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Ed Boltz
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From the consumer side of the bankruptcy world, it seems that the anonymous O's perspective is completely wrong in two ways- most bankruptcy judges do not come from a consumer practice, but are well-connected Chapter 11 attorneys, and the "hard truth" is that most of those erstwhile Tall Building Lawyer judges aren't competent to understand the lives of the consumers appearing before them, getting completely overwhelmed by the grind and the frustrations/heartaches of ruling on those cases.
Toggle Commented Jun 1, 2021 on Judge Shopping in Bankruptcy at Credit Slips
It is also worth noting that, as I understand this settlement, the law firms are reducing their fees by $1 million not paying $1 million into the bankruptcy estate. Law firms routinely reduce fees to make clients or courts happy, so often that the cynic might suspect that the discount is cooked into the initial bill. There is also the psychological and optical value of having malfeasors have to write a check. Query- do shouldn't appropriate state bars also investigate this for disciplinary action for lack of candor before a tribunal?
The overt racism in saying that "It could have been Gandhi and they would have voted 'no.' " when voting against Rohit Chopra needs to be called out.
This relates also to Chapter 13 bankruptcy, as payments made by debtors during the course of their plan are usually unreported by creditors (including their ongoing mortgage payments). While many folks can get new mortgages and refinancing during bankruptcy at surprisingly low rates, that credit reporting purgatory leaves the same people stuck with subprime car loans for 5 years. Trustees could be authorized to report payments, which would help tremendously. A smaller lift would be to allow debtor's attorneys to report the repayment of their fees to the credit reporting agencies but lawyers are prohibited by the CRAs from furnishing information.
In consumer cases, bankruptcy courts routinely hold that a general financial power of attorney that authorizes any and all actions is insufficient to allow a bankruptcy filing unless that is explicitly allowed
Toggle Commented Feb 8, 2021 on NRA Examiner Motion at Credit Slips
Perhaps what the OCC, as well as other problem agencies like the United States Trustee Program, need an few other academics to roll up their sleeves and follow the lead of fellow Credit Slipsters Elizabeth Warren and Katie Porter by putting themselves forward to bring a more pro-consumer thrust to these government entities?
Toggle Commented Dec 19, 2020 on The OCC Is a Problem Agency at Credit Slips
Can you comment on the similarities and differences between a public credit registry and the Bankruptcy Lien Registry proposed in the Consumer Bankruptcy Reform Act ("Cobra") that was recently introduced by Sen. Warren? There would seem to be the risk that the creation of the latter would spur the same for the former or even that the Cobra Bankruptcy Lien Registry would be co-opted by the financial services industry and morph into a more general debt registry.
President Biden could also immediately issue an executive order directing the Department of Education not to oppose undue hardship petitions in bankruptcy, either universally or by stating defined safe harbors, including for the disabled, those with limited retirement income, people caring for ill relatives, or those with below median income. NACBA and NCCL have previously recommended this approach (and I can provide that letter if helpful.) This provides broader relief for those that desperately need it, while sorting out those that have the ability to repay.
Toggle Commented Nov 24, 2020 on Debt Relief on Day One at Credit Slips
Beyond the HEROES Act, there are also proposals, including from Rep. Mary Gar Scanlon and Sen. Sheldon Whitehouse, to restore the discharge for student loans for people with COVID related loss of income or medical expenses.
Toggle Commented Aug 17, 2020 on Student Loan Relief Update at Credit Slips
Too bad they don't support venue reform to relax unnecessarily restrictions on consumers filing in the most convenient forum.
When it comes to venue and bankruptcy, it shouldn't be a surprise that such is apied inequitable against consumers compared with corporations, nonprofits or regular. The EOUST will object to a consumer filing in the "wrong" jurisdiction in every case, even if there is not substantive difference in the outcome, without concern for the convenience of the consumer debtor. (That the Bankruptcy Administrators in North Carolina and Alabama take a more laissez faire approach only exacerbates the absurdity of the UST position.) Rasonable venue reform would tighten application for corporations and relax such for individuals.
Another less than perfect solution, but still an improvement would be the great use of IDRs through Chapter 13 plans, particularly coupled with court supervision and accounting for IDR payments. This is not that dissimilar a problem from the mortgage crisis, with the provisions of Rule 3002.1 being a model for overseeing such payments and determining the number of qualifying payments made during the bankruptcy.
Since the publisher is only 3 miles from my office in Durham, do you think I can just stop in and pick up a copy? Also, with it being published by Carolina Academic Press, does it have anything much about North Carolina debt collection? Since we have don't have wage garnishment but do have fairly robust debt collection and debt buyer statutes, creditors constantly complain about the lack of viable collection mechanisms.
I very much agree that this is, looking back, a blind spot that we didn't consider. You are also, to continue the visual metaphor, correct that "the very richness of our local resources" regarding bankruptcy, leaves Americans with the perception that we need not look to other countries. That outlook, however, seems to be both directions- I'm just reading "Bankruptcy- The Case for Relief in an Economy of Debt" by Joseph Spooner from the U.K. about the English (and I guess Welsh) system of bankruptcy and debt relief. It is chock full of references to U.S. bankruptcy law, policy, and research, but has far, far less from other nations, including English-speaking ones. This points again to the "richness" of our bankruptcy resources but also hints that there is a dearth of much from elsewhere. That said, it is very interesting to compare debt relief American style with elsewhere. One immediate take away is that the English administrative Debt Management Plans lacking the clear adversarial nature of American bankruptcy, seems to be a system that has been "captured" by the financial industry, who constantly ratchet up the requirements of such plans. So, even though consumer debtor's attorneys get accused of being greedy and racially biased, at least American debtors can have zealous advocates. You should actively reach out to the ABI to encourage its next project to be a review of what international insolvency can teach the U.S. about bankruptcy and debt solutions.
And for bankruptcy? At the very least, separate classification of student loans in Chapter 13 to allow maintenance of IDR payments should be allowed. And that's the very least. A small step further, waiver of student loan default, although possible allowable already, should be explicitly allowed as a third option to rehabilitation or consolidation. This is especially needed for debtors that have defaulted once in an IDR, as they otherwise have to start over. It would also avoid the pointless, but draconian and dispiriting 18.5% collection penalty that is imposed for other means of resolving a default. Any payments under a Chapter 13 plan could be considered as sufficient for an IDR. The Secretary of Education already has the authority to authorize non-conforming IDR payments, but to the best of my knowledge never has under either the Obama or Trump administrations. Choosing between saving your house or car and continuing to make an IDR (which under the strict mechanical calculation ignores emergency expenses) is something of a Hobson's choice. The filing of a Chapter 7 should not automatically put a borrower into an administrative forbearance, where their IDR payments are accepted but not applied to the 10/20/25 year forgiveness terms. Seriously, you've suggested nothing for private loans. The answer: DISCHARGE. And for senior citizens? A nice 20 year IDR of $0 from their Social Security check. DISCHARGE. And, more generally, DISCHARGE.
Toggle Commented Apr 2, 2019 on Student Loan Fixes at Credit Slips
If you want some irony, look at the bankruptcy court cases, including In re Parkman from Mississippi, where judges lose their minds over the possibility that debtors will be able to enforce boilerplate language in confirmation orders through nonstandard provisions.
Toggle Commented Dec 24, 2018 on Contractual Lunacies at Credit Slips
To give, or perhaps take, credit where credit is due, the safe harbor criteria were suggested to the Department of Education several years back in a Dear Colleague Letter from a group of Democratic Senators, lead by Dick Durbin, based on ideas from NCLC and NACBA.
I've suggested many times ways that the goal of increasing discharges in Chapter 13 cases could be accomplished if courts ( and Ch. 13 Trustees) read the "best interests of creditors and the estate" in 1307(c) to to encompass the proposition that a discharge of debts through conversion of an non-performing Ch.13 case to Ch. 7 is in the best interests of creditors and the estate. It helps creditors by providing a final distribution (or lack thereof) in satisfaction of debts, stopping them (because, Lord knows they can't stop themselves) from collecting bad debts. It helps the estate because non-exempt equity gets liquidated and exempt equity is freed for productive use again. Ch. 13 Debtors should still be allowed to choose dismissal (particularly where there is non-exempt equity), but the presumption should be conversion not dismissal. This would tie the representation of the debtor in an involuntary converted case to the original Ch. 13, making it part and parcel of the representation. Then debtors would be free of debts and, if a second Chapter 13 filing was still needed, there would be neither a limited term automatic stay nor (except if there were nondischargable debts, like student loans) an Applicable Commitment Period, allowing the second case to be shorter, if affordable.
How apt of a comparison is it between the discharge rates of Attorney Fee Only plans and "regular" Chapter 13 cases? Using the $3200 average fee and the maximum 10% Trustee Commission, that would require a monthly payment as low as $60.00 or so. (Since these are presumed to be viable Ch. 7 cases, there shouldn't be either a Disposable Income or liquidation requirement.) This assumption may be incorrect, but it would seem likely that a plan that required only $60.00 a month would be more likely to succeed than a higher one that included on-going mortgage payments and an arrearage, car payments, taxes or any of the other secured or priority claims.
Does the judiciary keep statistics on the average number of years judges have served? Anecdotally, it seems there has been a generational change on the bankruptcy bench, with an increasing number of post-BACPA judges. Breaking down the statistic tilting on the reversal rate of that fulcrum could be interesting.
From the 1931 North Carolina law review of laws enacted that year: The other act (Ch. 208) prohibits any person or corporation from soliciting from any creditor the representation of any claim in bankruptcy, insolvency, or receivership proceedings or in connection with assignments for the benefit of creditors, and also forbids any person not an attorney to appear on behalf of another in any such proceedings. It would seem that as applied to claims and proceedings in bankruptcy (which cover the great majority of claims and proceedings involving insolvent estates) the prohibition is ineffectual and unconstitutional as being an attempt on the part of the State to regulate the prosecution of claims in courts of the United States.
That seems less problematic, except that the Code allows for corporate creditors to appear at 341 meetings, so is that partial preemption?
§ 84-9. Unlawful for anyone except attorney to appear for creditor in insolvency and certain other proceedings It shall be unlawful for any corporation, or any firm or other association of persons other than a law firm, or for any individual other than an attorney duly licensed to practice law, to appear for another in any bankruptcy or insolvency proceeding, or in any action or proceeding for or growing out of the appointment of a receiver, or in any matter involving an assignment for the benefit of creditors, or to present or vote any claim of another, whether under an assignment or transfer of such claim or in any other manner, in any of the actions, proceedings or matters hereinabove set out.
Would the Bankruptcy Code certainly be pre-empted? Following Butner v U.S., 440 U.S. 48, 99 S. Ct. 914 (1979), bankruptcy courts must look to state law for determination of property rights. Arguably, this statute defines when and whether the ownership of a property right, viz. the debt, can be transferred.
Does it matter that this statute doesn’t just apply to debt buyint in bankruptcy, but all insolvency proceedings?