E.D.N.C.: Williams v. Burnett- Denial of Interlocutory Appeal Ed Boltz Mon, 12/16/2024 - 19:18 Summary: In a case where confirmation appears to have denied because the Debtor sought to maintain direct payments of  $1,227.16/month on an automobile, the debtor sought an interlocutory appeal to the district court as  denial of confirmation of a Chapter 13 plan is not a final order appealable as of right. Bullard v. Blue Hills Bank, 575 U.S. 496, 503 (2015). Following  In re Biltmore Invs., Ltd., 538 B.R. 706, 713 (W.D.N.C. 2015),  the district court denied leave to maintain interlocutory appeal  as, even if the order involved a controlling question of law on which substantial ground for difference exists, the Debtor failed to meet his burden to show exceptional circumstances, or that an immediate appeal would advance the litigation Commentary: The Debtor can also attempt to advance an appeal by proposing a plan that would be acceptable to the court and trustee and then object to that confirmation himself.  Whether that would require the surrender of the vehicle (risking the further denial of a stay pending appeal)  or a substantially higher dividend,  is unclear. The Debtor testified that he is working 120+ hours a week at multiple jobs,  but that likely unsustainable level of work does not appear to have been persuasive, perhaps because the Debtor may still be providing substantial support to multiple family members, has large tax claims and used much of the debt incurred to repair and improve his house. While certainly not required,  the Debtor in this case proposed,  contrary to the  custom of the court,  to pay both this vehicle claim and the mortgage directly.  Whether the Debtor would have fared better if these were paid through the Chapter 13 plan,  giving the Trustee an additional dividend,   a dirty question that no one likes to ask. Additionally,  the Debtor  has nearly $600,000 in general unsecured claims and more than $100,000 in priority claims (even though there was less than $270,000 total scheduled.)  Unmentioned in this case seems to be that the Debtor is substantially above the current Chapter 13 debt limit. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document williams_v._burnett.pdf (576.78 KB) Category Eastern District

Bankruptcy Timing & The Holidays With Thanksgiving 2024 already come and gone, the winter holidays are just around the corner. These are times of joy with family, food, and celebration, but making the holiday season special can be difficult if you’re on a tight budget or struggle with debt. Bankruptcy provides protection from creditors in an instant and eventually allows the debtor to clear or pay off their debts while under court supervision. This could be just what you and your family need to stabilize your finances, especially during a hectic time like the holidays. On the flip side, preparing for and celebrating the holidays could draw your focus away from key aspects in your case or trigger certain limitations that would make it better to wait to file your case, if possible. If you are unsure after reading this article, you can have your debt evaluated by one of our experienced Phoenix and Tucson bankruptcy lawyers. Schedule your free consultation today by calling 480-470-1504.  Holiday Case Delays Some debtors have the goal of discharging their cases as expediently as possible. If this is a bankruptcy debtor’s primary objective, the holidays might not be the right time to file. The court sometimes has shortened hours around the holidays, and is closed on Christmas Day and New Year’s Day. You might find that a case filed around the holidays takes slightly longer to complete. However, the difference might not be drastic, and activating protection from the automatic stay might be more important to you than achieving a rapid discharge. And just like the courts, your attorney could be backlogged by holiday filings. They could have travel and time with family in their schedule during the holidays, just like you. Last-minute filings might be more difficult to pull off during the holiday season, but they are manageable with careful planning. To schedule your free consultation with a member of our Arizona bankruptcy team, call 480-470-1504.  Credit Card Spending Limits Before Bankruptcy If you’re considering bankruptcy, you might be tempted to max out your credit cards on extravagant gifts for your loved ones, since they will be discharged soon anyway. But bankruptcy is not meant to discharge debts that you never had any intention to repay. The bankruptcy trustee will be on the lookout for these types of abuses of the bankruptcy system, namely by reviewing your credit card statements prior to filing for bankruptcy. You will need to watch your credit card spending for 90 days or more prior to filing your petition. You shouldn’t exceed $850 in luxury purchases on your credit cards during that time. You also need to avoid cash advances of $1,100 or more 75 days before filing your bankruptcy petition. These expenditures also create the risk that you are keeping non-exempt funds on your person in an attempt to conceal them from the bankruptcy trustee.  During the holidays, you probably buy more gifts and spend more on festive meals than you do throughout the rest of the year. This can make it tricky to differentiate what is reasonable spending, and what is considered luxury spending. Before filing for bankruptcy, your purchases should be limited to those that are reasonably necessary for your maintenance and support. Picking up a meal from Subway or some clothes from your kids from Target should pass the trustee’s review without much pushback. But if the trustee reviews your credit card statements and sees you’ve been eating out at restaurants every night and shopping at Nordstrom, this could trigger further review. Most travel expenses, like flights, taxis, etc., are considered luxury purchases unless incurred for matters like business or a family funeral. Don’t go to pricier grocery stores like Whole Foods while shopping for your holiday meals. If you are ever unsure about whether a purchase you wish to make is a luxury or reasonably necessary, you should run it by your bankruptcy attorney first. For your free consultation with one of Arizona’s top choices for Zero Down bankruptcy representation, call 480-470-1504.   How Long Will My Case Last? Your credit cards and other lines of credit will be frozen and lost upon filing for bankruptcy. If this is how you are planning on paying your expenses during the holiday season, you should hold off on filing your bankruptcy until the new year. But if it can’t wait, it’s important to understand how long you are signing up to be in an active bankruptcy case. Chapter 13 bankruptcy has set time frames, while chapter 7 bankruptcy finishes faster but is more variable.  Chapter 13 bankruptcy reorganizes debts into a payment plan. The payment plan’s length depends on the debtor’s income level. If the debtor earns less than the state median income for their household size or passes the means test- in other words, qualifies for chapter 7 bankruptcy- their chapter 13 payment plan will last three years. If the debtor’s income exceeds both of these tests, their chapter 13 payment plan will last five years. A chapter 13 bankruptcy debtor needs to be prepared for both the benefits and limitations provided by the automatic stay for multiple years.  Chapter 7 bankruptcy takes months to complete rather than years. We generally tell clients to expect their cases to take three to six months, although extenuating factors could always affect a case’s lifespan. A chapter 7 debtor who wants to complete their case quickly should be sure to stay current on all communications with their attorney and trustee. Another common reason that chapter 7 cases are delayed is because the debtor fails to appear at their 341 Meeting of Creditors or has insufficient identification with them at the hearing. Make sure you are fully prepared for this hearing by having your forms of identification available when you file your petition, and if your hearing is remote, test your software and microphone before the hearing.  Holiday Gifts & Bonuses With a bankruptcy filed around the holidays, it’s important to remember how filing can affect gifts and bonuses you receive from others. Gifts and bonuses received shortly before or after filing might not be protected by Arizona’s bankruptcy exemptions. For example, Arizona’s bankruptcy exemption for cash on hand is $300 for an individual debtor. Gifts higher than this amount could be considered part of the bankruptcy estate. Here, the money would be used to pay back creditors rather than remain in the debtor’s wallet. If you expect to receive a large gift or bonus during the holiday season, you should discuss the potential impact this could have on your case with your bankruptcy attorney.  Looking For A Budget-Friendly Way To Declare Bankruptcy Around The Holidays? If you’re unfamiliar with the bankruptcy process, you should have a professional review your situation to determine when the best time is to file your case. Your budget might be especially tight during the holidays, making it difficult to pay your bankruptcy expenses in full before filing, like most firms require. However, our Arizona bankruptcy team offers Zero Down payment plan options for eligible clients. This allows you to enjoy all the benefits of bankruptcy while paying for it in affordable monthly installments. Clear your debts and start the new year with a clean slate by filing for chapter 7 or chapter 13 bankruptcy in Arizona. Get started with your free consultation with our firm today at 480-470-1504. MY AZ LAWYERS Email: info@myazlawyers.com Website: www.myazlawyers.com Mesa Location 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: 480-448-9800 Phoenix Location 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: 602-609-7000 Glendale Location 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: 602-509-0955 Tucson Location 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: 520-441-1450 Avondale Location 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: 623-469-6603 The post Bankruptcy Timing & The Holidays appeared first on My AZ Lawyers.

Bankruptcy Timing & The Holidays With Thanksgiving 2024 already come and gone, the winter holidays are just around the corner. These are times of joy with family, food, and celebration, but making the holiday season special can be difficult if you’re on a tight budget or struggle with debt. Bankruptcy provides protection from creditors in an instant and eventually allows the debtor to clear or pay off their debts while under court supervision. This could be just what you and your family need to stabilize your finances, especially during a hectic time like the holidays. On the flip side, preparing for and celebrating the holidays could draw your focus away from key aspects in your case or trigger certain limitations that would make it better to wait to file your case, if possible. If you are unsure after reading this article, you can have your debt evaluated by one of our experienced Phoenix and Tucson bankruptcy lawyers. Schedule your free consultation today by calling 480-470-1504.  Holiday Case Delays Some debtors have the goal of discharging their cases as expediently as possible. If this is a bankruptcy debtor’s primary objective, the holidays might not be the right time to file. The court sometimes has shortened hours around the holidays, and is closed on Christmas Day and New Year’s Day. You might find that a case filed around the holidays takes slightly longer to complete. However, the difference might not be drastic, and activating protection from the automatic stay might be more important to you than achieving a rapid discharge. And just like the courts, your attorney could be backlogged by holiday filings. They could have travel and time with family in their schedule during the holidays, just like you. Last-minute filings might be more difficult to pull off during the holiday season, but they are manageable with careful planning. To schedule your free consultation with a member of our Arizona bankruptcy team, call 480-470-1504.  Credit Card Spending Limits Before Bankruptcy If you’re considering bankruptcy, you might be tempted to max out your credit cards on extravagant gifts for your loved ones, since they will be discharged soon anyway. But bankruptcy is not meant to discharge debts that you never had any intention to repay. The bankruptcy trustee will be on the lookout for these types of abuses of the bankruptcy system, namely by reviewing your credit card statements prior to filing for bankruptcy. You will need to watch your credit card spending for 90 days or more prior to filing your petition. You shouldn’t exceed $850 in luxury purchases on your credit cards during that time. You also need to avoid cash advances of $1,100 or more 75 days before filing your bankruptcy petition. These expenditures also create the risk that you are keeping non-exempt funds on your person in an attempt to conceal them from the bankruptcy trustee.  During the holidays, you probably buy more gifts and spend more on festive meals than you do throughout the rest of the year. This can make it tricky to differentiate what is reasonable spending, and what is considered luxury spending. Before filing for bankruptcy, your purchases should be limited to those that are reasonably necessary for your maintenance and support. Picking up a meal from Subway or some clothes from your kids from Target should pass the trustee’s review without much pushback. But if the trustee reviews your credit card statements and sees you’ve been eating out at restaurants every night and shopping at Nordstrom, this could trigger further review. Most travel expenses, like flights, taxis, etc., are considered luxury purchases unless incurred for matters like business or a family funeral. Don’t go to pricier grocery stores like Whole Foods while shopping for your holiday meals. If you are ever unsure about whether a purchase you wish to make is a luxury or reasonably necessary, you should run it by your bankruptcy attorney first. For your free consultation with one of Arizona’s top choices for Zero Down bankruptcy representation, call 480-470-1504.   How Long Will My Case Last? Your credit cards and other lines of credit will be frozen and lost upon filing for bankruptcy. If this is how you are planning on paying your expenses during the holiday season, you should hold off on filing your bankruptcy until the new year. But if it can’t wait, it’s important to understand how long you are signing up to be in an active bankruptcy case. Chapter 13 bankruptcy has set time frames, while chapter 7 bankruptcy finishes faster but is more variable.  Chapter 13 bankruptcy reorganizes debts into a payment plan. The payment plan’s length depends on the debtor’s income level. If the debtor earns less than the state median income for their household size or passes the means test- in other words, qualifies for chapter 7 bankruptcy- their chapter 13 payment plan will last three years. If the debtor’s income exceeds both of these tests, their chapter 13 payment plan will last five years. A chapter 13 bankruptcy debtor needs to be prepared for both the benefits and limitations provided by the automatic stay for multiple years.  Chapter 7 bankruptcy takes months to complete rather than years. We generally tell clients to expect their cases to take three to six months, although extenuating factors could always affect a case’s lifespan. A chapter 7 debtor who wants to complete their case quickly should be sure to stay current on all communications with their attorney and trustee. Another common reason that chapter 7 cases are delayed is because the debtor fails to appear at their 341 Meeting of Creditors or has insufficient identification with them at the hearing. Make sure you are fully prepared for this hearing by having your forms of identification available when you file your petition, and if your hearing is remote, test your software and microphone before the hearing.  Holiday Gifts & Bonuses With a bankruptcy filed around the holidays, it’s important to remember how filing can affect gifts and bonuses you receive from others. Gifts and bonuses received shortly before or after filing might not be protected by Arizona’s bankruptcy exemptions. For example, Arizona’s bankruptcy exemption for cash on hand is $300 for an individual debtor. Gifts higher than this amount could be considered part of the bankruptcy estate. Here, the money would be used to pay back creditors rather than remain in the debtor’s wallet. If you expect to receive a large gift or bonus during the holiday season, you should discuss the potential impact this could have on your case with your bankruptcy attorney.  Looking For A Budget-Friendly Way To Declare Bankruptcy Around The Holidays? If you’re unfamiliar with the bankruptcy process, you should have a professional review your situation to determine when the best time is to file your case. Your budget might be especially tight during the holidays, making it difficult to pay your bankruptcy expenses in full before filing, like most firms require. However, our Arizona bankruptcy team offers Zero Down payment plan options for eligible clients. This allows you to enjoy all the benefits of bankruptcy while paying for it in affordable monthly installments. Clear your debts and start the new year with a clean slate by filing for chapter 7 or chapter 13 bankruptcy in Arizona. Get started with your free consultation with our firm today at 480-470-1504. MY AZ LAWYERS Email: info@myazlawyers.com Website: www.myazlawyers.com Mesa Location 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: 480-448-9800 Phoenix Location 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: 602-609-7000 Glendale Location 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: 602-509-0955 Tucson Location 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: 520-441-1450 Avondale Location 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: 623-469-6603 The post Bankruptcy Timing & The Holidays appeared first on My AZ Lawyers.

In re Randolph- No Common Law Exemption for Firearms Ed Boltz Tue, 12/03/2024 - 16:33 Summary: The bankruptcy Court for the Eastern District of North Carolina sustained  the Chapter 13 trustee’s objection to the debtors' attempt to exempt two firearms under the "arms for muster" exemption, based on North Carolina common law. The Randolphs argued that this exemption, which they believed to have originated from as far back pre-colonial common law, was still valid under N.C.G.S § 1C-1601(f). The trustee objected, contending that no common law "arms for muster" exemption existed or, if it had existed, was no longer valid due to subsequent statutory codifications. The court reviewed historical statutes and common law and concluded that while an exemption for "arms for muster" may have existed in the 18th and 19th centuries, it was later codified into statutory law and eventually removed in the early 1900s. The court found that the statutory "arms for muster" exemption was obsolete as it had been supplanted and later eliminated, and thus, no current exemption under North Carolina law allows the debtors to specifically claim their firearms as exempt on this basis, although wildcard or household goods exemptions were still available for firearms.  Commentary: While a minor loss for debtors (as this had no impact on their plan),  this opinion is still valuable both in being perhaps the first to recognize that there is a depth of legislative history in North Carolina regarding exemptions (that is also chaotic and seriously problematic to the point  of being repugnant) but also  in pointing the North Carolina legislature in the direction of exemption  reform. With N.C.G.S § 1C-1601(f)  still explicitly providing that "[t]he exemptions provided by common law of this State shall apply for purposes of The Bankruptcy Code" the hunt to  find what such exemptions are continues (because surely the North Carolina legislature did not go off half-cocked and include superfluous language),  even without any explicitly protected arms for muster with which to do such hunting. With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document in_re_randolph.pdf (307.16 KB) Category Eastern District

 SBA EIDL Fraud & How It Is DiscoveredEvery day, and often multiple times a day, we read stories about people or businesses being indicted for PPP or SBA EIDL loan fraud.I have always wondered how these cases are discovered.First, the SBA Inspector General has an online portal to submit loan fraud reports. The portal can be found at https://www.sba.gov/about-sba/oversight-advocacy/office-inspector-general/office-inspector-general-hotline#submit-a-complaint.Second, the FBI has special agents and field offices throughout the country investigating SBA EIDL loan fraud andThird, The New York Times recently published an article titled "They Investigated Pandemic Fraud, Then Earned Thousands," available at https://www.nytimes.com/2024/11/23/us/politics/pandemic-fraud-lawsuits.html. The article explains that under the False Claims Act, private citizens can file lawsuits on behalf of the federal government against those who may have defrauded the United States. If the government recovers funds, these citizens can typically earn between 15 and 30 percent of that amount. These lawsuits are known as "qui tam," or whistle-blower cases, and citizens have recovered hundreds of thousands of dollars by bringing these cases.This story brings to mind the old adage that one person's misfortune is another person's fortune!Jim Shenwick, Esq917-363-3391jshenwick@gmail.comPlease click the link to schedule a telephone call with mehttps://calendly.com/james-shenwick/15minWe help individuals and businesses with too much debt! 

Bankr. E.D.N.C.: Raynor v. ECMC- Student Loans Adversary Proceeding failed to satisfy 3rd Prong of Brunner Ed Boltz Mon, 11/25/2024 - 22:23 Summary: Leigh Raynor filed for Chapter 13 bankruptcy on April 11, 2019, and, after receiving a general discharge of debts on July 30, 2024,  commenced a Student Loan Adversary Proceeding  to discharge her student loan debts, totaling $80,408.84 as an "undue hardship" under 11 U.S.C. § 523(a)(8).  The student loans were incurred between 1999 and 2002 for undergraduate and graduate education, but Raynor did not enter the professional field associated with her graduate degree. The bankruptcy court evaluated Raynor's claim using the Brunner Test, a three-pronged standard for determining "undue hardship": Minimal Standard of Living: Ms.  Raynor proved that, given her limited Social Security income and lack of other financial resources, she could not maintain a minimal standard of living while repaying the loans. Persisting Hardship: At age 76, with ailing health and caregiving responsibilities for her husband, the court found Ms.  Raynor's financial hardship would persist, making future repayment unlikely. Good Faith Efforts to Repay: The court ruled Ms. Raynor failed this prong, citing insufficient attempts to maximize income or repay the loans,  finding that: Limited effort to secure higher-paying work in her field. Diversion of resources, such as $54,000 paid toward a family loan secured by property benefiting her husband. Lack of evidence supporting diligent efforts to negotiate or consolidate the debt. Conclusion: While Raynor met the first two prongs of the Brunner Test, the court  found that her failure to satisfy the third prong of the Brunner Test rendered her student loan debts nondischargeable. Commentary: Even though this student loan is guaranteed by the NC Education Assistance Authority and accordingly was not directly subject to the 2022  Student Loan Adversary Proceeding (SLAP)  guidance  from the Department of Judgment,  the motion for a consent judgment between Ms.  Raynor and ECMC  finding a undue hardship (presumably with the full consent of the review and consent of the NCEAA) was rejected by the bankruptcy court.   Perhaps the parties could have stipulated more clearly that the attempted settlement was agreed to with consideration of not only avoiding the costs of litigation, including discovery as mentioned below,  or the expenses and futility of continued  collection efforts (which creditors are often required to make or unable to stop)  from a 72-year old borrower with income, which being insufficient to meet a minimal standard of living almost certainly would be below any amounts subject to garnishment.  Nondischargeable does not equal paid. Having not listened to the recording of the trial, it is not clear what evidence Ms. Raynor may have presented regarding her good faith efforts to repay.  Speculating, Ms.  Raynor might have been able to present evidence, including obtained through  discovery and requests  for admissions from ECMC and the NCEAA,  that might have shown more of her diligent efforts to repay,  especially to the extent that her student loan servicers may have improperly diverted her from repayment plans to forbearances.   Further,  it appears that Ms.  Raynor's more than 60 months in Chapter 13,  which through  her good faith efforts (a requirement of the confirmation of her plan) she did pay  ECMC nearly $2,500,  were either not raised or considered by the court  regarding her diligent efforts. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Category Eastern District

Bankr. M.D.N.C.- Cournoyer v. Adrian Bruckner- Sanctions against Bankruptcy Petition Preparer Ed Boltz Sat, 11/23/2024 - 22:14 Summary: The bankruptcy court granted a default judgment in favor of the  Bankruptcy Administrator (BA) against Adrian Nathaniel Buckner, a non-attorney who acted improperly as a bankruptcy petition preparer (BPP) finding that Shemeika Ann Fuller filed a Chapter 7 bankruptcy petition and later converted the case to Chapter 13, then, when unable to fund her plan,  back to Chapter 7.  Buckner initially provided legal advice and prepared Fuller’s bankruptcy documents for compensation, despite not being an attorney.  After learning of Buckner's improper assistance to Fuller from her subsequent attorney,  the BA commenced suit and Buckner failed to respond to the adversary proceeding, leading to a default judgment. Findings of Violations: The bankruptcy court found that Buckner committed multiple violations of the Bankruptcy Code, including: Failure to Disclose: Buckner did not include his name, address, or social security number on documents he prepared (§ 110(b), (c)) and failed to file required disclosures of compensation (§ 110(h)). Unauthorized Practice of Law::  Buckner provided  (inaccurate) legal advice, including guidance on exemptions, debt classification, and reaffirmation agreements (§ 110(e)). Misrepresentation:  Buckner advised the debtor that her property could not be liquidated, which was false (§ 526(a)(3)). Failure to Provide Required Notices:  Buckner did not provide written notices or contracts outlining services, fees, or debtor rights (§ 526, § 527, § 528). Damages and Penalties: Turnover of Fees: Buckner must forfeit $450 of the $600 paid by Fuller. Damages: Actual damages of $1,354, including filing fees, attorney fees, lost wages, and mileage costs. Statutory damages of $2,000, totaling $3,354. Fines: Buckner was fined $500 per violation of § 110, tripled to $7,500 for failing to disclose his identity. Injunctive Relief: Granted: Buckner is permanently enjoined from acting as a bankruptcy petition preparer. Not Granted: The court declined broader injunctions under § 110(j)(2)(B) and § 526(c)(5), finding insufficient evidence of a consistent pattern of violations. Referral to Authorities:  The court directed the Clerk to forward the judgment and findings to the North Carolina State Bar and Pennsylvania Bar Association for review of Buckner’s unauthorized practice of law. Commentary: It is rather odd that while the bankruptcy court here appropriately found in this case that the failure to respond to a complaint  constituted a waiver of both Mr.  Buckner's right to a jury trial and to assert that this matter be adjudicated by an Article III tribunal,  but that in In re Martin (Case No. 10-81271) 01/26/2011  the bankruptcy court held that the failure to  object to a Chapter 13 plan did not constitute acceptance of that plan.  That  constitutional rights can be waived through silence but bankruptcy protections cannot seem an inversion and an inconsistency.  Perhaps the Local Form Chapter 13 plans  (See EDNC  MDNC  and WDNC)  or non-standard provisions included in those pursuant to Trantham could define procedures for obtaining assent to a Chapter 13 plan,  including implicit assent ("qui tacet consentire videtur") following the lack of objection.  This could include  providing additional due process safeguards,  such as the commencement of an Adversary Proceeding for declaratory judgment and/or determination of the (continuing) extent of a lien under Rule 7001,  requiring additional heightened service of the plan or allowing extended periods of time to later object to the plan.   This implicit assent has been  inferred by other bankruptcy courts in North Carolina,  for example In re Rose,  which found the assent to a coerced foreclosure, subject to certain requirements and restrictions. It is also rather odd that while a complete listing of Grievance Committee and DHC Actions is published quarterly in the NC Bar Journal,   any actions taken by the Authorized Practice of Law Committee,  to whom this matter was referred,  for the unauthorized practice of law,  do not appear to be published anywhere,  including even on the NC Bar website.  As this  is a particularly prevalent problem arising in the bankruptcy courts,  see for an additional example the recent opinion (and referral)  from the Eastern District of North Carolina in In re Bowen,  not only should  the bankruptcy courts and bankruptcy attorneys benefit  from being alerted to the illegal behavior of these BP Ps,  but  the general public would certainly also be better protected by being warned against obtaining assistance from non-attorneys that fail to comply with the important protections and restrictions,  which the North Carolina Bar  describes on its Unauthorized Practice of Law website, as follows: Unauthorized practice of law allegations have increased over the last few years. While some complaints of unauthorized practice of law reflect an attempt to gain an advantage of an opposing party in litigation or in a personal matter, other complaints manifest the victimization of members of the public that the unauthorized practice of law statutes were meant to prevent. People with limited funds are often those who seek legal services from non-attorneys in an effort to save money. The non-attorneys typically act in a manner detrimental to the legal rights and obligations of those hiring them, leaving those who can least afford it with a legal mess in what, in many cases, should have been a simple matter. Assistance with the preparation of legal documents is an area in which this victimization commonly occurs. Bankruptcy debtors receive bad advice from non-attorneys helping them fill out bankruptcy forms. The importance of this notwithstanding,  actions taken against individuals can only be discovered and followed by requesting information by name,  which, without knowing the names first,  is something of an impossibility.  I  do not have sufficient hubris that my7 blogging about these bankruptcy cases is a sufficient warning,  so hopefully the NC Bar Journal will consider inclusion and disclosure of these actions by the Authorized Practice of Law committee. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document in_re_fuller.pdf (881.99 KB) Category Middle District

Law Review: Boyack, Andrea J., Just Consumer Financial Protection: Prevention or Cure (August 09, 2024). University of Missouri School of Law Legal Studies Research Paper No. 2024-27 Ed Boltz Fri, 11/22/2024 - 17:06 Available at:  https://ssrn.com/abstract=4921426 Abstract: This article examines the relationship between two complementary and related consumer financial protection approaches: regulatory oversight of financing terms (ex ante protection) and bankruptcy discharge of consumer debts (ex post protection). Although often conceptualized as distinct areas of law, consumer financial regulation and consumer bankruptcy are two sides of the same coin and function together to treat the harms of financial distress. This article seeks to explore the relationship and tensions between these various approaches by juxtaposing consumer debtor-creditor law attitudes and legal developments in continental Europe (primarily France and Germany) with those in the United States. After a brief overview of consumer indebtedness in the United States, Part I examines consumer financial regulation trends in the United States, France, and Germany. Part II compares and contrasts US, German, and French approaches to consumer bankruptcy and outlines some recent developments in insolvency law in these systems. Part III explains why optimal consumer protection laws should recognize the importance of both ex ante regulation and ex post bankruptcy discharge and should embrace the complexity inherent in debtor-creditor law. The article concludes with a brief consideration of how and why legal reforms should act holistically to improve the financial wellbeing of the most economically vulnerable consumers in society.  Commentary: While this article contrasts consumer protection in its ex post  form of  American bankruptcy discharges  with ex ante European financial regulation,  describing "consumer financial regulation and consumer bankruptcy are two sides of the same coin and function together to treat the harms of financial distress",  similarly I have often compared  (and bemoaned) how even in just within the U.S.  there has been a lack engagement  by both  attorneys (including their organizations  such as NACBA and NACA) and policymakers (including the Department of Justice and the CFPB)  on either side of the gulf between bankruptcy  and consumer rights statutes such as the FDCPA and FCRA.  Hopefully,  this article and Prof.  Boyack herself  can serve as an additional encouragement to bridging that gap. The comparison of the bankruptcy regime in the United States,  focused on Chapter 7,  with those particularly in Germany and France,  which appear to require repayment efforts (or at least debtor oversight)  for 6 and 2 years,  respectively,  would likely have benefited from a deeper evaluation of the success rates of those and also with Chapter 13 bankruptcy in the U.S.,  which,  with its 3-5 year plans,  has a far lower discharge rate and is held in a consequently lower opinion by many American legal academics. Knowing how debtors fare under these European insolvency plans  would be enlightening. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document just_consumer_financial_protection_1.pdf (837.1 KB) Category Law Reviews & Studies

Bankr. E.D.N.C.: In re Island Breeze Grill- Binding Effect of Confirmation & Limitations on Standing for Plan Modification Ed Boltz Wed, 11/20/2024 - 15:35 Summary: The bankruptcy court for the Eastern District of North Carolina denied Signature Capital, LLC's motion to amend or set aside the order confirming Chapter 11 bankruptcy reorganization plan. Signature Capital sought relief under Rule 60(a) and Rule 60(b) of the Federal Rules of Civil Procedure, arguing that the plan failed to recognize a subordination agreement that granted it lien priority over the IRS for certain assets. Key points: Background: Island Breeze Grill filed for Chapter 11 bankruptcy to reorganize debts associated with its commercial property. The reorganization plan designated the IRS as holding the first priority lien, followed by Signature Capital. This designation was based on public records and testimony during the confirmation hearing. The Subordination Agreement: A 2022 agreement subordinated the IRS's lien to Signature Capital's lien, but it was neither filed with public records nor considered during the confirmation process. Signature Capital discovered the agreement months after the plan was confirmed. Rule 60(a) and (b) Arguments: Signature Capital argued that the omission of the subordination agreement was a clerical mistake (under Rule 60(a)) or excusable neglect/newly discovered evidence (under Rule 60(b)). The court rejected these claims, noting: The confirmation order reflected the court's intent at the time, and altering lien priorities would substantively change the parties’ rights, which is beyond Rule 60(a)’s scope. Signature Capital failed to exercise due diligence in identifying the subordination agreement before the confirmation hearing, negating claims of excusable neglect or newly discovered evidence under Rule 60(b). Bankruptcy Code Precedence: The court emphasized that 11 U.S.C. § 1144 is the sole method to revoke a Chapter 11 confirmation order, and only in cases of fraud. Rule 60(b) cannot override the Bankruptcy Code’s limitations. As Signature Capital did not allege fraud, no relief was available. Plan Modification: The court noted that only the debtor (Island Breeze Grill) or the plan proponent can seek post-confirmation plan modifications under 11 U.S.C. § 1127(b). Signature Capital lacked standing to request modifications. Outcome: The motion was denied, and the court reaffirmed the confirmed reorganization plan, binding the parties to its terms. This decision underscores the strict limitations on altering bankruptcy confirmation orders and the necessity of due diligence by creditors during the bankruptcy process Commentary: It is important to always contrast and conserve the differences and similarities between Chapter 11 and Chapter 13 reorganizations.  For example,  while under under 11 U.S.C. § 1127(b)  only "the proponent of the plan*( or the reorganized debtor"  can seek a modification,  unser under 11 U.S.C. § 1329 the debtor,  trustee or holder of an allowed unsecured claim can seek a modification.  Signature Capital,  holding a secured claim,  would not be able to seek a modification in Chapter 13 either. Additionally,  while bankruptcy courts seem to repeat as rote Gospel in Chapter 11 cases that  pursuant to §1141(a) a confirmed plan is  a contract which "is binding on the debtor and all creditors, whether or not they have accepted the plan" In re Coastline Care, Inc., 299 B.R. 373, 378 (Bankr. E.D.N.C. 2003),  it often seems much harder to get those same courts to recognize that under §1327(a)  the same,  if not even more expansive since there are no comparable exceptions to §1141(d)(2) or (3),  new binding contract applies. *  Query for Chapter 11 practitioners- Since under under 11 U.S.C. § 1121,  unlike §1321,  more parties than just the debtor can, in appropriate circumstances,  file the plan,  is the proponent just a synonym for debtor or is it whomever proposed the plan that was ultimately confirmed? With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document in_re_island_breeze_grill.pdf (158.01 KB) Category Eastern District

N.C. Ct. of Appeals: East Bay v. Baxley- No Tolling of Statute of Limitations for Judgment Renewal Ed Boltz Tue, 11/19/2024 - 16:17 Summary: The North Carolina Court of Appeals affirmed the trial court’s dismissal of a complaint by East Bay Company, Ltd. to renew a judgment against defendant Brandon Baxley. East Bay had obtained a judgment in 2010, which included principal, interest, and attorney’s fees, but the statutory ten-year period for renewing the judgment expired in July 2020. The defendant filed for Chapter 7 bankruptcy in 2018, triggering an automatic stay under federal law, with discharge being denied in that case in June of 2020. While East Bay argued that this stay tolled the statute of limitations for renewing the judgment under 11 U.S.C. § 362 and related provisions, the court disagreed. It found that the stay did not extend the statutory deadline beyond 30 days after the stay was lifted in June 2020,  as   N.C.G.S. § 1-23 provides that the Statute of Limitations is tolled only:  "When the commencement of an action is stayed by injunction or statutory prohibition, the time of the continuance of the injunction or prohibition is not part of the time limited for the commencement of the action." As East Bay did not renew its judgment by July 2020, the attempt to file in 2022 was untimely.  Consequently, the dismissal of East Bay's complaint was upheld, and the judgment renewal was denied. Commentary: The import of this case could actually be rather large on the practice of bankruptcy in North Carolina,  especially in conjunction with other N.C.  Court of Appeals decisions regarding the interplay of bankruptcy and Statutes of Limitation,  especially  Person Earth Movers v. Buckland,  that held  a payment by a bankruptcy trustee "is not ...an acknowledgment of the debt as will stop the running of the Statute of Limitations." This may result in more judgment creditors seeking,  during bankruptcy cases,  to obtain relief from the stay in order to renew judgment liens,  but that should be resisted in cases where the debtor is performing under the plan. Further,  this is another factor to consider in regards to vesting.  In a cases where assets vest in the debtor at confirmation and where the stay has terminated as to the debtor,  for example due to a second bankruptcy  filing without, as is the norm in jurisdictions such as the M.D.N.C. which follow   In re Paschal, 337 B.R. 274 and In re Jones  being extended under 11 U.S.C. § 362(c), not only might a creditor be able to commence a lawsuit and obtain a judgment and lien(s),  but would then also be able to execute on those liens.  At the same time,  however,  absent taking such action,  a creditor could find its claims become stale (often under a 3 year Statute of Limitations) during the Chapter 13 plan and subject to disallowance. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document east_bay_v._baxley.pdf (166.36 KB) Category NC Court of Appeals