The Bankruptcy Law Firm, Prof. Corp.
Debt Collection Activities Through the Treasury Offset Program (TOP)
The Social Security Administration (SSA) announced on Thursday that it will immediately resume debt collection activities through the Treasury Offset Program (TOP) that had been paused since 2020, reports Credit and Collection e-newsletter of 3/23/25. Why It Matters The move marks a shift in agency policy as the SSA looks to strengthen program integrity and reduce financial shortfalls. It comes as part of President Donald Trump‘s broader initiative to reduce government spending and eliminate inefficiencies. The Department of Government Efficiency (DOGE), established under his administration, has played a key role in identifying areas for budget reductions across federal departments and…
In Re Village Oaks Senior Care LLC, 664 B.R. 170 (E.D. CA 2024)
In In Re Village Oaks Senior Care LLC, 664 B.R. 170 (E.D. CA 2024), the trial court sustained the creditor’s objection to the Debtors’ eligibility as Subchapter V debtors and de-designated them as chapter 11 cases, after finding that the objecting creditor had not forfeited or waived her ability to challenge the debtors’ eligibility. To read the full decision, click here. Facts This case involved three related debtors– Village Oaks Senior Care, LLC, El Dorado Senior Care, LLC and Benjamin L. Foulk (“Dr. Foulk”). Dr. Foulk was the 100% owner of Village Oaks and El Dorado. Gina MacDonald (“MacDonald” or…
In re Raocore Technology LLC, ___ BR___ (Bankr. D.D.C. Jan. 28, 2025) bky case 24-00065
In re Raocore Technology LLC, ___ BR___ (Bankr. D.D.C. Jan. 28, 2025) bky case 24-00065: denied so called ‘Evergreen’ Retainer that SubV Chapter 11 debtor had agreed to pay its bankruptcy attorneys, and explains that ‘evergreen’ retainers are Ok Only in ‘Exceptional’ Sub V Cases Washington, D.C. Bankruptcy Judge Elizabeth Gunn describes the procedures to employ for approval and operation of an ‘evergreen’ retainer in chapter 11. In Washington, D.C., it seems unlikely that Gunn will countenance a so-called evergreen retainer in a chapter 11 case where “approval would essentially authorize the [debtor’s counsel] to write themselves a blank check…
American Bankruptcy Institute 2/4/25 newsletter reports Direct Lenders Face Rising Default Risks, Analysis Firm KBRA Says
Direct lenders face rising default risks in 2025, with 5% of middle-market borrowers struggling under heavy debt and worsening business performance, according to a quarterly report by credit rating analysis firm KBRA, WSJ Pro Bankruptcy reported. The prolonged high-interest-rate environment has put pressure on certain sectors, based on KBRA’s analysis of 1,903 private-equity-owned middle-market companies in the U.S. and Europe that hold a collective $922 billion in debt. Housing, construction, discretionary retail and physician practices are among the industries most susceptible to inflation and elevated borrowing costs, said John Sage, one of the lead authors of the report. Specifically, highly…
Saldana v. Bronitsky (In re Saldana), 122 F.4th 333 (9th Cir. Nov. 22, 2024)
In Saldana v. Bronitsky (In re Saldana), 122 F.4th 333 (9th Cir. Nov. 22, 2024), the Ninth Circuit Court of Appeal (“Ninth Circuit”), in a 2-1 decision, reversed a prior holding by the Ninth Circuit Bankruptcy Appellate Panel (“BAP”). The Ninth Circuit, in Saldana, held that voluntary contributions to employer-managed retirement plans are not disposable income which must be included in determining minimum required payments to creditors in a debtor’s Chapter 13 plan. The Ninth Circuit’s ruling creates a circuit split, because US Circuit Courts in Circuits other than the Ninth Circuit, have ruled opposite to how the Ninth Circuit…
California Bill—if passed by California state legislature and if signed into law by Governor Newsom–Would Provide a Year of Mortgage Relief to Fire Victims
[as reported in the Credit & Collection e-newsletter of 1/29/25] The proposed legislation which has been introduced in the California Legislature, after the Palisades and Eaton fires of January 2025, if passed by the California Legislature, and signed into law by the Governor, would block foreclosures and allow homeowners who’ve suffered financially due to the L.A. fires to freeze payments without penalty. Several major lenders have already reached agreement with Gov. Gavin Newsom to provide voluntary relief. If it becomes CA law, this CA state legislation that would make it easier for victims of the Los Angeles County fires to…
In re 301 W. North Ave. LLC, ___BR___(Bankruptcy Court. N.D. Ill. Jan. 6, 2025)
In re 301 W. North Ave. LLC, ___BR___(Bankruptcy Court. N.D. Ill. Jan. 6, 2025), bankruptcy case 24-2741, reports on a trick (and legal, and not against public policy) way for a lender to prevent a borrower which is a corporation, or a LLC, from being able to file bankruptcy, if/when the borrower defaults on paying the lender back for the loan that the borrower borrowed from the lender. Companies Can Be ‘Bankruptcy Remote,’ if Properly Done Bankruptcy Judge David Cleary wrote a manual on how a company can be prevented from filing bankruptcy (sometimes referred to as making the company…
California Emergency Declaration: Impact on Collection Operations
Credit & Collection e-newsletter of 1/9/25 at 11:59 pm suggests credit collection agencies may want to make accommodations for borrowers, such as payment accommodations, such as deferrals or extensions, and loan modifications to the rate or term, due to state of emergency declared in Los Angeles county due to wildfire damage, but it appears giving borrowers accommodations is not mandatory: Gov. Gavin Newsom declared a state of emergency as wildfires rage. ACA members should have plans in place to modify consumer outreach strategies and monitor areas with disaster declarations. The Los Angeles-area wildfires, expected to cause $50 billion in damages…
Gramigna v. Roumeliotis (In re Gramigna), __BR__ (Bankr. D. Conn. Dec. 20, 2024), case 24-50464
A Mortgage Deficiency Judgment Is a Judicial Lien Subject to Avoidance Under § 522(f) A deficiency judgment resulting from mortgage foreclosure is not ‘a judgment arising out of a mortgage foreclosure’ and can be avoided as a judgment lien. In a somewhat similar situation, Bankruptcy Judge Mina Nami Khorrami of Columbus, Ohio, decided that a consensual judgment results in a judicial lien that can be avoided as an encumbrance on an exemption under Section 522(f). Gramigna holds a deficiency judgment arising from mortgage foreclosure is also a judgment lien subject to avoidance and does not fall under the exception to…
US Credit Card Defaults Surge To $46B In First 9 Months Of 2024
Credit & Collection e-newsletter of 1/3/25 says that US credit card defaults have reportedly surged to $46 billion in the first 9 months of 2024, which is said to be the highest since 2010. Credit card defaults are now up more than 50% year-over-year. And defaults of seriously delinquent credit card loan balances have more than doubled during the past 2 years. Notably, the bottom-income consumers were hit the hardest “due to years of elevated inflation and interest rates.” In addition to this, the savings rate of the bottom third is now 0%, according to the latest update from Moody’s.…