The Bankruptcy Law Firm, Prof. Corp.
A US District Court Rules that the Consumer Financial Protection Bureau (“CFPB”) Lacked Authority To Bring Suit While Its Structure Was Unconstitutional
On March 26, the U.S. District Court for the District of Delaware dismissed a 2017 lawsuit filed by the CFPB against a collection of Delaware statutory trusts and their debt collector, ruling that the Bureau lacked enforcement authority to bring the action when its structure was unconstitutional. As previously covered by InfoBytes, the Bureau alleged the defendants filed lawsuits against consumers for private student loan debt that they could not prove was owed or that was outside the applicable statute of limitations, which allowed them to obtain over $21.7 million in judgments against consumers and collect an estimated $3.5 million…
In re Innerline Engineering, Inc.
In re Innerline Engineering, Inc., 6:21-bk-11349-WJ (Bankr. C.D. Cal. Mar. 31, 2021) Bankruptcy Court DENIED motion of bankruptcy debtor Innerline Engineering, Inc., which moved Bankruptcy Court to extend the debtor’s time to file debtor’s bankruptcy schedules, in the emergency SubV (Chapter 11 bankruptcy, 11 USC 1181 to 11 USC 1195 is the “SubchapterV part of Chapter 11): The United States Bankruptcy Court for the Central District of California (Judge Wayne Johnson) denied the motion of Chapter 11 debtor and debtor-in-possession Innerline Engineering, Inc., that moved to extend the time for Innerline Engineering to file its case initiation documents (schedules, etc),…
On 3/29/21, President Biden extended the National Eviction Moratorium through June 2021
On 3/29/21, President Biden extended the National Eviction Moratorium through June 2021. However, United States Courts are split on whether it is legal for the government to prohibit landlords from evicting tenants who fail to pay the landlords rent that the tenants owe the landlords, without the government paying that rent to the landlords. The legal argument is that the right of landlords to collect rent, per leases, is a property right, which cannot be taken away from landlords by the government, without the government paying the landlords for taking away the landlords’ right to evict nonpaying tenants, as allowed…
Gaske v. Satellite Restaurants Inc. Crabcake Factory USA (In re Satellite Restaurants Inc. Crabcake Factory USA), ___BR___ (Bankr. D. Md. March 19, 2021), bky case no. 21-00012 holds that Corporate Debtors in Subchapter V May Discharge 11 USC 523(a)
Only individuals in subchapter V of chapter 11 are barred from discharging debts found to be nondischargeable under Section 523(a). The first court to grapple with the new issue, Bankruptcy Judge Maria Ellena Chavez-Ruark of Greenbelt, Md., decided that corporate debtors in subchapter V of chapter 11 may discharge debts that would not be discharged under Section 523(a). In other words, according to Judge Ruark, only individual debtors in subchapter V are unable to discharge debts that are found to be excepted from discharge under Section 523(a). Before bankruptcy, more than a dozen former employees filed a wages and hours…
The Us Consumer Financial Protection Bureau (“CFPB”) Is “Encouraging” Banks and Debt Collectors Not To Take, From Consumers, Toward Paying Debts That Consumers Owe
The US Consumer Financial Protection Bureau (“CFPB”) is “encouraging” banks and debt collectors NOT to take, from consumers, toward paying debts that consumers owe, the $1,400 stimulus payments that the federal government is sending out to consumers, under the newest covid relief law. See below article. However, there is nothing in that newest covid relief law that prevents/prohibits banks and debt collectors from taking those $1,400 payments from consumers. Therefore, the CFBP “encouragement” is unlikely to be effective in keeping banks and debt collectors from taking those $1,400 payments from consumers. March 17, 2021WASHINGTON, D.C. – Consumer Financial Protection Bureau…
Educational Credit Management Corp. v. Goodvin, ___BR___ (US District Court Kansas 3/17/21) appeal from bankruptcy court to US District Court #20-1247
Many Bankruptcy Judges (here a bankruptcy judge in Kansas, affirmed on appeal by US District Court in Kansas) looked for and found way to discharge student loan debt, even though the wording of 11 USC 523(a)(8) only allows discharging student loan debt that is federal or federally insured (which is almost all student loan debt) if it would be an UNDUE hardship on the borrower (or the borrower’s dependents) if the borrower was required to repay the student loan debt, over the borrower’s whole working life. Decision turned on 2 things: (1) Inability to Cover Accruing Interest Was Pivotal on…
Kaiser et al v. Cascade Capital, LLC et al.
Kaiser et al v. Cascade Capital, LLC et al. , ___ F3rd.___, 2021 DJDAR 2171 (9th Circuit Court of Appeals, 3/11/21. This case holds that threatening to sue, or suing, a person or entity which owes a debt which is time barred t, constitutes a violation of the federal Fair Debt Collection Practices Act (“FDCPA”). This is a BIG change in the law: For decades, debt collectors have sued on time barred debts, and have claimed that a debt being time barred is an affirmative defense, which the person owing the debt must plead in the person’s answer, and prove,…
Tingling v. Educational Credit Management Corp. ___F.3d___ (In re Tingling), 20-757 (2d Cir. March 11, 2021)
Second Circuit Reaffirms the Strictures of Brunner case re. under what circumstances can student loan debts be discharged in a bankruptcy case Second Circuit insinuates that “undue hardship” and the Brunner test are synonymous. In 1987 when it handed down Brunner v. N.Y. State Higher Educ. Servs. Corp. (In re Brunner), 831 F.2d 395 (2d Cir. 1987), the Second Circuit claims to have anticipated legislative intent 10 years later when Congress adopted the current iteration of Section 523(a)(8), the statute that makes student loans nondischargeable except when the debtor suffers “undue hardship.” The debtor owed about $60,000 in student loans.…
Consumer Financial Protection Bureau (“CFPB”) Report: Housing insecurity and the COVID-19 pandemic (3/6/21)
In 2020, those who have fallen behind at least three months on their mortgage increased 250 percent to over 2 million households, and is now at a level not seen since the height of the Great Recession in 2010. Collectively, these households are estimated to owe almost $90 billion in deferred principal, interest, taxes and insurance payments.1 At the same time, we are facing a rental crisis, with over 8 million rental households behind in their rent. While there are significant differences from the last crisis, particularly a more stable mortgage market and substantial homeowner equity, there are a significant…
Edwards Family Partnership LP v. Johnson (In re Community Home Financial Services Inc.)
Edwards Family Partnership LP v. Johnson (In re Community Home Financial Services Inc.), ___F.3d___ (5th Circuit Court of Appeal, 3/5/21) appeal no. 20-60718: This is an additional Circuit holding that Trustees have standing to appeal, even if the Trustee has no pecuniary interest in the ruling being appealed. Cites 9th Circuit, 1st Circuit and 6th Circuit decisions that recognize “the inadequacy of a pecuniary-interest test for trustee standing.” Also cites a Fourth Circuit decision that says a trustee never has a pecuniary interest. Decision says that the Fifth Circuit had “implicitly recognized” the same principle. Decision observes that a “trustee’s…