The foreclosure process is very upsetting for homeowners, and it can also be expensive. Depending on how foreclosure happens, you might face additional fees and costs from the lender. This can be costly for those already facing financial hardship, but you may be able to challenge some of the fees. Foreclosure is not cheap, and lenders are already faced with the prospect of losing money. They may incur various costs during the foreclosure process, and these costs are typically passed on to homeowners. Fees for late mortgage payments, property inspections and evaluation, and various legal and attorney fees may be added to the final bill. You may challenge these costs with the help of a lawyer. Depending on the situation, you might negotiate with lenders about the fees or file for bankruptcy to halt the foreclosure process. Call Young, Marr, Mallis & Associates at (215) 701-6519 for a private, free case assessment from our Pennsylvania mortgage foreclosure defense lawyers. Possible Fees During the Pennsylvania Foreclosure Process People facing foreclosure are often in dire financial situations, yet the process may come with more costs. Our Philadelphia mortgage foreclosure defense lawyers may review these fees to determine if they are fair. Late Fees Foreclosure often happens because homeowners are late with payments. According to 12 C.F.R. § 1024.41(f), a lender may not foreclose for late mortgage payments until the homeowner is at least 120 days delinquent. Late fees might arise from banking issues or sudden layoffs, and some lenders might forgive first-time late fees. However, homeowners facing foreclosure are typically several months behind on payments, and they might have to pay hefty late fees during the foreclosure process. Inspection Costs Once you enter default, the lender may have the property inspected. They may check for maintenance issues, signs of disrepair, and anything else that might affect the property’s value. The lender may tack these costs onto your final bill after your home is sold at a sheriff’s sale. Property Maintenance Costs If the property needs maintenance, the lender may hire someone to repair property damage and prepare the home for sale. Lenders do not want to sell a house that is unfit for habitation and may order extensive work to be performed. If they do, these costs are usually passed on to homeowners. Various Legal Fees Pennsylvania is a judicial foreclosure state, meaning the foreclosure process goes through the courts. As such, lenders may incur filing and legal fees when they initiate foreclosure. They may also incur sheriff’s fees when the property is sold at auction. How to Minimize Extra Fees During the Foreclosure Process Extra fees imposed by the lender only serve to place a greater financial burden on homeowners who might already be struggling. If you are facing foreclosure, talk to your attorney about these fees and whether they can be mitigated or avoided. Negotiate with the Lender One possibility is that we can negotiate with the lender to minimize or avoid certain fees. After all, homeowners are in foreclosure because they cannot afford the mortgage, so how can the lender expect them to afford additional fees? The lender might be willing to forego some fees if doing so streamlines the foreclosure process. Challenge the Fees We should challenge any fees that seem unreasonable or unfair. For example, the lender might attempt to charge you fees related to repairs they made to the property. However, many of these repairs might not have been necessary to sell the house and were performed so the lender could get a better sale price. The lender should not be able to take advantage of homeowners this way, and we can push back on unnecessary repair or maintenance costs. File for Bankruptcy We may attempt to prevent foreclosure by filing for bankruptcy. While this is not an ideal option, it might alleviate your financial problems. Many people file for bankruptcy under Chapters 7 or 13. Chapter 7 bankruptcy involves the liquidation of your assets, including your home. Proceeds from liquidation may be distributed to creditors according to 11 U.S.C. § 726(a). Some remaining debts may be discharged, and you would no longer be responsible for payment. Chapter 13 bankruptcy does not involve liquidation and may help you hold on to your home. According to § 1322(a), you must devise a feasible but aggressive payment plan to regain control of your debts, including your mortgage. The court must approve the plan, which is subject to objections from lenders and creditors. When you file for bankruptcy, the court will impose an automatic stay under § 362(a). This prevents lenders from pursuing legal action, including foreclosure, against you for unpaid debts. If foreclosure is currently pending, the proceedings must immediately stop, giving you more time to remedy your financial situation. What to Do if You Are Facing Foreclosure in Pennsylvania If you have received a notice from your bank regarding foreclosure or are currently involved in the process, you should contact an attorney immediately. Your lawyer may review your legal options, including bankruptcy, to determine how to protect your home or minimize the financial impact of foreclosure. Begin gathering evidence to build your case. We need a copy of the mortgage so we can review the terms and conditions. You should also save any communication between you and the lender about the mortgage and foreclosure. This includes emails, letters, and records of phone calls. If the lender did not adequately communicate the foreclosure to you, we may be able to challenge the proceedings. Speak to Our Pennsylvania Mortgage Foreclosure Defense Attorneys About Your Case Call Young, Marr, Mallis & Associates at (215) 701-6519 for a private, free case assessment from our Radnor, PA  mortgage foreclosure defense lawyers.

Poor client communication is the source of both client anguish and discontent with the legal profession. Case in point: failure to return calls is the most frequent complaint to the state bar where I practice. As bankruptcy lawyers, we’re dealing with people under stress: they are seldom at their best and their capacity to absorb […] The post My Client Communication Strategy: Flood the Zone appeared first on Bankruptcy Mastery.

American Bankruptcy Institute: Protections for Consumers and Consumer Lawyers: The ESCRA Ed Boltz Tue, 03/04/2025 - 03:14 Shortly after the commencement of the 119th Congress, Reps. Young Kim (R-Calif.) and Sarah McBride (D-Del.) introduced the Ending Scam Credit Repair Act (ESCRA)1 to crack down on fraudulent practices in the credit repair industry. The bipartisan bill targets creditrepair organizations (CR Os) that deceive consumers with high fees and empty promises to improve credit scores. The bill will ensure transparency and accountability for consumers, but also will provide much-needed protections for attorneys assisting consumers with legitimate credit disputes, including those arising in connection with bankruptcy. Aimed at tackling the practice of “credit report jamming,” where CR Os send repeated baseless dispute letters to credit bureaus, with the goal of clogging up the dispute process and temporarily “cleaning” the consumer’s credit report, Rep. Kim said that fraudulent CR Os “should not get away with scamming hardworking Americans seeking to improve their scores and unlock their American dream.” The Consumer Financial Protection Bureau (CFPB) has taken action against a conglomerate of the nation’s largest CR Os for illegally collecting fees. Following the lawsuit, the CFPB is now distributing $1.8 billion to more than 4 million consumers nationwide. To prevent such abuses in the future, the ESCRA prevents CR Os from charging illegal upfront fees. Rep. McBride described it as follows: "CR Os exploit legal loopholes to target cashstrapped Delawareans by charging large upfront fees based on false hopes of debt reduction. Our bipartisan bill eliminates those loopholes that have allowed predatory practices to flourish by banning upfront fees, improving transparency, and enhancing consumer protections." The ESCRA would prohibit CR Os from charging consumers until six months after they have provided proof that their credit score has improved, while also increasing civil penalties for violations. The bill would also prohibit CR Os from “jamming” financial institutions with duplicative requests, which has prevented consumer-reporting agencies and data-furnishers from addressing legitimate credit-report issues. While generally important for consumers, the ESCRA also is particularly pertinent because it draws heavily on the Bankruptcy Code for an innovative approach to allow attorneys to assist and represent consumers with correcting legitimate credit-report disputes. Many CR Os have attempted to avoid restrictions under the Credit Repair Organizations Act (CROA) or the Telemarketing Sales Rule (TSR) through a “rent-a-lawyer” scheme, asserting that the prohibitions (among others) on collecting advance fees do not apply, as the CRO is providing legal services. In combating this, legislation has often tended to bar all lawyers from being paid in advance for providing any advice or assistance regarding credit-report errors. This can have the de facto effect of only restricting honest lawyers from assisting consumers (with one out of five Americans having an error on a credit report), since disreputable CR Os will likely have few compunctions in violating this restriction. CR Os have even argued that consumer bankruptcy attorneys who review their clients’ credit reports at no additional cost post-discharge for inaccuracies have violated the CROA and TSR by collecting their bankruptcy fees prior to the provision of all related legal services, since that offer is an improper inducement. The ESCRA, in language directly paralleling the Bankruptcy Code, would exempt: "any attorney [who] provides legal services rendered or to be rendered to a consumer in contemplation of or in connection with a case filed, or to be filed within 12 months, under title 11 or title 15, United States Code, by an attorney within the same law firm". By tying this exemption to actual pending cases, whether being filed in bankruptcy or under other consumer-protection statutes, such as the Fair Credit Reporting Act, attorneys can receive reasonable payment for their legal services. As the CR Os falsely offering “quick and painless” credit report jamming assiduously seek to avoid even the mention of bankruptcy, it is unlikely that they would pretend to “contemplate bankruptcy.” It is believed that this would deter consumers and also expose CR Os to all of the debt-relief agent requirements of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. With bipartisan support in Congress from Reps. Kim and McBride, as well as from consumer groups, including the National Consumer Law Center and the American Financial Services Association, the ESCRA has a reasonable likelihood of passage and would provide meaningful protections for consumers, credit-reporting agencies and consumer attorneys alike.   Blog comments Category Law Reviews & Studies

[NC NACBA} 4th Cir.: Guthrie v. PHH- Bankruptcy Code does not Preempt State Consumer Protection Claims Ed Boltz Tue, 02/25/2025 - 01:24 Summary:  As part of Guthrie's Chapter 13 bankruptcy,  he surrendered his interest in real property owned with his then wife (who did not file bankruptcy) to the mortgage holder.  Shortly after this PHH obtained an interest in the property.  After completing his bankruptcy and receiving his discharge.  Despite the discharge and multiple letters from his attorney,  PHH continued to contact Guthrie about payment on the mortgage and also reported to the credit bureaus that he was delinquent.  Similarly to the Barnhill case from the MDNC Guthrie brought suit against PHH in federal district court (not bankruptcy court),  originally asserting 10  state and federal causes of action,  but after the district court’s grant of summary judgment to PHH Mortgage Corporation,  only appealed on three state causes -negligent infliction of emotional distress, intentional infliction of emotional distress and violation of the North Carolina Debt Collection Act - and two federal—violations of the Fair Credit Reporting Act (“FCRA”) and the Telephone Consumer Protection Act (“TCPA”). The first issue on appeal was whether the Bankruptcy Code preempts state law causes of action for a creditor’s improper collection efforts related to debt that has been discharged in bankruptcy. Secondly, whether there genuine disputes of material fact with respect to Guthrie’s federal and state claims? The Fourth Circuit affirmed in part, vacated in part, and remanded. The court held that the Bankruptcy Code did not preempt Guthrie's  state law claims arising from alleged improper collection attempts of a discharged debt.   The Court of Appeals started with the presumption that federal law does not preempt state law unless there is either: Express Preemption:  Where   Congress explicitly states an intention to preempt certain state laws. Field preemption:   Where federal law  so thoroughly occupies a legislative field as to make reasonable the inference that Congress left no room for the States to supplement it. Direct Conflict Preemption:    Where compliance with both federal and state regulations is an impossibility. Obstacle Preemption:  Where  a state law  stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. While the district court did not explicitly specify which theory of preemption applied,  the Circuit  found Express Preemption did not apply "the  Bankruptcy Code provisions pertaining to chapter 13 bankruptcy and discharge injunctions do not include language preempting related state law. 11 U.S.C. §§ 524, 1301–1330" and that Field Preemption  had not been asserted.   As to Direct Conflict Preemption  applies,  the Court of Appeals found that "the answer to that question is easy"  as a "creditor can comply with both the discharge injunction and the state law on which Guthrie’s claims are based by not seeking to improperly collect debts discharged in bankruptcy."  (Emphasis added.) While a determination of Obstacle Preemption was "trickier"  the Court of Appeals applied a two step process: Determine Congress’s significant objectives in passing the federal law.  Determine whether the state law stands as an obstacle to the accomplishment of a significant federal regulatory objective. While the Supreme Court has explained that “[t]he principal purpose of the Bankruptcy Code is to grant a ‘fresh start’ to the ‘honest but unfortunate debtor",  it must also balance the "multiple, often competing interests"  including  providing a “prompt and effectual administration and settlement of the debtor’s estate" and centralizing disputes between the debtor and creditor.     Accordingly,  Guthrie's state law claims "create no obstacle to providing him with a fresh start" and, if successful, actually promote such.  Nor would, in balancing other interests,  allowing these claims   result in the inequitable distribution of his assets, would not increase the debts that are dischargeable and would not slow down or negatively affect the administration or settlement of his estate.  Granting some merit to the argument by PHH that this creates "piecemeal  litigation"  the Court of Appeals found the claims did not "detract from the ease of centrality with which the federal bankruptcy system operates"  as all alleged violations occurred following the completion of the case  and were not inconsistent with any bankruptcy court orders,  especially as "the Code’s treatment of violations of the discharge injunction is scant at best", derived largely from  11 U.S.C. § 105(a).   "[T]he mere fact that state law claims provide broader remedies than federal law means the state claims are preempted." Lastly,  following Butner v. United States, 440 U.S. 48, 54 n.9 (1979), the Uniform Bankruptcy Clause of the Constitution would not be presumed to preempt state claims. The court also held that Plaintiff has established a genuine dispute of material fact with respect to his NCDCA and FCRA claims. However, Guthrie did fail to establish a genuine dispute of material fact with respect to his TCPA claim. Commentary: This case opens the door further in bringing additional or alternative causes of action besides merely violations of the discharge order, including UDTPA,  NEID, IIED,   FDCPA,  FCRA- what bankruptcy judges often disparagingly call "alphabet soup"  claims.  Those causes of action often carry statutory damage provisions and may be more amenable to class actions.   Whether the same will hold for violations of the automatic stay or confirmation orders will require courts to provide a more detailed analysis of the various forms of preemption,  not merely a knee jerk "No soup  for you!!" To read a copy of the transcript, please see: As to the federal claims under the FCRA and TCPA,  remember that the Bankruptcy Code does not preempt other federal laws,  but instead can preclude or implicitly repeal the other,  but only if the separate federal laws cannot be harmonized.  See Randolph v. IMBS, Inc., 368 F.3d 726, 730 (7th Cir. 2004). Deciding whether to bring these state and federal claims together with a discharge violation in the bankruptcy,  only bringing the alternate claims in state or federal district court (or more complicated maneuvers involving remand, consolidation, or withdrawal of district court reference to the bankruptcy court)  will be important strategic considerations in these cases. That  PHH Mortgage sought to assert that the Uniform Bankruptcy Clause in the Constitution preempts state law claims is ironic,  given that nearly all claims in bankruptcy are based solely on state law.  Apparently,  PHH believes that its ability to collect on debts can rely on state laws,  but those same laws should not restrict its actions. (Again,  geese and ganders.) It is also worth noting that this is not an isolated incident of improper and illegal behavior by PHH Mortgage,  as it was found to have committed similar illegal acts in,  among other cases,  the line that culminated in PHH Mortg. Corp. v. Sensenich (In re Gravel). As that case showed that the remedies under Rule 3002.1  may not authorize punitive damages,  proceeding under alternate state and federal laws  seems likely the best way to deter the apparent blatant and repeated disregard for the law by PHH Mortgage and other creditors, as those do provide for greater monetary awards,  which might  lead to some degree of compliance. Congratulations to Matt Buckmiller and Blake Boyette on this important victory!   Blog comments Attachment Document guthrie_v._phh_circuit.pdf (278.35 KB) Document guthrie_v._phh_district.pdf (351.1 KB) Category 4th Circuit Court of Appeals

4th Cir.: LeClair v. Tavener- Withdrawal as Partner Prior to Bankruptcy Ed Boltz Fri, 02/21/2025 - 15:48 Summary: The Fourth Circuit vacated and remanded a bankruptcy court ruling that had held Gary D. LeClair, a founding member of the now-defunct law firm LeClairRyan PLLC, liable for tax obligations due to his status as a firm member at the time of its bankruptcy filing. LeClair had attempted to withdraw from the firm in July 2019, before it filed for Chapter 11 bankruptcy in September 2019. However, the bankruptcy and district courts concluded that the firm’s operating agreement prohibited members from withdrawing after a dissolution event, which they determined occurred on July 29, 2019, when the firm's members voted to form a Dissolution Committee. The Fourth Circuit disagreed, finding that the operating agreement did not prohibit members from withdrawing after a dissolution event. Instead, it only prevented withdrawal while a member still held shares in the firm. Because the agreement required a withdrawing member’s shares to be automatically transferred back to the firm upon termination of employment, LeClair effectively ceased to be a member when his employment ended on July 31, 2019. The court ruled that the bankruptcy court’s denial of LeClair’s motion to amend the firm’s equity holders list—where he had been listed as a member as of the bankruptcy filing—was an abuse of discretion. However, the appellate court left it to the bankruptcy court on remand to determine whether equitable considerations might still justify denying LeClair’s request to amend the list. Accordingly, the Fourth Circuit vacated the district court’s ruling and remanded the case for further proceedings. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document leclair_v._tavenner.pdf (159.06 KB) Category 4th Circuit Court of Appeals

Law Review: Baird, Douglas- Bankruptcy Minimalism Ed Boltz Thu, 02/20/2025 - 17:12 Available at:  Abstract: Bankruptcy exceptionalism, which was called into serious question by the Supreme Court in Harrington v. Purdue Pharma L.P., pushed the outer parameters of the remedial elasticity of the Bankruptcy Code. In this essay from Professor Douglas G. Baird, by contrast, examines the founding conceptions of the laws of corporate reorganizations rooted in Butner v. United States, which focused on not altering state law rights except to the extent necessary to resolve creditors’ collective action problems. In doing so, he explores the challenges that the minimalist account of corporate reorganizations must confront to be effective and balanced.  Commentary: Against my recurring gripe that corporate bankruptcy law review articles should pay some attention to consumer bankruptcy law,  here is Footnote 4 from Prof.  Baird in its entirety: "Of course, the law governing individual bankruptcy is cut from an altogether different cloth. The honest, but unfortunate debtor is entitled to a fresh start, and this requires dramatic changes in nonbankruptcy rights. Individual bankruptcy is not and cannot be minimalist. Its origins and its rationale are utterly different. Indeed, it is an unhappy accident that individual bankruptcy and corporate reorganization law are fused together, as it leads many to assume that policies designed for one type of debtor are suitable for the other. Debt is “discharged” in both kinds of cases, but the discharge of corporate debtors is not about helping flesh-and-blood individuals. It is merely part of the mechanism that allows dispersed investors to create a new and more sensible capital structure. There is no reason to think that the exchange of one investment instrument for another should have much in common with giving a flesh-and-blood individual a fresh start. Given the distinct (and radically different) purposes each sort of “discharge” serves, there is no need to treat them the same. Indeed, it would seem most unlikely that they should be the same."  So while conjoined in the same Title of the U.S. Code,  corporate and consumer bankruptcy do benefit in many ways from being mindful of developments in each sphere,  this point that   the purposes of each are radically different  is just as important to recognize. With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document bankruptcy_minimalism.pdf (262.67 KB) Category Law Reviews & Studies

N.C. Ct. of Appeals: CL Howard Investments v. Wilmington Savings Fund- Mortgage Modification does not Alter Seniority of Liens Ed Boltz Wed, 02/19/2025 - 15:38 Summary: The North Carolina Court of Appeals reversed the trial court’s order granting summary judgment in favor of CL Howard Investments I, LLC and denying Wilmington Savings Fund Society’s motion for judgment on the pleadings. The case involved a dispute over lien seniority between a first Deed of Trust held by Wilmington and the second deed of trust held by CL Howard on a property following a loan modification. The debtor initially had two deeds of trust: a senior deed for $52,850 and a junior deed for $22,650, both recorded on January 18, 1999. In 2014, after the maturity date, the senior lender modified the loan, extending its maturity to 2033 and recapitalizing the unpaid balance. The junior deed of trust was later foreclosed in 2021, and CL Howard purchased the property, arguing that the loan modification extinguished the senior deed’s priority. The trial court ruled in favor of CL Howard, determining that the loan modification, recorded after the junior deed’s initial filing, effectively extinguished the senior lien, making the junior deed the priority lienholder.  According to trial court,  by failing to obtain a subordination agreement from CL Howard,  Wilmington Savings Fund lost its senior status. The Court of Appeals disagreed, holding that the loan modification merely extended the terms of the senior deed of trust and did not extinguish its priority. The court found that North Carolina law, statutory provisions, and legal precedent support the continued priority of the senior lien, even after a loan modification, unless the modification materially prejudices junior lienholders—which was not the case here. Because the trial court incorrectly enjoined foreclosure of the senior deed and extinguished its priority, the Court of Appeals reversed the decision and remanded the case for further proceedings consistent with its opinion. Commentary: A contrary holding would have provided second mortgage holders with a near total ability to block any mortgage modification,  which can be difficult enough to obtain.  That's what makes the most surprising aspect of this case being that Wilmington Savings fund actually granted  the homeowner  a mortgage modification in the first place,  as it seems utterly incapable or unwilling to agree to those. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document cl_howard_v_wilmington_savings.pdf (142 KB) Category NC Business Court

Many clients have contacted our law firm asking how to sell a business subject to an SBA EIDL loan. There are two scenarios. In the first, the sales proceeds are sufficient to pay off the SBA loan (the easier scenario). In this case, one is required to contact the SBA and obtain prior approval, pursuant to SBA loan documents. In the second scenario, the sales proceeds are not sufficient to pay off the SBA loan (the more difficult and complex scenario), resulting in a shortfall ("Shortfall"). With respect to the Shortfall scenario, the Borrower/Seller must do the following: 1. Provide the SBA with information about the proposed sale (prior to closing), 2. Submit the required SBA documents for the sale to the SBA, 3. Send the SBA the proposed Sales Agreement, 4. Provide the SBA with a business valuation or appraisal of the business being sold, 5. Provide the SBA with financial statements for the business being sold, and 6. Provide the SBA with a proposal for handling the loan shortfall (an Offer in Compromise, payment by the Guarantor, Loan assumption by the Buyer, etc.).The proposed Sales Agreement should include a contingency clause stating that the sale is subject to SBA approval. Obtaining SBA approval can take months and may require negotiations with the SBA.Clients or their advisors having questions about the sale of a business subject to an SBA loan should 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/15minWe help individuals & businesses with too much debt!

Law Review: Seymour, Jonathan- Bankruptcy in Conflict Ed Boltz Tue, 02/18/2025 - 15:42 Available at: https://ablj.org/bankruptcy-in-conflict-vol-98-issue-3-pdf/ Abstract: In a continuation of his criticism of the claim of bankruptcy exceptionalism, in his symposium article Bankruptcy in Conflict, Professor Jonathan Seymour discusses three potential consequences to so-called bankruptcy specialization. Utilizing artwork from the New Yorker’s View of the World, he examines how the self-characterization as specialists can result in bankruptcy lawyers’ viewing ordinary legal issues through the proverbial camera-lens of bankruptcy. Seymour next applies recent Supreme Court trends away from deference to specialized courts or agencies to utilize their knowledge to fill gaps in governing law in support of his argument that we must move from a telephoto to panoramic lens. Finally, with these concepts in mind, he considers how these two principals are seen in recent Supreme Court decisions resolving conflicts between statutes, specifically the need for the removal of the filter on a lens that severely limits consideration of policy considerations. At its core, Seymour highlights a need for bankruptcy specialists to reconsider their lens selection and reframe their view on the world away from exceptionalism and towards resolving bankruptcy contests using ordinary (and not extraordinary) tools of statutory interpretation. Commentary: This article  betrays its prejudice through the  general omission of "corporate"  as a preceding descriptive adjective.  Whether in statements  that "only a handful of ... judges sit on the courts that handle the bulk of the largest corporate  (omitted in the original) cases that set the trends of practice"  or that "the needs of corporate   (omitted in the original)  bankruptcy often do 'win' when faced  with actual of perceived conflict with norm, objectives or even substantive rules from outside the world of corporate   (omitted in the original)  bankruptcy",  the assumption that corporate bankruptcy is the real bankruptcy whereas the word "consumer"  is only mentioned four times,  briefly in passing,  despite the vastly greater number of bankruptcy cases being consumer case rather than the infrequent corporate ones. This persistent academic bias may come from the greater  prestige assigned to corporate cases,  including from tenure committees. Related is  the fact that corporate attorneys,  with hourly rates  reaching astronomical heights in excess of $2,500 an hour in those trend setting districts,  are able to generously donate both to law schools and other organizations,  while consumer  bankruptcy lawyers are pilloried for making a pittance in comparison. This leads  to missed opportunities,  including in the present article to discuss how in the Supreme Court's  Midland Funding, LLC v. Johnson decision,  bankruptcy rules  "won"  over the Fair Debt Collections Practices Act.  Related as this is to Prof.  Pamela Foohey's article (in the same issue), The Periphery of Bankruptcy Law: The Importance of Non-Bankruptcy Issues in Consumer Bankruptcy,  it would both have been a nice bit of cross-promotion byt the American Bankruptcy Law Journal,  but would have also allowed insight into how even Supreme Court Justices  inexplicably  deferred to the bankruptcy expertise of Chapter 13 trustees by holding that the FDCPA did not apply "where a knowledgeable trustee is available" to protect against illegal Proofs of Claim. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document bankruptcy_in_conflict.pdf (357.79 KB) Category Law Reviews & Studies

4th Cir.: Espin v. Citibank- Arbitration Required Despite SCRA Ed Boltz Tue, 02/18/2025 - 15:39 Summary: The Fourth Circuit Court of Appeals reversed a district court decision that denied Citibank’s motion to compel arbitration in a class action lawsuit brought by military service members. The plaintiffs alleged Citibank violated the Servicemembers Civil Relief Act (SCRA) by charging standard civilian interest rates on credit card balances accrued during active duty once they left the military. Citibank argued that the plaintiffs had agreed to arbitrate disputes on an individual basis under their credit card agreements. The district court ruled that the SCRA’s provision allowing service members to participate in class actions “notwithstanding any previous agreement to the contrary” precluded enforcement of the arbitration agreements. The Fourth Circuit disagreed, holding that the SCRA does not explicitly override arbitration under the Federal Arbitration Act (FAA) and that arbitration must be enforced unless Congress clearly states otherwise. The court noted that Congress knows how to override arbitration, as seen in the Military Lending Act (MLA), which expressly prohibits arbitration for certain financial agreements. The court remanded the case with instructions to compel arbitration for all claims except those brought under the MLA. It also directed the district court to determine whether the MLA applies, as it only began covering credit card accounts in 2017, and Citibank argued that the plaintiffs’ accounts predated that change. The ruling reinforces the FAA’s strong presumption in favor of arbitration unless a federal statute explicitly prohibits it. Commentary: When even military service members are prohibited from class action and compelled to impractical arbitration, which is intended to preclude systemic change,  it starts to become clear  the extent of control held by the financial services industry. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document espin_v._citibank.pdf (164.14 KB) Category 4th Circuit Court of Appeals