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Ed Boltz
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Here's the link to the corporate filings with the NC Secretary of State:
There's a lot of fun to be had with this as a hypothetical- imagine the artist files bankruptcy (and pretend that Danish bankruptcy is identical to the U.S.- apologies for being parochial). Would this debt be dischargeable? Was the intent fraudulent or artistic? Was the artist in some sort of position as a fiduciary, such that this would be defalcation? Even more, could the artist keep the pile of cash? His paints and brushes would be tools of the trade, which has a $2515 federal exemption, so why not this media? I might use this in a presentation this week at NCBJ on discharge actions.
This comports with the lower regard that consumer bankruptcy is given compared to corporate cases not just by law reviews, but also the academics that teach the students and the judges that hire them as law clerks.
1325(a)(5)(A) provides in bridged and abridged pertinent parts that "... the court shall confirm a plan if ... with respect to each allowed secured claim provided for by the plan ... the holder of such claim has accepted the plan." Mel Watt, when he was the head of the FHFA under Obama, was urged, unfortunately to no avail, by NACBA and others to do exactly that. The response wasn't that agreeing to judicial mortgage mods was prohibited, but that it wasn't the policy choice wanted (by Sec. Geithner) Also, to go back to the drum I keep banging in your ear elsewhere on Creditslips, while "accepted the plan" in Chapter 11s is usually interpreted as a lack of objections, in consumer cases the same bankruptcy courts often require affirmative acknowledgement (in open court, while standing on a stack of Bibles) by creditors that they're willing to accept a plan that the Code couldn't compel.
Just like with Ch. 13 debt limits being told to wait their turn for an increase and not ask to go along when they're raised in Ch. 12 or Subchapter V?
We can have all sorts of proximate arguments about the impact of corporate versus consumer bankruptcy beyond the immediate debtor, with an individual's bankruptcy affecting not only their financial situation, but also that of their household (2.53 people on average), their adjacent family, as well as their creditors (and employees and their households....) But a point, that also goes towards the concerns raised in your separate blog about venue and judge shopping, is that some of the problems in the bankruptcy system ferment in the consumer side but only get recognized when it impacts the TBLs and their Chapter 11 cases. The venue issue is one, where perhaps if districts required all bankruptcy judges to hear a random selection of all types of cases, they would neither have time to handle 39% or so of major corporate bankruptcies and wouldn't get bored with the grind of consumer cases. But also, to take your example of a lack of a written opinion about a "split-level three blocks from the interstate", part of the reason is that the judge knows that the consumer almost certainly can't afford to appeal and the trustee likely doesn't care enough. So haphazard and flawed valuation methods build up until some fool of a debtor's attorney does take the case up. Then decisions like Till v. SCS shock the Chapter 11 bar by being applicable to all bankruptcy cases. So too perhaps with the oral ruling trend- once something that starts in the consumer world wends its way into the "important" cases and pearls start being clutched. That's likely just a hyperbolic and bitter pessimism on my part that has given up on expecting bankruptcy courts to treat regular debtors as decently as corporate ones and instead hopes that they'll just be equally awful to everyone.
It could consent to judicial mortgage modification in bankruptcy, rectifying one of the great failures of the Obama/Biden administration-the failure which clearly lead to some of despairing disgust upon which first the Tea Party and then Trump rose
This reform should also either restrict the UST from objecting to improper venue in consumer cases, leaving that for creditors only, or specifically make video or telephonic hearings the default presumption for Meetings of Creditors in consumer cases, as regular people often end up with absurdly long and expensive travel times to distant court locations due to the quirks and foibles of district borders
Would it be correct to understand your statement the you've "been reading a lot of bankruptcy court transcripts" to mostly mean in corporate cases and not the real bankruptcies of consumers? (I'm not being being coy about my bankruptcy prejudice and probably a bit too snide.) In real bankruptcy cases the judges usually rule orally on important issues about whether someone keeps their home, has their r case dismissed or loses a lien and expect the parties or trustee, none of whom are generally going to get paid anything extra, let alone anything like corporate bankruptcy attorneys, to write it up.
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