor Design Inc. v. Hjelmeset (In re Open Medicine Institute Inc.), ___BR___ (B.A.P. 9th Cir. May 26, 2022), appeal no. 21-1233: Ninth Circuit BAP decision holds that a bankruptcy court does NOT always have to evaluate a settlement/proposed compromise as an 11 USC 363 sale, and NOT to require overbidding opportunity. If there are mutual claims, the Ninth Circuit BAP gives the court discretion not to evaluate a settlement as a sale. When considering approval of a compromise and settlement that includes a sale of estate property, the bankruptcy court sometimes has discretion not to evaluate the transaction as…
Consumer Financial Protection Bureau v. Cashcall, Inc.; WS Funding, LLC; Delbert Services Corporation; J. Paul Reddam,___F4th___ (9th Circuit Court of appeals 2022)
CahCall, Inc. made high interest, predatory, loans to consumers. CashCall, Inc., tried to avoid state usury laws by making loans through an LLC created by an Indian tribe. The loans had a built-in choice of law provision favoring tribal law. CashCall immediately bought all such loans and provided the funding. In litigation initiated by the Consumer Financial Protection Bureau (CFPB), the Central District Court of California (the District Court) tossed out the choice of law provision and found CashCall liable for an “unfair, deceptive, or abusive act” based on the state law violations but restricted its award of damages. In…
Bartenwerfer v. Buckley
Bartenwerfer v. Buckley, 21-908 (US Supreme Court 5/4/22.): The United States Supreme Court on 5/4/22 granted a Petition for Certiorari, to hear and rule, in Bartenwerfer v. Buckley, on whether or not a Principal’s liability, for the fraud committed by the principal’s agent, makes the debt from that fraud NONdischargeable as to the Principal, if the Principal files bankruptcy. One assumes that principals often? Always? Claim they were not aware that their Agent was committing a fraud. The US Circuit Courts are split on whether an innocent debtor’s liability is automatically nondischargeable when an agent or partner committed fraud. The…
Bartenwerfer v. Buckley, 2022 U.S. LEXIS 2331 (May 2, 2022)
Bartenwerfer v. Buckley, 2022 U.S. LEXIS 2331 (May 2, 2022): On May 2, 2022, the US Supreme Court granted a petition for certiorari, to hear a nondischargeability case. Certiorari was presumably granted, by the US Supreme Court, so that the US Supreme Court can resolve the split between the Ninth Circuit and the Eight Circuit as to whether fraudulent intent may be imputed to a debtor for the purpose of section 523(a)(2)(A) based on a partnership relationship, but without proof that the debtor knew or should have known of the fraud or false representation.