Law Review: Ozel, N. Bugra, Depositor Confidence and Creditor Rights: Evidence from State Bankruptcy Exemptions (March 15, 2024). Ed Boltz Sat, 09/21/2024 - 18:41 Available at:  https://ssrn.com/abstract=4866943  Summary: Banking theories highlight the critical role of depositor confidence in maintaining financial stability. In this study, I examine how banks' legal rights during borrower bankruptcies influence depositor confidence and market dynamics. Exploiting staggered changes in U.S. state bankruptcy exemptions for personal bankruptcies from 1994 to 2023 as a quasi-natural experiment, I find that increases in exemptions lead to significant declines in uninsured deposits. I estimate that raising exemptions in the least generous state to match those in the most generous state could decrease uninsured deposits at an average bank by between 2.5 and 6.1 percentage points. The effect is amplified for banks with larger consumer/credit card lending, smaller banks, and banks with lower capital ratios. Conversely, banks specializing in mortgage or agricultural lending, which are less affected by bankruptcy exemptions, experience no significant change in uninsured deposits. In further support of these observations, I find that the enactment of a 2005 federal law that strengthened creditor rights led to an increase in uninsured deposits. Finally, I show that higher exemptions are associated with greater consumer lending concentration, suggesting a shift towards greater specialization amid increased market frictions. These findings underscore the impact of legal frameworks governing creditor rights on depositor confidence and the competitive landscape of lending markets. Commentary: Worth attention is that this study looks only at the impact on uninsured deposits at banks,  which, according to  FDIC reports, account for only  approximately 44% of all funds held. As the FDIC insurance limit is $250,000  the vast majority by both number and amount of  all depositors are insured,  with uninsured depositors certainly being more sophisticated and likely institutional or corporate, thus less prone to causing bank runs and instability.   Additionally,  it is unclear if the FDIC,  which is through its insurance indirectly the most sophisticated of depositors,  or any other bank regulators view higher exemptions as presenting any substantial increased risk of bank failure and require those banks to price credit higher. Further,  while many banks maintain both lending and depository functions,  many other financial institutions, including some of the largest,  are purely lenders with no other banking activities  or with lending segregated into separate corporate entities.   This research also pays scant attention to the mobility of debtors (who, even with the  requirement of 11 U.S.C. §522(b)(3)(A) that an individual to be continuously domiciled in a state for at least 730 days to use its exemptions, do routinely move to other states) and the nationwide reach of many, if not most, lenders,  who neither show evidence of higher interest rates or other restrictions for borrowers,  either at the inception of a loan or by changing terms (positively or negatively) for those that move to another state. Lastly,  to the extent that BAPCPA actually did increase the confidence of uninsured depositors by a whopping 1.3%,  all of us are still waiting to see the mythical $400 a year in annual savings promised by MBNA/Bank of America. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document depositor_confidence_and_creditor_rights_evidence_from_state_bankruptcy_exemptions_compressed.pdf (679.2 KB) Category Law Reviews & Studies

N.C. Ct. of App.: Patel v. Patel-Assignment of Judgment to One Debt Is Unenforceable Ed Boltz Sat, 09/21/2024 - 18:39 Summary: In Patel v. Patel (2024), the North Carolina Court of Appeals reversed a lower court’s decision that granted judgment on the pleadings to Dhirajlal Patel, the plaintiff, in his attempt to renew a 2012 judgment against co-debtors Kiran Patel, Sandip Patel, and Shiv Investments, Inc. The original 2012 judgment stemmed from a commercial loan default. After the judgment, Dhirajlal purchased the judgment from the creditor (Bank of the Carolinas) for less than the full amount owed, despite being one of the co-debtors. He then sought to enforce the judgment against the other co-debtors. The defendants argued that Dhirajlal, as a co-debtor, was barred from enforcing the judgment, and the appellate court agreed, holding that when a debtor acquires a judgment against himself and co-debtors, the debt is considered satisfied, and the judgment is extinguished. Therefore, Dhirajlal could not renew or enforce the judgment and was only entitled to seek contribution from his co-debtors for the amount he paid. The Court of Appeals,  relying on a trio of rather hoary  old cases, Hoft v. Mohn, 215 N.C. 397, 2 S.E.2d 23 (1939),  Sherwood v. Collier, 14 N.C. 380, 382 (1832), and Scales v. Scales, 218 N.C. 553, 554–55 11 S.E.2d 569, 570 (1940),  found that the following principles emerge:  (1) A judgment on a debt extinguishes, unless it is preserved by statutory process, when the amount owed under the judgment is satisfied.  (2) If a debt is transferred to its debtor, the amount owed as a liability merges into the debtor’s assets, the debt no longer exists, and there is no longer any amount owed on any judgment for that debt; the judgment ceases to exist.  (3) If a co-debtor pays any amount to his judgment creditor and causes the judgment to extinguish, it may only function as a payment in full satisfaction of the debt, and he is entitled not to subrogation of the entire amount of the debt or the entire amount paid, but to a ratable contribution from his co-debtors. Accordingly, it reversed the trial court’s order in favor of Dhirajlal, ruling that the judgment no longer existed, and he should have sought contributions rather than enforcing the expired judgment. Commentary: As the Court of Appeals discusses,  in 2023 North Carolina codified   at N.C.G.S. § 1B-7 a simplified means obtaining contribution payments from non-paying co-debtors, requiring only that a notation be made on the judgment docket to preserve the judgment as a lien against non-paying co-debtors.  Alternatively,  Dhirajlal Patel  could have brought a timely suit against Kiran Patel for a prorated contribution for the amount paid  or arguably could have had a third party,  who was not a debtor,  purchase the judgment. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document patel_v._patel.pdf (130.97 KB) Category NC Business Court

One of the most frustrating parts about foreclosure is that it is a long and complicated process. You might not know when or how it begins or when it can be expected to end. Generally, most people have at least a few months from the time foreclosure begins to the time it ends, and they can use that time to either fight the foreclosure with a lawyer or plan their next move when it is all over. Under federal law, when a bank or other lender initiates foreclosure because of delinquent mortgage payments, they cannot complete foreclosure until the borrower is more than 120 days delinquent. However, many borrowers can delay foreclosure by challenging it. Maybe you want to work out an agreement with the bank to wait longer while you get funds together. Maybe you decide to file for bankruptcy, which may slow the foreclosure process. Foreclosures usually do not happen overnight, and you should have some time to find a lawyer and figure out how to protect your home. For a free initial review of your case, call Young, Marr, Mallis & Associates at (215) 701-6519 and talk to our Pennsylvania mortgage foreclosure defense lawyers. How Much Time it Takes to Foreclose on a Home in Pennsylvania The foreclosure process must follow a specific set of rules and procedures, and these procedures are largely the same for everyone. Even so, different people get through the foreclosure process at different times. Some might complete the process relatively quickly. Others might spend more time in foreclosure, especially if their situation is more legally complicated. Slowing Down the Foreclosure Process One important factor for anyone facing foreclosure in Pennsylvania is the court system. Pennsylvania is a judicial foreclosure state, meaning all foreclosure proceedings must go through the courts. Foreclosures in Pennsylvania begin like a lawsuit, and the bank must file a claim against you. If and when this happens, our Pennsylvania mortgage foreclosure lawyers will help you file an answer and challenge the foreclosure. The fact that your case must go through the courts might buy you some extra time. Not only that, but the court’s schedule may play a role. If the court is busy and cannot hold foreclosure proceedings for weeks or months, your case will likely take longer to complete. One way to slow down the foreclosure process that you can actually control is by challenging the foreclosure. Banks or other lenders are sometimes too eager to foreclose, and they sometimes get started prematurely. If you have received the first foreclosure notice but have done nothing to warrant such a notice, tell a lawyer immediately. You might also slow down the process by filing for bankruptcy. When the federal bankruptcy court accepts a bankruptcy petition, the court issues an automatic stay under 11. U.S.C. § 362(a). The automatic stay is a court order that prevents creditors and banks from initiating legal action against you, and any currently pending action may be halted. If you are in foreclosure when you file for bankruptcy, the foreclosure process must stop, at least until the automatic stay is lifted. Speeding up a Foreclosure If you would rather get the foreclosure process over with as quickly as possible, you can help speed things along by not challenging the foreclosure. By not putting up a fight, your case will work its way through the courts much quicker. While this might seem like a bad idea, it is what some people want. If foreclosure is a losing battle, your efforts might be better spent on planning your life after the foreclosure rather than fighting it. If you do not challenge a foreclosure, it may be completed about 120 days from your initial notice. Under 12 C.F.R. § 1024.41(f), the bank may not legally foreclose on someone’s property unless they are more than 120 days delinquent with mortgage payments. Missing just one or two payments might get the bank’s attention, but they cannot foreclose at that time. How Foreclosures Usually Begin in Pennsylvania Foreclosure typically begins with a first notice from the bank. The notice, which will likely come in the mail, may be in response to a missed mortgage payment or something else that could trigger foreclosure. The first notice does not mean you are in foreclosure. It means that if you cannot catch up on mortgage payments in the next 120 days, the bank has the right to foreclose and may do so. If you have received such a notice, hire a lawyer immediately. Under the law mentioned above, a lender, creditor, or bank cannot legally foreclose on a house due to late mortgage payments until the borrower is more than 120 days delinquent. So, by federal law, the pre-foreclosure period must last at least 120 days. You may use this time to seek legal representation and meet with the bank to work out a solution. Banks typically just want to get paid, and if there is a way to make that happen for them, they may be willing to show leniency or otherwise work with you so you can avoid foreclosure. The first notice should explain what is wrong. If you are behind on payments, this should be explained in the notice. Not only that, but the notice usually explains what the borrower must do to avoid foreclosure, such as how much money they must pay the bank. Challenging a Home Foreclosure in Pennsylvania You can and should begin working against foreclosure as soon as you receive the first notice. This might be as simple as sending the bank your missed mortgage payments. Your situation might be more complicated if you do not have the money, which is a common problem. Hire a lawyer with experience fighting foreclosures. Retain all communications between you and the lender, which is often the bank. These communications may include emails, letters, and phone calls. Your time to fight the foreclosure may be limited, and the best way to challenge foreclosure will depend on your circumstances. Check with your attorney about how much time you have. It is possible the bank has miscalculated the time, and you are not yet 120 days late. It is also possible that there has been some mistake, and you should not be in foreclosure. Your lawyer can raise these issues and more in court. Contact Our Pennsylvania Mortgage Foreclosure Defense Lawyers for Help For a free initial review of your case, call Young, Marr, Mallis & Associates at (215) 701-6519 and talk to our Philadelphia mortgage foreclosure defense lawyers.

Bankr. W.D.N.C.: In re Hmok- Voluntary Sale Severs Tenancy by the Entireties Ed Boltz Wed, 09/18/2024 - 16:52 Summary: After previously approving the sale of the debtors' home, which was previously owned as tenants by the entirety, the  bankruptcy court subsequently their motion to modify their Chapter 13 plan,  ruling  that the proceeds from the voluntary sale were no longer protected by the tenancy by the entirety exemption. The debtors sought to keep the proceeds, arguing that the exemption applied to the sale proceeds. However, the court determined that pursuant to N.C.G.S 41-63(3) the Tenancy by the Entirety protections do not extend to cash proceeds from a voluntary sale.  The court contrasted this with an involuntary sale by a Chapter 7 Trustee, as in In re Surles (also attached), where the Tenancy by the Entirety protections were preserved as to the proceeds of the sale of the property. Consequently, the court further found that the sale of the property resulted in a substantial and unanticipated financial improvement, which justified modifying the plan to increase payments to unsecured creditors. Although the debtors' paltry homestead exemption was preserved, the court ordered the remaining proceeds to be distributed to the unsecured creditors.   Commentary: This case oddly could seem to urge Chapter 13 debtors (or at least one debtor) seeking to sell assets owned as Tenants by the Entireties  to convert to Chapter 7 first.  Then the Trustee might either force an involuntary sale,  paying only joint debts and the IRS,  but preserving the remainder of the proceeds from the creditors of only the individual debtors,  or, if there are no joint debts,  abandon the asset.  This would likely take longer for the sale to consummate,  but preserve greater assets for the debtors.  This approach might also be more beneficial as Chapter 13 Trustee often seem constrained,  whether by judicial oversight or their own perspective, in negotiating with debtors.  This concern seems  especially apt since in this case where the debtors appear to have been rather blindsided, with little hint when the motion to sell was granted that these proceeds would be lost.  Perhaps had the motion to sell property been filed contemporaneously with the motion to modify plan, the court would have tipped its hand in this regard,  giving the debtors the opportunity to reconsider the sale. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document in_re_surles.pdf (153.43 KB) Document in_re_hmok.pdf (173.72 KB) Category Western District

Law Review: Gouzoules, Alexander, Choosing Your Judge (January 29, 2024). SMU Law Review, forthcoming 2024, University of Missouri School of Law Legal Studies Research Paper No. 2024-18, Stafford Patterson Wed, 09/18/2024 - 00:54 Available at:   https://ssrn.com/abstract=4876697    Abstract: Accounts of American litigation pose a contradiction: Forum shopping is acceptable, but judge shopping is not. Formal disfavor toward judge shopping is pervasive, and attempts by parties to manipulate the assignment of their case are deemed abusive and even sanctionable. Nevertheless, sophisticated judge-shopping tactics have proliferated in specific areas of the law—particularly in challenges to executive branch policies and in the reorganization of large companies under Chapter 11. In these disparate areas, judge-shopping strategies have been deployed in high-profile cases, ranging from a challenge to the FDA’s authorization of an abortion drug to the opioid-driven bankruptcy of Purdue Pharma. In these cases and others like them, plaintiffs used permissive venue rules to reach small geographical divisions where a single, preferred judge hears all or nearly all cases. These trends led to recent and contested proposals by the Judicial Conference to encourage random assignment. This article first introduces a framework to distinguish between types of judge shopping, explaining why some forms are more problematic than others. Then, it compares judge shopping across areas of law, examining the basis for common intuitions against the practice. It concludes that judge shopping in the regulatory context is especially concerning, with its attendant impact on national governance and its selection away from judicial expertise in administrative law. In contrast, in bankruptcy cases, judge shopping can be disentangled from other controversial—and independently fixable—bankruptcy problems. When examined as a conceptually independent issue, judge shopping in the bankruptcy context raises relatively fewer concerns. Having concluded that judge shopping is more problematic in some areas than others, this article examines potential reforms to address it, including and in addition to the Judicial Conference’s recent recommendations. Alternative possibilities include the abolition of single-judge divisions, reforms to venue statutes, the use of three-judge district court panels to review certain cases, and the granting of judicial peremptory strikes.   Commentary:   While citing to two cases of judge shopping by consumers,  this is article does not address that in many districts consumer debtors are far more restricted in even venue shopping than corporations are, to the extent that consumers are often subject to bench bondage, where a single  judge personally hostile in regards to a particular issue,  whether vesting,  student loan discharge, or even Chapter 13 in general,  can have as results as unfair as when corporations are able to hand-select a preferred bankruptcy judge. Again an example of the disparate treatment of Fake and Real People in Bankruptcy.    With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments

 CELSIUS PREFERENCE CLAWBACK ADVERSARY PROCEEDINGS As many readers of our posts are aware, we have represented numerous former Celsius customers who have been sued in preference clawback actions in Adversary Proceedings in the SDNY Bankruptcy Court.We have also been retained by clients who have settled their cases and asked us to review the 10-page Settlement Agreements.At Shenwick & Associates, our bankruptcy and crypto experience has aided us in settling many cases on very favorable terms for the defendants.Recently, the Bankruptcy Court held a hearing and determined that outstanding settlement offers will expire at 5:00 p.m. on October 15, 2024. We believe it is in the best interest of most defendants to settle their actions as soon as possible.Clients who are defendants can contact Jim Shenwick, Esq. to discuss pending lawsuits or settlements.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!

Thanks to inflation, you can make over $100,000 and still file for Chapter 7 bankruptcy.  Here in Illinois, a married couple without children can make up to $84,000 and still qualify for Chapter 7 bankruptcy. Even a family of 4 can make $120,000 and still be qualified to file Chapter 7. That’s all because of the “Means Test.”   What Is the Bankruptcy Means Test & How Does It Work?   The Bankruptcy Means Test is a calculation that takes your average monthly income from the past 6 months and compares it to the median income for a same sized household in your state. According to Cubit, the median income for households in Illinois in 2024 is $78,433. Even if you find yourself making more, your disposable income may be lower after deducting consumer debt obligations and monthly expenses such as rent, utilities, food, transportation, and childcare. If you make less than the median income, you can file Chapter 7 bankruptcy without regard to the Means Test if your filing is not otherwise considered “abusive”. Don’t worry; if you are thinking of filing a case, your budget probably leaves nothing over from paycheck to paycheck. Your bankruptcy case won’t be an abuse. You can check your eligibility by filling out the following means test forms: Form 122A-1: Chapter 7 Statement of Your Current Monthly Income Form 122A-2: Chapter 7 Means Test Calculation Form 122A-1Supp:  Statement of Exemption from Presumption of Abuse Under § 707(b)(2)   What If I Don’t Pass the Means Test?   You can still qualify for alternative debt relief solutions if you don’t pass the means test for Chapter 7 bankruptcy, such as debt consolidation or debt settlement. You can also file for Chapter 13 bankruptcy if you have regular income to make monthly payments. While in a repayment plan, creditors are legally prohibited from suing or garnishing wages. At Lakelaw, we will help you analyze your finances. Our bankruptcy lawyers will calculate the allowances and deductions you are entitled to take under the Means Test calculation. We will investigate whether there are special circumstances which allow you to overcome the presumption of abuse that arises if you want to file a bankruptcy case and make more than the median income cut-off points. If it turns out that you must file for Chapter 13, we will do everything legally possible to minimize the payments you would have to make during your Chapter 13 repayment plan.   Safely & Confidently Navigate Bankruptcy with Lakelaw   If you are thinking about filing for bankruptcy, it’s probably because the pressure of credit card payments, garnishment, collection calls, and other creditor harassment is driving you crazy.  Don’t be afraid. We at Lakelaw will take care of you with the kindness, courtesy, respect, professionalism, and dedication that has been our hallmark since we were founded in 1999. If we need to go to bat for you in court, we will always represent you fearlessly and zealously. With close to 50 years of practice, we can speak truth to power on your behalf. And we will.   Get a Free Confidential Consultation The post Means Test: Can I File for Chapter 7 Bankruptcy with $100K Income? appeared first on Lakelaw.

   Bankruptcy Boom: Why More Young Adults Are Drowning in Debt! Forbes has a very interesting and informative article about young adults, debt and surging bankruptcy filings by young people. The article can be found at https://www.forbes.com/advisor/debt-relief/bankruptcies-on-the-rise-gen-z-millennial-debt/At Shenwick & Associates we can confirm that many young people are filing for Bankruptcy. 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!

Book: Zackin, Emily & Thurston, Chloe - The Political Development of American Debt Relief Ed Boltz Thu, 09/05/2024 - 03:17 Available at:  https://press.uchicago.edu/ucp/books/book/chicago/P/bo215476067.html Summary: A political history of the rise and fall of American debt relief. Americans have a long history with debt. They also have a long history of mobilizing for debt relief. Throughout the nineteenth century, indebted citizens demanded government protection from their financial burdens, challenging readings of the Constitution that exalted property rights at the expense of the vulnerable. Their appeals shaped the country’s periodic experiments with state debt relief and federal bankruptcy law, constituting a pre-industrial safety net. Yet, the twentieth century saw the erosion of debtor politics and the eventual retrenchment of bankruptcy protections. The Political Development of American Debt Relief traces how geographic, sectoral, and racial politics shaped debtor activism over time, enhancing our understanding of state-building, constitutionalism, and social policy.  Commentary: The authors describe the legislative debates leading to the passage of BAPCPA , with "[g]roups representing the borrowers who would be the most affected by such changes ... not entirely absent ..., but they were also not very present."   Even from my own personal experience, this gives scant credit to the involvement of organizations such as the National Association of Consumer Bankruptcy Attorneys (NACBA),  NCLC, NACA and even the National Association of Chapter 13 Trustees (NACTT),  who were often fiercely engaged in these battles,  going back as far as the National Bankruptcy Review Commission which led to BAPCPA,  continuing through proposed judicial mortgage modification following the Housing Crash and then through the still catastrophic Student loan crisis.  I would opine that speaking with these organizations  would have broadened the understanding of more recent developments, including looking at recent efforts in the various states that continue to provide parallel debt relief.  An in-depth history of bankruptcy policy and legislation in the 21st century (and the 1990s)  has not yet truly  been written. With its attention,  however,  to Occupy Wall Street and its related groups,  this book does point to missed opportunities for alliances between those grassroots, debtor-driven organizations and the professional advocacy groups such as NACBA.  This book would have further benefit from proposing ideas for how those famously decentralized groups  could better coordinate in the future with an "elite" vanguard to promote legislation more friendly to consumer debtors. With proper attribution,  please share this post.  Blog comments Category Book Reviews

 Many Small Businesses Struggle with COVID-19 EIDL Loan RepaymentRecent reports highlight a growing concern for small businesses that received Economic Injury Disaster Loans (EIDL) during the COVID-19 pandemic. According to a Fast Company article, a significant number of these businesses are facing difficulties in repaying their loans.   The article can be found at https://www.fastcompany.com/91183555/eidl-loans-covid-19-small-businessesThe Scale of the IssueThe Small Business Administration (SBA) distributed approximately 4 million loans through the EIDL program, totaling $380 billion. As of late 2023, more than $300 billion remained outstanding. Unlike some other pandemic-era financial assistance, EIDL loans are not forgivable and must be repaid in full.Impact on Business OperationsBusinesses with outstanding EIDL loans are experiencing several challenges:Reduced access to additional creditLimitations on new investments due to existing debtPotential closure or bankruptcy for those unable to meet repayment termsOur ExperienceAs legal professionals specializing in business debt issues, we've worked with hundreds of companies struggling with SBA EIDL loans. These loans range from $20,000 to $2,000,000. Our observations align with the broader trend:The majority of our clients have been unable to make payments on their SBA EIDL loansMany have found it impossible to refinance these loansA significant number have either:Closed their businessesFiled for bankruptcyAttempted to negotiate workouts with the SBA Additional ComplicationsBusinesses defaulting on SBA EIDL loans face further challenges:Personal guarantee issuesCancellation of debt tax implicationsWe have extensive experience counseling clients on these complex matters.Seeking AssistanceIf your business has defaulted on an SBA EIDL loan or you're dealing with personal guarantee issues related to these loans, it's crucial to seek professional advice.Contact Jim Shenwick for assistance:Jim Shenwick, Esq.Phone: 917-363-3391Email: jshenwick@gmail.comTo schedule a 15-minute telephone consultation, please use our online scheduling tool.We specialize in helping individuals and businesses manage overwhelming debt.