My fellow author at ConsiderChapter13.org Jen Lee called for the bankruptcy bar to do a better job of pitching the manifest strengths of Chapter 13. Ditch the jargon and focus on the facts that are Chapter 13’s strenght. Her advice to use head to head comparisons with alternative approaches to debt for the client is […] The post Putting the spotlight on Chapter 13 appeared first on Bankruptcy Mastery.

The last thing you want is for a personal injury settlement to be taken by greedy creditors rather than going to the very real damages you have incurred and need help covering if you don’t intentionally protect your settlement with exemptions or by filing Chapter 13. The federal exemption for personal injury settlements during bankruptcy is just over $30,000 in 2025. While you may be able to use several exemptions to increase the amount of the personal injury settlement you can exclude, it may not be totally protected if you file Chapter 7, especially if you do so without our attorneys’ help. Call Young, Marr, Mallis & Associates at (215) 701-6519 to get a free case discussion with our Pennsylvania bankruptcy lawyers. How Can You Protect a Personal Injury Settlement During Bankruptcy in Pennsylvania? Your personal injury settlement should go towards the damages you incurred from negligence, not creditors. Protecting a personal injury settlement from bankruptcy is very important, and our lawyers can help with this by ensuring you claim the right exemptions. Using Federal Exemptions There is a specific federal “personal injury exemption” that you can use to exclude up to $31,575 of a personal injury settlement in 2025 if you choose federal exemptions. You may also use the federal wildcard exemption that lets you exclude up to $1,675 of any property, including a personal injury settlement. You may also use up to $15,800 of an unused federal homestead exemption. “Stacking” federal exemptions may let you exclude up to $49,050 of a personal injury settlement from bankruptcy in 2025. Using State Exemptions Pennsylvania doesn’t have a specific exemption for personal injury settlements if you choose state exemptions. Its wildcard exemption only lets debtors exclude up to $300 of any property they want, which might barely scratch the surface of your personal injury settlement. Filing Chapter 13 You may protect a personal injury settlement by filing Chapter 13 bankruptcy rather than Chapter 7, which requires asset liquidation and puts your personal injury settlement and other property at risk. We can see if you qualify for Chapter 13 by assessing your income and running you through a “means test” to determine whether you can settle your debts through a repayment plan that spans three to five years. Can You Use Federal and State Exemptions to Protect a Personal Injury Settlement from Bankruptcy? As mentioned, there are federal and state-specific exemptions for assets during bankruptcy. You have to choose which set of exemptions will help you the most, whether federal or state. You cannot choose both types. You must decide between federal and state exemptions to protect a personal injury settlement and other assets. Federal exemptions are considerably better than Pennsylvania’s regarding personal injury settlements and other property, as the applicable state exemption, the wildcard exemption, only lets you exclude up to $300. What if You Don’t Protect Your Personal Injury Settlement During Bankruptcy? If you don’t intentionally protect your personal injury settlement during bankruptcy, it may be used to settle your outstanding debts with creditors. This could put you at risk of getting into medical debt if you cannot pay upcoming medical bills with your settlement, so don’t underestimate the importance of protecting this sum of money during bankruptcy. If you don’t disclose your recent personal injury settlement or any other assets when you file for bankruptcy, you might face considerable penalties and could lose a large portion of your settlement to the bankruptcy court, as well as creditors. Furthermore, your bankruptcy case might be dismissed, putting you at risk of wage garnishment, vehicle repossession, and even mortgage foreclosure from creditors no longer inhibited by bankruptcy’s automatic stay. FA Qs About Protecting a Personal Injury Settlement from Bankruptcy Can Creditors Take Personal Injury Settlements Before Bankruptcy? If you are in considerable debt and haven’t yet filed for bankruptcy, creditors might file a lawsuit against you to seek repayment and go after your largest assets, like your home, car, and even a recent personal injury settlement. Do You Have to Disclose a Personal Injury Settlement During Bankruptcy? You must disclose a personal injury settlement when you file for bankruptcy, as it’s one of your assets. Exemptions may not cover the entire settlement, and the bankruptcy court may use the rest to help repay creditors. Can Filing for Bankruptcy Protect Your Personal Injury Settlement from Creditors? Filing for bankruptcy may protect your personal injury settlement from creditors if you file Chapter 13 specifically. Chapter 13 doesn’t involve any asset liquidation, and the debtor’s debts are consolidated at a single interest rate and repaid in installments. Should You File Chapter 7 Bankruptcy if You Have a Personal Injury Settlement? Filing Chapter 7 bankruptcy is risky if you recently received a personal injury settlement in Pennsylvania, as you most likely cannot exclude all of it from your case. Do You Need a Lawyer to Protect Your Personal Injury Settlement During Bankruptcy? Without a lawyer, you might cause the wrong liquidation exemptions, fail to meet important bankruptcy deadlines, fail to receive a debt discharge, and face many other issues during your bankruptcy case. How Do You Claim Exemptions to Protect Your Personal Injury Settlement from Bankruptcy? Our Pennsylvania bankruptcy lawyers can use the bankruptcy form Schedule C to identify the exemptions we want to make and for what specific assets. Fail to list any exemptions, and they will not be included in your bankruptcy case. Should You Use Your Personal Injury Settlement to Avoid Bankruptcy? While your personal injury settlement should go towards medical bills and other expenses from an injury, you shouldn’t have to use it to cover previous debts. Filing the right bankruptcy chapter and choosing the right liquidation exemptions can protect the settlement during bankruptcy, so you don’t have to worry about losing it. Reach Out About Your Pennsylvania Bankruptcy Case Now Call Young, Marr, Mallis & Associates for help with your case from our Pennsylvania bankruptcy lawyers at (215) 701-6519.

M.D.N.C.: Custer v. Simmons Bank & DMI: Cause of Action for Loss-Mitigation Fees Survive, Bad Threats Don’t — A Middle District Tune-Up on Servicing Litigation Ed Boltz Fri, 11/21/2025 - 15:08 Summary: In a detailed but pragmatic opinion, Chief Judge Catherine Eagles offers a tidy roadmap for mortgage-servicing litigation in the Middle District — clarifying what sticks at the pleading stage (loss-mitigation fee violations, RESPA damages, UDTPA claims) and what gets tossed to the curb (negligence, joint venture fantasies, and the perennial “they threatened foreclosure!” count that courts treat like the boy who cried wolf). The result: Custer’s strongest claims live another day, and mortgage servicers get a reminder that North Carolina’s Mortgage Debt Collection and Servicing Act (MDCSA) actually has teeth — especially the 30-day fee-disclosure rules in N.C. Gen. Stat. § 45-91.  Personal Jurisdiction: If You Service in NC, You Answer in NC: Simmons Bank tried the predictable “we’re nowhere near North Carolina” argument — but once you service a North Carolina mortgage, communicate with a North Carolina borrower, and collect North Carolina payments, the long-arm statute and Due Process Clause converge in perfect harmony. Judge Eagles had no trouble finding specific jurisdiction, especially where DMI was acting as Simmons’ agent and the alleged misconduct arose out of the servicing relationship itself. Practice Point: Servicers who acquire loans on NC property should stop pretending they’re “not doing business” here. The MDNC is not impressed by that argument.  No Rule 8 “Shotgun Pleading” Here: Simmons also lobbed the increasingly popular “shotgun complaint” argument. Judge Eagles — correctly — found this complaint was not one of those sprawling, defendant-lumping monstrosities that courts love to mock in footnotes. Custer actually separated his allegations and counts with some clarity. Claim-Splitting Defense Rejected: DMI argued that Custer improperly brought two separate cases: Custer I – a narrow class action about illegal pay-by-phone fees. Custer II – an individual action about loss-mitigation misconduct, RESPA violations, and wrongful account handling. Even though both involve the same subservicer and overlapping time periods, the factual nuclei were distinct. Judge Eagles correctly held that North Carolina plaintiffs are not required to put every egg in the same basket just because one of them got mentioned in a demand letter.    This  support the argument that while an Objection to Claim in a Chapter 13 case might appropriate deal with the disallowance of illegal mortgage servicer  fees under   N.C.G.S. § 45-91,  a debtor could raise claims for damages in separate actions or even in other forums than the bankruptcy court. Surviving Claims 1. NCDCA — Loss-Mitigation Fees (Count I) This is the heart of the opinion. Custer alleged that DMI: charged “Loss Mitigation Attorney Fees,” failed to send the required clear and conspicuous explanation within 30 days, and passed through stale fees older than 30 days — all in violation of § 45-91(1)(b) and § 45-91(3). Judge Eagles recognizes that violations of the MDCSA constitute unfair acts under Chapter 75, and emotional distress is a cognizable injury under the NCDCA. This claim stays in. Why This Matters:  The MDCSA may be North Carolina’s most underutilized consumer-protection statute. Servicers routinely treat the 30-day disclosure rule as optional. It isn’t — and Custer shows courts will enforce it. 2. NCDCA — False Representations About the Amount Owed (Count III(b)) Custer alleged that after signing a loan-mod agreement: the servicers sent him incorrect payment amounts, misrepresented the amount owed, and later admitted they had done so. That’s enough to survive dismissal. Even a single incorrect statement, if used to collect a debt, satisfies N.C. Gen. Stat. § 75-54(4). 3. RESPA — Loss-Mitigation Handling (Count II) DMI argued Custer failed to allege “actual damages.” Judge Eagles disagreed. Allegations that: RESPA delays forced him into a worse modification, increased capitalized interest, and brought him closer to foreclosure are more than sufficient. This tracks the increasingly borrower-friendly reading of RESPA damages that’s shown up in recent Fourth Circuit and district-court decisions. 4. UDTPA (Count IV) Servicers argued that the NCDCA provides the exclusive remedy and bars a standalone UDTPA claim. Not necessarily so. Judge Eagles notes that: the MDCSA and SAFE Act impose duties beyond pure “debt collection,” the defendants have not yet admitted they are “debt collectors” under the NCDCA, and a factual record is needed before declaring exclusivity. The UDTPA claims survive, at least for now. Commentary: This is important.   Servicers love arguing that Chapter 75 only applies through the NCDCA. This opinion confirms what practitioners know: mortgage servicing involves more than “debt collection.”   Servicers have independent statutory duties — especially under § 45-93 — and violating those duties can support a UDTPA claim. Dismissed Claims: 1. NCDCA — Communicating With a Represented Consumer (Count III(a)) Custer didn’t identify any specific communication after the attorney-rep notice. Courts don’t accept “they kept calling me” without dates or examples. This was correctly dismissed. 2. NCDCA — Threatening an Illegal Foreclosure (Count III(c)) Simply alleging “they pursued foreclosure” isn’t enough. North Carolina courts have long held that lawful foreclosure threats are not UDTPA violations unless the borrower alleges the foreclosure itself was unlawful. This claim dies — again, correctly. 3. Negligence (Count V) Custer conceded dismissal. 4. Joint Venture (Count VI) The “Simmons + DMI = Joint Venture” theory gets a swift judicial eye-roll. Joint ventures require: shared profits, and mutual control. Servicer and subservicer do not share profits, and DMI does not get to boss Simmons Bank around. Dismissed with prejudice. Takeaways: 1. The MDCSA is no longer the forgotten stepchild of NC consumer law. Judge Eagles treats § 45-91’s fee-disclosure rule as a meaningful, enforceable statute — and one that can trigger treble damages via Chapter 75.  These protections are well known in bankruptcy courts from cases including Saeed, Peach and most recently Rogers.  Mortgage servicers should now be on notice that violations of these restrictions and notice requirements will result in requests  for treble damages. 2. Servicing misconduct during loan modifications is fertile litigation ground. RESPA, MDCSA, NCDCA, UDTPA — all survived in some form. North Carolina homeowners are uniquely well-protected if counsel knows the statutory landscape. 3. Not every misdeed equals a foreclosure-threat claim. Courts require specificity — and borrowers must allege the threat itself was unlawful. 4. Joint venture theories between servicers and subservicers should be permanently retired. We can stop wasting keystrokes on them. Final Commentary: Custer v. Simmons Bank & DMI is a solid example of how North Carolina’s layered statutory scheme protects mortgage borrowers — and how servicers’ casual treatment of fee disclosures, modification timelines, and payment accuracy can open them to real litigation risk. As more cases like Custer develop, expect to see: More MDCSA enforcement, More RESPA damages claims tied to loan-mod failures, and More UDTPA claims survive despite NCDCA “exclusivity” defenses. Debtors in bankruptcy cases seeking treble damages for violation of   N.C.G.S. § 45-91 (whether in bankruptcy court claims objection or subsequent suits in federal district court.) North Carolina continues to be one of the few states where mortgage servicers can’t treat homeowners as an afterthought — and the federal courts are beginning to treat these statutes as more than decorative wall hangings. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document custer_v._simmons_bank.pdf (280.21 KB) Category Middle District

 Chapter 7 Business Bankruptcy Filings in SDNY and EDNY In today’s challenging economic climate, many businesses are struggling due to declining sales, high interest rates, tariffs, supply-chain pressures, or other factors. As a result, an increasing number of business owners in the Southern and Eastern Districts of New York are choosing to close their doors and file for Chapter 7 bankruptcy. Filings commonly rise after the holiday season, following Christmas and Chanukah. Most business filers are Subchapter S corporations or LL Cs. A Chapter 7 bankruptcy for a business is a liquidation proceeding. While many cases are “no-asset” cases, if the company does have assets, the Chapter 7 Trustee will hire a liquidator or auctioneer to sell those assets and generate funds for distribution to creditors. Trustee Document Requests After a business files for Chapter 7, the Trustee will typically request financial documents, including: Bank statements Tax returns Credit card statements Accounting records Contracts and leases Any documents reflecting asset transfers These materials are reviewed by the Trustee, Trustee’s counsel, or the Trustee’s accountant to identify preferential payments, fraudulent conveyances, and other questionable or prohibited transactions. Common Transactions the Trustee Will Scrutinize Below are transactions frequently examined or challenged in a Chapter 7 business case: Preference Payments Transfers made to creditors within 90 days before filing (or within one year if to an insider such as a family member, officer, or business partner) that give one creditor more than others. The Trustee may “claw back” these payments to ensure equal treatment. Fraudulent Conveyances Transfers made to hinder, delay, or defraud creditors—or transfers for less than reasonably equivalent value—typically within two years under the Bankruptcy Code, and longer under New York’s Debtor & Creditor Law. These often involve “sweetheart deals,” including transfers to family members, insiders, or related entities. Personal Expenses Paid by the Business Payments for the owner’s personal insurance, car expenses, meals, vacations, or similar items can be flagged by the Trustee as improper or excessive. Gifts or Large Transfers to Friends or Family Significant transfers to insiders may be reversed if the Trustee determines the business did not receive value in return. Sales of Assets Below Fair Market Value Selling equipment, inventory, or property for less than fair market value, particularly shortly before filing, raises red flags for fraudulent transfer claims. Unusual or Inconsistent Transactions Any activity that departs from ordinary business practices—such as sudden depletion of assets, hidden accounts, cash withdrawals, or unreported income—will be reviewed carefully. Undervalued Transactions Transfers where the business received significantly less than fair market value, sometimes going back up to five years under applicable state law. Transfers Intended to Defeat Creditors Any transfer made to move assets out of reach of creditors (e.g., shifting assets to a family member or affiliate) is subject to reversal. Transactions Where Consideration Is Paid to a Third Party If property goes to one person but payment goes to someone else, the Trustee may challenge the transaction as improper. Transfers to Insiders or Related Entities Deals involving officers, directors, family members, or other businesses under common ownership are examined with particular scrutiny. If you or your advisors have questions about Chapter 7 business bankruptcy filings in SDNY or EDNY, please contact: Jim Shenwick, Esq. 📞 917-363-3391 📧 jshenwick@gmail.com Schedule a phone call: https://calendly.com/james-shenwick/15min We help individuals and businesses with too much debt.

Bankr. M.D.N.C.: In re Lombrano- No Automatic Stay for 3rd Filing Ed Boltz Thu, 11/20/2025 - 15:29 Summary: In In re Lombrano, Judge Kahn confronted the all-too-common BAPCPA problem of repeat filings colliding head-on with the automatic stay provisions. Ms. Lombrano—pro se—had filed three bankruptcy cases in under five months, two Chapter 7s (one dismissed for filing defects and jurisdictional issues, the next for nonpayment of the fee) followed by this Chapter 13. Facing eviction, she filed an “Urgent Motion to Impose Stay.” Facing her motion, she did not appear at the hearing. Facing the statute, the Court had essentially no choice.  Accordingly, the stay was denied. But the real significance of Lombrano comes from what doesn’t apply: the familiar “narrow reading” of § 362(c)(3) from In re Paschal and In re Jones—a doctrine still followed in the Middle District (even though it originated under Judge Small in the EDNC), but entirely unavailable when two prior dismissals appear on the debtor’s recent record. Why § 362(c)(3) Doesn’t Help Here: Paschal/Jones Narrow Interpretation Becomes Irrelevant Had there been only one prior dismissal within the year, Ms. Lombrano might have benefitted from MDNC’s continued adherence to: Paschal, 337 B.R. 274 (Bankr. E.D.N.C. 2006) Jones, 339 B.R. 360 (Bankr. E.D.N.C. 2006) Under those decisions, § 362(c)(3) terminates the stay: Only as to the debtor, Not as to property of the estate, and Only as to creditors who acted following the prior dismissal. This nuanced and debtor-protective interpretation frequently gives repeat filers at least some breathing room, and it remains the prevailing rule in the MDNC (even though the EDNC has occasionally shown signs of wavering from Judge Small’s original view). But none of that applies when the debtor has two prior dismissals. With two prior dismissed cases in the past 12 months, this filing falls squarely under § 362(c)(4): No automatic stay arises at all. The debtor must request that the stay be imposed. The debtor must overcome a presumption of bad faith. And must do so by clear and convincing evidence. The Court is prohibited from granting retroactive relief (§ 362(c)(4)(C)). Most importantly: § 362(c)(4) completely displaces Paschal/Jones. You don’t get to argue that the stay remains in place as to estate property. You don’t get to argue that it terminates only as to certain creditors. There is no stay—period—unless and until the Court decides otherwise. And here, Ms. Lombrano didn’t appear, didn’t testify, and didn’t rebut the statutory presumption. As Judge Kahn succinctly concluded: the stay cannot and will not be imposed. Commentary: A Predictable, Avoidable Outcome Cases like Lombrano should be stapled to the intake materials of every consumer bankruptcy practice. They illustrate three recurring truths: 1. § 362(c)(3) is irritating but manageable. Especially in the MDNC, the Paschal/Jones narrow reading keeps the practical effect modest—even after one prior dismissal. 2. § 362(c)(4) is a brick wall. Two prior dismissals transform the stay from automatic to aspirational. The debtor must earn the stay back. And pro se litigants almost never clear the “clear and convincing” bar. 3. Showing up matters. A stay-imposition motion under § 362(c)(4) is an evidentiary hearing, not a formality. Miss it, and the case collapses under its own procedural weight. 4. Timing matters even more. Had Ms. Lombrano obtained counsel after the first dismissal (or even the second), someone could have course-corrected: By addressing the filing-fee issue, Or fixing the jurisdictional defect, Or ensuring future filings were prosecuted properly. Instead, three filings in rapid succession triggered the worst possible statutory outcome. Takeaway: In the Middle District, debtors with two dismissals in a year cannot look to the friendly shelter of Paschal and Jones—those cases simply do not apply. Once § 362(c)(4) governs, the stay never arises, the evidentiary burden is steep, and as Lombrano shows, failing to attend the hearing makes denial virtually automatic. In short: You rarely get a third chance to make a second impression—especially in bankruptcy court. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_jones.pdf (142.66 KB) Document in_re_lombrano.pdf (404.86 KB) Category Middle District

Bankr. E.D.N.C.: In re Williams- Yet another Forged Bankruptcy Court Order Ed Boltz Wed, 11/19/2025 - 16:32 Summary: Judge Warren’s latest sanctions order reads like a greatest-hits compilation of the Eastern District’s prior encounters with bankruptcy document forgery—Wilds, Purdy, and now Williams—but with one glaring distinction: unlike Ms. Sugar, whose saga wound its way to the Fourth Circuit and back on the strength of a plausible (and ultimately successful) reliance on counsel argument, Deja Williams had no attorney to blame but herself. And that turns out to matter—a lot. The Facts: Fiverr, a Fake Order, and a Leasing Agent Who Asked Too Many Questions Ms. Williams filed two prior Chapter 13 cases—both dismissed for failure to comply with the most basic statutory requirements—and then filed a Chapter 11 for her salon business, Hairoin, which was promptly tossed because the LLC never obtained counsel. When those bankruptcies appeared on her credit report, they posed an obstacle to securing a commercial lease. The solution she chose? A $15 fake bankruptcy order purchased from a seller on Fiverr, complete with the name and signature block of a bankruptcy judge in Raleigh. Unsurprisingly, when she tendered this “order” to a leasing agent, the agent did what landlords too rarely do: she attempted to verify it. That inquiry led straight back to the Clerk’s Office, straight into a reopened case, and straight onto Judge Warren’s sanctions docket. The Court’s Ruling: Five-Year Bar and $1,500 Fine: Citing Wilds and Purdy, Judge Warren held that Ms. Williams’ conduct—though remorseful—was “hardly distinguishable” from prior EDNC forgery cases. The sanctions: Five-year bar on filing any bankruptcy, personally or for any entity she owns or is affiliated with $1,500 civil fine Referral to the U.S. Attorney for possible prosecution under 18 U.S.C. §§ 157 or 505 This places Ms. Williams squarely in the same penalty tier as prior debtors who forged court documents—though, critically, without the criminal sentences seen in Wilds and Purdy. Why Sugar Got Mercy—and Williams Did Not: Here is where In re Williams departs from the Sugar line of cases. When the Fourth Circuit remanded In re Sugar, Judge Agee instructed the bankruptcy court to consider the “effect of record evidence that she acted on advice of counsel.” On remand, Judge Warren found that Ms. Sugar’s reliance on her prior attorney was “justified and reasonable,” ultimately vacating severe sanctions in light of that mitigating factor. Ms. Williams had no such shield. Representing herself in all her cases, she could not invoke “advice of counsel”—good, bad, or nonexistent. There was no attorney to mislead her, no mistaken advice to lean upon, and no professional to blame. Her fabrication was: intentional, deliberate, and fully self-directed. In other words, this is the Sugar case with the safety net removed. When you fly pro se and forge a court order, there is no soft landing. Commentary: The Perils of Pro Se Practice in the Age of Fiverr The growing availability of AI-generated and gig-marketplace “legal documents” is giving rise to a new species of bankruptcy misconduct—one cheaper, faster, and more recklessly accessible than anything in the Wilds era. A $15 fake “vacate” order generated overseas is the modern equivalent of forging an attorney’s signature on the office Xerox machine. But courts—and the U.S. Attorney’s Office—are treating it the same. This case also serves as a reminder that pro se debtors don’t get a discount on the standard of honesty owed to the court. They may get leniency when mistakes arise from misunderstanding, but not when the misconduct is calculated. And unlike Ms. Sugar, who ultimately benefited from the rehabilitative power of the “advice of counsel” doctrine, Ms. Williams stands alone. If you are your own lawyer, you also become your own scapegoat. Takeaway: In re Williams reinforces the EDNC’s unwavering approach: forging court documents—no matter the motive, circumstances, or sophistication level—gets treated as a severe affront to the integrity of the system. And while the Fourth Circuit has built space for mercy when a debtor’s missteps stem from reliance on counsel, those who represent themselves don’t have that option. When you choose to go it alone, you own the consequences—including, as here, a five-year bar and a criminal referral. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_williams.pdf (295.07 KB) Category Eastern District

After spending so much time, effort, and money creating and contributing to your child’s 529 college savings plan in Pennsylvania, you do not want to risk it being liquidated during bankruptcy. Our lawyers can explain the different ways you can protect a 529 plan and other assets as you repay creditors. There are federal and state exemptions that protect 529 plan contributions during bankruptcy. Pennsylvania’s exemptions for 529 plans can be all-encompassing, so you may choose state exemptions if the 529 plan is the asset you are most concerned about safeguarding. Don’t file for bankruptcy before confirming the 529 plan is not up for liquidation, especially if you have an out-of-state plan. Get a free and confidential case review from our Pennsylvania bankruptcy lawyers by calling Young, Marr, Mallis & Associates today at (215) 701-6519. Is Your Child’s 529 Plan Protected from Bankruptcy? There are federal and state protections for 529 plans in bankruptcy, and our lawyers can apply the appropriate exemptions in your Pennsylvania bankruptcy case. Federal Protections for 529 Plans Federal law protects some contributions made more than two years before filing for bankruptcy from the bankruptcy case. Contributions made between one and two years before filing for bankruptcy may also be exempt from liquidation in the bankruptcy case, but to a lesser limit than older contributions. Federal exemptions generally don’t apply to contributions made within less than a year before filing for bankruptcy. State Protections for 529 Plans States can provide their own exemptions for bankruptcy petitioners, and Pennsylvania’s exemptions for 529 plans are even better than federal exemptions. In Pennsylvania, the full value of a state-sponsored 529 plan is protected from creditors and during bankruptcy. If you live in Pennsylvania but have an out-of-state 529 plan for your child, it may not be entirely protected from bankruptcy under Pennsylvania’s exemptions, so don’t file for bankruptcy before confirming your child’s 529 plan isn’t at risk. When Can Filing for Bankruptcy Affect a 529 Plan in Pennsylvania? Bankruptcy can sometimes affect a 529 plan, and having an attorney helps ensure that the account and other assets are properly protected. Account Beneficiary isn’t a Qualifying Family Member For federal exemptions, especially, the account beneficiary must be your child, stepchild, grandchild, or step-grandchild. Even if they are another close relative, like a niece or nephew, the exemptions may not apply to your bankruptcy case. Sudden Contributions to 529 Plans Before Filing for Bankruptcy Making significant and sudden contributions to your child’s 529 plan shortly before you file for bankruptcy can complicate your case. Recently transferred funds might be vulnerable if you cannot explain the contribution, and it seems as though you are trying to shield as much of your wealth as possible. You Own an Out-of-State 529 Plan If you live in Pennsylvania but have an out-of-state 529 plan for your child, it may not be entirely protected from bankruptcy under Pennsylvania’s state-specific exemptions. In this case, you may have to claim federal exemptions and may be able to exempt only some contributions. How Do You Protect Your Child’s 529 Plan During Bankruptcy? Keeping track of contributions, claiming the right exemptions, and filing the right chapter can help you protect your child’s 529 plan during bankruptcy. Keep Records of Contributions Federal exemptions for 529 plans during bankruptcy vary depending on when contributions were made. Keeping careful records of your contributions is important so that we can easily confirm exemption eligibility. Claim the Right Liquidation Exemptions You must specifically list all the property and assets you want to exempt from liquidation when you file Chapter 7 bankruptcy, which our Pennsylvania bankruptcy lawyers can help you do on Schedule C, a specific bankruptcy form. File the Right Bankruptcy Chapter You may not have to worry about creditors touching your child’s 529 plan whatsoever if you file for Chapter 13 bankruptcy instead of Chapter 7. Chapter 13 bankruptcy eligibility is determined by income, and your child’s 529 plan won’t disqualify you from filing a specific chapter. FA Qs About 529 Plans and Bankruptcy in Pennsylvania Is a 529 Plan Considered an Asset in Bankruptcy Cases? A 529 plan is an asset in a bankruptcy case, although our lawyers may be able to protect most or all of it from creditors during your case in Pennsylvania. Is it Safe to File for Bankruptcy if My Child Has a 529 Plan? If you must file for Chapter 7 bankruptcy in Pennsylvania, our lawyers may use state exemptions to protect recent contributions from creditors. Do I Have to List My Child’s 529 Plan When I File for Bankruptcy in Pennsylvania? You must list your child’s 529 plan along with all other assets when filing for bankruptcy, even if it is ultimately partially or fully exempt from the case. Can I Close My Child’s 529 Plan to Avoid Bankruptcy? You cannot liquidate your child’s 529 plan to avoid bankruptcy, as that would be considered an unqualified withdrawal and come with significant financial penalties. Does Having a 529 Plan Affect the Bankruptcy Chapter I Can File? Your child’s 529 plan won’t have much effect on whether you file Chapter 7 or 13 bankruptcy in Pennsylvania; rather, your income will largely influence this. Can I Use Federal and State Exemptions to Protect My Child’s 529 Plan During Bankruptcy in Pennsylvania? You can’t use federal and state bankruptcy exemptions when you file for bankruptcy. There are other federal and state exemptions you may need to claim that affect your decision, which our lawyers can help you make. Why Should I Protect My Child’s 529 Plan? If you don’t intentionally claim exemptions to protect contributions to your child’s 529 plan, creditors might take funds in the account to cover whatever debts you owe. Call Us About Your Bankruptcy Case in Pennsylvania Today Get a free case analysis from our Philadelphia bankruptcy lawyers by calling Young, Marr, Mallis & Associates now at (215) 701-6519.

Law Review: Skeel, David A., Debt's Dominion: A New Epilogue (October 21, 2025). U of Penn, Inst for Law & Econ Research Paper No. 25-16, BYU Law Review, forthcoming, 2025 Ed Boltz Fri, 11/14/2025 - 19:45 Available at:  https://ssrn.com/abstract=5647631 or http://dx.doi.org/10.2139/ssrn.5647631 Abstract: This Essay, written for the “Who Governs Debt’s Dominion” symposium, looks back on Debt’s Dominion: A History of Bankruptcy Law in America as the twenty-fifth anniversary of the book’s publication nears. The Essay begins, in Part I, by briefly describing how Debt’s Dominion came about. Part II identifies and seeks to explain a striking decline in optimism about American bankruptcy law since Debt’s Dominion was first published. Part III explores a few of the major recent developments in consumer bankruptcy, small business bankruptcy, and large-scale corporate reorganization that I would have analyzed in the book if it were written today. Part IV briefly considers the impact of globalization and concludes the new epilogue. Summary of David Skeel’s 2025 Epilogue to Debt’s Dominion David Skeel’s new epilogue to Debt’s Dominion, written for the BYU symposium “Who Governs Debt’s Dominion,” revisits the arguments that made his 2001 classic the foundational account of American bankruptcy’s political economy — and measures what has changed in the quarter century since. Skeel finds, to his relief, that the book’s core narrative still holds: American bankruptcy law continues to oscillate between the creditor discipline of Hamilton and the populist mercy of Jefferson, brokered and sustained by the self-interested professionalism of bankruptcy lawyers. Yet, while the scaffolding endures, the mood, he writes, has darkened. The optimism of the 1978 Code’s “golden age” has given way to disillusionment — a system now dominated by insiders collecting tribute rather than reformers expanding relief. I. From Hamilton and Jefferson to Visa and Warren Skeel begins by returning to his book’s original dramatis personae: Hamilton’s pro-creditor nationalism and Jefferson’s agrarian debtor populism. In the 2005 BAPCPA reforms, Skeel sees their modern avatars — credit-card lenders like Visa and Mastercard as the new Hamiltonians, and Elizabeth Warren as the reincarnated Jeffersonian reformer from what was once staunchly creditor-friendly Massachusetts. He recalls that Debt’s Dominion was born of a simple but powerful puzzle: why corporate law and bankruptcy had evolved as estranged disciplines, despite their shared concern with financial failure. The book bridged that divide, blending political history with legal theory, and situating bankruptcy within America’s larger narrative of economic democracy. II. A Shift in Mood: From the 1978 Renaissance to Managed Decline In Debt’s Dominion, Skeel likened bankruptcy’s modern history to a rock-star biography — early promise, decline, and triumphant comeback with the 1978 Code. But in 2025, he admits, the “promised land” has become congested. Where once bankruptcy liberated the distressed, it now serves those already in control. Chapter 11’s once-revolutionary “debtor-in-possession” financing has hardened into a near-monopoly market for incumbent lenders, dictating outcomes through restructuring support agreements and milestone-laden credit terms. The system still works — Skeel cautions that “rumors of Chapter 11’s demise are premature” — but it has lost its moral shine. The insiders have taken over the promised land, and the pilgrims are paying rent to stay there. III. Updating the Story: New Fault Lines in a Familiar Dominion A. Consumer Bankruptcy and Race Skeel highlights the surge of scholarship exposing how “neutral” bankruptcy rules reinforce racial inequality. Since Ferguson, scholars like Abbye Atkinson, Mechele Dickerson, and Pamela Foohey have shown that Black debtors disproportionately carry nondischargeable penal fines and fees, effectively reviving debtor’s prisons under a modern guise. He acknowledges that his own 2004 essay on the racial dimensions of credit was an early but limited foray, and that today’s research — extending back even to Rafael Pardo’s work on Bankrupted Slaves — adds a long-missing chapter to the social history of bankruptcy. B. Small Business: The Subchapter V Revolution The epilogue celebrates Subchapter V as a quiet triumph — the most successful reform since 1978. Where once the “new value” doctrine left owner-operators trapped by absolute priority, Congress’s 2019 Small Business Reorganization Act has, in Skeel’s view, “given small business a second chance without requiring them to buy it.” He praises Subchapter V’s pragmatic flexibility, noting its high plan-confirmation rates and its embodiment of the very populist spirit Hamilton feared and Jefferson championed. C. Large Corporate Reorganization: The New Insider’s Game In the realm of large cases, Skeel chronicles the continued erosion of managerial control — replaced not by democracy, but by domination. DIP lenders and private-equity sponsors now wield “contractual sovereignty,” using pre-packaged RS As to dictate terms before the petition is filed. He identifies three current flashpoints: Venue Shopping: The old Delaware–New York rivalry now yields to judge-shopping in Houston and Richmond, where debtors can all but select their judge. Even after scandals, Skeel notes wryly, “nothing happened in Washington.” Delaware’s lobby remains as effective as ever — a living case study in Mancur Olson’s logic of concentrated interests. Disproportionate Payouts: “Liability management exercises” (uptiers, dropdowns, and double-dips) and RSA fees allow favored creditors to jump the queue, sometimes with judicial blessing. He describes Serta Simmons as a rare judicial thunderbolt restoring fairness — though, as Skeel dryly observes, such thunder seldom strikes twice. Mass-Tort Bankruptcies: From Johns-Manville to Purdue Pharma, bankruptcy has become the “social solution of last resort,” where mass tort defendants cleanse liabilities through non-debtor releases. The Supreme Court’s 2024 decision in Purdue barred such releases — but Skeel predicts, quoting a 1935 lament, that bankruptcy lawyers will soon find “new rituals” to circumvent it. The bar, he notes, “has too much at stake to abandon the practice”. IV. The Third Era Marches On In closing, Skeel reaffirms his tripartite history: (1) founding until the New Deal; (2) 1938–1978; (3) 1978–present. Despite globalization and reformist murmurs abroad — from the UK’s “restructuring plan” to Singapore’s importation of  American judges — U.S. bankruptcy remains “debt’s dominion.” If change comes, Skeel suggests, it will be populist and homegrown, born of a future economic shock — not imported from London or Singapore. Commentary: A Quarter Century of Dominion Skeel’s retrospective, fittingly elegiac, reaffirms Debt’s Dominion as both history and prophecy. Like Bruce Mann’s Republic of Debtors, it locates bankruptcy at the moral center of the American experiment — a nation perpetually balancing punishment and mercy, contract and conscience.   To appreciate the scope of Skeel’s project, it should be read it alongside these complementary histories: Bruce Mann’s Republic of Debtors (2002) – a rich account of how early American bankruptcy intertwined with notions of honor, mercy, and civic trust.  Mann shows that insolvency was once a moral—not merely financial—status. Scott Sandage’s Born Losers: A History of Failure in America (2005) and David Graeber’s Debt: The First 5,000 Years (2011) which situate debt within cultural and anthropological frameworks—why societies forgive, or refuse to forgive. Scott Berman’s When All Else Fails (2019) tracks how modern capitalism uses legal failure as a design feature. Foohey, Lawless, and Thorne’s recent Debt’s Grip (2025), which  provides the empirical counterpart to Skeel’s political economy—a granular look at how ordinary Americans still live within that dominion, racialized and gendered as it may be. Together these reveal that bankruptcy’s history is not linear progress but cyclical contest—a series of moral negotiations between failure and forgiveness. For today’s practitioners, the lesson is both humbling and galvanizing. Bankruptcy remains the law’s most democratic institution — but democracy, Skeel reminds us, can be quietly bought out. Whether in the DIP market, Subchapter V courtrooms, or the trenches of consumer practice, the Hamiltonians still have their lobbyists. The Jeffersonians, as ever, must make do with their lawyers. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document debts_dominion_a_new_epilogue.pdf (710.64 KB) Category Law Reviews & Studies

[ACBC] Law Review: Pardo, Rafael I., Specialization and the Permanence of Federal Bankruptcy Law (August 08, 2025). Brigham Young University Law Review, Volume 51 (forthcoming 2026) Ed Boltz Fri, 11/14/2025 - 16:51 Available at SSRN: https://ssrn.com/abstract=5641971 or http://dx.doi.org/10.2139/ssrn.5641971 Abstract: Traditional historical accounts posit that federal bankruptcy specialization in the United States first developed under the system established by the Bankruptcy Act of 1898. That view assumes that the structural and temporal conditions necessary to foster specialization did not exist under the nation’s earlier federal bankruptcy systems—those created by the Bankruptcy Acts of 1800, 1841, and 1867. This Article theorizes that federal bankruptcy specialization very likely occurred under the pre-1898 systems and marshals evidence to that effect, primarily focusing on the Bankruptcy Act of 1841 (the 1841 Act). That statute marked a critical turning point in federal bankruptcy law, shifting its primary focus to debtor relief and granting federal district courts substantial policymaking authority and administrative responsibilities to effectuate the law’s reorientation. Drawing on a detailed framework for assessing specialization, this Article shows how the surge of cases under the 1841 Act reshaped the operation of federal district courts, producing a specialized judiciary that facilitated specialization among attorneys and other legal professionals through the creation of patronage networks. Recovering this history invites a broader investigation into federal bankruptcy specialization before 1898, not merely to determine whether it existed, but to reconsider the extent to which it was a causal factor in the emergence of a durable bankruptcy regime in the twentieth century. Summary: In Specialization and the Permanence of Federal Bankruptcy Law (forthcoming BYU Law Review 2026), Rafael Pardo challenges the traditional narrative that a specialized bankruptcy bar—and thus the political durability of federal bankruptcy law—only emerged with the 1898 Act. Building on David Skeel’s Debt’s Dominion, Pardo argues that specialization in bankruptcy practice arose far earlier, particularly under the 1841 Act, and that this specialization among judges, attorneys, and administrators shaped the institutional evolution of federal bankruptcy law. Drawing on political scientist Lawrence Baum’s framework, Pardo distinguishes between “judge concentration” (how narrowly judges focus on certain cases) and “case concentration” (how concentrated cases are among judges), extending the analysis to lawyers and other professionals. Using archival and quantitative methods, he suggests that even under short-lived nineteenth-century bankruptcy statutes, clusters of judges and lawyers developed focused expertise. This created proto-institutional networks—patronage-based, regionally concentrated, and self-reinforcing—that foreshadowed the specialized bar later recognized as key to the 1898 Act’s permanence. Pardo also expands the field of view beyond the federal statutes to state-level bankruptcy and insolvency regimes, which continued to function during the long interregna when Congress repealed national laws. These state systems, he contends, provided the continuity and professional pathways that sustained specialization even in the absence of federal jurisdiction. The result was not an absence of bankruptcy practice, but a fragmented and uneven “ecosystem” of specialized work that persisted beneath the surface of formal repeal. Ultimately, Pardo argues that nineteenth-century specialization—judicial, administrative, and professional—was both more extensive and more important to the endurance of modern bankruptcy law than historians have recognized. The 1898 Act did not invent the specialized bankruptcy bar; it merely nationalized one that had already emerged through decades of intermittent practice. Commentary: Pardo’s rediscovery of the antebellum bankruptcy bar’s quiet persistence gives new depth to Skeel’s famous “interest-group” thesis—that bankruptcy endured because lawyers made it their livelihood. Where Skeel saw the 1898 Act as the birth of specialization, Pardo uncovers a much older lineage: district judges in the 1840s who built local patronage networks, lawyers who mastered the mechanics of debtor relief under state insolvency statutes, and a growing cadre of practitioners whose professional survival depended on the continued availability of bankruptcy relief.  It was not a sudden professional creation but an evolution—interrupted by repeal, but never extinguished. The article’s most practical contribution for modern courts lies in its careful definition of *specialization*.  In footnote 8, Pardo identifies two complementary measures:  The number of attorneys whose practice primarily focuses on a single legal field, and  The extent to which a relatively small number of professionals handle a disproportionate share of that field’s work.   This framework fits neatly within how bankruptcy courts should interpret 11 U.S.C. § 330(a)(3)(E), which directs them to consider “whether the professional person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field.”  Under Pardo’s analysis, specialization is not self-promotion—it is a measurable concentration of expertise and caseload.  The same historical logic that made specialized lawyers essential to the survival of bankruptcy law should make specialized lawyers today eligible for higher presumptive compensation. Moreover, Pardo’s insight that specialization historically developed in “layered” fashion has striking relevance under today’s Bankruptcy Code.  Even now, the ecosystem of debtor relief extends beyond Title 11.  Non-bankruptcy regimes—consumer-protection statutes such as the FDCPA, RESPA, and UDTPA, as well as state receivership and debt-adjustment laws—continue to illustrate how bankruptcy specialization evolves across overlapping state and federal frameworks.  Just as nineteenth-century lawyers moved fluidly between state insolvency systems and federal bankruptcy courts, modern consumer advocates also need to be able to navigate among these administrative, regulatory, and bankruptcy remedies, building precisely the kind of integrated professional expertise that Pardo describes. That continuity extends even to the culture of practice.  The much-maligned advertising of modern consumer bankruptcy firms, so often derided as a tawdry innovation, has a venerable pedigree.  North Carolina itself provides the lineage: A. W. Shaffer of Raleigh advertised his bankruptcy services in 1868 much as John T. Orcutt has continued on in current time —reaching out directly to struggling debtors and democratizing access to legal relief.  Far from degrading the profession, such public visibility has always been part of how bankruptcy practice sustains itself. Pardo’s broader lesson is that specialization is not necessarily elitist; it is the mechanism through which bankruptcy has endured and evolved.  Just as nineteenth-century courts relied on experienced practitioners to translate congressional policy into meaningful relief, modern bankruptcy courts depend on a certified, specialized bar—tested through the American Board of Certification (ABC) and devoted to the field—to keep the system both expert and humane. Recognizing that expertise under § 330(a)(3)(E) would not merely reward professionals; it would affirm the very historical tradition that has made bankruptcy, in America, permanent.   With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document specialization_and_the_permanence_of_federal_bankruptcy_law.pdf (1.31 MB) Category Law Reviews & Studies