The Bankruptcy Law Firm, Prof. Corp.
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.…
Reuters Bankruptcy Trends to Watch in 2025
American Bankruptcy Institute reports that the same industries that made increased bankruptcy filings in 2024 year, can be expected to keep filing bankruptcy at increased rates in 2025 year: Rising interest rates, inflation, higher labor costs, and post-pandemic shifts in consumer spending were common factors cited by companies that filed for bankruptcy in 2024, Reuters reported. Business bankruptcy filings rose 33.5 percent in the 12 months ending Sept. 30, 2024, according to statistics from the Administrative Office of the U.S. Courts. Bankruptcy experts expect those factors to continue to drive companies over the brink next year. Several particularly hard-hit industries…
Bankruptcy Court Decision Holds
Bankruptcy Court decision holds that a lien that is created to enforce a court judgment the bankruptcy debtor consented to, before debtor filed bankruptcy, is a judgment lien that can be avoided pursuant to 11 USC 522(f), IF the judgment lien impairs an exemption that debtor was entitled to claim, and did claim, in debtor’s bankruptcy schedule C (exemptions). ‘Obtained by’ legal proceedings, a consent judgment is still a judgment lien that can be avoided if it impairs an exemption. Even when a debtor consents to the entry of judgment, a lien on debtor’s property (usually on debtor’s residence), created…
The Bank Behind the Fintech Revolution Stumbles After Customer Funds Go Missing
American Bankruptcy Anstitute (“ABI”) 12/27/24 e-newsletter reports as much as 96 million dollars may have gone missing from customer accounts at Evolve Bank, a bank holding customer funds of many “fintech” firms: The Bank Behind the Fintech Revolution Stumbles After Customer Funds Go Missing Scot Lenoir turned a sleepy farming bank in Arkansas, Evolve bank, into one of Silicon Valley’s top financial partners. Now it is in crisis mode, and some clients have started pulling funds after a business partner failed and thousands of customers couldn’t access their money, the Wall Street Journal reported. Evolve Bank at its peak managed…
Soaring Costs for Home Insurance and Property Taxes
American Bankruptcy Institute (“ABI”) 12/26/24 e-newletter reports that soaring costs for home insurance and property taxes are busting homeowners’ budgets, according to a Wall Street Journal analysis. Insurers have pushed big rate increases because of losses from natural disasters and rising costs to repair homes. Surging home values in recent years, meanwhile, have lifted property taxes for many homeowners. These ballooning expenses are rewriting the math of homeownership. In September, 32% of the average single-family mortgage payment went to property taxes and home insurance, the highest rate ever for data going back to 2014, according to Intercontinental Exchange. The analysis…
Stehrenberger v. Stehrenberger (In re Stehrenberger)
Stehrenberger v. Stehrenberger (In re Stehrenberger), ___BR___ (B.A.P. 9th Cir. Nov. 25, 2024), appeal 23-1207: BAP holds that for a debt to be held nondischargeable per 11 USC 523(a)(19) (securities law violations), the a Bankruptcy Court Can Find a Securities Law Violation, there does not have to be a pre-existing decision of a state or federal court that the debtor has violated securities law(s). This is a question where the lower courts are divided, which makes this Ninth Circuit Bankruptcy Appellate Panel decision important, that a prior decision by a state or federal court finding a violation of securities laws…