The Bankruptcy Law Firm, Prof. Corp.
Credit and Collection E-newsletter of 4/29/19 Reports
Red flags are flying in the credit-card industry after a key gauge of bad debt jumped to the highest level in almost seven years. The charge-off rate—the percentage of loans companies have decided they’ll never collect—rose to 3.82 percent in the first three months of 2019, the highest since the second quarter of 2012, according to data compiled by Bloomberg Intelligence. And loans 30 days past due, a harbinger of future write-offs, increased at all seven of the largest U.S. card issuers. At Discover Financial Services, which reported results on Thursday, the charge-off rate increased to 3.5 percent from 3.23…
Wells Fargo Bank NA v. Weidenbenner (In re Weidenbenner), ___BR___ (Bankruptcy Court S.D.N.Y. April 25, 2019) case number 15-244 Freezing a Chapter 7 Debtor’s Bank Account Doesn’t Violate the Automatic Stay
SDNY opinion seems to mean that a bank may freeze a debtor’s entire bank account at filing, without violating the automatic stay. Persuaded by a Ninth Circuit opinion, a district judge in New York held that a bank does not violate the automatic stay by imposing a temporary freeze on the account of an individual who files a chapter 7 petition. The bank had an internal policy of allowing chapter 7 debtors to continue drawing funds from their accounts if the accounts held an aggregate of less than $5,000 on the date of filing. On the other hand, the bank…
American Bankruptcy Institute reports that Malls are Under Pressure as More Stores Close
Strong retail numbers last year from department stores Macy’s Inc. and Nordstrom Inc. raised hopes that the beleaguered mall industry would finally rebound. But recent developments this year are pointing to more trouble ahead, the Wall Street Journal reported. A number of struggling retailers are closing stores and being more selective about where to open ones, dimming prospects for many mall owners and investors. U.S. retailers have already closed 5,994 stores so far this year, compared with 5,864 closures for all of last year, according to Coresight Research. The net store closings, or the number of closings minus openings this…
Bankrupt Student Loan Borrowers Could Finally Get a Break
American Bankruptcy Institute 4/15/19 e-newsletter reports that it is possible that Bankrupt Student Loan Borrowers Could Finally Get a Break, if congress were to accept the recommendations of the recent Commission on Consumer Bankruptcy report, and make amendments to the Bankruptcy Code, to make it easier to seek to discharge student loan debt in bankruptcy. Getting out from under crushing student loan debt might become a little easier if new proposed changes in bankruptcy rules take hold, MarketWatch.com reported. The proposed changes are part of a wide-ranging report by prominent members of the bankruptcy community, including former judges, academics and…
Sens. Grassley and Klobuchar Introduce Bipartisan Legislation to Help Family Farms Reorganize
U.S. Senators Chuck Grassley (R-Iowa), Amy Klobuchar (D-Minn.) and Tina Smith (D-Minn.) reintroduced bipartisan legislation to help family farms reorganize after falling on hard times, according to a press release from Sen. Smith’s office. The legislation is also cosponsored by Senators Ron Johnson (R-Wis.), Patrick Leahy (D-Vt.), Thom Tillis (R-N.C.), Doug Jones (D-Ala.) and Joni Ernst (R-Iowa). As bankruptcy rates among American farmers near record highs, the Family Farmer Relief Act of 2019 would raise the chapter 12 operating debt cap to $10 million, allowing more family farmers to seek relief under the program. Several years of low commodity prices,…
Jung v. Internal Revenue Serv. (In re Jung) (Bankr. W.D. Wis., 2019)
Jung v. Internal Revenue Serv. (In re Jung) (Bankr. W.D. Wis., 2019) holds Bankruptcy court has jurisdiction to adjudicate both dischargeability as well as liability of prepetition taxes owed to IRS: After filing chapter 7 the debtors filed an adversary action in bankruptcy court requesting a ruling of discharge for income taxes and penalties. “The IRS moved to dismiss this adversary on the ground of lack of subject-matter jurisdiction under Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3). The IRS asserts the adversary should be dismissed because the decision will not affect creditors given that the case is a no…
Car Loan Delinquencies Surge To Highest Point Since 2010
Car Loan Delinquencies Surge To Highest Point Since 2010, reports Credit & Collection e-newsletter of 2/27/19 Borrowers are behind in their auto loan payments in numbers not seen since delinquencies peaked at the end of 2010, according to the Federal Reserve Bank of New York. More than 7 million Americans were 90 or more days behind on their car loans at the end of last year, 1 million more than eight years ago, according to a report from the bank. That’s a potential sign of trouble for the auto industry and perhaps the broader economy. The New York Fed reported…
FTC v. Federal Check Processing, Inc., ___F.3d ___(2nd Cir. 2019)
The US Court of Appeals for the Second Circuit held that Individual Owners Of Debt Collector Companies Personally Liable For Companies’ FDCPA And FTCA Violations The Second Circuit recently held that it was proper to find two individual co-owners and co-directors of several corporate debt collector entities personally liable for $10,852,396 after such entities violated the Federal Trade Commission Act (FTCA) and the Federal Fair Debt Collection Practices Act (FDCPA). In FTC v. Federal Check Processing, Inc., the FTC brought suit against thirteen corporate debt collector entities and the two co-owners and co-directors of such entities, alleging that the defendants’…
Federal Trade Commission vs. AMG Capital Management, LLC
Federal Trade Commission vs. AMG Capital Management, LLC, ___F.3d___, 2018 Westlaw 6273036 (9th Cir.): The Ninth Circuit Court of Appeals holds that a trial court correctly ordered equitable restitution of $1.27 billion due to a payday lender’s deceptive practices. Comment: seems unlikely that 1.27 billion can be collected from a payday lender, regardless of the amount stated in the judgment against the payday lender.
Williams vs. American Honda Finance Corp.
Williams vs. American Honda Finance Corp., 907 F.3d 83 (1st Cir. 2018): The federal court of appeals for the First Circuit recently decided a case regarding whether, when a car borrower defaults on paying, and the car lender repossesses and sells the car at auction, is the “deficiency” that the car borrow owes calculated as amount owed minus fair market value of car, or as amount owed minus auction price car sold for at a wholesale auction. NOT a 9th Circuit case, NOT on CA law, but still could have effect in how 9th Circuit would rule on this issue,…