Currently Not Collectible (CNC) Status and Defaulted SBA Loans“Currently Not Collectible” (CNC) status can, in limited cases, be used to temporarily pause collection activity on a defaulted SBA loan. CNC is not an SBA program and is not available immediately after default. It may only be requested once the loan has been charged off, assigned to the SBA, and referred to the U.S. Treasury or IRS for collection. At that stage, collection efforts may include the Treasury Offset Program, private collection agencies, or IRS cross-servicing. If the IRS is the active collector, a borrower may request CNC status by demonstrating financial hardship. To qualify, the borrower must show that there is no disposable income after basic living expenses. If approved, CNC may temporarily stop wage garnishments, levies, and aggressive IRS collection actions. However, CNC does not eliminate the SBA debt or stop interest from accruing. Tax refunds may still be intercepted, and the account can be reactivated if the borrower’s financial condition improves. Even with CNC status, the SBA retains the right to enforce guarantees and resume collection efforts in the future.Borrowers or advisors with questions about defaulted SBA loans and borrower alternatives should contact Jim Shenwick, EsqJim Shenwick, Esq  917 363 3391  jshenwick@gmail.comPlease click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!

W.D.N.C.: Bethea v. Equifax — Defaults Aren’t Windfalls, and “Shotgun Pleadings” Miss the Target Ed Boltz Tue, 01/13/2026 - 15:40 Summary: In Bethea v. Equifax (W.D.N.C. Dec. 19, 2025), Judge Kenneth Bell offers both a procedural refresher and a cautionary tale for consumer litigants hoping to convert technical missteps into instant victory. The plaintiff sued Equifax, Navy Federal Credit Union, and Goldman Sachs, alleging inaccurate and unauthorized accounts on his credit reports, along with failures to reasonably investigate disputes under the Fair Credit Reporting Act (FCRA) — and, for good measure, invoking the Gramm-Leach-Bliley Act (GLBA). Navy Federal ,  the  the largest credit union in the United States  with about $191.8 billion in total assets,  miscalculated its response deadline by four days. The Clerk entered default and the plaintiff moved for default judgment. But the Court set aside the default, emphasizing that federal courts prefer deciding cases on the merits, particularly where the defendant acted promptly and the plaintiff suffered no real prejudice. The Court then dismissed the complaint — not on default grounds — but because it lacked factual specificity, lumped defendants together, and didn’t clearly explain what was inaccurate in the report. The GLBA claim failed outright because there is no private right of action. The dismissal was without prejudice, allowing refiling — but only with specific allegations tied to each defendant. Commentary: Courts Forgive Institutional Mistakes — But Are They Equally Forgiving to Consumers? The Court’s reasoning here is doctrinally sound. Defaults are disfavored. Cases should be decided on the merits. A vague FCRA complaint shouldn’t proceed just because the defendant was four days late. But the opinion also invites a harder question — one bankruptcy and consumer lawyers see every day: Do courts extend the same patience to consumers who default? Consider the contrast. When creditors miss deadlines “Good cause” No prejudice Resolve on the merits Defaults set aside When consumers miss deadlines In debt collection suits, foreclosure proceedings, and even bankruptcy adversaries — consumers who: don’t file an answer within 30 days don’t respond to a motion misunderstand service are pro se and confused often find themselves hit with: default judgments foreclosure orders wage garnishments liens sometimes years later discovering what happened And courts frequently emphasize finality and procedural compliance, not “deciding claims on the merits.” Yes, there are good judges who bend toward justice and give leeway — but those decisions are far less routine than the institutional forgiveness shown to banks, mortgage servicers, and national credit bureaus. Why the asymmetry matters Institutional defendants benefit from: Tall Building Lawyers calendaring systems in-house litigation teams repeat-player credibility Consumers operate with: anxiety limited legal understanding chaotic financial and life circumstances no counsel in most collection cases Yet the procedural expectations applied to each group often look identical on paper — and very different in practice. ⚖️ Could Navy Federal Have Sued Its Own Lawyers for Malpractice? While it’s easy to say Navy Federal “dodged a bullet,” the reality is that the real exposure from the blown deadline lay not with the credit union, but with its lawyers. Missing a response date is classic malpractice territory — the duty is clear, the breach obvious, and the potential consequences severe.    A further question is not whether Navy Federal could have sued its lawyers, but whether those lawyers had an ethical duty to recognize that their own potential liability created a conflict of interest requiring disclosure — and perhaps withdrawal. By missing the deadline, counsel became personally invested in persuading the court that the mistake was harmless and should be forgiven. That means their interests arguably diverged from Navy Federal’s, whose best option might have been independent advice about potential claims, strategy, and risk. At a minimum, that conflict should have been disclosed to Navy Federal; some would argue it should also have been candidly addressed with the court, and even with Bethea, to avoid any appearance that counsel was litigating primarily to protect themselves. Whether courts would actually require that level of transparency is another matter — but the issue reminds us that when procedural errors occur, lawyers are not just advocates, they may be witnesses and parties with skin in the game, and the rules of professional responsibility are supposed to account for that. The lesson in Bethea: This opinion is a reminder to: 1️⃣ Draft well-pleaded, fact-specific FCRA complaints. 2️⃣ Avoid relying on technical defaults as strategy. 3️⃣ Continue pushing courts to apply their “preference for merits decisions” consistently — including when consumers stumble. If default is a disfavored “windfall,” that should be true whether the party asking for relief is Navy Federal — or a working family trying to save a home from foreclosure. ⚖️ Takeaway Bethea is doctrinally correct — but it highlights an uneven playing field. Creditors get grace. Consumers get judgments. The challenge for consumer advocates is not simply litigating well-pleaded cases — but continuing to press courts to extend the same mercy to the people the system was supposedly built to protect.   To read a copy of the transcript, please see: Blog comments Attachment Document bethea_v._equifax.pdf (315.08 KB) Category Western District

N.C. Bus. Ct.: Meridian Renewable Energy LLC v. Birch Creek Development, LLC- Effect of Bankruptcy Filing on Third Parties in Lawsuit Ed Boltz Mon, 01/12/2026 - 15:18 Summary: The Business Court addressed what happens when one party in multi-party commercial litigation files bankruptcy — here, Pine Gate Renewables’ Chapter 11 filing — while litigation continues between the remaining parties. Judge Houston held: Claims against Pine Gate are stayed under §362. The stay does not extend to Meridian’s contract and tort claims against Birch Creek. The competing declaratory judgment claims are dismissed without prejudice, because deciding them would necessarily involve determining Pine Gate’s contractual rights while Pine Gate is frozen in bankruptcy. Everything else proceeds.  Commentary: This opinion is yet another reminder that the automatic stay is powerful — but it isn’t contagious. §362 protects the debtor — not everyone standing near the debtor North Carolina courts continue to follow the rule that unless there are extraordinary circumstances, the stay applies only to the debtor, not co-defendants trying to enjoy a free litigation vacation. Birch Creek’s argument that everything should grind to a halt failed for the same familiar reason: joint obligors remain jointly liable, and North Carolina law expressly allows the plaintiff to proceed against one. Why dismiss the declaratory judgment claims? Because those claims weren’t really narrow clarifications — they were invitations to declare everyone’s rights under multi-party agreements, including Pine Gate’s. Issuing sweeping declarations while Pine Gate is barred from defending itself would risk prejudicing the debtor and potentially interfering with the administration of the bankruptcy estate. So the Court wisely declined to play advisory bankruptcy court. Where Chapter 11 complicates things more than people expect: It’s especially important to read this opinion in light of the Supreme Court’s recent decision in the Purdue Pharma case. There, SCOTUS made clear that bankruptcy courts cannot impose broad, non-consensual third-party releases that permanently protect non-debtors simply because a debtor filed a plan. But — and this is where practitioners must be careful — Chapter 11 plans can STILL contain negotiated provisions that, in practice, insulate or benefit third parties — especially if creditors consent or receive consideration. Indemnification provisions, channeling injunctions tied to specific settlements, and claims procedures can all functionally limit litigation rights even if they don’t look like Purdue-style releases. Translation: If Pine Gate’s Chapter 11 plan ultimately includes provisions affecting litigation involving Birch Creek, Meridian, or the joint venture structure, those plan terms may later change the playing field. That means: 💡 Reviewing the actual Chapter 11 plan — not merely relying on §362 — becomes critical. Contrast: Chapter 13 is very different — and much stronger for co-debtors This opinion also highlights something consumer bankruptcy lawyers already know: The Bankruptcy Code can give far more protection to co-debtors in Chapter 13 than in Chapter 11. Under 11 U.S.C. §1301, the automatic codebtor stay prevents creditors from pursuing a co-signer on a consumer debt while the Chapter 13 is pending — unless the bankruptcy court grants relief. So whereas Birch Creek got no shelter from Pine Gate’s Chapter 11 filing: A mom who co-signed her son’s car note, A spouse on a joint credit card, A parent who co-signed student-style consumer financing, would generally enjoy protection in a Chapter 13 filed by the primary debtor until the court says otherwise. In other words: ✔ Chapter 11 → debtor-focused stay, limited extension to others ✔ Chapter 13 → explicit statutory shield for consumer co-debtors The takeaway: The Business Court struck the right balance: Protect the debtor where federal law requires, Keep commercial litigation moving otherwise, Avoid issuing declarations that might accidentally step on the bankruptcy court’s turf, And quietly remind practitioners that bankruptcy strategy doesn’t stop at the automatic stay — it runs through the plan. And for consumer practitioners, the comparison underscores that Chapter 13 contains protections that simply don’t exist in commercial Chapter 11 practice. To read a copy of the transcript, please see: Blog comments Attachment Document meridian_renewable_energy_llc_v._birch_creek_dev._llc.pdf (149.57 KB) Category NC Business Court

    At Shenwick and Associates, we regularly represent individuals and businesses facing financial distress, including borrowers who have defaulted on Small Business Administration (SBA) loans. Over the past several months, we have observed a marked increase in aggressive collection activity by the SBA and the U.S. Department of the Treasury against borrowers and guarantors of defaulted SBA loans.   Heightened Enforcement Activity in Late 2025 and 2026 Beginning in the last quarter of 2025 and continuing into 2026, collection efforts by the SBA and the Treasury have intensified. These efforts are not limited to letters or informal demands. Instead, we are seeing the government use a broad range of statutory collection tools, including: Retention of private collection agencies to pursue defaulted SBA loans; Administrative wage garnishment of up to 15% of a debtor’s wages, without the need for a court judgment; Seizure of federal tax refunds through the Treasury Offset Program; and Offset of Social Security benefits, with up to 15% of monthly payments taken from individuals who are personally liable for, or who guaranteed, SBA loans.   These collection actions are being taken against both primary obligors and personal guarantors of SBA loans. If you signed a personal guarantee, your personal income and federal benefits may be at risk.   The “They Won’t Collect” Myth We recently met with a new client who told us that their accountant had advised them: “Don’t worry about a defaulted SBA loan—the SBA isn’t really collecting on those loans.” Unfortunately, that advice is simply wrong!   Based on our recent experience and the increasing number of calls we are receiving, it is clear that the SBA and Treasury authorities are actively pursuing collection of defaulted SBA loans. Assuming that the government will not act is a mistaken and risky strategy that can result in wage garnishments, lost tax refunds, and reduced Social Security income. Take Action Early If you have defaulted on an SBA loan, or if you personally guaranteed an SBA loan that is now in default, it is critical to take proactive steps. Options may exist to address the debt, such as a mitigate collection efforts, or restructure or resolve the obligation, or a bankruptcy filing and or a payment plan with Treasry—but those options are often time-sensitive.   Consulting with an experienced bankruptcy and workout professional can make a meaningful difference in protecting your income, your retirement income and your financial future.   If you are facing collection activity related to a defaulted SBA loan, we encourage you to seek qualified legal advice sooner rather than later. For those clients or their advisors who have questions with respect to defaulted SBA loans, please contact Jim Shenwick, Esq.   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/15min   We help individuals & businesses with too much debt!

Bankr. W.D.N.C.: In re Holland — Means Test Reality Beats Wishful Thinking Across All Three NC Districts Ed Boltz Fri, 01/09/2026 - 16:53 Summary: Judge Laura Beyer’s decision in In re Holland drives home a now-settled point in North Carolina bankruptcy practice: if a debtor does not intend to keep collateral and make payments, then the debtor does not get to deduct those payments on the Chapter 7 means test. The Hollands were above-median debtors with multiple secured debts and stated their intention to surrender a 2023 Kia K5. They hadn’t made payments on the Kia in months, it had already been repossessed, and stay relief had been granted. Yet they still deducted the $590 Kia payment on the means test. The Bankruptcy Administrator objected. Once that deduction disappeared, the Hollands had sufficient disposable income to trigger the presumption of abuse under § 707(b). Judge Beyer agreed and ordered dismissal unless the debtors converted to Chapter 13. A Unified North Carolina Rule: Sterrenberg (EDNC), Hamilton (MDNC), and Holland (WDNC): This isn’t just a Western District trend — it now reflects all three North Carolina bankruptcy districts. In re Sterrenberg (Eastern District of North Carolina) Judge Randy D. Doub Judge Doub held that a debtor who intends to surrender collateral cannot deduct secured payments tied to that collateral on the means test. A deduction cannot be based on payments the debtor already knows will not be made. https://case-law.vlex.com/vid/in-re-sterrenberg-no-895409367 In re Hamilton (Middle District of North Carolina) Judge Catherine Aron Judge Aron reached the same result: allowing secured-payment deductions on property the debtor plans to surrender distorts the means test and conflicts with the forward-looking approach of Lanning and Ransom. https://case-law.vlex.com/vid/in-re-hamilton-no-891123578 In re Holland (Western District of North Carolina) Judge Laura T. Beyer Judge Beyer follows the same reasoning, expressly adopting the forward-looking interpretation and disallowing deductions tied to surrendered collateral. Across EDNC, MDNC, and WDNC, the message is consistent: If you aren’t going to keep it and pay for it, you don’t get to deduct it. Commentary: Why Debtors Should Not Rush to Surrender or Reaffirm This case also highlights an important strategic lesson for consumer debtors: ⭐ It is often in the debtor’s best interest not to surrender vehicles or other secured property until after discharge, and not to sign reaffirmation agreements. Why: declaring surrender during the case can remove a means-test deduction losing that deduction can turn a Chapter 7 into a 707(b) “abuse” case debtors get pushed into Chapter 13 unnecessarily reaffirmations recreate personal liability on depreciating assets most lenders will accept payments without reaffirmation surrendering after discharge does not change the means test at all Put differently: ✔️ Keep the car if possible during the case ✔️ Do not reaffirm unless there is a compelling reason ✔️ Decide about surrender after discharge once your financial circumstances have stabilized Holland shows how quickly a routine Chapter 7 can unravel once a debtor checks the “surrender” box too early. Sterrenberg and Hamilton show that this outcome isn’t a fluke — it’s doctrine. In bankruptcy, sometimes the smartest move is not bold action. It’s patient inaction. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_holland.pdf (372.68 KB) Category Western District

W.D.N.C: Moseley v. Latino Community Credit Union-If you click “I agree,” don’t be surprised when they actually check your credit Ed Boltz Thu, 01/08/2026 - 15:40 Summary: In this Western District case, the pro se plaintiff, Brittney Moseley, brought what has become a fairly common species of Fair Credit Reporting Act litigation — alleging that a lender “pulled” her credit report without authorization and, in the process, violated both the FCRA and North Carolina’s Unfair and Deceptive Trade Practices Act. The Court did not buy it. Moseley applied online to open a membership account with Latino Community Credit Union. As part of that process, she electronically signed an application that — in clear, unambiguous language — authorized the credit union to verify her identity and obtain a credit report if necessary. The account rules repeated the same thing: eligibility for membership includes consent to check your credit and banking history. That’s the ballgame. Because the record showed: A real credit report existed, The credit union accessed it, and It had a permissible purpose — i.e., the consumer’s written authorization and a legitimate transaction initiated by the consumer — the Court concluded that there was no FCRA violation, and therefore no UDTPA violation either. The Court converted the motion to dismiss into one for summary judgment (with the parties’ consent) and entered judgment for the credit union. It also denied the plaintiff’s attempt to file yet another amended complaint, finding that amendment would be futile because the documents already in the record doomed the theory of liability. As the Court put it, obtaining a credit report “in connection with an application to open a financial account with the consent of the consumer” simply isn’t unfair, deceptive, or unlawful.   Commentary: Cases like this are an important reminder — for both lawyers and consumers — about the real-world consequences of online agreements. The credit unions and banks have learned (sometimes the hard way) to put conspicuous authorization language directly above the signature line, and courts are increasingly unwilling to ignore that language when consumers later claim surprise. This is also another example where adding more allegations to a complaint cannot salvage a claim once the documentary record contradicts the narrative. Rule 15 is liberal, but not magical: if the authorization is right there in black and white, no amount of “re-pleading” can make it disappear. For consumer advocates, the takeaway isn’t that FCRA claims are frivolous — many are not — but that these cases live or die on the paper trail. Where creditors fabricate applications, misuse credit pulls, or go fishing without a legitimate purpose, liability remains very real. But when the consumer clicks “I agree,” courts will hold them to it. To read a copy of the transcript, please see: Blog comments Attachment Document moseley_v._latino_community_credit_union_1.pdf (329.39 KB) Category Western District

M.D.N.C.- Custer v. Dovenmuehle Mortgage II: Class Certification Granted in “Pay-to-Pay” Mortgage Fee Case Ed Boltz Wed, 01/07/2026 - 16:32 Summary: In yet another chapter of what is becoming a running series on pay-to-pay mortgage fees, Chief Judge Catherine Eagles has issued a significant opinion certifying a statewide class of North Carolina homeowners against Dovenmuehle Mortgage, Inc. (DMI). The ruling allows claims under both the North Carolina Debt Collection Act (NCDCA) and the Unfair and Deceptive Trade Practices Act (UDTPA) to proceed on a class-wide basis. This case ties directly back to earlier discussions here: Custer v. Dovenmuehle Mortgage (2024) — holding that the NCDCA does not require default before protections apply https://ncbankruptcyexpert.com/2024/11/06/mdnc-custer-v-dovenmuehle-mortgage-nc-debt-collection-act-does-not-require-default Custer v. Simmons Bank (2025) — where claims survived despite “bad threats” arguments and highlighted that loss-mitigation fees can still be actionable https://ncbankruptcyexpert.com/2025/11/21/mdnc-custer-v-simmons-bank-dmi-cause-action-loss-mitigation-fees-survive-bad-threats Williams v. PennyMac (2025) — another strike against “pay-to-pay” fees as lenders tried to argue creative contractual interpretations https://ncbankruptcyexpert.com/2025/12/23/mdnc-williams-v-penny-mac-dim-view-pay-pay-mortgage-fees Collectively, these cases are forming a fairly coherent message: Mortgage servicers should not treat borrowers as captive revenue streams for junk fees. What DMI Was Doing DMI charged borrowers: $9.50 to pay by automated phone system $11.50 to pay a live representative Meanwhile, the actual cost of processing these payments was measured in pennies — often less than 50 cents per transaction. And — critically — the mortgage documents did not authorize these charges. Worse, DMI appeared to treat the fees not as cost-recovery, but as a profit center. Judge Eagles noted that the Uniform Mortgage documents routinely used in North Carolina expressly prohibit charging fees that are not permitted by law or contract — which is going to be a recurring issue for servicers who have reflexively adopted the “everybody charges these” mindset. The Class That Was Certified: The Court certified a statewide class consisting of: All North Carolina borrowers whose mortgages were serviced by DMI and who paid a pay-to-pay phone fee between April 10, 2020 and the date notice is issued. The Court found that: The legal theories are the same for everyone. DMI used standardized practices. Damages are manageable. Individual borrowers are unlikely to litigate $10–$15 fees on their own. In other words — exactly the type of case Rule 23 exists for. Key Legal Takeaways 1. NCDCA + UDTPA remain powerful consumer tools The Court recognized that charging unlawful fees may constitute: unconscionable debt collection (NCDCA), and an unfair or deceptive trade practice (UDTPA). And importantly — statutory damages may apply, which shifts leverage away from servicers and toward consumers. 2. “Consent” arguments didn’t carry the day DMI floated arguments that borrowers “agreed” to the fees simply because the automated phone system disclosed them. But Judge Eagles noted: It isn’t clear DMI is even covered by the “any fee the borrower agrees to pay” statute. The core question — whether DMI could legally charge the fee at all — is still common across all class members. The Court also gently reminded DMI that it previously resisted producing loan documents — making it difficult to now claim that individual contracts somehow change everything. 3. Courts increasingly reject “junk fee” rationalizations Echoing the trajectory in Williams and the earlier Custer decisions, the Court showed skepticism toward the idea that “everyone does this” equals legality. Mortgage servicers cannot tack on charges simply because: payment convenience is nice, servicing platforms allow it, or they think borrowers won’t fight back. Commentary: Where This Is Headed We are seeing a pattern emerge — across federal courts and in North Carolina specifically. Judges are increasingly unwilling to let mortgage servicers: hide behind technicalities, charge fees untethered from cost, or impose “convenience” tolls that borrowers never bargained for. This opinion matters especially in bankruptcy and consumer practice because: Many Chapter 13 clients were hit with these fees repeatedly. Those charges often compounded delinquency problems. Trustees, courts, and debtors’ counsel can now more confidently challenge them. And yes — servicers will almost certainly continue to argue: “But borrowers could have mailed a check instead!” That’s not likely to carry much weight when the real story is: “We charged people extra to pay us — and then profited on the difference.” Final Thought: Between the earlier Custer rulings, Simmons Bank, Williams, and now this class certification order, mortgage servicers should be getting the message. North Carolina law does not permit turning payment mechanics into a side-business. And for once, the small $10 fees that nobody used to fight about may wind up costing a servicer far more than it ever collected. To read a copy of the transcript, please see: Blog comments Attachment Document custer_v._doevenmuhle.pdf (305.57 KB) Category Middle District

Law Review: Iuliano, Jason Bridging the Student Loan Bankruptcy Gap Ed Boltz Tue, 01/06/2026 - 15:24 Available at:  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5944454 Abstract: In November 2022, the Department of Justice and Department of Education announced sweeping reforms designed to make student loan bankruptcy discharge more accessible to struggling borrowers. Drawing upon an original (hand collected) dataset of more than six hundred adversary proceedings filed during the first year of implementation, this article presents the first empirical analysis of whether these reforms have achieved their goal and bridged the “Student Loan Bankruptcy Gap”—the chasm between those who could benefit from bankruptcy discharge and those who actually pursue it. The results are mixed but suggest the gap, although narrowed, remains wide. On the positive side, success rates have reached 87% in the post-reform period. But on the negative side, filings remain remarkably low. This article evaluates the reforms along four key metrics of success and proposes solutions to make bankruptcy relief more accessible to struggling borrowers. Bridging the Student Loan Bankruptcy Gap: Progress — But Still Miles To Go: Professor Jason Iuliano’s newest article, Bridging the Student Loan Bankruptcy Gap, offers something that has been sorely missing in the conversation about student-loan discharges: data rather than rumor, analysis instead of folklore, and a grounded assessment of whether the Department of Justice’s November 2022 attestation process actually changed anything. And yes — it has. Borrowers who file adversary proceedings are winning. But the real problem remains: almost no one files. It Isn’t Really the Law That’s the Problem — It’s Behavior Across multiple articles — including: Student Loans, Bankruptcy, and the Meaning of “Educational Benefit” (which helped catalyze the Crocker, McDaniel, and Homaidan line of cases clarifying that not every supposed “student loan” is actually protected by §523(a)(8)), and The Student Loan Bankruptcy Gap:  Where Prof. Iuliano documented how prior to the SLAP Guidance,  out of the ~250,000 student loan debtors who filed for bankruptcy, fewer than three hundred discharged their educational debt. Iuliano has shown that the dominant myth — student loans cannot be discharged — has done more damage than §523(a)(8) itself ever could. Lawyers stopped filing. Clients never heard about the possibility. Courts stopped seeing the cases — and the myth hardened. The DOJ’s 2022 guidance tries to correct course by: Defining clearer presumptions under Brunner Simplifying evidence through attestation Encouraging stipulations instead of trial by attrition The result? Roughly 87% success among those who actually file. And yet filings remain anemic — proof that culture changes slower than doctrine. Judges: Some Obstacles — But Many Quiet Allies It must be acknowledged — there are still a few rogue judges who seem determined to block agreed student-loan discharges, even where the DOJ stipulates that undue hardship exists. These judges, driven by an ill-conceived sense that they personally safeguard federal fiscal responsibility  (which, if our system was working, would be the job of Congress), insist on second-guessing both the borrower and the government. The result is needless litigation, higher costs, and exactly the kind of access-to-justice barrier both the Biden and Trump administrations have sought to avoid. But those judges are the exception — not the rule. Across the country, many bankruptcy judges are doing the opposite: encouraging Student Loan Adversary Proceedings (SLA Ps) adopting student-loan management programs creating standardized discovery schedules pushing user-friendly procedures rather than obstacle courses Instead of weaponizing Brunner, they are demystifying it — and signaling clearly that debtors should bring these cases. That matters. Culture follows procedure. More Can Be Done— Especially on Fees If we truly want SLA Ps to become routine tools rather than heroic undertakings, we need to make them economically feasible. Right now, many debtors simply cannot afford counsel — and many attorneys understandably hesitate to shoulder unpaid litigation risk. One simple fix: Allow “no-look” fees in Chapter 13 for student-loan adversaries, payable through the plan. Treat SLA Ps as a recognized service — not a boutique add-on. If attorneys could rely on standardized compensation, more cases would be filed. More courts would see the right facts. More borrowers would receive discharges. And the Student Loan Bankruptcy Gap would actually begin to close. This is the kind of structural tweak that aligns incentives instead of relying on heroics. Connecting Back to “Full Discharge Ahead” This all echoes themes discussed earlier in the review of: Pang & Belisa / Jimenez-Dalie & Bruckner — Full Discharge Ahead The winds are shifting: DOJ is more reasonable courts are less hostile scholarship supports workable frameworks judges increasingly support bringing the cases The barrier now is no longer doctrinal despair — it is professional inertia. Final Thought: Ask — Because Now You Might Receive Iuliano’s newest article reinforces something bankruptcy practitioners cannot afford to ignore: The discharge is no longer fantasy. The gap persists only because most people never try. Our task — as lawyers, judges, trustees, and educators — is to make sure that borrowers learn that relief exists, that the courthouse door is not welded shut, and that the promise of a fresh start applies to student loans as much as to everything else. And while some still cling to the myth that protecting the Treasury means punishing borrowers forever, the better view — the bankruptcy view — remains: Fresh starts make better citizens, better economies, and better futures. With proper attribution,  please share. To read a copy of the transcript, please see: Blog comments Attachment Document bridging_the_student_loan_bankruptcy_gap.pdf (483.74 KB) Category Law Reviews & Studies

N.C. Ct. of App.: The Law Office of Robert Forquer v. Arcuri- Co-Signer on Deed Not Liable for Mortgage Payoff Ed Boltz Mon, 01/05/2026 - 16:19 Summary: This case began as an interpleader filed by a closing attorney caught in the middle of a family property dispute — wisely deciding not to referee a fight over sale proceeds while trying to deliver clear title. Susan Arcuri and her late partner, John Renegar, owned a house in Charlotte as tenants-in-common. In 2021, Arcuri alone signed a $245,000 promissory note, but both she and Renegar signed the Deed of Trust, which described both as “Borrowers” — while also expressly stating that any co-signer not on the Note was not personally liable for the debt. When Renegar passed away, his interest passed to his two adult children. The property was eventually sold, and everyone agreed the lien had to be paid. The disagreement? Who’s share took the mortgage hit. Arcuri argued: Everyone had to give up proceeds proportionally because everyone pledged their interest. The Renegar children argued: Only Arcuri signed the Note — so payment comes from her half. The trial court agreed with the children, and the Court of Appeals affirmed. The majority emphasized a core principle: A deed of trust secures a debt — it does not create a new obligation to pay one. And Section 13 of the Fannie Mae form deed could not be clearer that co-signers like Renegar encumber the property only, without assuming payment responsibility. Therefore, the mortgage payoff was deducted solely from Arcuri’s share of the proceeds . The opinion does correct one misstep below: the deed did encumber the Renegar heirs’ interest — but encumbrance is different from personal liability. That distinction mattered, but not enough to change the outcome. Chief Judge Dillon concurred, offering a richer surety analysis. He explained that someone who mortgages property for another’s debt is often treated like a surety — responsible only to the extent of the pledged property. In his view, there is a rebuttable presumption that Renegar was acting as surety, and Arcuri failed to offer competent evidence that the loan was actually for joint benefit. Since she didn’t rebut the presumption, the payoff properly came from her side. Commentary: What makes this opinion interesting — and highly relevant to bankruptcy lawyers — is how clearly it separates: Who owes the debt What property is pledged Who ultimately bears the economic burden when property is sold Creditors — and sometimes debtors — tend to conflate these. The Court’s reasoning reinforces what we too often see in practice: Signing the deed of trust is not the same as signing the note. This is particularly common with non-borrowing spouses, partners, elderly parents helping their children qualify, and anyone else who winds up “on title” but not “on the loan.” The Court wisely refused to treat the sale payoff as some kind of equitable contribution obligation. There was no separate agreement shifting responsibility. No implied assumption. No magic language in the deed that turned a non-obligor into a debtor. And had this landed in bankruptcy? A Chapter 7 or Chapter 13 trustee might have argued “benefit to the estate,” “marshalling,” or equitable contribution — but those are uphill climbs without evidence. The opinion makes clear: The encumbrance survives. The obligation does not expand. Proceeds follow liability unless facts show otherwise. Chief Judge Dillon’s concurrence is also worth flagging for practitioners. His surety analysis opens the door — in other cases — for evidence showing: both parties benefited from the loan, the loan refinanced joint debt, improvements increased shared value, or the parties intended shared obligation. Had Arcuri produced competent evidence (not an unverified pleading), the outcome may have been different. That’s a practice pointer worth remembering. Takeaways for consumer bankruptcy and real-property lawyers ✔ Always review both the Note and Deed of Trust — they are related, but not identical. ✔ Co-signing a deed does not create personal liability without signing the note. ✔ Encumbrance ≠ obligation. ✔ Evidence matters — especially when seeking contribution. ✔ In bankruptcy cases, don’t assume joint ownership means joint liability. And finally — the closing attorney did exactly what closing attorneys should do in these situations: interplead and walk away slowly. With proper attribution,  please share. To read a copy of the transcript, please see: Blog comments Attachment Document the_law_off._of_robert_forquer_v._arcuri.pdf (174.32 KB) Category NC Court of Appeals

Although you use bankruptcy to get out of debt, you do have to spend a little to file a bankruptcy petition with the court in New Jersey and ensure the case resolves successfully, with all debts repaid or discharged. You can expect to spend several hundred dollars on the bankruptcy filing fee, much less than that on mandatory credit counseling courses and legal fees. More complex cases may take longer and ultimately cost more to file and finish. Delaying filing for bankruptcy may ultimately cost you more, so don’t wait to submit your bankruptcy petition today in New Jersey. Call the New Jersey bankruptcy lawyers of Young, Marr, Mallis & Associates for a free analysis of your case today at (609) 755-3115. How Much Does Filing for Bankruptcy Cost in New Jersey? There are several costs to consider before initiating a bankruptcy case in New Jersey, starting with the filing fees the petitioner must pay to the court. Court Filing Fees Court filing fees vary depending on the chapter of bankruptcy under which the debtor is filing. The fee to file a Chapter 7 bankruptcy case in New Jersey is currently $338 in 2026. The filing fee for a Chapter 13 case is $313, so there is not a major difference between the cost to file a Chapter 7 or 13 bankruptcy petition with the court. There is also typically a fee to file an appeal of a bankruptcy case in New Jersey. Mandatory Credit Counseling Debtors must take mandatory credit counseling courses before filing for bankruptcy in New Jersey. Credit counseling courses range in price, but generally don’t cost more than $50, with some costing substantially less. You must complete the credit counseling course within 180 days of filing the bankruptcy petition. If you don’t, the court won’t accept the case. You may also have to take additional counseling courses before obtaining a debt discharge at the end of bankruptcy. Legal Representation Debtors should also factor in the cost of representation into the total cost of a bankruptcy case. While filing without an attorney might cost less initially, it may end up harming you in the long run if you make costly mistakes during the case. Even accidentally omitting or providing incorrect information may lead to a costly dismissal, forcing you to restart the entire bankruptcy process. Why Do Some Bankruptcy Cases Cost More to File? Some bankruptcy cases cost more to file and see through because of their complexity and length, the debtor’s eligibility for a debt discharge, and the debtor having to re-file the case after a dismissal. Bankruptcy Chapter The specific bankruptcy chapter dictates the basic filing fee. However, there is very little difference between the filing fees for Chapter 7 and 13 bankruptcies in New Jersey. Case Complexity and Length A longer, more complex case may cost more due to the amount of work and preparation required. The more assets and creditors involved, the more complicated the case gets. Rushing complex cases risks mistakes that can lead to dismissal of the bankruptcy case. No Debt Discharge A bankruptcy case may end up costing you much more than you anticipated if you do not receive a debt discharge, absolving you of repaying certain unsecured debts. If there is no debt discharge, you must repay those unsecured debts, which may require you to liquidate more assets or extend the repayment period. Debt discharges can be withheld for several reasons, such as providing inaccurate information or filing repeatedly. Case Dismissal If a bankruptcy case is dismissed before all debts are repaid, the petitioner can re-file. Still, they must repay the filing fees and retake credit counseling courses within six months of the new filing date, increasing the overall cost of bankruptcy. A case dismissal means creditors can resume debt collection, meaning interest rates might spike, and wage garnishment might begin, costing you a lot. Does Delaying Filing a Bankruptcy Case Cost More? Anyone struggling with debt in New Jersey should not wait to learn whether bankruptcy is the right solution. Delaying a bankruptcy case might cost you more for several reasons, namely, because the debt has continued to grow unchecked. The more debt you incur as you wait to file for bankruptcy, the more you will have to repay during your bankruptcy case. If you file a Chapter 7 case, you will repay debts via asset liquidation. If you file Chapter 13, you will follow a three to five-year repayment plan that our Trenton, NJ bankruptcy lawyers help set up based on your income and expenses. Accumulating more debt because of high interest rates, worsening your credit score, and ultimately paying more are risks of delaying a crucial bankruptcy case to improve your financial health in New Jersey. What Costs Can You Avoid by Filing for Bankruptcy in New Jersey? You can avoid many costly collection efforts from creditors by filing for bankruptcy in New Jersey with our lawyers’ help and benefiting from an immediate automatic stay. Wage Garnishment Wage garnishment is a major consequence of accumulating debt. With wage garnishment, the court allows your employer to withhold some of your income and send it directly to the creditors seeking repayment. This can directly affect your ability to pay other bills, worsening your overall financial health. Creditor Lawsuits Avoid costly creditor lawsuits by filing a bankruptcy case. When you do this, any ongoing creditor lawsuit must pause, as the bankruptcy case takes precedence. If a creditor violates the automatic stay during this time, they can face consequences from the bankruptcy court, so tell us if that happens to you. Mortgage Foreclosure or Vehicle Repossession Mortgage foreclosure and vehicle repossession are very real risks of delaying a bankruptcy case for too long. We may use federal exemptions to protect your car and a large portion of the equity in your home during the Chapter 7 bankruptcy case, so you don’t have to worry about transportation or living accommodations while repaying debts. Does it Cost the Same to File for Bankruptcy After a Case is Dismissed? Creditors may petition to dismiss bankruptcy claims for a variety of reasons, enabling them to resume debt collection efforts, such as wage garnishment or mortgage foreclosure. If the case is dismissed and you file it again, do you have to pay the filing fee again? You pay the standard filing fee a second time if you file for bankruptcy again after a case is initially dismissed by the court. While the filing fee remains the same, the protections under the automatic stay do not. If you re-file your case within the same year, the automatic stay will only stop creditors from collecting debt for 30 days, though we can file a motion to extend it. It may cost less to “reinstate” a closed bankruptcy case rather than filing a new case, and we can see if that saves you some money. What Makes the Cost of Filing for Bankruptcy Worth It? The asset protection from the automatic stay, debt reduction from the debt discharge, and the opportunity to rebuild your credit are clear benefits that make the cost of filing for bankruptcy worth it for debtors in New Jersey. Asset Protection After you pay the filing fee to open a bankruptcy case in New Jersey, an automatic stay will most likely take effect. The automatic stay prohibits any creditors associated with the case from contacting the debtor outside the case or attempting to collect money from you. The peace of mind this alone provides makes bankruptcy filing worth it for many debtors. You may also protect assets further in a Chapter 7 case by selecting exemptions that shield your home, vehicle, or personal property from liquidation. Debt Reduction The point of bankruptcy is to reduce or eliminate debt. Some unsecured debts may be entirely erased through a discharge, such as credit card debt, medical bills, and even personal loans. Being proactive and addressing debt stops it from growing and worsening your financial situation. Rebuild Credit Filing for bankruptcy also gives you the opportunity to begin rebuilding your credit. If you don’t file and let debt continue to grow, the worse your credit score might become, hurting your ability to buy a home or vehicle. The bankruptcy case will remain on your credit report for several years and will eventually be removed. FA Qs About the Cost of Filing for Bankruptcy in New Jersey Is Filing for Bankruptcy in New Jersey Too Expensive? Compared to the cost of creditor lawsuits and growing interest on unpaid debts, filing for bankruptcy may be considerably less expensive, especially if you receive a debt discharge and don’t need to repay everything you owed, such as credit card bills. Can You Pay Bankruptcy Costs in Installments? Debtors without the cash to pay all of the bankruptcy filing fees at once may pay in installments, most likely four over 120 days. We can help you complete and submit the installment payment application. Be prepared to pay 25% of the filing fee upfront, even if you qualify for installment payments based on your income. Can You Get a Waiver for Bankruptcy Filing Fees? You may get the bankruptcy filing fee waived if your income is below 150% of the federal poverty level for 2026, and we show that you cannot pay in installments and still support yourself. Does it Cost Less to File Chapter 7 Bankruptcy? Overall, Chapter 7 bankruptcy generally costs less to file because it ends the quickest, in 3 to 6 months, even though the initial filing fee might be slightly higher. Does it Cost More to File Chapter 13 Bankruptcy? Chapter 13 may cost more to file because it generally takes three to five years. Does it Cost More to File for Bankruptcy without a Lawyer? When debtors file without our New Jersey bankruptcy lawyers’ help, they risk spending too much on filing fees, agreeing to bad interest rates for repayment plans, and not receiving the debt discharge they deserve. How Do You Pay Filing Fees for a Bankruptcy Case? Filing fees for bankruptcy cases are paid to the court, and you may pay online with a debit card, by mail, or in person via money order or cashier’s check, not cash. For Help with Your Bankruptcy Case, Call Us in New Jersey Call Young, Marr, Mallis & Associates at (609) 755-3115 for a free and confidential case review from our Voorhees, NJ bankruptcy lawyers.