Bankruptcy may be necessary to alleviate your financial burdens and obtain a fresh start. If you have received a Workers’ Compensation settlement or are in the process of negotiating one, you should talk to your attorney about how to protect your settlement during bankruptcy proceedings. Workers’ Compensation benefits and settlements are usually protected from bankruptcy, but you must navigate the appropriate legal channels. You can exclude a Workers’ Comp settlement from bankruptcy by claiming the right state or federal exemptions. However, what you do with these funds might place them at risk. Avoid comingling funds from a Workers’ Compensation settlement, as they may lose their protected status. Also, be careful about spending these funds, as what you purchase may not be exempt. Get a private, free case evaluation from our bankruptcy lawyers by calling us at Young, Marr, Mallis & Associates at (215) 701-6519. Protecting Workers’ Comp Settlements Through Bankruptcy Exemptions If you were injured at work, you may have accepted a Workers’ Compensation settlement to help you make ends meet while you recover. If you are also going through bankruptcy, your Workers’ Comp settlement may be in jeopardy. Federal Exemptions Bankruptcy exemptions allow you to shield certain funds, assets, or accounts from the bankruptcy process, meaning a bankruptcy trustee cannot seize certain assets to pay your debts. Under federal law, bankruptcy exemptions may protect a wide range of assets, accounts, and property, including public benefits or government assistance. Workers’ Compensation falls under this category, and you can exempt it from bankruptcy proceedings. State Exemptions In addition to federal exemptions, state exemptions may shield certain assets. While federal and state exemptions often overlap, there may be key differences that you should discuss with your lawyer. If your state provides exemptions for public assistance or benefits, including Workers’ Compensation settlements, you may think about selecting these exemptions. However, you should carefully consider the state and federal exemptions before making a final decision. Selecting Optimal Exemptions Depending on what state you live in, you may only be permitted to select entirely federal or entirely state exemptions. Federal law provides exemptions that may protect your Workers’ Compensation settlement, but not every state offers the same. It is crucial that you speak to an attorney about your case to determine if state exemptions adequately protect you or if you should only select federal exemptions. Possible Risks to Your Workers’ Compensation Settlement During Bankruptcy Even if you can claim exemptions that would protect your Workers’ Comp settlement, what you do with the settlement might still place it at risk during bankruptcy proceedings. Mixing Funds When you receive a Workers’ Compensation settlement, you might not give much thought to what kind of account you put it in. Since most people need these settlements to cover ordinary expenses, they may deposit them into the accounts they normally use. However, if you comingle Workers’ Compensation settlement funds with other money, your settlement could lose its protected status. It may be best to keep any settlement proceeds completely separate from other money and accounts. Doing so may help ensure its protection during bankruptcy proceedings. Spending Your Workers’ Comp Settlement While your Workers’ Compensation settlement is shielded from bankruptcy under the right circumstances, what you purchase with the settlement funds might not be. For example, if you spend that money on car payments or a mortgage, your vehicle or home could still be seized by bankruptcy and liquidated to pay your debts, depending on which bankruptcy chapter you file under. Spend the money wisely. If you receive the settlement while in the middle of bankruptcy proceedings, it might be wise to spend as little as possible to protect the money until your bankruptcy case is completed. Pending Workers’ Compensation Claims You might be going through bankruptcy while your Workers’ Compensation case is pending. This can be a legally complex situation, and your potential settlement might not be protected since you technically do not have it yet. It is crucial that you disclose the settlement, whether you have received it or not, to the bankruptcy court. Disclosing the full extent of your assets is required, and to do otherwise may be seen as fraud. Although Workers’ Compensation settlements are exempt from bankruptcy, they are still considered income, which is an enormous factor in bankruptcy proceedings. Failing to inform the court of a potential settlement is not a good idea. FA Qs About Bankruptcy and Workers’ Compensation Settlements Will You Lose a Workers’ Comp Settlement During Bankruptcy? Your Workers’ Compensation settlement may be at risk during bankruptcy proceedings if you do not claim the appropriate exemptions. Federal exemptions protect public assistance or benefits, such as Workers’ Compensation, but state exemptions may vary. Depending on where you live, you may be able to choose only federal or state exemptions, not both. What Can You Do to Protect Your Workers’ Compensation Settlement During Bankruptcy? First, you should talk to your lawyer about selecting the right bankruptcy exemptions. If you play your cards right, you may completely exempt your Workers’ Compensation settlement from bankruptcy. Even if your settlement is pending, you must still disclose it to the court. To do otherwise may be considered fraud and could land you in serious trouble. What Should You Do with Your Workers’ Comp Settlement During Bankruptcy? Avoid mixing funds from a Workers’ Comp settlement with other funds. For example, do not deposit your settlement funds in the same account that your spouse deposits their normal income. This could cost your Workers’ Comp settlement its protected status. You should also be careful about how you spend the money from your settlement. While the settlement might be protected, what you buy with it might not be. Do You Have to Use a Workers’ Comp Settlement to Pay for Bankruptcy? Possibly. Your settlement may be exempt from bankruptcy, but it will still be considered income. Although we can protect it from a bankruptcy trustee, you might still end up using the settlement to pay for a Chapter 13 payment plan if that is how you file. Receive Help from Our Bankruptcy Lawyers Today Get a private, free case evaluation from our bankruptcy lawyers by calling us at Young, Marr, Mallis & Associates at (215) 701-6519.

Bankruptcy can be an unpleasant experience, but it may be the best way to get out from under debts you can no longer afford and get a fresh financial start. During bankruptcy, you may need to submit reports about your property and how much it is worth. If property is not valued correctly, you might encounter trouble. Much property is evaluated based on its fair market value, which may fluctuate over time based on numerous factors you cannot control. Generally, the fair market value of a property is based on what the property may sell for currently, not necessarily what you paid for it or what it could be worth in the future. Courts tend to focus on larger or more valuable property, not small personal items that are not particularly valuable or expensive. Call our Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates at (215) 701-6519 for a free, private review of your case. How is Property Valued by Pennsylvania Bankruptcy Courts? Courts may value property at the current fair market value, which may be determined by multiple factors unique to the property. Determining Fair Market Value Fair market value is not a number that is set in stone. It is based on what the property may reasonably sell for on the open market. This value will likely change over time. For example, when people buy a home, they often expect, or at least hope, that its value will go up over time. So, if you must value the home for a bankruptcy case, its fair market value may be more than what you actually paid for it. Factors such as the property’s condition, its location (for real property), and overall demand for similar properties may determine the fair market value. Appraising Fair Market Value The fair market value of your property might not be something we can determine on our own. We may need third parties to evaluate and appraise the property. In fact, it may be best to have experienced professionals appraising your property, as their conclusions may be harder to challenge if the value is disputed. Importance of Accurate Appraisals The value of certain property, especially real property, is somewhat subjective. What you paid for it might not be what the property is worth. Value also tends to fluctuate over time based on numerous factors. Some properties may be more hotly contested than others. For example, the fair market value of a piece of real property in an up-and-coming neighborhood might skyrocket in just a few years. If you have such a property, it is crucial to evaluate it carefully and seek opinions from multiple experts. What Kind of Property is Evaluated by Pennsylvania Bankruptcy Courts? While valuing property is crucial in a bankruptcy case, not all property may need to be professionally appraised. Real Property Perhaps the most significant property in a bankruptcy case is real property. Whether you own a home, business, or an empty plot of land, it must be properly appraised. Real property is often very valuable. Even small plots of land may be extremely valuable in the right neighborhood. What is more, the value of real property fluctuates significantly over time. Especially Valuable property Some property may need to be evaluated even though it is not real property. Courts tend to focus on non-exempt, valuable property. Property that may need to be valued for your bankruptcy case may include, but is not limited to, the following: Vehicles Computers and electronics Collectibles Artwork Antiques Business assets (e.g., intellectual properties, inventory, digital assets) Luxury Property The court will also likely want to value certain luxury items. This may include clothing, jewelry, or even furniture that is considered a luxury. Designer items usually fall into this category and should be accounted for. Often, this kind of property is worth a fair amount of money and may be seized by the bankruptcy trustee if it is not exempt. Why is Evaluating Property Important in Bankruptcy Cases? It is important that our Harrisburg, PA bankruptcy lawyers are as accurate as possible when evaluating your property. If our numbers are incorrect, you might be in trouble. Avoiding Fraud If we inaccurately report the value of your property to the bankruptcy court, you may be suspected of fraud. People sometimes try to hide assets by making something seem less valuable than it really is. If the court suspects that we are not totally honest about your current financial situation, including the value of your property, your bankruptcy case could be dismissed. Chapter 7 Liquidation If a bankruptcy trustee seizes your property, it will be liquidated and used to pay your debts. While this can be uncomfortable, it may be unavoidable for some. If this happens, you want to make sure that the property is sold for its maximum value, which can help eliminate your debts. If property is undervalued, it may be liquidated and sold for less than it is worth. This means you would lose the property, and less money may be applied to your debt. FA Qs About How Pennsylvania Courts Value Property During Bankruptcy Proceedings How Do Pennsylvania Courts Value Property for Bankruptcy Cases? Property is usually valued at its fair market value, which reflects what the property would likely sell for on the open market. Fair market value tends to fluctuate over time, but we must base your property’s value on its current fair market value. What if Property is Not Valued Correctly in a Bankruptcy Case? If your property is valued correctly, the court may suspect you of fraud. Misrepresenting the value of your property during bankruptcy is a serious violation, and your case could be dismissed. If any property is misvalued, we should correct the error and bring it to the court’s attention as soon as possible. How Can You Make Sure Your Property is Valued Accurately for Bankruptcy? It may be a good idea to have the property evaluated by multiple professionals, especially if its value is subject to change. The more evidence we have backing up our evaluations, the better. What Kind of Property Should Be Valued for Bankruptcy? Property you should have valued for bankruptcy includes, but might not be limited to, real property, vehicles, jewelry, collectibles, antiques, and anything else that might be particularly valuable. Ask Our Pennsylvania Bankruptcy Attorneys to Assess Your Case Call our Allentown, PA bankruptcy lawyers at Young, Marr, Mallis & Associates at (215) 701-6519 for a free, private review of your case.

Jointly owned real estate can be treated differently from other assets during bankruptcy, depending on the type of joint ownership. If you co-own property with a spouse or someone else and file for bankruptcy, our lawyers can prepare you for what comes next. If you file for bankruptcy and co-own real estate with your spouse as a tenancy by the entirety (TBE), exemptions protect the co-owned property from being included in the bankruptcy case. Co-owning a property with your spouse is not enough to qualify for TBE exemptions during bankruptcy; you must intentionally elect to mamake it a TBE property when you purchase it. Unmarried co-owners don’t get the same protections during lawsuits, and a debtor’s portion of the property most likely will be included in the real estate case. Spouses who file for bankruptcy together do not receive tenancy by the entirety protections, but they can protect jointly owned real estate by filing a Chapter 13 bankruptcy in Pennsylvania. Call (215) 701-6519 today to get the free, confidential case review with Young, Marr, Mallis & Associates’ Pennsylvania bankruptcy lawyers. What Happens to Jointly Owned Real Estate During Bankruptcy in Pennsylvania? What happens to jointly owned real estate during bankruptcy mostly depends on the type of joint ownership, such as tenancy by the entirety (only available to married couples), joint tenancy, or tenancy in common. Tenancy by the Entirety If you file for bankruptcy and own real estate with your spouse, tenancy by the entirety protections can protect your home from seizure. Tenancy by the entirety is a kind of joint property ownership that’s only available to married couples. Under this concept, each spouse owns the entire property, not just a portion of it. Tenancy by the entirety protections only protect real estate you own with your spouse if one of you files for bankruptcy. Tenancy by the entirety protection applies exclusively to married couples who purchase the property while they are already married and elect to own it as a tenancy by the entirety instead of tenancy in common. It may also extend to other assets besides real estate if they are also owned as a tenancy by the entirety, such as joint bank accounts and vehicles purchased together. Joint Tenancy Joint tenancy is similar to tenancy by the entirety in that co-owners share an undivided interest in the property, and the property passes automatically to the surviving co-owner upon the death of a co-owner. Joint tenancy differs from tenancy by the entirety in that it does not have specific bankruptcy protections, and is treated similarly to tenancy in common during bankruptcy. This means that each owner has a percentage of ownership in the property, and only the debtor’s percentage is part of the bankruptcy case. Joint tenancy is a common type of property ownership for married couples, especially if they were unmarried when the house was purchased. Tenancy in Common With tenancy in common, each co-owner owns a specific, often unequal, share of the property. The debtor’s portion of the property is part of the bankruptcy estate, but the co-owner’ s is not, unless the bankruptcy trustee forces a sale. If this happens, the co-owner will be compensated for their share of the property. Tenancy in common is not exclusive to unmarried co-owners, and married co-owners can also use this type of property ownership. What Happens to Jointly Owned Real Estate if You File Joint Bankruptcy? Tenancy by the entirety doesn’t always protect jointly owned real estate when you file for bankruptcy. Don’t assume that property you own with your spouse is untouchable during joint bankruptcy; always get clarification from our Bensalem, PA bankruptcy lawyers. No Tenancy by the Entirety Protections If you file a joint bankruptcy with your spouse, jointly owned property is not protected because of tenancy in the entirety. All jointly owned property and real estate becomes part of the bankruptcy case because both spouses filed the case together. Risk of Liquidation During Chapter 7 If you file a joint Chapter 7 bankruptcy case with your spouse, jointly owned property could be at risk. You may be able to avoid liquidation by selecting the right exemptions, like the federal homestead exemption. In 2026, debtors filing for bankruptcy individually can exempt up to $31,575 of home equity from the bankruptcy case, while married couples filing jointly can exempt up to $63,150. Keep Property with a Chapter 13 Repayment Plan If you file a joint Chapter 13 bankruptcy case with your spouse, you can keep jointly owned property by proposing a 3- to 5-year repayment plan and sticking to it. As long as you and your spouse stay current with the repayment plan, you shouldn’t have to worry about losing your primary home or other jointly owned real estate. FA Qs About Filing for Bankruptcy with Jointly Owned Real Estate Can You File for Bankruptcy with Jointly Owned Real Estate? You can file for bankruptcy with jointly owned real estate, but how that property is affected depends on who you co-own it with, what type of joint ownership you have, if you jointly file for bankruptcy, and what specific bankruptcy chapter you file under. What is the Best Bankruptcy Chapter to File Under if You Own Joint Property? If you co-own property and want to minimize the effects of bankruptcy, you should typically file Chapter 13 bankruptcy instead of Chapter 7. Can a Bankruptcy Trustee Force the Sale of Jointly Owned Real Estate? The bankruptcy trustee may be able to force the sale of jointly owned real estate, even if a co-owner has more equity in the property than the debtor does, if certain conditions are met. Otherwise, they can only sell the debtor’s share or offer to buy out the co-owner. Should You File for Joint Bankruptcy with Your Spouse if You Co-Own Property? If you and your spouse own property together and share debts, filing for joint bankruptcy can help you both wipe the slate clean. However, there are important considerations before filing for joint bankruptcy with your spouse, such as the fact that bankruptcy will affect both spouses’ credit scores and stay on both spouses’ credit reports for years. What Liquidation Exemptions Apply to Jointly Owned Real Estate During Bankruptcy? The same federal or state bankruptcy exemptions apply to real estate you own alone or with another person, whether that person is your spouse or not. Debtors may still choose to use the federal homestead exemptions, wildcard exemptions, and other exemptions to protect jointly owned property during a bankruptcy case. Get Our Help with Your Pennsylvania Bankruptcy Case Get a free case discussion from Young, Marr, Mallis & Associates by calling our West Chester, PA bankruptcy lawyers at (215) 701-6519.

Law Review: Palermo, Anthony and Bruce, Kara J. and Coordes, Laura, An Open Letter to Law School Deans About the Importance of Commercial Law Education (April 20, 2026) Ed Boltz Tue, 06/02/2026 - 15:26 Available at SSRN: https://ssrn.com/abstract=6615598 Abstract: The American Bar Association's Commercial Law Education Task Force was formed to bring renewed attention to the importance of commercial law in legal education. There has been a significant decline in commercial law course offerings at U.S. law schools, and we write to law schools to ask them to prioritize and encourage commercial law offerings. Commercial law cuts across disciplines and includes selling, leasing, lending, investing, and payments. Commercial law concepts appear regularly and substantially in a variety of practices, including not only transactional and business litigation fields but also practices focused on consumer law, family law, bankruptcy, and criminal law. Commercial law forms the basis for understanding our existing systems of finance and trade and informs developing systems such as cryptocurrency. Despite its significance, commercial law is disappearing from law school curricula. In addition, Secured Transactions will no longer be directly tested on the NextGen Uniform Bar Exam. We are a robust community of more than 100 law professors and practitioners who are dedicated to ensuring that commercial law classes remain in law school curricula. We urge law schools to make it a priority to offer these courses, including those covering secured transactions, sales and leases of goods, payment systems, bankruptcy, or some combination of these, plus additional courses in transactional skills, cryptocurrencies and other digital assets, international trade, consumer finance, and the like. Of these classes, retaining and promoting Secured Transactions is our priority. Summary: An open letter signed by more than 100 professors, practitioners, and commercial law scholars warns that commercial law education is quietly disappearing from American law schools, even though commercial law issues permeate nearly every area of practice. The letter, organized through the American Bar Association’s Commercial Law Education Task Force, specifically highlights the decline in courses involving secured transactions, payment systems, bankruptcy, sales, leasing, consumer finance, and digital assets. The authors stress that commercial law is not merely “business law” for future Wall Street attorneys. Instead, they emphasize that commercial law concepts arise constantly in consumer law, family law, criminal law, and bankruptcy practice. They point to examples ranging from trust-account overdrafts to foreclosure failures during the Great Recession, all rooted in lawyers not understanding negotiable instruments, perfection of security interests, or payment systems. The letter also warns that the removal of Secured Transactions from direct testing on the NextGen Bar Exam may accelerate the decline in course offerings, despite secured credit systems forming the backbone of modern lending and bankruptcy practice. The signatories argue that law schools should continue offering robust commercial law curricula regardless of bar exam incentives. Notably, the list of signatories includes many of the leading scholars in bankruptcy and consumer finance. Commentary: This open letter identifies a problem that consumer bankruptcy attorneys have seen developing for years: law schools increasingly treat bankruptcy and commercial law as niche electives rather than foundational components of legal education. Having had the opportunity to speak with law students at several law schools about consumer bankruptcy practice, there is plainly a real hunger for these courses. Students consistently express surprise that bankruptcy intersects with family law, consumer protection, housing, student loans, tax disputes, foreclosure defense, business reorganizations, and even criminal matters. Many also discover—often far too late—that bankruptcy courts are among the busiest federal courts in the country. Yet bankruptcy education has long been undercut by one structural problem: the almost complete exclusion of meaningful bankruptcy questions from bar examinations. Once bar-tested status became the primary determinant of curricular priority, bankruptcy and secured transactions were placed at a disadvantage. The removal of Secured Transactions from direct testing on the NextGen Uniform Bar Exam only risks accelerating that decline. That is unfortunate because secured transactions and bankruptcy are not obscure specialties. They are the operating system of the American credit economy. A lawyer who does not understand attachment, perfection, priority, negotiability, payment systems, or the automatic stay is missing core knowledge necessary for modern practice. Just as importantly, the decline in commercial law and bankruptcy education also ignores the enormous body of consumer protection law that now overlays nearly every credit transaction. Modern consumer practice requires not merely understanding security interests and negotiable instruments, but also the interaction of those doctrines with statutes such as the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting Act (“FCRA”), the Real Estate Settlement Procedures Act (“RESPA”), the Telephone Consumer Protection Act (“TCPA”), and state unfair and deceptive trade practice statutes. When these subjects disappear from law school curricula, the result is not neutrality; it is the gradual devaluation of consumer protections in the eyes of new lawyers who never meaningfully study them. And because many of those lawyers will eventually become judges, the long-term effect is a judiciary increasingly unfamiliar with the statutory and remedial frameworks that govern modern consumer finance and debt collection. The irony is that bankruptcy may well be the most common type of federal court proceeding many Americans will ever encounter. As discussed in the excellent book Debt’s Grip: Risk and Consumer Bankruptcy by Pamela Foohey, Robert M. Lawless, and Deborah Thorne, consumer debt and bankruptcy are deeply woven into ordinary American life. Bankruptcy is not peripheral to the legal system—it is central to it. The examples discussed in the letter themselves demonstrate why bankruptcy education matters. The foreclosure crisis exposed widespread confusion over negotiable mortgage notes and custody requirements. Consumer bankruptcy attorneys spent years litigating standing, note ownership, lost-note affidavits, and securitization defects that many lawyers—and judges—were poorly prepared to understand. Likewise, understanding consignments under Article 9 or the status of stablecoin reserves are not merely academic curiosities; they are questions of ownership, priority, and creditor rights that increasingly appear in bankruptcy courts. There is also a deeper irony here. Even bankruptcy courts themselves sometimes undervalue specialized bankruptcy expertise despite Congress expressly recognizing its importance in compensation decisions. Under 11\ U.S.C.\ §\ 330(a)(3)(E), courts are directed to consider “whether the person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field” when evaluating compensation. Yet many courts continue to set flat or “no look” Chapter 13 fees without materially accounting for attorney expertise, specialization, or board certification. That creates exactly the wrong incentive structure. If law schools reduce bankruptcy education, and courts simultaneously fail to recognize expertise economically, the pipeline of highly trained consumer bankruptcy attorneys inevitably shrinks. There are, however, notable exceptions. The Middle District of Tennessee Bankruptcy Court, the United States Bankruptcy Court for the Western District of Michigan, and the United States Bankruptcy Court for the Middle District of North Carolina have all, in different ways, shown greater willingness to recognize the value of bankruptcy specialization and expertise in setting presumptive compensation structures. Ultimately, this letter is less about preserving an academic niche than preserving competence in the American legal system itself. A legal profession that does not understand secured lending, consumer finance, payment systems, and bankruptcy will struggle to represent ordinary Americans in the places where financial distress most directly intersects with the law. To read a copy of the transcript, please see: Blog comments Attachment Document an_open_letter_to_law_school_deans_about_the_importance_of_commercial_law_education.pdf (174.6 KB) Category Law Reviews & Studies

N.C. S.Ct.: Smith Debnam v. Muntjan — Emails, Guaranties, and the Elasticity of the Statute of Frauds Ed Boltz Tue, 05/05/2026 - 14:06 Summary: In Smith Debnam Narron Drake Saintsing & Myers, LLP v. Muntjan, the North Carolina Supreme Court reversed the Court of Appeals and held that a series of informal emails satisfied the statute of frauds for a guaranty of another’s debt. The underlying facts are familiar to any consumer practitioner: a parent informally steps in to help a financially distressed child—here, a father engaging and interacting with counsel for his son’s struggling business (with bankruptcy looming in the background). The trial court found that the father promised to pay the law firm’s fees. The Court of Appeals majority reversed, treating the promise as a collateral guaranty that failed the statute of frauds because there was no clear written undertaking. The dissent would have enforced the obligation. The Supreme Court—reviewing only the statute of frauds issue—adopted a functional, evidentiary approach: The statute of frauds does not require a formal contract, only “some memorandum or note” signed by the party charged. That memorandum can be informal and pieced together from multiple writings. It need only reflect the essential terms: the parties, the debt, and the obligation. Applying that standard, the Court held that the father’s emails—using language like “we,” requesting invoices, discussing payments, and coordinating legal strategy—collectively evidenced a promise to pay and thus satisfied N.C.G.S. § 22-1. Notably, the Court emphasized that the statute of frauds is an evidentiary safeguard, not a technical escape hatch, cautioning against its use to “evad[e] just obligations.” The Dissents Both dissents (Dietz and Riggs, JJ.) sound a warning that will resonate with transactional lawyers: The emails never contain an explicit promise to pay the son’s debt. They are equally consistent with a parent assisting, not guaranteeing. The majority’s approach risks blurring the line between involvement and liability. Justice Riggs, in particular, frames the issue starkly: without a clear written assumption of liability, courts should not infer a guaranty from ambiguous communications. Commentary: This is one of those deceptively “simple” contract cases that carries real consequences for consumer bankruptcy practice—especially in Chapter 13, where third-party involvement is ubiquitous. 1. The Supreme Court Quietly Rejected Formalism The Court’s opinion is best understood as a course-correction away from rigid formalism: No signed engagement letter? Not fatal. No magic words (“I personally guarantee payment”)? Not required. No single integrated document? Irrelevant. Instead, the Court embraced what bankruptcy practitioners already live with daily: real-world transactions are messy, iterative, and often undocumented in formal terms. That approach aligns with the reality of consumer cases—where family members frequently step in informally to keep a case afloat. 2. Your Court of Appeals Take Was Not Wrong—Just Incomplete The prior  analysis of the Court of Appeals decision at N.C. Ct. of App.: Smith Debnam v. Muntjan- Statute of Frauds correctly identified the central tension: Is this an “original promise” (no statute of frauds) or a “collateral guaranty” (statute applies)? The Supreme Court sidestepped that fight procedurally (because of the limited scope of review) and instead reframed the issue: Even if this is a guaranty, the statute of frauds is satisfied. That shift is significant. It means the doctrinal battleground is no longer classification—it is whether the writings, taken together, perform an evidentiary function. 3. Bankruptcy Practitioners Should Pay Attention This case has direct implications for consumer bankruptcy practice: Family-funded cases: Parents, spouses, and relatives often communicate with counsel, pay fees, or negotiate strategy. Under Muntjan, those communications may create enforceable liability. Fee collection litigation: This opinion strengthens attorneys’ ability to recover fees where a third party has been actively involved—even without a signed guaranty. Chapter 13 dynamics: The emails’ reference to “bankruptcy being considered” is not incidental. It reflects a common scenario: Financial distress Informal support structures Blurred lines of responsibility The Court effectively recognizes—and enforces—that reality. 4. The Real Risk: Expanding Guaranty Liability by Inference The dissents are not merely academic—they highlight a real concern: If phrases like: “we will take care of this,” “send invoices to me,” “we may be missing a payment,” can create a guaranty, then liability can arise from ordinary coordination language. That has two consequences: For creditors and professionals: This is a powerful tool. For consumers and their families: This is a trap. 5. Practice Pointer: Put It in Writing—Or Don’t Say It at All From a practical standpoint, Muntjan cuts both ways: For attorneys (including consumer debtor counsel): Confirm third-party payment obligations in writing. Follow up emails with clear acknowledgment of responsibility. For clients and their families: Be cautious about “helpful” language. Understand that participation can become obligation. Bottom Line Smith Debnam v. Muntjan is not really about emails—it is about how much inference courts are willing to tolerate in enforcing financial responsibility. The Supreme Court’s answer is clear: If the writings, taken together, reasonably evidence a promise to pay, the statute of frauds will not stand in the way. For consumer bankruptcy practitioners, that is both an opportunity—and a warning. To read a copy of the transcript, please see: Blog comments Attachment Document smith_debnam_v._muntjan.pdf (271.83 KB) Category NC Supreme Court Cases

4th Cir.: Sessoms v. US Health Advisors- Lead Generators and Marketing Partners Can Enforce Arbitration Clauses in TCPA Litigation Ed Boltz Fri, 06/05/2026 - 15:36 In Sessoms v. US Health Advisors, LLC, the Fourth Circuit reversed the Eastern District of North Carolina and held that US Health Advisors, LLC could enforce an arbitration clause contained in a lead-generation website’s Terms of Use against a consumer bringing TCPA claims. Summary: Plaintiff Cynthia Sessoms alleged that US Health violated the TCPA through prerecorded telemarketing calls. US Health argued that Sessoms had previously agreed to arbitration when she sought insurance quotes through a NextGen/FirstQuoteHealth lead-generation website. The district court refused to compel arbitration, finding that US Health was not a third-party beneficiary of the agreement between Sessoms and the lead generator. The Fourth Circuit reversed. While reaffirming Rogers v. Tug Hill Operating, LLC that courts — not arbitrators — decide whether non-signatories can enforce arbitration agreements, the Court held that US Health qualified as a third-party beneficiary under Delaware law because the purpose of the agreement was to connect consumers with marketing partners providing insurance quotes. Commentary: This case demonstrates how modern lead-generation systems increasingly use arbitration clauses as part of the infrastructure for monetizing consumer data and consent. From a doctrinal standpoint, the Fourth Circuit carefully grounded its analysis in ordinary contract law rather than any special “pro-arbitration” preference. But from a consumer perspective, the ruling expands the ability of downstream marketing entities to enforce arbitration agreements consumers likely never understood would apply to them. For consumer bankruptcy and consumer protection attorneys, the most important aspect of the decision may actually be the Court’s reaffirmation of Tug Hill. The Fourth Circuit continues to insist that courts must determine whether a non-signatory can compel arbitration before a case is sent to arbitration. That remains a significant protection in FDCPA, FCRA, TCPA, mortgage servicing, and other consumer litigation where entities frequently attempt to invoke arbitration clauses contained in contracts they never signed. To read a copy of the transcript, please see: Blog comments Attachment Document sessoms_v._ushealth_advisors_llc.pdf (174.05 KB) Category 4th Circuit Court of Appeals

4th Cir.: Palazzo v. Bayview Loan Servicing, LLC- Accurate Informational Mortgage ​Statements Are Not Debt Collection Ed Boltz Tue, 04/21/2026 - 15:38 Summary: In a published decision that will reverberate through both the consumer bankruptcy and mortgage servicing worlds, the Fourth Circuit in affirmed summary judgment for mortgage servicers, holding that accurate, properly disclaimed, and timely mortgage communications sent during a Chapter 13 case are not “debt collection” under the FDCPA—and therefore do not violate the automatic stay. The Facts (and the Fight) Ruben Palazzo, a Chapter 13 debtor, received the familiar trio of communications from his mortgage servicer: Monthly mortgage statements Payoff statements (requested by the debtor) IRS Form 1098 tax documents He argued these were impermissible collection efforts during bankruptcy and further alleged that inaccuracies in the statements violated federal and state consumer protection laws. The Fourth Circuit, affirming the district court, disagreed—across the board. The Holding: Context, Content, and Clarity Matter The Court applied its now-familiar “commonsense inquiry”: looking at the purpose, context, and content of the communication. 1. Monthly Statements: Safe Harbor When Done Right The monthly statements: Included clear and prominent bankruptcy disclaimers Explicitly stated they were for informational purposes only Directed the debtor to pay the trustee, not the servicer Reflected post-bankruptcy obligations, not current demands Under those facts, the Court held these were not attempts to collect a debt. Critically, the Court leaned heavily on Lovegrove and distinguished Koontz, emphasizing: If the communication disclaims collection entirely, it is not debt collection. If it still seeks payment (even indirectly), it is. 2. Payoff Statements: Even Safer When Requested The payoff statements were even easier: Requested by the debtor Included similar disclaimers Provided purely responsive information The Court essentially treated these as ministerial responses, not collection activity.   3. Tax Forms: Not Even Close IRS Form 1098: No demand for payment No payment instructions Purely informational Result: Not debt collection. Full stop. Unmentioned, but still pertinent, is that Form 1098 statements are required under the Internal Revenue Code. The Automatic Stay: No Violation Without Collection Activity Having found no “debt collection,” the Court made the next step easy: Informational communications do not violate the automatic stay. This is an important doctrinal bridge—what fails under the FDCPA analysis will almost always fail under § 362 as well. Commentary: A Win for Servicers—But Not a Free Pass This is a significant and, frankly, welcome clarification—but it is not the blank check the mortgage servicing industry may want it to be. 1. Accuracy and Timeliness Are Doing the Heavy Lifting The Court’s reasoning implicitly depends on something critical: These were accurate, compliant, and properly framed statements. That leaves fully intact—and arguably reinforces—the holdings in: In re Peach (Bankr. W.D.N.C.) In re Rogers (Bankr. M.D.N.C.) Those cases recognize that: Inaccurate statements Misleading balances or arrearages Tardy or noncompliant notices can—and do—violate: The automatic stay The FDCPA (where applicable) State UDAP / debt collection statutes Rule 3002.1 and related bankruptcy obligations Palazzo does not disturb that line of cases. If anything, it sharpens it: ✔ Accurate + clear disclaimer + proper context → Safe ✘ Inaccurate or misleading → Potential liability 2. This Undercuts the Industry’s Reaction to In re Klemkowski Mortgage servicers have, at times, resisted transparency—particularly online account access—arguing that providing detailed account information could expose them to FDCPA or stay-violation claims. That argument is now on much weaker footing. The Fourth Circuit has effectively said: Providing accurate, clearly disclaimed information to a debtor in bankruptcy is not only permissible—it is not debt collection at all. Which leads to an obvious conclusion: If monthly statements with balances, payment coupons, and forward-looking payment info are permissible… Then providing real-time online account access should be even less problematic. In that sense, Palazzo undercuts the defensive posture taken by servicers after In re Klemkowski.   3. The Real Risk Zone: Sloppy Servicing Where servicers should still be losing sleep: Misapplied payments Phantom fees Escrow miscalculations Rule 3002.1 noncompliance Post-petition arrearage errors Because under Palazzo, once a communication crosses the line into inaccuracy, the “informational” shield may collapse. And at that point: FDCPA exposure returns Stay violation claims reappear State law claims (UDTPA/NCDCA) come roaring back Practice Pointer for Consumer Attorneys Do not read Palazzo as a retreat—it is a sorting mechanism: Good servicing behavior → protected Bad servicing behavior → still actionable This makes forensic review of mortgage statements even more important, not less. The litigation battlefield has not disappeared—it has simply been narrowed to where it always should have been: Accuracy, transparency, and compliance. Bottom Line The Fourth Circuit has drawn a clean and workable line: Mortgage servicers may communicate with debtors in bankruptcy—so long as they do so accurately, clearly, and without attempting to collect. But the corollary is just as important: When they get it wrong, the full weight of bankruptcy, federal, and state remedies remains firmly in place. To read a copy of the transcript, please see: Blog comments Attachment Document palazzo_v._bayview.pdf (263.45 KB) Category 4th Circuit Court of Appeals

4th Cir.: LaRosa v. IRS — Innocent Spouse Relief May Extend to Erroneous Refund Interest Claims Ed Boltz Thu, 05/28/2026 - 15:43 Summary: In LaRosa v. Commissioner of Internal Revenue, the Fourth Circuit held that interest obligations arising from an erroneous IRS refund can constitute “unpaid tax” eligible for equitable innocent spouse relief under 26 U.S.C. § 6015(f). After decades of disputes with the IRS over underpayment and overpayment interest calculations, the LaRosas received a substantial refund from the IRS in 1994. The IRS later reversed itself, claimed the refund was erroneous, and successfully sued to recover the funds. When the government later attempted to foreclose on the family home, Catherine LaRosa sought innocent spouse relief under § 6015(f). The IRS refused even to process her request, arguing that liabilities arising from erroneous refunds could never qualify as “unpaid tax.” The Fourth Circuit rejected that argument. Relying heavily on 26 U.S.C. § 6601(e)(1), the Court explained that underpayment interest is statutorily treated as a tax obligation and therefore may qualify for equitable relief under § 6015(f). The Court vacated the Tax Court’s decision and remanded for further proceedings. Commentary: LaRosa may prove surprisingly important for taxpayers in bankruptcy cases. Consumer bankruptcy practitioners routinely encounter IRS claims that have evolved through decades of amended assessments, offsets, interest recalculations, erroneous refunds, and aggressive collection activity. The Fourth Circuit’s opinion pushes back against the IRS attempting to characterize obligations in ways that avoid statutory taxpayer protections. Particularly useful is the Court’s recognition that tax liabilities arise from the Internal Revenue Code itself—not merely from IRS “bookkeeping notation[s]” or administrative labels. That reasoning may help debtors challenge IRS attempts to reframe liabilities in bankruptcy objections, discharge litigation, or innocent spouse disputes. For married debtors in bankruptcy, innocent spouse relief can be a critical tool, especially where one spouse had limited involvement in tax preparation or financial decision-making. LaRosa broadens the possibility that even complicated interest-based liabilities tied to erroneous refunds may still fall within the scope of equitable relief. The decision also reflects the post-Loper Bright Enterprises v. Raimondo environment, where courts are increasingly less willing to defer automatically to agency interpretations lacking clear statutory support. The Fourth Circuit emphasized that “no amount of policy-talk can overcome plain statutory text.” For bankruptcy debtors facing old IRS liabilities that appear inscrutable or untouchable, LaRosa is another reminder that tax claims are often far more legally vulnerable—and negotiable—than the government prefers to admit. To read a copy of the transcript, please see: Blog comments Attachment Document larosa_v._irs.pdf (150.46 KB) Category 4th Circuit Court of Appeals

Law Review: Coordes, Laura- Whose Problem is it, Anyway? Some Thoughts on § 541(b)(7)’s Hanging Paragraph Ed Boltz Mon, 06/01/2026 - 20:41 Available: SSRN – “Whose Problem is it, Anyway? Some Thoughts on § 541(b)(7)’s Hanging Paragraph” Abstract: This edition of Bankruptcy Law Letter explains the “hanging paragraph” problem of § 541(b)(7). It argues that the Ninth Circuit’s 2024 decision in In re Saldana has the potential to direct attention away from Congress and toward the Supreme Court to resolve the problem with the hanging paragraph. It concludes that Congress should act to resolve the problem it created and clarify the meaning of the hanging paragraph through a Bankruptcy Code amendment. Summary: The article examines one of the more notorious drafting disasters left behind by BAPCPA: the so-called “Hanging Paragraph” in 11 U.S.C. § 541(b)(7). The dispute centers on whether voluntary retirement contributions—particularly 401(k) contributions—made after the filing of a Chapter 13 case are excluded from “disposable income” that must be committed to a Chapter 13 plan. The author focuses on the Ninth Circuit’s decision in In re Saldana, where the court wrestled with whether postpetition retirement contributions may be shielded from creditors under the awkwardly drafted language Congress inserted into § 541(b)(7). Rather than cleanly amending Chapter 13’s disposable income provisions directly, Congress embedded language in a “hanging paragraph” attached to a subsection defining property of the estate. The result has been years of litigation and inconsistent interpretations among courts. The article argues that the judiciary is increasingly being asked to solve what is fundamentally a legislative drafting failure. While courts—including the Supreme Court in other BAPCPA disputes—often attempt to impose coherence on the Bankruptcy Code, the article contends that Congress itself should fix the statute through amendment rather than leaving bankruptcy judges and appellate courts to reverse engineer congressional intent from syntactically tortured text. Commentary: BAPCPA may have been marketed in 2005 as a sophisticated reform package designed to crack down on supposed bankruptcy abuse, but twenty years later consumer bankruptcy attorneys are still cleaning up the legislative debris field. The “Hanging Paragraph” discussed in this article is only one of many dangling statutory monstrosities inserted into the Code during BAPCPA. Indeed, the term “Hanging Paragraph” itself feels like something bankruptcy lawyers had to invent simply to describe provisions so awkwardly drafted that normal statutory interpretation terminology became inadequate. Of course, the most famous Hanging Paragraph remains the unnumbered paragraph following § 1325(a)(9)—the infamous “910-day vehicle anti-cramdown” provision that turned ordinary car loan litigation into a cottage industry for years after BAPCPA. Congress apparently decided that if numbered subsections worked reasonably well, then unnumbered floating text fragments scattered throughout the Bankruptcy Code would work even better. The retirement contribution issue discussed in this article is particularly important because it demonstrates something that academics—and sometimes even courts—frequently misunderstand about Chapter 13 bankruptcy: Chapter 13 often requires debtors to pay less to unsecured creditors than they would effectively surrender in Chapter 7. That sounds counterintuitive to non-bankruptcy lawyers, but it is absolutely true in many cases. One reason is the exclusion of 401(k) contributions from disposable monthly income calculations. If voluntary retirement contributions are excluded from projected disposable income, debtors can continue saving for retirement rather than diverting those funds to unsecured creditors. That can substantially reduce plan payments. And importantly, this exclusion may actually make the difference between receiving a discharge and being pushed out of bankruptcy entirely. Without the ability to deduct or exclude those retirement contributions, some debtors could suddenly appear to have sufficient “Disposable Monthly Income” to fail the Means Test or become trapped in unaffordable Chapter 13 plans. Another major example is the “hypothetical liquidation test” under § 1325(a)(4). In determining what unsecured creditors must receive in Chapter 13, courts compare what creditors would hypothetically receive in a Chapter 7 liquidation. But that hypothetical Chapter 7 distribution must account for the commissions, administrative expenses, trustee compensation, liquidation costs, broker fees, tax consequences, and other expenses a Chapter 7 trustee would incur. Once those hypothetical Chapter 7 administrative expenses are properly deducted, the amount unsecured creditors would actually receive in Chapter 7 may shrink dramatically. In many cases, Chapter 13 debtors can therefore confirm plans paying far less than outsiders assume,  while retaining assets that would have been seized and sold in a Chapter 7 liquidation. Consumer bankruptcy practitioners understand this reality because they see it every day. Yet scholarship and commentary about Chapter 13 often continues to describe it as a system where debtors necessarily “repay” creditors more than in Chapter 7. Frequently, that is simply incorrect. What Chapter 13 often really provides is a structured mechanism for debtors to retain assets, protect retirement savings, cure mortgage defaults, save vehicles, preserve co-debtor relationships, and obtain broader relief—while still paying creditors at least what the Bankruptcy Code hypothetically requires after accounting for all the friction and expense inherent in liquidation. And that, ironically enough, is precisely why the drafting of provisions like § 541(b)(7) matters so much. A few stray words in a BAPCPA hanging paragraph can determine whether a debtor keeps saving for retirement, qualifies for bankruptcy relief at all, or must instead devote years of future income to unsecured creditors. For something Congress treated almost as an afterthought in statutory drafting, the consequences are enormous. To read a copy of the transcript, please see: Blog comments Attachment Document whose_problem_is_it_anyway_some_thoughts_on_ss_541b7s_hanging_paragraph.pdf (269.64 KB) Category Law Reviews & Studies

Bankr. M.D.N.C.: ​In re Muhammad (Bankr. M.D.N.C. Mar. 19, 2026)- When the automatic stay meets the DMV, Public safety wins. Ed Boltz Wed, 04/22/2026 - 15:22 Summary: The court denied the debtor’s motion for sanctions against the North Carolina DMV after her vehicle registration was revoked post-petition due to an insurance lapse. Why? Because the DMV wasn’t acting as a bill collector—it was acting as a regulator. Two key takeaways drove the result: No collection activity: The revocation wasn’t tied to collecting a prepetition debt. In fact, as of the petition date, there wasn’t even a matured “debt” to collect. Police/regulatory power exception: Even if the revocation touched estate property (license/registration), it fell squarely within § 362(b)(4)—the governmental “health, safety, and welfare” exception. The DMV was enforcing North Carolina’s Financial Responsibility Act—i.e., making sure drivers have insurance—not trying to squeeze payment out of a bankruptcy debtor. Commentary: This is one of those cases where the automatic stay meets the real world—and loses. There’s a persistent (and understandable) instinct among debtors: “I filed bankruptcy, so everything stops.” But Muhammad is a clean illustration that the stay is not a force field against regulatory consequences. If you’re driving uninsured, bankruptcy doesn’t magically make that acceptable. The court does a nice job drawing the line that matters in § 362(b)(4) cases: If the government is protecting the public, the stay likely doesn’t apply. If the government is protecting its pocketbook, the stay probably does. Here, the DMV wasn’t trying to collect a penalty—it was trying to keep uninsured drivers off the road. That’s classic police power. Practice Pointers Don’t rely on bankruptcy to fix compliance problems. Filing a petition won’t cure things like lapsed insurance, expired licenses, or regulatory violations. Separate the “penalty” from the “consequence.” Even if a fine might be dischargeable or stayed, the regulatory consequence (like suspension or revocation) often survives. Burden of proof still matters. The debtor here simply couldn’t show a willful stay violation—because there wasn’t one. The Bigger Picture This fits neatly with the broader trend: courts are increasingly unwilling to let the automatic stay be used as a backdoor shield against public safety enforcement. Bankruptcy protects against creditors—not against the rules of the road. And in North Carolina, if you don’t have insurance, the DMV isn’t negotiating with § 362. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_muhammad.pdf (511.39 KB) Category Middle District