The Bankruptcy Law Firm, Prof. Corp.
Increase In Applications for Unemployment Benefits
Wall Street Journal, on 3/26/20, reports that a record 3.28 million workers applied for unemployment benefits last week as the new coronavirus hit the economy, ending a decade long job expansion.
Mortgage Lenders Fannie Mae, and Freddie Mac To Suspend Foreclosures Through April
Mortgage lenders Fannie Mae and Freddie Mac will suspend foreclosures and evictions for at least 60 days as federal and business leaders respond to the growing COVID-19 crisis that will cost people their jobs and likely tip the economy into a recession. In a statement Wednesday, the Federal Housing Finance Agency said the suspension by the mortgage giants applies to homeowners with a single-family mortgage, backed by either company. “This foreclosure and eviction suspension allows homeowners with an Enterprise-backed mortgage to stay in their homes during this national emergency,” said FHFA Director Mark Calabria in a statement. The agency announced…
67 Million Americans May Have Trouble Paying Credit Card Bills
Even before the spread of corona virus (aka COVID-19) brought the U.S. economy to a near standstill, Americans were taking on increasing amounts of debt. Now, around 67 million Americans said they will have trouble paying their credit card bills due to the outbreak and its aftermath, according to a new Coronavirus Money Survey by personal finance site WalletHub. “Their struggles could easily ripple through the economy if left unaddressed, especially considering the more than $1 trillion in credit card debt currently owed by U.S. consumers,” said Odysseas Papadimitriou, CEO of WalletHub. According to data from the Federal Reserve, the…
Lariat Companies, Inc. v. Wigley (In re Wigley), 951 F.3d 967 (8th Cir. 3/9/20)
The Eighth Circuit Court of Appeals reversed the Eighth Circuit Bankruptcy Appellate Panel. The 8th Circuit held that husband’s discharge of a Minnesota state court Judgment for fraudulent transfer, against husband and wife, did not extinguish the wife’s joint and several liability for a fraudulent transfer judgment against the husband and wife. Though husband had discharged husband’s liability on the state court judgment, creditor Lariat still held a claim against wife (Mrs. Wigley) based on Bankruptcy Code 11 USC §524(e), which provides that “discharge of a debt of the debtor does not affect the liability of any other entity on,…
Mass. Dept. of Revenue v. Shek (In re Shek), ___ F3d ___ (11th Cir. Jan. 23, 2020), appeal case number 18-14992, widens the Circuit Split over whether Income Taxes can ever be discharged in bankruptcy, where the tax return for those taxes was filed even one day late
Widening an existing split of circuits, the Eleventh Circuit rejected the one-day-late rule adopted by three circuits and held that a tax debt can be discharged even if the return was filed late. The Atlanta-based circuit aligned itself with the Third, Fourth, Sixth, Seventh, Eighth and Eleventh Circuits, which employ the four-part Beard test, named for a 1984 Tax Court decision. Beard v. Commissioner of IRS, 82 T.C. 766 (1984), aff’d, 793 F.2d 139 (6th Cir. 1986). Following Beard, it’s possible — but not automatic — to discharge the debt on a late-filed tax return. The First, Fifth and Tenth…
United States Dep’t of Agriculture v. Hopper (In re Colusa Reg’l Med. Ctr.)
In United States Dep’t of Agriculture v. Hopper (In re Colusa Reg’l Med. Ctr.), 604 B.R. 839 (9th Cir. BAP 2019), the U.S. Bankruptcy Appellate Panel of the Ninth Circuit vacated a bankruptcy court’s order surcharging a secured creditor for a substantial portion of the Trustee’s attorneys’ fees, and the entire statutory fee, of a chapter 7 trustee. The basis for the decision was that the bankruptcy court failed to correctly apply either the objective test for surcharge adopted by the Ninth Circuit (that the funds were expended directly, specifically and primarily for the benefit of the secured creditor) or…
In re Palladino, 942 F.3d 55 (1st Cir. Court of Appeals 2019)
In re Palladino, 942 F.3d 55 (1st Cir. Court of Appeals 2019): Bankruptcy Trustee recovered—as constituting fraudulent transfers–the tuition payments that parents made to college, to pay college tuition for parent’s daughter. Whether paying the college tuition for daughter was a fraudulent transfer had to be analyzed from the point of view of the creditors of parents. Creditors of the parents did not receive any benefit from parents paying the daughter’s college tuition. Note: These were not sympathetic debtors, they had been found liable for running a Ponzi scheme. The First Circuit reversed a bankruptcy court order, that had granted…
Supreme Court Rules that ‘Unreservedly’ Denying a Lift-Stay Motion Is Appealable
Building on Bullard, the US Supreme Court on 011420 ruled unanimously that a lift-stay motion is a “procedural unit” that’s appealable if the bankruptcy court “conclusively” denies the motion. Note: Where a bankruptcy court order is “final”, the party complaining about the order must file a Notice of Appeal within 14 days after the order is entered by the Bankruptcy Court, and loses the right to appeal a final order if the party complaining about the order FAILS to file a Notice of appeal within 14 days after the order is entered in the Bankruptcy Court docket. The Supreme Court…
Hospitals Are Seizing Patients’ Homes And Wages For Overdue Bills
Credit and Collection e-newsletter of 1/6/20 reports that the American Hospital Association, the biggest hospital trade group, says it promotes “best practices” among medical systems to treat patients more effectively and improve community health. But the powerful association has stayed largely silent about hospitals suing thousands of patients for overdue bills, seizing homes or wages and even forcing families into bankruptcy. Atlantic Health System, whose CEO is the AHA’s chairman, Brian Gragnolati, has sued patients for unpaid bills thousands of times this year, court records show, including a family struggling to pay bills for three children with cystic fibrosis. AHA,…
Rising Credit Card Defaults Are Reported by 1/1/2020 Credit & Collection E-Newsletter
Rising credit card defaults are reported by 1/1/2020 Credit & Collection e-newsletter: Consumer credit card losses, or charge-offs, among the Top 100 U.S. banks, are continuing to rise to levels for a third-quarter not seen since early 2013. Meanwhile, delinquency, the precursor of charge-offs, is also hovering at seven-year highs. The trends are concerning to card issuers as it adds more evidence the U.S. economy is headed into a downturn in 2020, or already unraveling. Third-quarter card charge-offs among the Top 4 U.S. bank credit card declined sharply from the prior quarter, a historical pattern, but up slightly from one-year…