EDNC: Steinke. v Harris ventures- “Effective Date” Means Confirmation — and Post-Petition Events Matter Ed Boltz Fri, 04/10/2026 - 15:13 Summary: In Steinke v. Harris Ventures, Chief Judge Richard Myers affirmed what the Bankruptcy Court had already made clear: for purposes of the Chapter 13 liquidation test under § 1325(a)(4), the “effective date of the plan” is the confirmation date—not the petition date. That seemingly dry statutory interpretation has very real consequences—particularly where, as here, life intervenes between filing and confirmation. The Setup: Death Changes Everything When the Steinkes filed Chapter 13, they owned their Raleigh home as tenants by the entirety, shielding it from an individual creditor (Harris Ventures). But before confirmation, Mrs. Steinke passed away. Under North Carolina law, that meant the property vested in Mr. Steinke in fee simple, eliminating the entireties protection and dramatically increasing what unsecured creditors could reach. The debtors argued that the liquidation test should be frozen as of the petition date—when the property was still protected. The Bankruptcy Court disagreed, and the District Court affirmed. The Holding: Confirmation Date Controls The District Court adopted the majority view nationally: A plan becomes “effective” when it is confirmed and binding. Therefore, the liquidation test must be applied as of confirmation, not filing. Relying heavily on Hamilton v. Lanning and Rake v. Wade, the court emphasized that identical language elsewhere in § 1325 has already been interpreted to mean the confirmation date—and consistency matters. Equally important, the court leaned on § 1306: A Chapter 13 estate includes property acquired after filing but before the case is closed, dismissed, or converted. In other words, Congress expected the estate to change—and required plans to account for those changes. Commentary: When Entireties Protection Disappears Mid-Case This decision is a direct sequel to the Bankruptcy Court ruling discussed here: 👉 https://ncbankruptcyexpert.com/2025/01/27/bankr-ednc-re-steinke-death-debtor-and-tenancy-entireties There, the Bankruptcy Court recognized the harsh reality: Entireties property that was fully protected at filing Became fully exposed upon the death of one spouse And that change had to be reflected in the Chapter 13 plan The District Court now confirms that result was not just equitable—it was required by the Code. The Strategic Question: Why Not Convert? Which raises the most interesting—and still unanswered—question in this case: Why not convert to Chapter 7? Based on the timeline, it appears that Ms. Steinke died 205 days after filing—outside the 180-day window of § 541(a)(5). That matters enormously. In Chapter 13, § 1306 sweeps in post-petition property and changes—so the estate captures the fee simple interest. But upon conversion to Chapter 7, § 348 would generally fix the estate as of the petition date. Meaning: 👉 The Chapter 7 estates of both Mr. and Mrs. Steinke would likely still hold the property as tenants by the entirety, preserving the exemption against individual creditors. That is a dramatically different outcome from the Chapter 13 result, where the estate now holds the property in fee simple and fully exposed. It is unclear from the opinion what factors precluded conversion—whether practical, procedural, or strategic—but from the outside, that option appears at least worth serious consideration. The Danger of Dismissal Voluntary dismissal, meanwhile, is no safe harbor. With an aggressive judgment creditor like Harris Ventures waiting in the wings, dismissal would likely: Lift the automatic stay immediately; and Allow the creditor to pursue execution, potentially leading to a sheriff’s sale of the property. In other words, dismissal may trade a difficult bankruptcy outcome for an even worse state-court one. Final Thoughts: Chapter 13 Is a Moving Target The lesson from Steinke is both simple and sobering: Chapter 13 is not a snapshot—it’s a moving picture. Property interests can change Exemptions can evaporate And the liquidation test will capture those changes at confirmation For debtor’s counsel, this reinforces two critical points: Timing matters—especially in cases involving entireties property, health concerns, or other foreseeable changes. Conversion strategy must always be on the table—because § 1306 and § 348 can lead to radically different estates. And for creditors, Steinke is a roadmap: Wait long enough, and sometimes the law—and life—will do the work for you. To read a copy of the transcript, please see: Blog comments Attachment Document steinke_v._harris_ventures.pdf (218.58 KB) Category Eastern District

Bankr. M.D.N.C.: Parrott v. Yeh – Trigger (Creditors) and Badges (of Fraud) Trustee Takes Aim at Lindberg Web of Transfers and Alleged Fraudulent Scheme Ed Boltz Thu, 04/30/2026 - 14:52 Summary: Parrott v. Yeh is another chapter in the ongoing effort to unwind transactions tied to the collapse of entities associated with Greg Lindberg—this time through the lens of a Chapter 7 Trustee exercising core avoidance powers under the Bankruptcy Code. The Trustee seeks to recover transfers made to Yeh, alleging both actual fraudulent intent and constructive fraud under §§ 544 and 548. While § 548 provides a federal cause of action, the more expansive reach often comes through § 544(b)—which allows the Trustee to step into the shoes of an actual unsecured creditor, commonly referred to as the “triggering creditor.” The Lindberg Enterprise: Context Matters Lindberg’s business operations were built around a dense network of insurance companies and affiliated investment entities, often engaging in extensive intercompany transactions. Over time, regulators—particularly the North Carolina Department of Insurance—raised concerns regarding solvency, liquidity, and the movement of assets within that network. Those concerns ultimately coincided with: Federal criminal convictions arising from efforts to influence regulatory oversight; The collapse or restructuring of multiple affiliated entities; and A wave of litigation aimed at recovering assets and untangling years of financial activity. Parrott v. Yeh sits squarely within that third category. The Trustee’s Task—and the Role of the Triggering Creditor The Chapter 7 Trustee is doing what trustees are supposed to do: Identify transfers of the debtor’s property; Trace those transfers through complex financial pathways; and Invoke both federal and state avoidance law to recover those transfers for the estate. The “triggering creditor” is critical to that last step. Under § 544(b), the Trustee must identify at least one actual unsecured creditor in existence at the time of the transfer who could have brought a fraudulent transfer action under applicable nonbankruptcy law (often the state Uniform Voidable Transactions Act). If such a creditor exists, the Trustee may: Borrow that creditor’s rights; Utilize longer state law look-back periods (often four years or more, compared to § 548’s two years); and In some circumstances, take advantage of more favorable state law standards or remedies. In cases like this—where transfers may span multiple years and entities—the presence (or absence) of a viable triggering creditor can be outcome determinative. Issues Likely to Drive the Litigation Tracing the Funds The Trustee must connect Yeh’s receipt of funds to property of the debtor, often across multiple entities and accounts. Existence and Rights of a Triggering Creditor The Trustee will need to establish that a qualifying unsecured creditor existed at the relevant time and could have pursued the same claims under state law. Reasonably Equivalent Value Whether the debtor received value—or merely shifted assets within a controlled network—will be central. Good Faith Defense (§ 548(c)) Yeh’s defense will likely rest on good faith and value. In cases arising from broader alleged schemes, courts tend to scrutinize these defenses carefully. Badges of Fraud Timing, relationships, and financial condition at the time of transfer will inform the analysis of intent. Commentary: Bankruptcy as the Financial Reckoning If the criminal proceedings involving Lindberg addressed culpability, Parrott v. Yeh addresses consequences. This is where the Bankruptcy Code earns its keep. The Trustee is not simply telling a story of misconduct; she must prove, transfer by transfer, that assets should be brought back into the estate—and that she has the statutory footing to do so, including through a properly identified triggering creditor. For practitioners, this case is a useful reminder that: § 544(b) is only as strong as the triggering creditor behind it; Identifying that creditor early—and defending against it effectively—can shape the entire litigation; And while large-scale financial collapses may involve complex facts, the outcomes often turn on these foundational doctrinal requirements. In the end, Parrott v. Yeh reflects the methodical work of bankruptcy: follow the money, identify the rights, and rebuild the estate—one transfer at a time. To read a copy of the transcript, please see: Blog comments Attachment Document parrott_v._yeh.pdf (863.25 KB) Category Middle District

Bankr. W.D.N.C. : In re Perez- No Shortcuts to Appeal—Rule 54(b) Requires More Than “Magic Words” in Perez Adversary Stafford Patterson Mon, 04/13/2026 - 15:57 Summary: Judge Laura Beyer delivers a straightforward—but instructive—reminder that not every adverse ruling is immediately appealable, and that Rule 54(b) remains the exception, not the rule. The Setup In this Chapter 13 adversary proceeding, the debtor, Luis Perez, attempted to bring a third-party claim for unfair and deceptive trade practices against Fernando Ycaza. That claim was dismissed with prejudice. Perez then tried to salvage an immediate appeal by filing a motion asking the court to either: Add Rule 54(b) “magic language” (i.e., no just reason for delay), or Convert the dismissal to without prejudice. The Ruling The court denied both requests—firmly. Applying the Fourth Circuit’s Braswell Shipyards framework, Judge Beyer acknowledged that the dismissal was “final” as to that claim, but emphasized that finality alone is not enough. The real question is whether there is no just reason for delay, and the burden rests squarely on the movant. Perez fell short. The court found: The dismissed and remaining claims were closely intertwined. Future developments could moot the need for appeal entirely. Immediate appeal risked duplicative appellate review. The alleged hardship—delay and expense—was simply the ordinary consequence of litigation, not the “undue hardship” required for Rule 54(b). Just as importantly, the court rejected the notion that labeling a dismissal “with prejudice” somehow entitles a party to immediate appeal. Rule 54(b) doesn’t turn on that distinction. Commentary This is a clean, practical opinion that bankruptcy practitioners should keep handy—particularly in multi-party adversary proceedings where the temptation for piecemeal appeals is strong. Two takeaways stand out: First, Rule 54(b) is not a drafting oversight doctrine. Perez’s motion essentially read as if the court had forgotten to include the required language. Judge Beyer makes clear: those words are not automatic—they must be earned. Second, litigation inconvenience is not “undue hardship.” The desire to avoid delay, expense, or even a second trial is baked into the system. If that were enough, Rule 54(b) would swallow the rule against interlocutory appeals. In short, this decision reinforces what most of us already know—but occasionally need to be reminded of: appeals come at the end, not along the way. To read a copy of the transcript, please see: Blog comments Attachment Document ameris_bank_v._perez.pdf (204.4 KB) Category Western District

Law Review (Note): Masterton, Carsen - North Carolina's Debt Adjusting Attorney Exemption & Implications for Consumers, 30 N.C. BANKING INST. 465 (2026). Ed Boltz Wed, 04/29/2026 - 16:09 Available at: https://scholarship.law.unc.edu/ncbi/vol30/iss1/17 INTRODUCTION: North Carolinians have an average of almost $100,000 in consumer debt. Faced with the pressure to address their debts, many North Carolinians choose to engage with companies that advertise services to help settle outstanding debts based on their negotiation expertise and experience gaining favorable outcomes for the consumer.  One such North Carolina consumer, Katherine Otto, decided to navigate repayment of her roughly $15,000 debt with the assistance of a law firm. Ms. Otto enlisted the help of Carolina Legal Services, a firm offering debt adjustment services. Carolina Legal Services represented to Ms. Otto that they would act on her behalf to settle her outstanding debts with creditors, thereby relieving her of any further debt liability and enabling her to achieve financial freedom. However, Ms. Otto’s use of Carolina Legal Services resulted in a worse financial position than the one in which she began: the law firm had not actually settled her debts, her creditors initiated lawsuits against her, and she was unable to recover the nearly $10,000 she had paid the law firm toward  her settlement. Ms. Otto eventually learned that none of the individuals she interacted with at Carolina Legal Services were actually attorneys. Indeed, an exemption in North Carolina law allows such fraudulent law firms to exist and deceive North Carolinians.  Carolina Legal Services engaged in a practice known as debt adjusting. Debt adjusting occurs when a consumer hires an intermediary to negotiate with their creditors on the consumer’s behalf. In exchange for a settled debt amount, the consumer agrees to pay the creditor an immediate payment of the settled debt amount. If this process is successfully managed and the consumer pays the negotiated amount, the consumer is relieved of their debt liability and the creditor is satisfied after partially recovering an otherwise outstanding debt. While debt adjusting companies purport to provide a substantial benefit to consumers, both state governments and regulators are apprehensive about the practice. North Carolina, alongside the majority of other states, has prohibited debt adjusting since 1963, and allows it only when an exemption applies. Skeptical legislators cited widespread acts of deception and exploitation by debt adjusters against vulnerable North Carolinians, as well as a national movement to regulate debt adjusting, as the primary motivation to substantially limit debt adjusting in the state. While the law generally prohibits debt adjusting, the 1963 Debt Adjusting Act provided several exemptions that permit certain parties to adjust debts on behalf of others. Some exempted parties included employees of the debtor and persons who debt adjusted at the debtor’s request without compensation. The Legislature carved out these limited exemptions because legitimate debt adjusting offers consumers the opportunity to avoid lengthy bankruptcy proceedings and erase their liability to a creditor with an immediate decrease in payment.   In response to increasing reports of exploitation under the fee collection exemptions, the North Carolina legislature amended the Debt Adjusting Act in 2005.The amendment modified the debt adjusting exemptions by limiting advanced fee recovery. However, the amendment also added a group to the provided exemptions: attorneys who practice law in North Carolina and are not employed by a debt adjuster. The General Assembly enacted the attorney exemption to accommodate consumers’ increasing need for assistance in managing their debt and to permit attorneys to perform actions frequently necessary in their work. Despite the state legislature’s intention to provide North Carolina consumers with more options to handle their debt and permit attorneys to handle debt matters, the exemption inadvertently created the issue of façade law firms. Façade law firms, which are firms in name only and provide nominal legal services, evade detection by operating under a licensed attorney. In many cases, consumers actually have little to no interactions with the attorney, receive ineffective assistance in settling their debts, and suffer severe financial harm. As this Note will argue, the attorney exemption inadvertently allows façade law firms to utilize predatory practices and lead North Carolinians to overpayment on their debt. This Note considers how the statutory structure of numerous federal and state consumer protection laws has resulted in limited regulation of façade law firms in North Carolina. Moreover, other laws and regulators are unable to effectively regulate façade law firms due to political and practical constraints. Because of these limitations facing federal agencies and political intervention making state statutory revision unlikely, this Note recommends that the North Carolina State Bar increase its focus on façade law firms in North Carolina.  This Note proceeds in five parts. Part II discusses the development of the North Carolina Debt Adjusting Act and explains recent attempts to amend it.  Part III analyzes state consumer protection laws and their applicability to the attorney exemption.  Part IV describes several federal statutes and agency regulations relevant to debt adjusting in North Carolina, but considers the numerous challenges facing federal regulators under the Trump Administration. Due to the limitations of the state and federal laws and regulators, Part V posits that the North Carolina State Bar will be the most reliable regulator to prevent deceptive façade law firms in North Carolina.30 Part VI concludes this Note. Commentary: The Setup: When “Law Firms” Aren’t Really Law Firms The recent UNC Banking Institute note lays out a story that will sound painfully familiar to anyone practicing consumer bankruptcy in North Carolina: desperate debtors, slick marketing, and a “law firm” that turns out to be little more than a call center with a bar license taped to the wall. At its core, the article explains how North Carolina’s Debt Adjusting Act—originally designed to prohibit debt settlement abuses—now contains an attorney exemption that has been stretched into a loophole big enough to drive a national debt settlement enterprise through. The result? So-called “façade law firms”—entities that technically comply with the statute by having a licensed attorney somewhere in the structure, but in practice deliver little or no legal services. Consumers are told to stop paying creditors, send money into a “settlement fund,” and wait for negotiations that never happen. Predictably, creditors don’t wait. Lawsuits get filed. Interest and fees pile up. And the debtor—who thought they were buying relief—ends up deeper in the hole. The Loophole: How the Attorney Exemption Became a Shield The 2005 amendment that added the attorney exemption was supposed to protect legitimate attorneys doing legitimate work. Instead, by removing the “incidental to the practice of law” limitation, it created a structure where: A “figurehead” attorney can front the operation Non-lawyers do the actual work (or non-work) The enterprise claims exemption from regulation That’s not just bad policy—it’s an invitation to abuse. And as the article notes, enforcement is fragmented: the Debt Adjusting Act, UDTPA, CFPB authority, and State Bar discipline all apply in theory, but none fully close the gap. The Real World: Rufty and the Cost of Playing Figurehead This isn’t hypothetical. North Carolina has already seen how this plays out. The State Bar suspended attorney Daniel Rufty for his role in operating one of these operations—effectively lending his license to a debt-adjusting enterprise that allowed non-lawyers to provide legal services and mislead consumers. 👉 https://www.ncbar.gov/mypastordersofdiscipline/getfile?id=071918ce-6a56-4411-b5d1-e48b576b5642&search= That discipline order reads like a checklist of what not to do—and a roadmap for how these businesses actually function. Where Bankruptcy Courts Step In (and Why This Matters to Us) Here’s where this hits home for the bankruptcy bar: These cases routinely end up in bankruptcy court. And that’s not an accident—it’s because bankruptcy provides tools that other forums don’t: Debt Relief Agency provisions (11 U.S.C. §§ 526–528) Fee review and disgorgement under 11 U.S.C. § 329 Court supervision of professionals Broad equitable powers under § 105 In other words, when the state regulatory scheme gets gamed, bankruptcy courts often become the cleanup crew. We’ve all seen it: Debtors arrive after paying thousands to a “settlement” outfit No creditors paid Multiple suits pending Credit destroyed And now, finally, they need a real solution Bankruptcy isn’t the first resort—it’s the last resort after the scam. The Policy Response: ESCRA and the Fight Over Upfront Fees Congress is now taking notice. The Ending Scam Credit Repair Act (ESCRA Act), H.R. 306 would tighten restrictions on advance fees—long the lifeblood of these operations—while carving out a clearer, more legitimate space for real attorneys: 👉 https://www.congress.gov/bill/119th-congress/house-bill/306?loclr=cga-bill Critically, the bill includes an attorney-safe harbor: “any attorney that provides legal services rendered or to be rendered to a consumer in contemplation of or in connection with a case filed, or to be filed within 12 months, under title 11 or title 15… by an attorney within the same law firm.” That language matters. It attempts to draw a line between: Actual legal services tied to bankruptcy or restructuring, and Pseudo-legal debt settlement schemes hiding behind a bar license Whether it succeeds will depend—as always—on enforcement.  But tying this to the "contemplation of on in connection with"  a bankruptcy,  subjects  those attorneys to the further limitiation of the bankruptcy code (such as  the obligation for Debt Relief Agents to describe all bankruptcy options).   Perhaps more importantly,  by forcing credit repair and debt settlement scammers to simply  say the dreaded word "Bankruptcy"  that may  lead consumers to seek a more complete understanding of all of their options. While ESCRA targets the similarly fraud riddled  "credit repair"  industry,  its innovation (draw from the Bankruptcy Code)  for  distinguishing between honest attorneys and scammers by looking towards their clear intentions,  would be welcome in the sphere of legislation  around debt settlement as well. The Takeaway: Regulation Is Fragmented, But Bankruptcy Isn’t The article ultimately concludes that no single regulator has solved the problem: State statutes are undercut by exemptions Federal enforcement is inconsistent Legislative reform keeps stalling That leaves the North Carolina State Bar as a primary backstop—but even that is reactive, not preventative. From a practitioner’s standpoint, the more practical truth is this: Bankruptcy remains the most effective forum for unwinding these schemes and recovering value for consumers. And until the statutory gaps are closed, that’s likely to remain the case. Practice Pointer If a new client mentions: “debt settlement” “monthly program payments” “law firm negotiating with creditors” …start asking questions immediately. You may be looking at: A potential § 329 disgorgement claim A Debt Relief Agency violation Or even grounds for a separate adversary proceeding Final Thought This UNC note does an excellent job of connecting the statutory dots—and exposing how a well-intentioned attorney exemption became a consumer trap. The lesson is one we’ve seen before: When regulation depends on labels (“law firm”) instead of substance (actual legal services), bad actors will always find the edge. And when they do, bankruptcy courts are left to sort out the damage. To read a copy of the transcript, please see: Blog comments Attachment Document north_carolinas_debt_adjusting_attorney_exemption_implications.pdf (625.28 KB) Category Law Reviews & Studies

4th Cir.: Cook v. Trustee- Fourth Circuit Reins in Equitable Mootness in Chapter 13 — And Quietly Preserves Appellate Rights Post-Bullard Ed Boltz Tue, 04/14/2026 - 02:56 Summary: The Cook v. Chapter 13 Trustee decision is one of those deceptively modest Chapter 13 cases that, on closer inspection, carries outsized importance for consumer practitioners. At first glance, this is a fairly routine plan confirmation dispute: debtor proposes a low-payment plan, trustee objects, bankruptcy court denies confirmation, debtor ultimately confirms a higher-payment plan—and then tries to appeal the denial of the earlier, more favorable plan. The district court dismissed that appeal as equitably moot. The Fourth Circuit reversed. And that matters. A lot. The Holding (In Plain Terms) The Fourth Circuit did two key things: 1. Rejected Equitable Mootness in a Simple Chapter 13 Case The Court emphasized that equitable mootness is a pragmatic, discretionary doctrine—not a jurisdictional bar—and is generally reserved for complex Chapter 11 cases involving numerous parties and irreversible transactions. Here, there was: No asset transfers No unwinding of complex transactions No disruption to third parties Only a request to adjust payments going forward As the Court put it, “there is no egg to unscramble.” That alone doomed the district court’s dismissal. 2. Reached the Merits—and Affirmed the Bankruptcy Court On the substance, the debtor still lost. The bankruptcy court’s denial of confirmation of the first plan—based largely on lack of good faith and inconsistent financial disclosures—was affirmed. So yes, the debtor ultimately loses the battle. But consumer debtors as a whole won something bigger.   The Real Story: A Narrowing of Equitable Mootness This opinion draws a bright line that has long been blurred: Equitable mootness should not be casually applied in consumer Chapter 13 cases. The Fourth Circuit essentially says what many of us have argued for years: This doctrine was built for mega Chapter 11 reorganizations It has no business short-circuiting appeals in individual wage-earner cases The Court’s analysis of the Mac Panel factors is particularly instructive: Failure to seek a stay? Not dispositive. Payments already made? Irrelevant if relief is prospective. Impact on creditors? Minimal and manageable. This is a course correction. The Bigger Win: A Path Around Bullard The shadow looming over all of this is, of course, Bullard v. Blue Hills Bank. In Bullard, the Supreme Court held that: Denial of confirmation of a Chapter 13 plan is not a final, appealable order. That decision significantly constrained appellate review of plan denials—forcing debtors to either: Confirm a different plan, or Seek dismissal to create finality (a risky move) Cook provides a workaround—without saying so explicitly. Here’s how: The debtor confirmed a later plan (creating a final order) Then appealed the earlier denial The district court tried to shut it down via equitable mootness The Fourth Circuit said: Not so fast The Result: Chapter 13 debtors still have a viable path to appellate review of denied plans—so long as they can get to a confirmed plan and frame relief prospectively. That is a significant preservation of appellate rights in the wake of Bullard. Practice Implications (Where This Really Hits Home) For consumer bankruptcy attorneys, this case should immediately change how you think about preserving issues for appeal: 1. Don’t Assume the Door is Closed After Bullard There is a path: Confirm a plan (even under protest) Preserve objections Appeal the denial of the preferred plan 2. Frame Relief Prospectively The Fourth Circuit repeatedly emphasized: No clawbacks No unwinding distributions Just forward-looking adjustments That framing is critical to defeating equitable mootness. 3. Equitable Mootness is Now a Weak Defense in Chapter 13 Expect trustees (and sometimes courts) to continue raising it—but: This opinion sharply limits its reach Especially in routine consumer cases 4. NACBA / NCBRC Impact Notably, amici included the National Association of Consumer Bankruptcy Attorneys and the National Consumer Bankruptcy Rights Center—and their fingerprints are visible in the Court’s reasoning. This is exactly the kind of doctrinal narrowing consumer advocates have been pushing for. Final Take Cook is a quiet but important win for consumer bankruptcy law. Yes, the debtor loses on the merits. But the Fourth Circuit: Rejects overuse of equitable mootness Reinforces meaningful appellate review in Chapter 13 And—most importantly—keeps alive a post-Bullard pathway to challenge plan denials For practitioners, that’s not just academic. That’s leverage. Addendum: Amici NACBA & NCBRC—And a Well-Earned “Told You So” No discussion of Cook v. Chapter 13 Trustee would be complete without recognizing the amicus brief filed by Richard P. Cook (no relation to the debtor) on behalf of the National Association of Consumer Bankruptcy Attorneys and the National Consumer Bankruptcy Rights Center. That brief did not merely participate—it framed the issue the Fourth Circuit ultimately decided. Congratulations Are in Order Credit where it is due: To Richard P. Cook (no relation), for a clear, disciplined brief that stayed focused on the doctrine rather than the debtor’s underlying merits. To NACBA and NCBRC, for continuing to do what they do best—identify systemic risks to consumer bankruptcy rights and intervene at precisely the right moment. This is exactly the kind of case where amicus participation matters: The debtor wins the procedural battle The doctrine is narrowed And appellate rights are preserved for thousands of future Chapter 13 debtors To read a copy of the transcript, please see: Blog comments Attachment Document cook_v._trustee.pdf (163.8 KB) Document cook_v._trustee_amicus_brief_of_nacba-ncbrc.pdf (273.16 KB) Category 4th Circuit Court of Appeals

4th Cir. : Goddard v. Burnett- Means Test Compliance Is Not a “Get Out of Good Faith Free” Card Ed Boltz Tue, 04/28/2026 - 22:08 Summary: In Goddard v. Burnett, the Fourth Circuit affirmed what many bankruptcy judges (especially in the Eastern Disttrict of North Carolina) have been signaling for years: the mechanical safe harbor of § 1325(b) does not displace the equitable backbone of Chapter 13—good faith. The debtor, an above-median wage earner with a combined household gross income exceeding $16,000 per month (including VA disability benefits that would not be included in his Current Monthly Income), proposed a Chapter 13 plan that would allow him to retain and ultimately pay off three recently purchased vehicles—a 2015 Chevrolet Corvette, a 2021 GMC Sierra, and a 2022 Genesis G70—carrying combined monthly payments of roughly $3,000 and total secured debt approaching $140,000. At the same time, the plan projected that general unsecured creditors, owed approximately $84,700, would receive only about $6,500 over five years—roughly a 7.7% dividend—with the balance discharged at completion. Mr. Goddard proposed a plan that, on paper, checked every means test box. But in substance? It would have left him with three paid-off luxury vehicles while unsecured creditors received just 7.7%—and over $78,000 wiped away. The courts—bankruptcy, district, and now the Fourth Circuit—weren’t buying it. The Six Bases for Rejecting Goddard’s Argument The Fourth Circuit didn’t just reject Goddard’s position—it dismantled it methodically with six distinct points: 1. Flawed Logic: Means Test ≠ Good Faith Goddard argued that because BAPCPA removed discretion from expense calculations, courts lost discretion to evaluate good faith. The Court’s response: that does not follow. Removing discretion in one area doesn’t eliminate a separate statutory requirement. 👉 Translation: Math is not morality. 2. Good Faith Is Broad and Foundational The Court emphasized that good faith “permeates the entire Bankruptcy Code.” This isn’t a narrow inquiry—it’s an equitable backstop to prevent manipulation of the system. 3. Technical Compliance Is Not Enough Citing Deans v. O’Donnell, the Court reiterated the classic Fourth Circuit test: Is there an abuse of the provisions, purpose, or spirit of Chapter 13? 👉 You can comply with the letter of the Code and still violate its spirit. 4. BAPCPA Didn’t Eliminate Good Faith Congress left § 1325(a)(3) intact—intentionally. The means test was added to ensure payment capacity, not to authorize strategic manipulation. 5. § 1325(a) Is Independent of § 1325(b) Confirmation requires compliance with all provisions of Chapter 13—not just disposable income. 👉 Passing one test doesn’t excuse failing another. 6. Structural Analogy to § 707(b) This is where the opinion gets particularly useful for practitioners. The Court analogized: § 707(b)(2) = mechanical means test § 707(b)(3) = totality of circumstances / bad faith These operate together, not in isolation. Same for Chapter 13: § 1325(b) = numbers § 1325(a)(3) = fairness 👉 The Court explicitly rejects the idea that one replaces the other. The Bankruptcy Court’s Findings of Bad Faith (and Why They Matter) The bankruptcy court made several factual findings—affirmed on appeal—that should make every consumer attorney sit up: 1. Timing and Pattern of Conduct Vehicles purchased within ~32 months prepetition Personal loans taken out around same time One loan taken the day before buying the Genesis 👉 This looked like pre-bankruptcy positioning, not ordinary consumer behavior. 2. Use of Bankruptcy to “Complete the Deal” The Court saw the plan as a strategy to: Pay secured debt in full Discharge unsecured borrowing used to support those purchases 👉 In other words: leveraging Chapter 13 to subsidize luxury consumption. 3. Lack of Necessity Goddard: Could not justify the need for three luxury vehicles Offered no practical necessity evidence 4. Disproportionate Outcome ~$3,000/month to vehicles Minimal payout to unsecured creditors 5. Admission Against Interest Goddard conceded he: “probably could have” paid unsecured debts if he reduced vehicle expenses. 👉 That’s the kind of testimony that sinks a good faith argument. 6. End Result: Windfall The Court focused on the outcome: Three unencumbered luxury vehicles Massive discharge 👉 That’s not a “fresh start”—that’s a financial upgrade at creditor expense. Practice Pointers: The "Watson Method" of  Defending Against “Luxury” Bad Faith Attacks This decision doesn’t mean debtors can’t keep expensive vehicles. It means you better build the record. 1. Establish Actual Need (Not Preference) Employment requirements (travel, tools, reliability) Family needs (multiple drivers, childcare logistics) Health/disability considerations 👉 Don’t just say “needed”—prove why alternatives don’t work. 2. Document the Purchase History Helpful facts include: Market pricing at time of purchase Interest rates (especially if reasonable prepetition) Trade-in necessity Lack of cheaper viable options 👉 Normalize the purchase—avoid “impulse luxury” optics. 3. Compare Replacement Reality A key practical flaw in many “just surrender the vehicle” arguments is the assumption that doing so will automatically free up money for unsecured creditors. For financially distressed debtors—particularly those already in bankruptcy or on the brink—that is often not true. With damaged credit, replacement financing frequently comes at subprime rates (18–25%), requires cash down payments the debtor does not have, and is limited to older, less reliable vehicles. As a result, a debtor who surrenders a $1,000/month vehicle financed pre-distress at a reasonable rate may find themselves paying $600–$7800/month for a car—or $1400+ for two modest vehicles needed for work and family—often with higher maintenance costs and greater risk of breakdown. Add in increased insurance, repair expenses, and the difficulty of obtaining court approval for new financing in Chapter 13, and the supposed “savings” can quickly evaporate. In short, for debtors in financial distress, trading down does not necessarily mean paying less—and it certainly does not guarantee that unsecured creditors will receive more. This is critical and often overlooked: Show: What would it cost today to replace the vehicle? What interest rate would debtor get post-petition or near insolvency? Availability of financing for someone in financial distress 👉 Courts need to understand: surrender isn’t free—it may be worse. 4. Run the Chapter 7 Comparison Would the debtor: Pass the § 707(b)(2) means test? Survive § 707(b)(3) scrutiny? If not: Chapter 13 may already be the best outcome for creditors 👉 Use liquidation analysis as a shield. 5. Increase Unsecured Dividend (If Possible) Even modest increases can: Undercut “abuse” arguments Show genuine effort 👉 Optics matter. 6. Prepare the Debtor for Testimony Goddard lost in part because of his own testimony. While testifying truthfully, your client must: Avoid admissions like “I could have paid this” Be consistent about necessity and constraints Was This a Good Case to Appeal? Short answer: Even without the benefit of hindsight:  Absolutely Not Why: 1.Standard of review Good faith = factual / discretionary Reviewed for clear error That’s a steep hill 2. Bad facts Three luxury vehicles Timing of loans Minimal dividend 3. Fourth Circuit precedent Strong emphasis on equitable principles Deep roots in Deans and its progeny 4. Record issues Lack of necessity evidence Damaging debtor testimony Final Take This decision is a warning shot—especially for above-median Chapter 13 cases: You cannot game the means test to preserve luxury assets and expect the court to ignore it. For practitioners, the lesson is clear: Build the story, not just the numbers Anticipate good faith challenges early And most importantly—   never assume § 1325(b) is the finish line Because in the Fourth Circuit, it ma now just be the starting point. To read a copy of the transcript, please see: Blog comments Attachment Document goddard_v._burnett_1.pdf (170.95 KB) Category 4th Circuit Court of Appeals

Bankr. W.D.N.C.: Official Committee of Asbestos Personal Injury Claimants v. DBMP- Attorney-Client Privilege Issues in Bankruptcy Ed Boltz Wed, 04/15/2026 - 16:23 Summary:   What Judge Edwards has done in the DBMP decision—and what In re Wolbert foreshadowed years earlier—is to remind us that attorney-client privilege in bankruptcy is not a static shield. It is a conditional protection, one that can erode—sometimes quickly—once the debtor crosses the line from considering bankruptcy to committing to it. And that line matters. I. The Core Tension: Confidential Advice vs. Mandatory Disclosure Bankruptcy is different. Unlike most litigation, it is built on compelled transparency. As Wolbert explains, the privilege protects candid communications only so long as they are intended to remain confidential. But once those communications are made for the purpose of producing a public filing—the petition, schedules, SOFA—the expectation of confidentiality evaporates. That produces a two-stage framework: 1. Pre-decision phase (privilege intact) Discussions about whether to file Strategy, alternatives, risks Legal advice about exemptions, timing, or consequences These remain privileged because they are not yet destined for public disclosure. 2. Post-decision phase (privilege erosion) Once the debtor has decided to file, communications: Supplying facts for schedules Drafting petitions Explaining assets, transfers, liabilities are no longer confidential in the same way—because they are intended to be published. That is the doctrinal hook both Wolbert and Judge Edwards rely on: privilege is lost when communications are made with the understanding they will be disclosed. II. What Counts as a “Decision to File”? This is where the DBMP analysis becomes especially instructive—and dangerous if misapplied to consumer practice. Judge Edwards did not rely on a formal board resolution alone. Instead, she looked at objective conduct demonstrating commitment: Structural steps (entity formation, restructuring) Movement of significant assets (e.g., $25 million transfer) Implementation of a pre-packaged legal strategy Board-level actions consistent with an inevitable filing In other words, the court inferred the “decision” from actions inconsistent with anything else. Translating that to consumer cases A court could find that a debtor has “decided to file” when: The debtor has retained counsel and paid a bankruptcy-specific retainer The debtor is actively compiling documents for schedules There is no meaningful exploration of alternatives The debtor has taken pre-filing actions uniquely tied to bankruptcy (e.g., asset conversions, timing transfers, stopping payments solely for filing) But—and this is critical—none of those are necessarily dispositive. The real question is: Has the client committed to filing, or are they still evaluating options? III. Can a Retainer Agreement Preserve Privilege? A well drafted retainer agreement may not just be good practice,  but  may be likely essential. A provision stating: "Even though the debtor has consulted with the attorney, viable alternative options, including debt settlement and/or defense, refinancing, etc., an ultimate decision whether to file bankruptcy, what chapter and what, if any plan for reorganization to propose, will not be made until the Debtor has reviewed and signed as complete and accurate the final bankruptcy petition." ” does two important things: 1. It preserves the “pre-decision” characterization It creates a record that: The client is still evaluating alternatives The attorney is still providing advisory services, not merely transcription 2. It rebuts objective inference If later challenged, it helps counter arguments like those in DBMP that: the decision had already been made during document preparation That said, a contract alone is not dispositive. Courts will look at conduct over language. If everything about the representation screams “this filing is happening,” the clause may not save privilege. But it significantly strengthens the argument. IV. Third-Party Assistance: Does It Preserve Privilege? Third-Party Confidentiality Agreements, as sample of which is attached and for which I would welcome comments and suggestsion,  are often necessary to preserve attorney-client privilege for consumers who need the assistance of family or friends—but it is not a magic wand.   A. When third-party involvement does NOT waive privilege Privilege can be preserved when the third party is: An agent necessary to facilitate communication A translator, advisor, or functional equivalent Someone whose involvement is reasonably necessary to the representation Such an agreement hits these points well: Identifies the son as agent/confidant States his involvement is necessary Limits use of information to the representation These are exactly the facts courts look for. B. Where the risk remains Courts are skeptical when the third party is: Merely supportive (emotional or logistical) Not actually necessary to legal advice Functioning as a “family observer” The key vulnerability is this: If the third party’s presence is not necessary, it may be treated as a “stranger,” destroying privilege. A Third-Party Confidentiality agreement tries to solve that by declaring necessity. That helps—but courts will still ask: Could the client have communicated without this person? Was the person adding substantive assistance? Or simply present? V. Joint Interest vs. Agency: Don’t Confuse the Doctrines A common mistake is to treat family members as part of a “joint defense” or “common interest” group. That usually fails. Joint/common interest doctrine requires: Separate clients Separate counsel Shared legal interest in anticipated litigation A parent and adult child helping with finances typically do not meet this test. Instead, the better framework—correctly used in your agreement—is: 👉 Agency / necessary intermediary That is far more defensible in consumer bankruptcy. VI. The “Draft for Publication” Waiver Problem Both Wolbert and the Fourth Circuit authorities it relies on make a broader point: If a communication is intended to result in a public filing, privilege may be waived not just for the final document—but for drafts and underlying communications.   This creates real exposure in bankruptcy practice: Draft schedules Intake notes Emails about asset disclosure Paralegal communications All potentially discoverable once tied to the petition. VII. Practical Takeaways This is where doctrine meets the trenches. 1. Preserve the “decision gap” Maintain a clear distinction between: Consultation phase (privileged) Execution phase (potentially not) Document that distinction. 2. Use retainer language strategically Your proposed clause is not boilerplate—it is litigation positioning. 3. Be careful with third parties Use written agreements (as you did) Frame them as necessary agents Limit their role and participation 4. Assume petition-related facts are discoverable Operate under the working assumption that: Anything used to prepare schedules may be examined later 5. Train staff accordingly Paralegals—like in Wolbert—can become witnesses. That is not theoretical. VIII. The Bigger Picture The throughline from In re Wolbert to the DBMP decision is this: Bankruptcy trades confidentiality for transparency. Attorney-client privilege survives—but only at the margins: before the decision to file outside the scope of required disclosure and only when confidentiality is carefully preserved Everything else risks becoming evidence. To read a copy of the transcript, please see: Blog comments Attachment Document third_party_confidentiality_agreement.docx (15.57 KB) Document in_re_wolbert.pdf (217.17 KB) Document official_committeee_of_asbestos_personal_injury_claimants_v._dbmp.pdf (3.66 MB) Category Western District

Law Review (Note): Gabrielle R. Lanoue, Reframing Furnisher Obligations Under the FCRA: Roberts v. Carter-Young and the Objectively and Readily Verifiable Standard, 30 N.C. Banking Inst. 312 (2026). Ed Boltz Tue, 04/28/2026 - 15:31 Available at: https://scholarship.law.unc.edu/ncbi/vol30/iss1/13 INTRODUCTION: Credit reports have a gatekeeping function for access to economic opportunity in America. They affect whether consumers can qualify for mortgages, obtain car loans, secure rental housing, or gain employment. Even when consumers qualify for credit, their credit report can affect the interest rate lenders charge them. Given this extensive reach, inaccuracies in credit reporting carry serious consequences that shape whether and how consumers access fundamental aspects of economic life.   National studies underscore the scale of the problem. In 2012, the Federal Trade Commission (“FTC”) reported that more than twentysix percent of consumers identified at least one potentially material error in their credit report, and about five percent had errors significant  enough to lower their credit risk tier. The FTC defined a “potentially material error” as any inaccuracy capable of altering creditworthiness, such as misreporting accounts in collection or duplicating entries. In 2024, the Consumer Financial Protection Bureau (“CFPB”) reported that consumers submitted over 2.7 million credit or consumer reporting complaints, accounting for eighty-five percent of all complaints received by the agency. These figures demonstrate the persistent, realworld consequences of reporting errors.  Congress has long recognized the risks that inaccuracies pose to consumer welfare and market efficiency. In 1970, it enacted the Fair Credit Reporting Act (“FCRA”) to require the “maximum possible accuracy” in consumer credit reports.The statute originally placed its accuracy obligations on consumer reporting agencies (“CR As”). However, this structure had an inherent weakness. CR As compile rather than originate data, so faulty information from furnishers can persist even when CR As follow reasonable procedures.  To address this limitation, Congress amended the FCRA in 1996 by adding § 1681s-2, which imposed direct duties on furnishers to ensure accuracy and respond to consumer disputes. Yet, the statute never defines what counts as an inaccuracy or how far a furnisher must go when reviewing a dispute, leaving courts to determine the scope of the investigative duty. Some courts confine the furnisher’s duty to investigate to disputes they characterize as factual, while others focus on whether the disputed information can be confirmed through ordinary documentation. These differing interpretations produced the modern circuit split over § 1681s-2(b).  The First, Seventh, and Tenth Circuits have adopted a restrictive “fact-law distinction.” Under this approach, furnishers must correct factual mistakes, such as a misreported balance, but need not investigate disputes involving legal interpretation, such as whether a lease permits a particular fee. These courts reason that the FCRA requires “reasonable investigations,” not legal adjudications, and that expecting furnishers to resolve legal questions would exceed their administrative role.  Other circuits instead focus on whether a furnisher can actually verify the disputed information. Courts adopting this view describe it as an “objectively and readily verifiable” standard, requiring investigation when disputed information can be confirmed through ordinary records even if the dispute includes legal elements. The Eleventh Circuit was the first to apply that reasoning to furnishers, concluding that § 1681s-2(b) reaches only those disputes capable of objective verification and that the statute does not expect furnishers to act as tribunals resolving complex or unsettled questions of law. Against this backdrop, the Fourth Circuit’s 2025 decision in Roberts v. Carter-Young, Inc. marked a shift in how courts interpret furnishers’ obligations under the FCRA. Roberts adopted the “objectively and readily verifiable” framework as the governing standard, requiring investigation whenever disputed information can reasonably be confirmed through available evidence. The court also clarified that unverifiability marks the statutory endpoint. When information cannot be substantiated, § 1681s-2(b) requires its deletion. By grounding the duty in both text and purpose, Roberts links verifiability to furnisher compliance and treats accuracy and investigation as interdependent obligations that collectively safeguard the integrity of consumer reporting. This Note argues that the “objectively and readily verifiable” standard, as applied and clarified in Roberts, is the most faithful interpretation of the FCRA. It further contends that courts in circuits that have not yet addressed the issue—and, if the split reaches it, the Supreme Court—should adopt this framework. Unlike earlier decisions, Roberts structures furnishers’ obligations around what their records can actually verify, filling a gap in the case law that focused on when the duty begins but did not address what should follow when verification fails. The decision offers a workable, text-grounded framework that balances consumer protection with the practical limits of furnisher investigations and helps close the enforcement loophole Congress sought to eliminate in 1996. By articulating this standard in clear, functional terms, Roberts provides momentum toward national uniformity and gives practical guidance to circuits that have not yet addressed the issue. \ The stakes of this circuit split extend beyond legal doctrine. Unresolved disputes carry concrete economic consequences for consumers, and the fact-law distinction entrenches those harms by allowing furnishers to avoid investigation simply by labeling a dispute “legal.” Roberts rejects that categorical approach and redirects the inquiry to whether the accuracy of a disputed item can be confirmed through objective records. Critics warn that this expansion risks burdening furnishers with quasi-judicial responsibilities. However, Roberts makes clear that the standard does not demand resolution of complex or unsettled legal issues. It requires only that furnishers review the documentation they already maintain and act when verification is possible. This approach preserves the balance Congress intended. This Note proceeds in five parts. Part II reviews the statutory framework of 15 U.S.C. § 1681s-2(b) and traces the development of the circuit split that emerged following the 1996 amendments. Part III examines the Fourth Circuit’s reasoning in Roberts and situates the decision within the broader landscape of FCRA interpretation. Part IV argues that the “objectively and readily verifiable” standard, as clarified in Roberts, best fulfills Congress’s intent, closes the enforcement loophole created by the “fact-law distinction,” and provides a workable framework for furnishers and courts. Part V considers the broader implications of Roberts for consumer protection, furnisher compliance, and the path toward national uniformity in FCRA interpretation. Finally, Part VI summarizes and concludes this Note. Summary: If you’ve been following the slow-burning doctrinal knife fight over the scope of furnisher duties under the Fair Credit Reporting Act, this Note—Reframing Furnisher Obligations Under the FCRA: Roberts v. Carter-Young and the Objectively and Readily Verifiable Standard—is required reading. And not just because it’s academically sound. It actually matters in the trenches. The article starts where it should: with the uncomfortable reality that credit reporting is less a neutral database and more a gatekeeper to modern economic life. Errors are not hypothetical—they are endemic. The FTC has long found material inaccuracies in over a quarter of credit reports, and the CFPB continues to be inundated with complaints. The structural flaw? The original FCRA regime regulated credit reporting agencies, but not the entities actually generating the data (furnishers). Congress tried to fix that in 1996 with § 1681s-2(b), imposing investigation and correction duties once a dispute is lodged. As is often the case, however, Congress left just enough ambiguity to keep federal courts gainfully employed for decades. Enter the Circuit Split The Note does an excellent job walking through the two competing camps: The “fact vs. law” crowd (1st, 7th, 10th Circuits): Furnishers only need to fix obvious factual errors—wrong balances, duplicate entries, etc. Anything that smells like a legal issue? Not their problem. The “objectively and readily verifiable” camp (2d, 11th—and now the 4th): The real question is practical, not metaphysical: Can this be checked with the records you already have? If yes, investigate. If not, you’re not a court—move along. The Fourth Circuit’s Pivot in Roberts v. Carter-Young As discussed in my earlier post  👉 Roberts v. Carter-Young- Fair Credit Reporting Act – Reasonable Investigation – Legal vs. Factual Disputes didn’t just pick a side. It sharpened the rule. The Fourth Circuit: Rejects the fact-law distinction outright Because nothing in § 1681s-2(b) says “except legal disputes.” And courts generally shouldn’t add words Congress didn’t. Adopts the “objectively and readily verifiable” standard If the furnisher can check it using its own records, it must. (And here’s the real kicker)  gives teeth to the statute’s deletion requirement If the furnisher can’t verify it, it doesn’t get to shrug and keep reporting it. It must delete it. That last point is where this Note really shines. It correctly identifies that Roberts didn’t just clarify when the duty to investigate begins, it clarified what happens when the investigation fails. And that’s the part many courts had conveniently sidestepped. As the Note explains, Roberts creates a “verify or delete” regime, aligning investigation and accuracy into a single, integrated obligation. Commentary (a.k.a. what this actually means in practice) Let’s translate this out of law review and into bankruptcy practice. 1. The “just call the creditor and ask” defense is in trouble In Roberts, the furnisher did what many servicers and collectors do: “Hey landlord, is this debt legit?” “Yep.” “Great, verified.” That’s not an investigation. That’s outsourcing your statutory duty to the party with the most incentive to be wrong. Under Roberts, that dog won’t hunt anymore. 2. This is quietly a big deal for bankruptcy debtors Think about the overlap: Disputed deficiencies after surrender Questionable post-petition fees Zombie debts that should have been discharged Lease or contract mischaracterizations Under the old “fact-law” dodge, furnishers could say: “Sounds like a legal dispute—take it to court.” Now the question is: Can the furnisher check its own file? If yes, it must. If no, it must delete. That’s a meaningful shift in leverage. 3. The deletion remedy is the sleeper issue The Note correctly identifies what many courts missed: The statute doesn’t just require investigation—it reallocates the burden of uncertainty. If the furnisher cannot verify, the consumer wins, not because they proved the debt invalid, but because the furnisher couldn’t prove it valid. That’s not just pro-consumer. That’s exactly what Congress intended when it amended the FCRA in 1996. 4. The Fourth Circuit is (again) dragging the law toward reality As I noted in my earlier blog post, Roberts reflects a growing judicial impatience with formalistic defenses that ignore how these systems actually work. Credit reporting is automated, volume-driven, and too often sloppy. The “objectively verifiable” standard forces furnishers to do something radical: Look at their own records before ruining someone’s credit. Not exactly an unreasonable ask. 5. But don’t overread it—limits remain The Note is also clear (and right) that Roberts doesn’t turn furnishers into mini-judges. Fraud? Retaliation? Subjective intent? Those still fall outside the scope—because they aren’t “objectively and readily verifiable.” So yes, there are guardrails. But they are far narrower than the old “anything legal is off-limits” escape hatch. Final Thought This is one of those rare law review Notes that actually bridges doctrine and practice. It captures not just what Roberts says, but why it matters—and where it’s likely going. And for those of us dealing with inaccurate credit reporting in bankruptcy cases, that trajectory matters a lot. Closing Congratulations to UNC Law student Gabrielle R. Lanoue on this important contribution to consumer rights literature. To read a copy of the transcript, please see: Blog comments Attachment Document reframing_furnisher_obligations_under_the_fcra.pdf (597.2 KB) Category Law Reviews & Studies

If you have decided to declare bankruptcy, you are on your way to relief from pressing debt. As a part of this process, you must decide how you wish to handle financial agreements you entered while you were solvent. There are several options for dealing with executory contracts in bankruptcy cases, each with its own implications. One of our experienced attorneys could help you understand the issues you face as you make your decision. Contact Allmand Law Firm today for guidance. What Is an Executory Contract? An executory contract is an agreement that has not yet been fulfilled. For example, if you agree to purchase an item with payment on delivery, the contract remains executory until the merchandise is delivered and you make payment. Another type of executory contract involves an agreement where you and the other party maintain ongoing obligations to each other, such as: Residential leases Cell phone contracts Gym memberships Home security services with a monthly subscription fee Early in filing for your Chapter 7 or Chapter 13 bankruptcy case, you have to decide whether you want to continue honoring these executory agreements. Talking with one of our attorneys could help you decide if it makes sense to continue with specific contracts. How Bankruptcy Impacts Executory Agreements Many contracts contain language saying that the agreement terminates immediately if one party declares bankruptcy, but these provisions may not be enforceable. According to the federal bankruptcy law under 11 United States Code § 365, you, as the debtor, have a choice about whether to continue with the contract, and the other party must continue to honor the current arrangement until you decide which option to pursue. Assumption You can assume the contract, which means you agree to honor its terms despite your bankruptcy. If you assume a contract, you must resolve any default. The other party is entitled to seek assurances that you will honor your obligations, so you may need to make a security deposit or get a co-signer. Rejection You can choose to reject the contract, which means you will no longer be required to perform under its terms. The other party may file a claim for damages with the bankruptcy court, and your outstanding balance would be treated like the other dischargeable debts in your case. An experienced attorney can help you understand the potential implications of rejecting a specific executory contract in your case. One of our attorneys could explain the potential implications of rejecting a specific executory contract in your bankruptcy case. Assignment If the contract does not benefit you during your bankruptcy, but may be of value to someone else, you may be able to assign it. This means that you would transfer the contract to someone who can handle its obligations. You may still owe a debt to the contract holder if you defaulted before transferring it over, but sometimes the person assuming the contract is willing to cure your default as part of the assignment. Timing The timeframe in which you must decide to assume, reject, or assign your contracts depends on the form of bankruptcy you choose. If you file under Chapter 7, you have 30 days from the filing date to make your choice and notify the bankruptcy trustee, who makes the final decision. If you file under Chapter 13, you typically submit your proposed repayment plan, including your intentions regarding executory agreements, at the time of filing. The final ruling on repayment terms comes at a hearing that typically occurs two to three months after the filing date. Call Us for Help With Executory Agreements in Your Bankruptcy Case Debtors have a choice in how to handle executory contracts in bankruptcy cases. However, making your decision and persuading the trustee or creditor committee to accept it can be a complex process. If you need guidance, contact our team at Allmand Law Firm today. The post Executory Contracts in Bankruptcy Cases appeared first on Allmand Law Firm, PLLC.

 SBA EIDL Loan Successfully Recalled from Treasury 4/27/26 Jim Shenwick, Esq. is pleased to announce a significant victory on behalf of a client: the successful recall of a defaulted SBA EIDL loan from the U.S. Department of Treasury back to the SBA. The loan in question had an outstanding balance of $212,000 and was personally guaranteed by the borrower. By securing the recall, the client avoided a substantial 30% penalty and all associated costs that come with Treasury-level collection. How We Achieved This Result The client had a compelling set of facts working in their favor. They were able to demonstrate that they never received the required 60-Day Default Notice from the SBA, and they had a documented medical condition that further supported their case. Upon being retained, we moved quickly. Under our guidance, the client sent targeted correspondence — both emails and formal letters — directly to the Treasury and the SBA. The client also reached out to their Congressional representative, who contacted the SBA on their behalf. Last Friday, the SBA notified the client by email that, following a thorough review of the file, the loan had been recalled from Treasury back to the SBA. The client may now resume making payments directly to the SBA, avoiding the severe consequences of Treasury-level default. The client was thrilled — and so were we. What This Means for Other Borrowers These cases are challenging to pursue and require the right combination of facts, documentation, and strategy. However, this outcome demonstrates that a recall from Treasury to the SBA is achievable with the proper approach. If you have an SBA EIDL loan that has been referred to the Department of Treasury, don't wait. Contact us today to discuss your options. Jim Shenwick, Esq. 📞 917-363-3391 ✉️ jshenwick@gmail.com 📅 Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15min We help individuals and businesses manage overwhelming debt, and represent creditors in bankruptcy cases