W.D.N.C.: Montgomery v. GoodLeap- Arbitration Denied: You Can’t Arbitrate a Contract That May Never Have Existed Ed Boltz Thu, 04/23/2026 - 15:30 Summary: In Montgomery v. GoodLeap, the U.S. District Court for the Western District of North Carolina refused to compel arbitration where the plaintiff plausibly claimed he never agreed to the underlying loan in the first place. The case arose from alleged violations of the Fair Credit Reporting Act and the North Carolina Debt Collection Act tied to a 2020 loan purportedly taken out in the debtor’s name. The lender, GoodLeap, LLC, pointed to a broad arbitration clause covering essentially any dispute—including disputes about arbitrability itself—and moved to force the case out of court. The problem? The plaintiff swore he never signed, authorized, or even knew about the loan until years later, alleging illiteracy and coercion by his mother. Relying on recent Fourth Circuit authority—particularly Johnson v. Continental Finance Co., LLC—the court emphasized a now-settled rule: contract formation comes first, and that question belongs to the court, not the arbitrator. Because the plaintiff raised genuine disputes of material fact about whether any agreement existed at all, the court held that the defendant failed to meet its burden under the Federal Arbitration Act. Result: motion to compel arbitration denied. Commentary: This is one of those decisions that should not be controversial—but in the modern arbitration-industrial complex, it absolutely is. Lenders (and their lawyers) have gotten very comfortable waving around arbitration clauses like a magic wand: “Dispute? Arbitration. Fraud? Arbitration. Identity theft? Arbitration. Existential crisis? Probably arbitration.” But this case is a reminder of a basic, almost quaint legal principle: You need a contract before you can enforce a contract. The Fourth Circuit, via Johnson, has put some steel back into that rule, and this court followed through. Delegation clauses—the ones that say “the arbitrator decides arbitrability”—don’t get you out of the threshold question: did the consumer ever agree to anything at all? And here, the facts matter. This isn’t a sophisticated borrower arguing about fine print. This is an allegation of outright non-consent—possibly identity theft dressed up as a consumer loan. If proven, there is no agreement, no arbitration clause, and no shortcut out of court. Practice Pointers (Because This Matters in Bankruptcy Land Too) Arbitration ≠ automatic. When your debtor says “that’s not my loan,” don’t let the creditor skip straight to arbitration. Force the formation fight first. Sworn declarations still matter. The court rejected the idea that a recorded call trumps a sworn affidavit. That’s important when servicers try to weaponize call center transcripts. This dovetails with claims litigation. In bankruptcy, this logic supports objections to proofs of claim where the debtor disputes the underlying obligation—especially in identity theft or unauthorized account cases. Expect more of this. As fintech lending (hello, point-of-sale solar loans…) expands, so will disputes about who actually agreed to what. Bigger Picture This decision quietly reins in a trend that has been eroding consumer rights: the idea that arbitration clauses can bootstrap themselves into existence. They can’t. And when courts insist on that, they preserve something fundamental—the right to have a real dispute heard in a real court when the very existence of an agreement is in question. Not flashy. Not revolutionary. Just… basic contract law doing its job. N Ice work by Shane Perry. To read a copy of the transcript, please see: Blog comments Attachment Document montgomery_v._goodleap.pdf (197.62 KB) Category Western District

N.C. Bus. Ct.: State of North Carolina v. MV Realty — Consent Judgment Permanently Voids MV Realty “Covenants Running with the Land” Ed Boltz Thu, 05/21/2026 - 15:24 Summary: In this sweeping Consent Judgment, the North Carolina Attorney General effectively finishes what the North Carolina Business Court had already begun in its earlier summary judgment ruling against MV Realty: dismantling the company’s attempt to transform exploitative listing agreements into purported “covenants running with the land.” As discussed previously in “N.C Bus. Ct.: State of North Carolina v. MV Realty: When ‘Covenants Running with the Land’ Turn Out to Be Pure Fiction,” the Business Court had already concluded that MV Realty’s Homeowner Benefit Agreements (“HB As”) did not create enforceable real property covenants, that the memoranda recorded against homeowners’ properties were deceptive, and that the company’s collection of “early termination fees” constituted unfair and deceptive trade practices. This Consent Judgment now permanently enjoins MV Realty from attempting to enforce any HB As in North Carolina, collect any fees from North Carolina consumers, record any future encumbrances, or even conduct further business operations in North Carolina except to wind down the company. Commentary: This decision may be among the more significant consumer-protection rulings to emerge from the Business Court in recent years, particularly because it treats the recorded memoranda not merely as aggressive contract provisions, but as fundamentally deceptive instruments that falsely purported to burden title to consumers’ homes. What makes this Consent Judgment particularly striking is the breadth of the relief. MV Realty agreed: that the HB As and memoranda are “wholly unenforceable” against North Carolina consumers; to dismiss all pending litigation and arbitration against North Carolina consumers; to record terminations of all memoranda; never to assign these purported rights to third parties; and to cease doing business in North Carolina altogether. The monetary component is also substantial. A $4.5 million judgment was entered against the entity defendants, although $3.18 million was suspended based on asserted inability to pay and MV Realty’s pending Florida bankruptcy proceeding. But for bankruptcy lawyers, the most interesting — and perhaps vulnerable — portion of this Consent Judgment lies in Section VI, the “Bankruptcy Provisions.” Those provisions attempt to bind MV Realty in advance to: not contest nondischargeability; concede that the allegations establish nondischargeability under § 523(a)(2)(A); concede collateral estoppel effect; and refrain from opposing administrative expense requests for the State’s bankruptcy counsel fees. Some of these provisions may ultimately be enforceable. Others may not. There is certainly authority allowing parties to stipulate to underlying facts that later support nondischargeability. Courts also frequently give prepetition consent judgments collateral-estoppel effect where the factual findings are sufficiently detailed and where the parties clearly intended preclusive effect. But bankruptcy courts have historically been skeptical of contractual “pre-waivers” of discharge rights or provisions that effectively attempt to predetermine dischargeability outside the bankruptcy process itself. A debtor generally cannot simply contract away bankruptcy protections in advance. Bankruptcy courts remain courts of independent federal jurisdiction, and dischargeability ultimately remains a federal question. That tension is evident here. Section 6.2 attempts to provide that “the facts alleged in the Complaint establish all elements necessary” for nondischargeability under § 523(a)(2)(A) and § 1141(d)(6), while simultaneously giving the Consent Judgment “collateral estoppel effect.” But the Consent Judgment elsewhere expressly states that Defendants “neither admit nor deny” the State’s allegations. That creates an interesting bankruptcy problem. Collateral estoppel generally requires actual litigation and actual determination of factual issues. Consent judgments can sometimes satisfy that requirement, but courts often scrutinize whether the parties genuinely intended factual adjudication or merely settlement. Here, the “neither admit nor deny” language may substantially complicate any future attempt to assert issue preclusion automatically. Similarly, the provision attempting to render all amounts nondischargeable under § 523(a)(7) may face substantial limits. Section 523(a)(7) applies to fines, penalties, or forfeitures payable to and for the benefit of a governmental unit and not compensation for actual pecuniary loss. But portions of this judgment are expressly described as restitution and attorneys’ fees. Whether all of those amounts fit comfortably within § 523(a)(7) is hardly automatic. There is also an irony here familiar to consumer bankruptcy attorneys. This settlement devotes extensive attention to constraining any future bankruptcy filed by MV Realty. Yet it says remarkably little about the bankruptcies of the consumers allegedly victimized by these practices. The Consent Judgment voids the HB As and prohibits future collection activity. That is important. But many homeowners likely: refinanced under pressure, paid termination fees, delayed sales, incurred attorneys’ fees, suffered damaged credit, or filed bankruptcy while attempting to deal with these recorded memoranda. The settlement does not appear to address whether: restitution recoveries are exempt property for consumers in bankruptcy; trustees may attempt to administer those recoveries; consumers who paid termination fees while in bankruptcy may have additional bankruptcy-specific causes of action; or whether any claims based upon violations of the automatic stay, discharge injunction, or Bankruptcy Rule 3002.1-type notice principles may exist. Indeed, one can easily imagine scenarios where homeowners filed Chapter 13 cases specifically because these purported “covenants” clouded title, interfered with refinancing, or obstructed home sales. The Business Court’s finding that these memoranda never actually created enforceable real-property interests may ultimately strengthen arguments that many of these collection efforts were little more than sophisticated pressure tactics masquerading as property law. And for bankruptcy practitioners, there may still be significant unexplored issues regarding: avoidance of recorded memoranda under § 544; classification of claims arising from HB As; whether any payments extracted postpetition violated the automatic stay; and whether debtors may exempt or retain future restitution recoveries. In many respects, this Consent Judgment marks the collapse of an entire business model that depended upon transforming small upfront payments into long-term leverage against homeowners’ equity and mobility. The North Carolina Business Court had already exposed the legal fiction behind those “covenants running with the land.” This Consent Judgment largely finishes the job. But the bankruptcy consequences — for both MV Realty and the homeowners caught in its web — are probably not over yet. For a summary and commentary of previous related decisions,  please see N.C Bus. Ct.: State of North Carolina v. MV Realty: When “Covenants Running with the Land” Turn Out to Be Pure Fiction For an additional summary of this case,  please see: Business Court Blast- State of N.C. v. MV Realty PBC, LLC, 2026 NCBC Order 41 (N.C. Super Ct. Apr. 23, 2026) (Davis, J.) To read a copy of the transcript, please see: Blog comments Attachment Document state_of_n.c._v._mv_realty_pbc_llc.pdf (2.51 MB) Category NC Business Court

Law Review Note (Note): Rodriguez, Lilyanne- The Future of Bankruptcy Exemptions in North Carolina: Expanding Debtors' Ability to Exempt the EITC Ed Boltz Fri, 04/24/2026 - 15:32 Available at:  https://wfujournaloflawandpolicy.org/volume-16-issue-2/ Introduction: The North Carolina legislature has the opportunity to improve the lives of debtors in this state. To reflect the changing opinions towards bankruptcy, North Carolina is equipped to create a new state exemptions statute for the first time in over twenty years. In fact, the United States Bankruptcy Court for the Middle District of North Carolina suggests that “such concerns must be addressed by the North Carolina General Assembly.”1 In bankruptcy proceedings, a debtor’s right to exempt certain assets from the estate is deemed necessary for the debtor to support their family and ensure financial rehabilitation.2 Debtors may exempt the value of their homes, vehicles, and even personal property such as clothes or jewelry.3 Some states have taken a broader approach to what a debtor may exempt by allowing a debtorto exempt public assistance, like the Earned Income Tax Credit (“EITC”).4 States’ ability to create exemptions in bankruptcy is based on the presumption that states are best suited to define property rights.5 However, some commentators suggest that the expansion of state exemptions disadvantages creditors, resulting in higher interest rates for consumers, thus creating more harm than good.6 However, the expansion of state exemptions works to keep states in touch with changing attitudes towards bankruptcy, and ensures debtors truly have a “fresh start.” Part I of this Note will discuss the guiding bankruptcy policies at work in the background of all bankruptcy proceedings. Part II of this Note will describe the history and purpose of the EITC, and how it can be exempt in bankruptcy. Part III of this Note will discuss In re Quevedo, a recent Middle District of North Carolina opinion, and what influence it may have on the North Carolina legislature. Finally, Part IV of this Note will analyze the benefits and downfalls of state exemptions for the debtor, society, and the bankruptcy system. This Note argues that the North Carolina legislature should amend N.C. Gen. Stat. § 1C-1601 to create a provision that exempts “[t]he debtor’s right to receive an earned income tax credit under the federal tax laws and any moneys that are traceable to a payment of an earned income tax credit under the federal tax laws.”7 This would thereby create an explicit exemption for federal earned income tax credits. By doing so, the North Carolina legislature is creating change that is reflective of a general shift in attitudes towards bankruptcy and feelings towards “dishonest” debtors. Introduction: The North Carolina legislature has the opportunity to improve the lives of debtors in this state. To reflect the changing opinions towards bankruptcy, North Carolina is equipped to create a new state exemptions statute for the first time in over twenty years. In fact, the United States Bankruptcy Court for the Middle District of North Carolina suggests that “such concerns must be addressed by the North Carolina General Assembly.” In bankruptcy proceedings, a debtor’s right to exempt certain assets from the estate is deemed necessary for the debtor to support their family and ensure financial rehabilitation. Debtors may exempt the value of their homes, vehicles, and even personal property such as clothes or jewelry. Some states have taken a broader approach to what a debtor may exempt by allowing a debtor to exempt public assistance, like the Earned Income Tax Credit (“EITC”). States’ ability to create exemptions in bankruptcy is based on the presumption that states are best suited to define property rights. However, some commentators suggest that the expansion of state exemptions disadvantages creditors, resulting in higher interest rates for consumers, thus creating more harm than good. However, the expansion of state exemptions works to keep states in touch with changing attitudes towards bankruptcy, and ensures debtors truly have a “fresh start.” Part I of this Note will discuss the guiding bankruptcy policies at work in the background of all bankruptcy proceedings. Part II of this Note will describe the history and purpose of the EITC, and how it can be exempt in bankruptcy. Part III of this Note will discuss In re Quevedo, a recent Middle District of North Carolina opinion, and what influence it may have on the North Carolina legislature. Finally, Part IV of this Note will analyze the benefits and downfalls of state exemptions for the debtor, society, and the bankruptcy system. This Note argues that the North Carolina legislature should amend N.C. Gen. Stat. § 1C-1601 to create a provision that exempts “[t]he debtor’s right to receive an earned income tax credit under the federal tax laws and any moneys that are traceable to a payment of an earned income tax credit under the federal tax laws.” This would thereby create an explicit exemption for federal earned income tax credits. By doing so, the North Carolina legislature is creating change that is reflective of a general shift in attitudes towards bankruptcy and feelings towards “dishonest” debtors. Summary: The Note takes aim squarely at a gap in North Carolina exemption law that practitioners have been flagging for years—but which the bankruptcy courts have now made impossible to ignore after In re Quevedo. In In re Quevedo, the court held that the Earned Income Tax Credit (EITC) does not fall within North Carolina’s existing exemptions—particularly rejecting arguments that it constitutes a “public assistance benefit” or other protected category under N.C. Gen. Stat. § 1C-1601. The result? For working families, the single largest anti-poverty tax credit in the United States can be swept into the bankruptcy estate and distributed to creditors. This Note argues that outcome is not just harsh—it is out of step with both federal bankruptcy policy and modern state exemption trends. Many states have already enacted explicit EITC protections, recognizing that these funds are designed to support low-income households, not to boost creditor recoveries. The proposal is straightforward: amend N.C. Gen. Stat. § 1C-1601 to expressly exempt the EITC and any traceable proceeds. That would bring North Carolina in line with a growing national consensus and reinforce the Bankruptcy Code’s core promise of a meaningful fresh start. Commentary (because Quevedo wasn’t the last word—just the wake-up call) Let’s be blunt: Quevedo didn’t necessarily create a policy problem— but it did expose one. North Carolina’s exemption statute hasn’t kept pace with economic reality, and certainly not with the modern bankruptcy system. When a working debtor loses their EITC in bankruptcy, that’s not some abstract doctrinal issue—it’s rent, groceries, car repairs, or childcare walking out the door. And the court in Quevedo essentially said: “Don’t look at us—talk to the General Assembly.” That’s not a dodge; it’s a roadmap. 1. The EITC is low-hanging fruit (and overdue) Protecting the EITC is one of the easiest—and most defensible—fixes available: It is already recognized as an anti-poverty tool under federal law Many states explicitly exempt it It aligns cleanly with the “fresh start” principle Failing to exempt it effectively converts a wage subsidy for working families into a creditor dividend. That’s not policy—it’s leakage. 2. But focusing only on EITC misses the bigger problem Here’s where this Note should go further—and where practitioners need to push harder. North Carolina doesn’t just have an EITC problem. It has an exemption problem. The homestead exemption ($35,000) hasn’t been updated since 2009 It bears little relationship to current housing prices It routinely forces Chapter 13 filings (or worse outcomes) for homeowners with modest equity The National Consumer Law Center has repeatedly highlighted how outdated exemption schemes undermine both debtor rehabilitation and system efficiency. North Carolina consistently lags behind. 3. The real reform agenda (hint: it’s not just one line item) If the General Assembly is going to act—and Quevedo gives it the political cover to do so—it should think bigger: Index the homestead exemption to inflation or median home prices Expand protections for tax credits and public benefits, including EITC and Child Tax Credit Clarify wildcard and personal property exemptions to reflect modern household assets Incorporate recent reforms (like 529 and ABLE account protections) into a coherent framework In other words, don’t just patch the roof—renovate the house. 4. The creditor-cost argument? Overstated and outdated The Note fairly acknowledges the perennial objection: broader exemptions increase credit costs. Maybe. Marginally. But that argument ignores the countervailing realities: Bankruptcy already prices in risk Efficient fresh starts reduce repeat defaults Stripping basic supports (like EITC) increases long-term financial instability If anything, failing to modernize exemptions may increase systemic costs—just not in ways that show up neatly in an APR. Practice Pointer Until the legislature acts, practitioners should: Carefully time bankruptcy filings around tax refunds Consider spending strategies prepetition (within ethical bounds) Evaluate Chapter 13 vs. Chapter 7 implications for refund retention Track any legislative movement—because once this changes, it will change fast Bottom Line Quevedo was not the end of the story—it was the invitation. Protecting the EITC is the right first step. But if North Carolina is serious about aligning its exemption scheme with modern realities (and basic fairness), it needs to go further. A fresh start shouldn’t depend on outdated statutes. To read a copy of the transcript, please see: Blog comments Attachment Document the_future_of_bankruptcy_exemptions_in_north_carolina_expanding_debtors_ability_to_exempt_the_eitc.pdf (337.65 KB) Category Law Reviews & Studies

 SBA EIDL Loan Defaults: What Small Business Borrowers Need to Know In these times of high gasoline and diesel prices and high interest rates, many  small business owners are facing difficulty in repaying SBA Economic Injury Disaster Loans (EIDL) received during the COVID-19 pandemic.  BackgroundThe SBA issued approximately $378 billion in EIDL loans to small businesses during the pandemic. Based on our experience, approximately 70% of borrowers have defaulted or will default on their repayment obligations. At Shenwick & Associates, we have been contacted by or have represented over 250 borrowers who have defaulted on SBA EIDL loans. Those loans ranged from $20,000 to $2,000,000. Loans exceeding $200,000 required a personal guarantee from the principal borrower, and interest rates were approximately 3% to 3.2%.Previously, borrowers experiencing financial hardship could apply for a loan modification that reduced their required monthly payment to 10% of the scheduled amount for a six-month period. That hardship payment program has since ended. Borrowers who are more than 90 days delinquent are now being referred to the U.S. Department of the Treasury for collection. As a precursor to referral, the SBA issues a 60-day demand letter to borrowers who are more than 60 days past due, advising that failure to cure the delinquency will result in referral to Treasury for collection action. Treasury Collection RemediesOnce a loan is referred to Treasury, the following collection tools become available:1.    Seizure of federal tax refunds owed to the defaulted borrower2.    Offset of up to 15% of Social Security payments for individual borrowers or guarantors3.    Garnishment of up to 15% of wages of individual borrowers or guarantors4.    Seizure of federal payments owed to the borrower, including payments to defense contractors, Medicaid reimbursements, and payments to medical providers serving Medicaid patientsIn addition, a 30% penalty is assessed on the outstanding loan balance upon referral to Treasury. Treasury has also engaged five collection agencies to pursue collection action on referred loans. Comments and Observations from Jim Shenwick1.    Act before referral to Treasury. Borrowers who have defaulted or are struggling to meet their payment obligations should contact the SBA promptly to explore a workout arrangement. Resolving the default at the SBA level avoids both the 30% penalty and the more aggressive collection mechanisms available to Treasury.2.    Recall from Treasury is extremely difficult. Once a loan has been referred from the SBA to Treasury, it is very difficult — as a practical matter — to have the loan recalled. Proactive engagement with the SBA is far preferable to attempting to unwind a Treasury referral.3.    Personal guarantees add significant complexity. If the loan exceeded $200,000 and an individual provided a personal guarantee, the matter becomes considerably more complex. Any workout must address the obligations of both the borrower entity and the individual guarantor.4.    Tax consequences for LLC members. If the loan was made to a pass-through entity such as a limited liability company and the loan balance is discharged or forgiven, the LLC members may recognize ordinary income under Section 108 of the Internal Revenue Code. Treasury will issue a Form 1099-C to the LLC members reflecting the cancellation of debt income.5.    Exercise caution with three-year repayment plans. The collection agencies retained by Treasury are actively promoting three-year repayment workout arrangements. In our experience, these plans are often economically unworkable for most borrowers and should be carefully evaluated — ideally with legal counsel — before any agreement is signed.6.    Ten-year repayment plans are available from Treasury. Treasury will offer eligible defaulted borrowers a 10-year repayment plan; however, both the borrower and any guarantor must provide extensive financial disclosure and documentation as a condition of approval.7.    Offers in compromise remain elusive with the SBA and/or Treasury Borrowers and guarantors who have defaulted on SBA EIDL loans are encouraged to contact Jim Shenwick, Esq. to discuss their situation, available options, and strategy.📞 917-363-3391 📧 jshenwick@gmail.com 📅 Schedule a 15-minute telephone consultationPlease click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15min

4th Cir.: Rouse v. Fader- Fourth Circuit Sidesteps SCRA Accountability—And Kicks It to Annapolis? Click to teach Law Offices of John T. Orcutt Mail this conversation is important Ed Boltz Mon, 04/27/2026 - 15:17 Summary: In , the United States Court of Appeals for the Fourth Circuit considered whether servicemembers could sue the Maryland governor or Supreme Court Justices for alleged violations of the Servicemembers Civil Relief Act (SCRA). The plaintiffs—active-duty servicemembers and their spouses—had default-type judgments domesticated and enforced against them in Maryland without the SCRA’s required protections (such as affidavits regarding military status and appointment of counsel). As a result, their bank accounts were garnished and frozen before the judgments were later vacated. Rather than suing only the creditor, the plaintiffs brought claims against: the Governor of Maryland, and the Justices of the Supreme Court of Maryland, arguing those officials failed to ensure Maryland’s procedures complied with federal law. The Fourth Circuit vacated the lower court’s ruling and dismissed the case for lack of standing, holding that: although the plaintiffs suffered a real injury, their injuries were not “fairly traceable” to the named defendants, because the harm was caused by independent actions of state court clerks who issued the writs. The court emphasized that federal courts cannot hear claims unless the plaintiff sues the proper party responsible for the injury, and here, the connection between high-level officials and the alleged violations was too attenuated.   The Fourth Circuit’s Move: Not Wrong—Just No One to Blame (Legally Speaking) The Fourth Circuit didn’t say the SCRA wasn’t violated. In fact, it essentially assumed violations occurred. Instead, the court held: you sued the wrong people. The Governor? Not involved in judicial enforcement. The Justices of the Maryland Supreme Court? They didn’t cause the violations. Administrative judges and clerks? Still not enough causal connection and potential protected by judicial or quasi-judicial immunity The problem, according to the court, is Article III standing—specifically traceability. The harm (frozen accounts) was caused by third parties (clerks issuing writs), and the plaintiffs couldn’t show that the named defendants caused those clerks to violate federal law. Put bluntly: Federal courts cannot be used to “remind” state actors to follow federal law—at least not by suing high-level officials who didn’t directly commit the violation. Result: vacated and remanded with instructions to dismiss for lack of jurisdiction. The Dissent: Congress Meant What It Said Judge Roger Gregory dissented, and—true to form—he went straight to first principles: Congress enacted the SCRA under its war powers, which carry unusual constitutional weight. That authority can override state sovereign immunity (see Torres v. Texas DPS). The statute imposes mandatory duties on courts—not optional guidelines. His key point: If state courts systematically fail to implement those duties, someone must be accountable, and the state judiciary—through its rulemaking authority—is the logical place to look. A Bigger Constitutional Undercurrent: War Powers vs. State Sovereignty Here’s where things get more interesting. The SCRA isn’t just another federal statute passed under the Commerce Clause. It is rooted in Congress’s Article I war powers, which historically allow broader incursions into state sovereignty. That matters. As even the dissent notes, the states effectively pre-consented at the Founding to a deeper level of federal intrusion in military-related matters. In that sense, the SCRA represents a more aggressive federal override of state autonomy than your garden-variety regulatory statute. And yet—despite that expanded federal authority—the Fourth Circuit declined to push Maryland’s judiciary into compliance via this lawsuit. That tension is hard to ignore. Judicial Restraint—or Judicial Deference? There may also be a quieter dynamic at play. The Fourth Circuit’s opinion reads less like a rebuke of Maryland and more like a careful sidestep. Rather than dictate how the Supreme Court of Maryland should structure its rules or supervise its clerks, the panel emphasized standing doctrine and exited stage left. That suggests a degree of institutional comity—a reluctance of federal appellate judges to tell a state’s highest court how to run its house. In other words: This may be less about constitutional incapacity and more about judicial etiquette. The Practical Reality: This Is Now a Legislative Problem The decision effectively punts the issue to the political branches. And Maryland has options—easy ones, in fact: Virginia Code § 8.01-15.2 explicitly requires SCRA compliance procedures. N.C.G.S. §127B-28 went further with the North Carolina Servicemembers Civil Relief Act, adding enforcement teeth and state-level remedies. Maryland could do the same: mandate affidavits before judgment or enforcement, require clerk-level screening, impose penalties for noncompliance. Instead, it currently relies on federal law alone—and this case shows how that can fail in practice. The Odd Silence from Annapolis (and Annapolis Courts) Perhaps the most surprising aspect of this case is what didn’t happen. The Supreme Court of Maryland has broad authority over procedural rules. It could have: adopted a rule incorporating SCRA requirements, issued administrative guidance, or required compliance protocols for clerks. Other states have done exactly that. Yet here, the system apparently allowed repeated, identical failures—multiple clerks, multiple cases, same statutory violation. That’s not a one-off mistake. That starts to look systemic. Practice Pointer (Because This Will Show Up Again) For consumer practitioners—especially in border states or federal practice: Don’t assume SCRA compliance is baked into state procedures. Scrutinize foreign judgment domestications and post-judgment remedies (garnishments, executions). Raise SCRA violations early—and often. And if necessary, go after the actual actor (creditor or clerk), not just supervisory officials. Because after Rouse, the Fourth Circuit has made one thing clear: You may have a great SCRA claim—but if you can’t trace it to the right defendant, you don’t have a federal case.   Bottom Line The Fourth Circuit didn’t weaken the SCRA. It just made it much harder to enforce—at least against systemic failures. And by declining to step in, it has effectively told Maryland: Fix this yourself. Whether Annapolis—or its courts—take that invitation remains to be seen.  Pressure from consumer groups,  including NACA,  NACBA,  and NCLC,  along with veteran's and servicember organizations,  is vital. https://ncbankruptcyexpert.com/sites/default/files/2026-04/the_future_of_bankruptcy_exemptions_in_north_carolina_expanding_debtors_ability_to_exempt_the_eitc.pdf Blog comments Attachment Document rouse_v._fader_1.pdf (287.35 KB) Category 4th Circuit Court of Appeals

NC. Bus. Ct.: Gray Constr., Inc. v. Future Meat Techs., Inc.- Automatic Stay and State Court Receivership- But Why Not a Bankruptcy? Ed Boltz Sat, 05/23/2026 - 21:02 Summary: The collapse of the much-publicized Believer Meats cultured-meat facility in Wilson County has now moved from construction disputes into full-blown insolvency administration. But rather than filing a federal bankruptcy case under Chapter 11, Subchapter V, or even Chapter 7, the parties instead proceeded through North Carolina’s Commercial Receivership Act. That strategic choice may ultimately become the most interesting aspect of this case. The litigation began when Gray Construction alleged that Believer Meats owed more than $35 million for design and construction work performed on the Wilson facility. Gray asserted mechanic’s lien rights, foreclosure claims, breach of contract damages, and rights under a promissory note and deed of trust granted in October 2024. The construction contract itself was massive—more than $153 million—and contemplated a sophisticated cultured-meat production facility in Wilson County. The agreement expressly required arbitration through the AAA. By late 2025, however, the project had plainly imploded. Gray alleged that Believer had ceased operations, terminated employees, abandoned the facility, and failed to maintain critical industrial systems, including ammonia and refrigeration components that required ongoing oversight. The agreed receivership order similarly noted that the facility required immediate management and preservation pending sale. The receivership then expanded. What began as a “limited receiver” over collateral property became a full general receivership. Ameris Bank intervened claiming more than $13 million in secured debt, while other creditors reportedly asserted competing security interests. The Business Court ultimately extended the “Limited Additional Automatic Stay” under N.C.G.S. § 1-507.42(d), finding that the receiver needed time to market and sell the business as a going concern. According to reporting by AgFunderNews, the insolvency structure appears even more complicated because an Israeli trustee was simultaneously attempting to isolate or “ringfence” Believer’s intellectual property from the U.S. receivership estate. That alone starts sounding very much like the sort of cross-border and asset-allocation dispute typically seen in Chapter 11 cases under Chapter 15 or multinational restructurings. And that is where the real questions begin. Why Was This Not A Bankruptcy Case? At nearly every stage, this matter looks structurally like a bankruptcy case without actually being one. There is: an insolvent debtor, competing secured creditors, disputed lien priorities, a shut-down operating business, preservation of going-concern value, a centralized stay, a court-appointed fiduciary, planned asset sales, potential intellectual property disputes, and likely dozens of unsecured creditors. That sounds remarkably like Chapter 11—or perhaps Chapter 7 if liquidation truly was inevitable. Instead, the parties used North Carolina receivership law. That choice may not have been accidental. Possible Reasons To Avoid Chapter 11 One possibility is speed and control. Receiverships can move much faster than Chapter 11 cases, particularly where secured creditors already agree on liquidation strategy. Here, Gray and Ameris appear to have been aligned sufficiently to proceed cooperatively through state court receivership procedures. Another possibility is avoidance of the Bankruptcy Code’s broader protections and scrutiny. A Chapter 11 filing would have immediately raised difficult questions: Could the debtor obtain DIP financing? Would existing management remain in possession? Would a creditors’ committee be appointed? Could executory contracts be assumed or rejected? What would happen to intellectual property rights? Would avoidance actions exist against insiders or affiliates? Would foreign proceedings require Chapter 15 recognition? And perhaps most importantly: who actually controlled the value? The AgFunderNews reporting suggests substantial concern over separating the U.S. production facility from Israeli-held intellectual property, worrying that if the IP necessary to operate the facility sits outside the receivership estate, the Wilson plant may be little more than an extremely expensive shell.  That said,  the receiver has appears likely to be filing a motion  to approve a stalking horse bid of $50MM solely for these US assets to an entity that has its own comparable IP and doesn’t need the IP held by the Israeli parent.  Hopefully this will generate substantial additional interest and drive the price up substantially. The “Automatic Stay” Without Bankruptcy One particularly fascinating feature is the North Carolina Commercial Receivership Act’s “Limited Additional Automatic Stay.” North Carolina’s receivership statute increasingly resembles a state-law analogue to bankruptcy administration. The Business Court’s order extending the stay specifically emphasized preventing collateral litigation while the receiver marketed the business as a going concern. That starts sounding very familiar to bankruptcy practitioners. But unlike the Bankruptcy Code, the stay protections here are narrower, more customizable, and arguably more creditor-driven. Secured creditors may prefer that flexibility. Bankruptcy judges—and creditors’ committees—often introduce uncertainty, scrutiny, and competing constituencies. A state-law receiver can sometimes function more as a liquidation manager than as a rehabilitative fiduciary. The Missing Constituency: Unsecured Creditors? One lingering concern is whether unsecured creditors receive the same transparency and procedural protections they would have in bankruptcy. In Chapter 11: schedules must be filed, claims are centralized, preferences and fraudulent transfers may be investigated, committees can be appointed, disclosure obligations are extensive, and asset sales receive federal scrutiny. Receiverships can accomplish many similar goals, but often with substantially less procedural structure. That may be entirely appropriate here. Or it may eventually generate disputes if unsecured creditors believe value migrated elsewhere—particularly regarding intellectual property or foreign affiliates. Final Thoughts For years, receiverships were often viewed as secondary alternatives to “real” insolvency proceedings. Cases like this suggest that perception may be changing. North Carolina’s Commercial Receivership Act is increasingly functioning as a streamlined insolvency platform for distressed businesses—particularly where secured creditors seek speed, control, and liquidation efficiency without the complexity of federal bankruptcy court. Still, the Believer Meats collapse leaves an unavoidable question lingering in the background: If this case walks like Chapter 11, talks like Chapter 11, and imposes stay protections like Chapter 11… why was it not filed as Chapter 11 in the first place? To read a copy of the transcript, please see: Blog comments Attachment Document gray_constr._inc._v._future_meat_techs._inc.pdf (103.73 KB) Category NC Business Court

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

Bankr. E.D.N.C.: In re Clark II—Private School Tuition, “Litter Box” Credibility Problems, and the Difficult Reality of “Belt-Tightening” in Chapter 13 Ed Boltz Wed, 05/27/2026 - 17:43 Summary: In , Judge Pamela McAfee denied confirmation of the Clarks’ Chapter 13 plan after concluding that continuing to spend $1,715 per month on private Christian school tuition while proposing to discharge roughly 90% of more than $300,000 in unsecured debt was inconsistent with the good faith requirement of 11 U.S.C. § 1325(a)(3). The court emphasized that Chapter 13 good faith requires examination of the “totality of the circumstances,” including the debtors’ financial situation, percentage repayment to creditors, accuracy and honesty in schedules and testimony, and whether the debtors made meaningful efforts to reduce expenses. Judge McAfee carefully reviewed both the Clarks’ prior Chapter 7 abuse litigation and the subsequent Chapter 13 plan. The opinion repeatedly focused on the debtors’ continued effort to maintain what the court viewed as expensive lifestyle choices—including costly vehicles, gym memberships, pet expenses, and especially private school tuition—while seeking to discharge substantial unsecured debt with minimal repayment. The opinion gave particular attention to the evolving explanations for why the debtors chose private school. During the earlier Chapter 7 proceedings, Mr. Clark emphasized dissatisfaction with pandemic-era virtual public schooling and generalized criticism of public schools. Later, during the Chapter 13 confirmation hearing, he reframed the decision primarily as rooted in faith and Christian education. The court was especially critical of Mr. Clark’s testimony that he would not consider public schools because “They put litter boxes in the public schools in Apex.” Footnote 6 directly identified this as a “widely circulated (and debunked) rumor” involving children who “identified as cats.” The court clearly viewed this testimony as damaging to credibility.   Importantly, the court did not hold that private school tuition can never be maintained in Chapter 13. Instead, Judge McAfee discussed multiple cases where courts permitted such expenses because debtors demonstrated either: educational necessity or special circumstances; or meaningful financial sacrifice elsewhere in their budgets. The opinion referenced cases involving children with ADHD, emotional crises, chronic illnesses, denied transfer requests, or other compelling educational needs. The court also noted cases where debtors significantly adjusted their lifestyles or where one spouse worked specifically to fund tuition expenses. Ultimately, Judge McAfee concluded that the Clarks failed to demonstrate either sufficient educational necessity or meaningful “belt-tightening” efforts. Confirmation was therefore denied, although the court expressly stated it was not requiring the debtors to remove their children from private school in order to obtain Chapter 13 relief. Commentary: In re Clark II is not really a “private school tuition” case as much as it is a credibility and lifestyle-adjustment case. Footnote 6 likely will receive the most snide attention (including from this blog) because it reflects unusually direct judicial scorn for Mr. Clark’s reliance on the debunked “litter box” conspiracy theory regarding public schools. But the deeper issue was not politics—it was credibility. While attorneys cannot control what their clients say,   preparing them to avoid rambling into rants and conspiracy nonsense is vital.  The court repeatedly contrasted the debtors’ earlier explanations for private school enrollment with later testimony that appeared more carefully tailored toward bankruptcy confirmation standards. For consumer debtor attorneys, the opinion contains several important practical lessons. First, debtors who intend to maintain private school expenses in Chapter 13 increasingly will need significant pre-bankruptcy preparation. Attorneys likely will need to help clients investigate and document: public-school alternatives, charter or magnet options, scholarship or tuition assistance programs, church support, transportation concerns, individualized educational needs, bullying or emotional concerns, special learning accommodations, extracurricular or continuity issues, and any other facts supporting genuine educational necessity. Equally important, attorneys will need to prepare debtors to testify honestly, consistently, and without appearing defensive or ideological. A debtor who calmly explains: “We researched alternatives extensively, made difficult sacrifices elsewhere, and believe this educational environment remains critically important for our child” presents far differently than a debtor who appears dismissive of the process or relies on inflammatory rhetoric. The opinion also exposes a recurring tension in consumer bankruptcy law: what exactly constitutes sufficient “belt-tightening”? Courts routinely expect debtors to reduce expenses before and during bankruptcy. But substantial pre-petition sacrifices often become invisible by the time schedules are filed. Families may already have eliminated vacations, stopped retirement contributions, sold assets, exhausted savings, canceled discretionary spending, liquidated cryptocurrency, deferred healthcare, or downsized numerous aspects of life merely to survive until bankruptcy. Once those sacrifices are already embedded into the schedules, courts frequently see only the remaining expenses. That said, the remaining numbers here were still difficult. If the Clarks had: eliminated $250/month in gym memberships, reduced pet expenses by $75/month, curtailed private school expenses to the Means Test amount of approximately $189.58 per child per month, and somehow replaced or refinanced vehicles to reduce payments by another $800 monthly without creating large deficiency claims, they potentially could have generated well over $2,300 additional monthly disposable income. Combined with the proposed $700 payment, that could have created approximately $3,000 per month for unsecured creditors—potentially yielding repayment approaching or exceeding $180,000 over a 60-month plan. Yet the vehicle issue also highlights a recurring disconnect in consumer bankruptcy jurisprudence. In the wake of Goddard v. Burnett, this sort of vehicular “belt-tightening” increasingly can feel like a mirage envisioned by judges and trustees that rarely materializes in practice. Surrendering even admittedly expensive vehicles does not necessarily mean that financially distressed debtors can obtain reliable replacement transportation that is genuinely and substantially cheaper once all real-world costs are considered—including damaged post-bankruptcy credit, higher interest rates, required down payments, increased maintenance costs on older vehicles, repair uncertainty, insurance costs, and the practical necessity of dependable transportation for employment and family obligations. A debtor who replaces a newer financed vehicle with an older high-mileage car may reduce the monthly payment on paper while simultaneously increasing long-term financial instability through recurring repair expenses and transportation unreliability. Whether the statutory private-school amount under § 707(b)(2)(A)(ii)(IV) is truly an “allowance” or still requires a separate showing of “reasonable and necessary” remains an interesting unresolved issue. The Clarks’ counsel argued that no further explanation should be required for expenses within that statutory amount. Judge McAfee firmly rejected that argument, emphasizing that the statute itself expressly requires “documentation” and a “detailed explanation” even for those amounts. One additional irony stands out in the opinion. Although faith ultimately became central to the debtors’ justification for both private Christian schooling and participation in a “faith-based medical cost-sharing program,” the schedules reflected no charitable or religious contributions whatsoever. That omission matters because Congress specifically protected charitable contributions in Chapter 13 through 11 U.S.C. § 1325(b)(2)(A)(ii), authorizing qualified charitable giving up to 15% of gross income. In some situations, debtors with strong church involvement may have opportunities for reciprocal tuition assistance, scholarships, or ministry support that reduce the direct financial burden of private education. Whether such options existed here is unknown, but the absence of any tithing or charitable giving likely weakened the persuasiveness of the debtors’ later faith-centered narrative. Ultimately, Clark II reflects a broader judicial expectation that Chapter 13 debtors cannot simultaneously preserve nearly every major component of an upper-middle-class lifestyle while shifting the overwhelming burden of financial collapse onto unsecured creditors. The opinion is a reminder that successful Chapter 13 practice often depends not only on statutory calculations, but on credibility, demonstrated sacrifice, and a debtor’s ability to persuade the court that difficult compromises have genuinely been attempted. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_clark_ii.pdf (417.97 KB) Category Eastern District

Depending on the bankruptcy chapter you file under, your assets may be liquidated to repay creditors. Lots of things count as assets that might surprise debtors, such as tax refunds, which they may not be able to keep or ever receive during a bankruptcy case. Tax refunds are assets during bankruptcy, which means you must report them when listing your assets and filing your case. If you file Chapter 7 bankruptcy, you may be able to use a wildcard exemption to protect some or all of your tax refund from being taken to repay creditors. Any tax refunds you receive while completing a 3 to 5-year Chapter 13 bankruptcy repayment plan are considered disposable income and taken by the bankruptcy trustee to pay off debts. You can call Young, Marr, Mallis & Associates at (215) 701-6519 or (609) 755-3115 to get a free case analysis from our bankruptcy lawyers. Do Tax Refunds Count as Assets in Bankruptcy? Tax refunds count as assets during bankruptcy. How those assets are treated during bankruptcy mostly depends on the type of bankruptcy you file, either Chapter 7 or Chapter 13. Tax Refunds and Chapter 7 Bankruptcy If you file for Chapter 7 bankruptcy before receiving your tax refund for the year, the bankruptcy trustee might seize the funds to repay your credits, potentially leaving you with no funds from the refund. If you file for Chapter 7 bankruptcy after receiving the refund and depositing it into your bank account, the bankruptcy trustee can also access the money and use it to repay creditors, unless you can exempt the refund from the bankruptcy estate or you have already spent it. Tax Refunds and Chapter 13 Bankruptcy Any tax refunds you receive while completing a 3 to 5-year repayment plan during a Chapter 13 case are treated as disposable income and used to repay creditors. Refunds must be given to the bankruptcy trustee rather than deposited in your bank account to become an asset that is shielded from liquidation by Chapter 13 bankruptcy. You may not be able to keep any portion of your tax refunds while you are completing a repayment plan during a Chapter 13 case. How Can You Protect Your Tax Refund During Bankruptcy? Although bankruptcy puts your tax refund at risk, there are a few things you can do to protect your refund from a bankruptcy case. Wildcard Exemption You may be able to protect a recent tax refund during bankruptcy by using a wildcard exemption. The federal wildcard exemption lets debtors protect up to $1,675 in assets of their choosing, including a tax refund, from being used to repay creditors during a case. You can put the wildcard exemption toward your tax refund or any other assets or property. Many states also have wildcard exemptions, but debtors may not use federal and state exemptions. Financial Hardship Exception You might be able to protect the tax refunds you receive while still completing a Chapter 13 repayment plan by requesting an exception for financial hardship or an emergency. Our bankruptcy lawyers can petition to modify the repayment plan so you can keep some of your tax refund. Adjusting Withholdings By adjusting withholdings before filing for bankruptcy, your annual return might be lower or nonexistent, eliminating any need to hand over refunds to the bankruptcy trustee during the case. Adjusting withholdings affects your take-home pay, which might help alleviate some financial strain in and of itself. Strategic Filing Being strategic about filing for bankruptcy can help you protect your recent tax refund from a bankruptcy case. Put the refund toward daily living expenses before you file your case so that the bankruptcy trustee cannot use any of the refund to repay creditors. Refunds for years that have already ended are considered part of your estate, even if you have not officially received the refund by the time you file for bankruptcy. You still need to report it, even though the bankruptcy trustee will most likely use it to repay creditors. Refunds are prorated based on when you file for bankruptcy, so strategic filing could limit the bankruptcy trustee’s access to your refund for that year during a Chapter 7 case. Top Bankruptcy FA Qs About Tax Refunds Answered Why Do Tax Refunds Count as Assets in Bankruptcy? Since tax refunds are money, and money is an asset, your tax refund is considered an asset and could be fair game during your bankruptcy case, depending on the circumstances. Can a Bankruptcy Trustee Take Your Entire Tax Refund? A bankruptcy trustee may be able to take your entire tax refund for a recent year and other assets to repay creditors during a Chapter 7 case. If you file mid-year, your refund will be prorated, and a portion of the anticipated refund will be set aside for the trustee. They could also take all tax refunds during a Chapter 13 case, as tax refunds are treated as disposable income. Should You Spend Your Tax Refund Before Filing for Bankruptcy? Spending your tax refund before filing for bankruptcy means it is no longer an asset you own that the bankruptcy trustee can use to repay your creditors and is not part of your bankruptcy case. Can the IRS Keep Your Tax Refund During Bankruptcy? If you owe income tax to the IRS and are filing for bankruptcy, the IRS could keep your tax refund. Can a Lawyer Help You Keep Some of Your Tax Refund During Bankruptcy? You may be able to keep some of your tax refund while under bankruptcy by using the right property exemptions and requesting an exception for financial hardship because of a medical emergency or other unavoidable and major expense. We Can Help with Your Bankruptcy Case Call Young, Marr, Mallis & Associates today at (215) 701-6519 or (609) 755-3115 for help with your case from our Pennsylvania, PA bankruptcy lawyers.

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