The Bankruptcy Law Firm, Prof. Corp.
Lawsuit Over Rule on Credit Card Late Fees
Credit & Collection e-newsletter of 4/15/25 reports: The Consumer Financial Protection Bureau today reached an agreement with the American Bankers Association and other plaintiffs to settle a lawsuit over its rule on credit card late fees. The CFPB last year issued a final rule to lower the safe harbor dollar amount for late fees to $8, eliminate a higher safe harbor dollar amount for late fees for subsequent violations of the same type, and eliminate the annual inflation adjustment for the safe harbor amount that was provided by the Federal Reserve in 2010. ABA joined the U.S. Chamber of Commerce…
Notice: All dollar amounts in US Bankruptcy Code increased by 13.2% on 4/1/25
Every 3 years, the dollar amounts in the US Bankruptcy Code, 11 USC 101 et seq, are adjusted for inflation. On 4/1/25, all the dollar amounts in the US Bankruptcy Code adjusted for inflation. Because there has been a total of 13.2% inflation in the past 3 years (last adjustment before 4/1/25 was on 4/1/22) the dollar amounts in the U.S. Bankruptcy Code each increased by 13.2%. Chapter 13 bankruptcy, and “SubV” Chapter 11 bankruptcy each have debt limits. A person cannot file Chapter 13 bankruptcy (individual wage earner repayment plan bankruptcy) or SubV Chapter 11 bankruptcy, unless dollar amount…
Johnson & Johnson’s Third Bankruptcy Case for Talc Lawsuits Thrown Out
On 4/1/25, a US bankruptcy judge dismissed Johnson & Johnson’s (“J&J”) third attempt to resolve its mass talc liabilities through chapter 11, rejecting the company’s latest bid to end one of the largest-ever mass torts. J& J had set up an “affiliate” corporation to J&J, and had the affiliate corporation file bankruptcy ins Texas. J&J put the liabilities for the mass tort suits suing J&J, for J&J’s talc baby powder allegedly causing people to get cancer, particularly allegedly causing women to get ovarian cancer. Judge Christopher Lopez of the U.S. Bankruptcy Court in Houston dismissed a J&J affiliate’s chapter 11…
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…