Law Review: Skeel, David A., Debt's Dominion: A New Epilogue (October 21, 2025). U of Penn, Inst for Law & Econ Research Paper No. 25-16, BYU Law Review, forthcoming, 2025 Ed Boltz Fri, 11/14/2025 - 19:45 Available at:  https://ssrn.com/abstract=5647631 or http://dx.doi.org/10.2139/ssrn.5647631 Abstract: This Essay, written for the “Who Governs Debt’s Dominion” symposium, looks back on Debt’s Dominion: A History of Bankruptcy Law in America as the twenty-fifth anniversary of the book’s publication nears. The Essay begins, in Part I, by briefly describing how Debt’s Dominion came about. Part II identifies and seeks to explain a striking decline in optimism about American bankruptcy law since Debt’s Dominion was first published. Part III explores a few of the major recent developments in consumer bankruptcy, small business bankruptcy, and large-scale corporate reorganization that I would have analyzed in the book if it were written today. Part IV briefly considers the impact of globalization and concludes the new epilogue. Summary of David Skeel’s 2025 Epilogue to Debt’s Dominion David Skeel’s new epilogue to Debt’s Dominion, written for the BYU symposium “Who Governs Debt’s Dominion,” revisits the arguments that made his 2001 classic the foundational account of American bankruptcy’s political economy — and measures what has changed in the quarter century since. Skeel finds, to his relief, that the book’s core narrative still holds: American bankruptcy law continues to oscillate between the creditor discipline of Hamilton and the populist mercy of Jefferson, brokered and sustained by the self-interested professionalism of bankruptcy lawyers. Yet, while the scaffolding endures, the mood, he writes, has darkened. The optimism of the 1978 Code’s “golden age” has given way to disillusionment — a system now dominated by insiders collecting tribute rather than reformers expanding relief. I. From Hamilton and Jefferson to Visa and Warren Skeel begins by returning to his book’s original dramatis personae: Hamilton’s pro-creditor nationalism and Jefferson’s agrarian debtor populism. In the 2005 BAPCPA reforms, Skeel sees their modern avatars — credit-card lenders like Visa and Mastercard as the new Hamiltonians, and Elizabeth Warren as the reincarnated Jeffersonian reformer from what was once staunchly creditor-friendly Massachusetts. He recalls that Debt’s Dominion was born of a simple but powerful puzzle: why corporate law and bankruptcy had evolved as estranged disciplines, despite their shared concern with financial failure. The book bridged that divide, blending political history with legal theory, and situating bankruptcy within America’s larger narrative of economic democracy. II. A Shift in Mood: From the 1978 Renaissance to Managed Decline In Debt’s Dominion, Skeel likened bankruptcy’s modern history to a rock-star biography — early promise, decline, and triumphant comeback with the 1978 Code. But in 2025, he admits, the “promised land” has become congested. Where once bankruptcy liberated the distressed, it now serves those already in control. Chapter 11’s once-revolutionary “debtor-in-possession” financing has hardened into a near-monopoly market for incumbent lenders, dictating outcomes through restructuring support agreements and milestone-laden credit terms. The system still works — Skeel cautions that “rumors of Chapter 11’s demise are premature” — but it has lost its moral shine. The insiders have taken over the promised land, and the pilgrims are paying rent to stay there. III. Updating the Story: New Fault Lines in a Familiar Dominion A. Consumer Bankruptcy and Race Skeel highlights the surge of scholarship exposing how “neutral” bankruptcy rules reinforce racial inequality. Since Ferguson, scholars like Abbye Atkinson, Mechele Dickerson, and Pamela Foohey have shown that Black debtors disproportionately carry nondischargeable penal fines and fees, effectively reviving debtor’s prisons under a modern guise. He acknowledges that his own 2004 essay on the racial dimensions of credit was an early but limited foray, and that today’s research — extending back even to Rafael Pardo’s work on Bankrupted Slaves — adds a long-missing chapter to the social history of bankruptcy. B. Small Business: The Subchapter V Revolution The epilogue celebrates Subchapter V as a quiet triumph — the most successful reform since 1978. Where once the “new value” doctrine left owner-operators trapped by absolute priority, Congress’s 2019 Small Business Reorganization Act has, in Skeel’s view, “given small business a second chance without requiring them to buy it.” He praises Subchapter V’s pragmatic flexibility, noting its high plan-confirmation rates and its embodiment of the very populist spirit Hamilton feared and Jefferson championed. C. Large Corporate Reorganization: The New Insider’s Game In the realm of large cases, Skeel chronicles the continued erosion of managerial control — replaced not by democracy, but by domination. DIP lenders and private-equity sponsors now wield “contractual sovereignty,” using pre-packaged RS As to dictate terms before the petition is filed. He identifies three current flashpoints: Venue Shopping: The old Delaware–New York rivalry now yields to judge-shopping in Houston and Richmond, where debtors can all but select their judge. Even after scandals, Skeel notes wryly, “nothing happened in Washington.” Delaware’s lobby remains as effective as ever — a living case study in Mancur Olson’s logic of concentrated interests. Disproportionate Payouts: “Liability management exercises” (uptiers, dropdowns, and double-dips) and RSA fees allow favored creditors to jump the queue, sometimes with judicial blessing. He describes Serta Simmons as a rare judicial thunderbolt restoring fairness — though, as Skeel dryly observes, such thunder seldom strikes twice. Mass-Tort Bankruptcies: From Johns-Manville to Purdue Pharma, bankruptcy has become the “social solution of last resort,” where mass tort defendants cleanse liabilities through non-debtor releases. The Supreme Court’s 2024 decision in Purdue barred such releases — but Skeel predicts, quoting a 1935 lament, that bankruptcy lawyers will soon find “new rituals” to circumvent it. The bar, he notes, “has too much at stake to abandon the practice”. IV. The Third Era Marches On In closing, Skeel reaffirms his tripartite history: (1) founding until the New Deal; (2) 1938–1978; (3) 1978–present. Despite globalization and reformist murmurs abroad — from the UK’s “restructuring plan” to Singapore’s importation of  American judges — U.S. bankruptcy remains “debt’s dominion.” If change comes, Skeel suggests, it will be populist and homegrown, born of a future economic shock — not imported from London or Singapore. Commentary: A Quarter Century of Dominion Skeel’s retrospective, fittingly elegiac, reaffirms Debt’s Dominion as both history and prophecy. Like Bruce Mann’s Republic of Debtors, it locates bankruptcy at the moral center of the American experiment — a nation perpetually balancing punishment and mercy, contract and conscience.   To appreciate the scope of Skeel’s project, it should be read it alongside these complementary histories: Bruce Mann’s Republic of Debtors (2002) – a rich account of how early American bankruptcy intertwined with notions of honor, mercy, and civic trust.  Mann shows that insolvency was once a moral—not merely financial—status. Scott Sandage’s Born Losers: A History of Failure in America (2005) and David Graeber’s Debt: The First 5,000 Years (2011) which situate debt within cultural and anthropological frameworks—why societies forgive, or refuse to forgive. Scott Berman’s When All Else Fails (2019) tracks how modern capitalism uses legal failure as a design feature. Foohey, Lawless, and Thorne’s recent Debt’s Grip (2025), which  provides the empirical counterpart to Skeel’s political economy—a granular look at how ordinary Americans still live within that dominion, racialized and gendered as it may be. Together these reveal that bankruptcy’s history is not linear progress but cyclical contest—a series of moral negotiations between failure and forgiveness. For today’s practitioners, the lesson is both humbling and galvanizing. Bankruptcy remains the law’s most democratic institution — but democracy, Skeel reminds us, can be quietly bought out. Whether in the DIP market, Subchapter V courtrooms, or the trenches of consumer practice, the Hamiltonians still have their lobbyists. The Jeffersonians, as ever, must make do with their lawyers. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document debts_dominion_a_new_epilogue.pdf (710.64 KB) Category Law Reviews & Studies

[ACBC] Law Review: Pardo, Rafael I., Specialization and the Permanence of Federal Bankruptcy Law (August 08, 2025). Brigham Young University Law Review, Volume 51 (forthcoming 2026) Ed Boltz Fri, 11/14/2025 - 16:51 Available at SSRN: https://ssrn.com/abstract=5641971 or http://dx.doi.org/10.2139/ssrn.5641971 Abstract: Traditional historical accounts posit that federal bankruptcy specialization in the United States first developed under the system established by the Bankruptcy Act of 1898. That view assumes that the structural and temporal conditions necessary to foster specialization did not exist under the nation’s earlier federal bankruptcy systems—those created by the Bankruptcy Acts of 1800, 1841, and 1867. This Article theorizes that federal bankruptcy specialization very likely occurred under the pre-1898 systems and marshals evidence to that effect, primarily focusing on the Bankruptcy Act of 1841 (the 1841 Act). That statute marked a critical turning point in federal bankruptcy law, shifting its primary focus to debtor relief and granting federal district courts substantial policymaking authority and administrative responsibilities to effectuate the law’s reorientation. Drawing on a detailed framework for assessing specialization, this Article shows how the surge of cases under the 1841 Act reshaped the operation of federal district courts, producing a specialized judiciary that facilitated specialization among attorneys and other legal professionals through the creation of patronage networks. Recovering this history invites a broader investigation into federal bankruptcy specialization before 1898, not merely to determine whether it existed, but to reconsider the extent to which it was a causal factor in the emergence of a durable bankruptcy regime in the twentieth century. Summary: In Specialization and the Permanence of Federal Bankruptcy Law (forthcoming BYU Law Review 2026), Rafael Pardo challenges the traditional narrative that a specialized bankruptcy bar—and thus the political durability of federal bankruptcy law—only emerged with the 1898 Act. Building on David Skeel’s Debt’s Dominion, Pardo argues that specialization in bankruptcy practice arose far earlier, particularly under the 1841 Act, and that this specialization among judges, attorneys, and administrators shaped the institutional evolution of federal bankruptcy law. Drawing on political scientist Lawrence Baum’s framework, Pardo distinguishes between “judge concentration” (how narrowly judges focus on certain cases) and “case concentration” (how concentrated cases are among judges), extending the analysis to lawyers and other professionals. Using archival and quantitative methods, he suggests that even under short-lived nineteenth-century bankruptcy statutes, clusters of judges and lawyers developed focused expertise. This created proto-institutional networks—patronage-based, regionally concentrated, and self-reinforcing—that foreshadowed the specialized bar later recognized as key to the 1898 Act’s permanence. Pardo also expands the field of view beyond the federal statutes to state-level bankruptcy and insolvency regimes, which continued to function during the long interregna when Congress repealed national laws. These state systems, he contends, provided the continuity and professional pathways that sustained specialization even in the absence of federal jurisdiction. The result was not an absence of bankruptcy practice, but a fragmented and uneven “ecosystem” of specialized work that persisted beneath the surface of formal repeal. Ultimately, Pardo argues that nineteenth-century specialization—judicial, administrative, and professional—was both more extensive and more important to the endurance of modern bankruptcy law than historians have recognized. The 1898 Act did not invent the specialized bankruptcy bar; it merely nationalized one that had already emerged through decades of intermittent practice. Commentary: Pardo’s rediscovery of the antebellum bankruptcy bar’s quiet persistence gives new depth to Skeel’s famous “interest-group” thesis—that bankruptcy endured because lawyers made it their livelihood. Where Skeel saw the 1898 Act as the birth of specialization, Pardo uncovers a much older lineage: district judges in the 1840s who built local patronage networks, lawyers who mastered the mechanics of debtor relief under state insolvency statutes, and a growing cadre of practitioners whose professional survival depended on the continued availability of bankruptcy relief.  It was not a sudden professional creation but an evolution—interrupted by repeal, but never extinguished. The article’s most practical contribution for modern courts lies in its careful definition of *specialization*.  In footnote 8, Pardo identifies two complementary measures:  The number of attorneys whose practice primarily focuses on a single legal field, and  The extent to which a relatively small number of professionals handle a disproportionate share of that field’s work.   This framework fits neatly within how bankruptcy courts should interpret 11 U.S.C. § 330(a)(3)(E), which directs them to consider “whether the professional person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field.”  Under Pardo’s analysis, specialization is not self-promotion—it is a measurable concentration of expertise and caseload.  The same historical logic that made specialized lawyers essential to the survival of bankruptcy law should make specialized lawyers today eligible for higher presumptive compensation. Moreover, Pardo’s insight that specialization historically developed in “layered” fashion has striking relevance under today’s Bankruptcy Code.  Even now, the ecosystem of debtor relief extends beyond Title 11.  Non-bankruptcy regimes—consumer-protection statutes such as the FDCPA, RESPA, and UDTPA, as well as state receivership and debt-adjustment laws—continue to illustrate how bankruptcy specialization evolves across overlapping state and federal frameworks.  Just as nineteenth-century lawyers moved fluidly between state insolvency systems and federal bankruptcy courts, modern consumer advocates also need to be able to navigate among these administrative, regulatory, and bankruptcy remedies, building precisely the kind of integrated professional expertise that Pardo describes. That continuity extends even to the culture of practice.  The much-maligned advertising of modern consumer bankruptcy firms, so often derided as a tawdry innovation, has a venerable pedigree.  North Carolina itself provides the lineage: A. W. Shaffer of Raleigh advertised his bankruptcy services in 1868 much as John T. Orcutt has continued on in current time —reaching out directly to struggling debtors and democratizing access to legal relief.  Far from degrading the profession, such public visibility has always been part of how bankruptcy practice sustains itself. Pardo’s broader lesson is that specialization is not necessarily elitist; it is the mechanism through which bankruptcy has endured and evolved.  Just as nineteenth-century courts relied on experienced practitioners to translate congressional policy into meaningful relief, modern bankruptcy courts depend on a certified, specialized bar—tested through the American Board of Certification (ABC) and devoted to the field—to keep the system both expert and humane. Recognizing that expertise under § 330(a)(3)(E) would not merely reward professionals; it would affirm the very historical tradition that has made bankruptcy, in America, permanent.   With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document specialization_and_the_permanence_of_federal_bankruptcy_law.pdf (1.31 MB) Category Law Reviews & Studies

Bankr. M.D.N.C.: In re Peters- No Interest on DMI in Chapter 13 Ed Boltz Wed, 11/12/2025 - 16:18 Summary: In In re Peters, Judge Kahn addressed a  recurring question: when Chapter 13 debtors propose to pay unsecured claims in full under §1325(b)(1)(A), must those creditors also receive post-petition interest? The Peters, above-median income debtors, proposed to pay 100% of unsecured claims over a five-year plan, without interest. The Trustee objected, arguing that because the Debtors were not devoting all of their monthly disposable income, §1325(b)(1)(A) required interest to ensure unsecured creditors received the “present value” of their claims.  At 8% interest,  this could have required the Peters to pay as much as $30,000 more over the length of their Chapter 13 plan. Judge Kahn rejected that argument, aligning the Middle District of North Carolina with the majority approach. Reading §1325(b)(1) “as written and as punctuated,” the Court held that its two subsections are disjunctive — a debtor may satisfy either (A) or (B), but not both — and that the phrase “as of the effective date of the plan” modifies the timing of the court’s confirmation analysis, not the value of distributions. The Court contrasted §1325(b)(1)(A) with §§1325(a)(4) and (a)(5)(B)(ii), which explicitly require “value, as of the effective date of the plan.” That consistent statutory variation, Judge Kahn explained, reflects congressional intent. Applying an interest requirement to §1325(b)(1)(A) would not only violate that structure but create an unjustified windfall for creditors, since even a full-income plan does not provide immediate payment. Judge Kahn’s ruling relied on In re Gillen, 568 B.R. 74 (Bankr. C.D. Ill. 2017); In re Moore, 635 B.R. 451 (Bankr. D.S.C. 2021); In re Edward, 560 B.R. 797 (Bankr. W.D. Wash. 2016); and the analysis in Collier on Bankruptcy §1325.11[3], concluding that no “present value” requirement applies under §1325(b)(1)(A). The Trustee’s objection was overruled. Commentary: A careful, textual opinion that exemplifies Judge Kahn’s methodical approach to statutory construction — and a welcome confirmation (literally) that Chapter 13 debtors who pay unsecured creditors in full do not owe them interest simply for choosing repayment over liquidation. This ruling is significant in both doctrine and tone. It underscores that §1325(b)(1) offers two independent paths to confirmation: debtors may either pay all projected disposable income under (B) or pay unsecured claims in full under (A). Trustees who try to graft a “present value” gloss from §§1325(a)(4) and (a)(5) are, as Judge Kahn notes, ignoring Congress’s deliberate shift in phrasing. Grammar matters — and here, syntax protects substance. From a policy standpoint, the Court rightly recognized that unsecured creditors in Chapter 13 are already better off than they would be in Chapter 7, where post-petition earnings are excluded from the estate entirely. Imposing interest atop a 100% plan would distort that balance and penalize good-faith debtors who attempt full repayment. This decision thus harmonizes the Middle District’s approach with the majority view nationwide, providing clarity to both trustees and practitioners drafting above-median 100% plans. Kudos: Congratulations to Koury Hicks for his crisp advocacy and clear briefing — once again showing why he’s among the most thoughtful consumer lawyers practicing before the Middle District bench. And credit to Hector Quesada, whose earlier research and argumentation helped pave the way for this interpretation of §1325(b)(1)(A). With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document in_re_peters.pdf (471.52 KB) Category Middle District

Zombie Second Mortgages Are Hard to Kill Zombie mortgages are hard to kill. But in the past two years, we successfully used Chapter 13 and consumer law violations to save two families from foreclosure by zombie second mortgages. Maurice and Lily Hadn’t Paid the Zombie Mortgage Since 2008 Maurice and Lily fell on hard times and stopped paying their home equity loan during the mortgage crisis in December 2008. Suddenly, in 2023, that zombie home equity loan started to foreclose, saying they were $216,394.75 behind.  (The principal balance on the loan in December 2023 was $86,188.33. The zombie mortgage claimed $130,000 in interest.) We filed Chapter 13 to stop the foreclosure and we had a fight on our hands. Here’s what we had going for us. The Truth in Lending Act requires a mortgage company to send monthly bills. Somewhere along the line, the mortgage company had stopped. We said a total of 108 months had no monthly statements, so we argued we could deduct $140,000 from what was owed.  That was double the interest on those months. The double the interest penalty is in 15 USC 1640(a)(2)(A)(iv). We didn’t get the whole deduction we wanted, but the mortgage company agreed to reduce the $216,394.75 to $100,000.00. And they also agreed to call the $100,000 current, so it was back on a monthly payment, instead all all due at once. The house was saved. Phil and Emma Stopped Paying in 2013. Phil and Emma bought a house January 2007, with a $575,000 first mortgage at 5.75% and a second of $135,000 at 9%.  Their payment on the second was $990 per month and they kept it up until January 2013.  After seventy months of paying almost a thousand dollars per month, they had only reduced their balance on that mortgage by just $7,000.00. From $135,000 down to $128,000.  At that point, they gave up trying to pay. Fast foward ten years, the second mortgage started to foreclose, claiming Phil and Emma now owed $218,000 (on the original $135,000 plus $84,000 in interest) and were $108,041 behind. We filed Chapter 13 to stop the foreclosure, and I brought in a Virginia lawyer–who is a nationally known consumer law expert–Kristi C Kellly, to help fight this. Ms. Kelly fought back with claims under the Virginia Consumer Protection Act  and RESPA. Eventually, the zombie mortgage agreed to a compromise settlement. The settlement balance was $137,877 (close to the $135,000 original loan) and the interest was reduced from 9% to 6.3%.  Most importantly, instead of being $108,000 behind, Phil and Emma were made current. The house was saved. We were able to fight off the zombie mortgages and save two family homes. Zombie Loans are Enforceable The fact that a loan is showing “charge off” on your credit report, doesn’t help you. And the statute of limitions on mortgages in Virginia is really long.   But, those zombie mortgages may have consumer law violations that you can use along with Chapter 13 to stop a foreclosure, renegotiate the loan and get back in track.     The post Two Homes Saved from Zombie Second Mortgages appeared first on Robert Weed Virginia Bankruptcy Attorney.

M.D.N.C.: Brown v. First Advantage Background Services Corp. & Ashcott, LLC II- Minimal Emotional Distress Damages Ed Boltz Tue, 11/04/2025 - 16:47 Summary: Following up on his earlier order in Brown v. First Advantage granting default judgment as to liability against Ashcott, LLC under the Fair Credit Reporting Act (FCRA), the Middle District of North Carolina revisited Plaintiff Charles Edward Brown’s claim for damages. The Court ultimately awarded Brown $11,343.79 — consisting of $8,843.79 in lost income and $2,500 for emotional distress, while allowing him to separately seek attorney’s fees. Background: Brown, a North Carolina truck driver, applied for a FedEx Ground subcontractor position through FXG in December 2022. FedEx’s offer was contingent upon a background check conducted by First Advantage, which in turn subcontracted to Ashcott. Ashcott erroneously matched felony convictions from Pennsylvania to Brown — despite mismatched Social Security numbers and the fact that he had never lived in that state. The false report led FXG to withdraw its offer. Though Brown immediately disputed the report, it took six weeks to correct. Despite being invited to reapply, he never did so — a fact that sharply curtailed his damages recovery. Lost Income: Judge Schroeder limited Brown’s economic loss to a six-week period, rejecting his claim for a full year’s lost income on mitigation grounds. Brown’s prior employment at R&L Carriers earned him roughly $326 per week, while the FedEx position would have paid about $1,800 per week. The resulting “shortfall” was pegged at $8,843.79. Emotional Distress: Brown claimed $100,000 in emotional damages for depression, sleeplessness, and increased alcohol use, supported only by his own affidavit referencing rising A1C levels and later treatment. Citing Sloane v. Equifax and Robinson v. Equifax, the Court found such claims “fraught with vagueness and speculation” absent medical corroboration or timely treatment. Despite acknowledging Brown’s frustration and “some demonstrable emotional distress,” the Court found the ten-month delay in seeking therapy undercut causation and limited recovery to $2,500. Commentary: This decision serves as a sobering coda to Judge Schroeder’s earlier opinion in Brown v. First Advantage (Sept. 8, 2025), where liability was easily found but damages were deferred. Then, the Court made clear that default judgments under the FCRA are not blank checks; plaintiffs still bear the burden of proving harm — both economic and emotional. Now, the Court’s modest award underscores the difficulty of quantifying emotional distress without objective, contemporaneous medical support. Brown’s experience — losing a job offer over false criminal charges — is undoubtedly humiliating. Yet the Court’s tone reveals skepticism toward the expanding “soft tissue” of FCRA emotional distress claims, particularly where plaintiffs recover swiftly or fail to mitigate. To paraphrase Sloane, “the distress must be demonstrable, not speculative.” Broader Implications: “The Sweatbox” of Psychological Harm While this was a Fair Credit Reporting Act case, the Court’s demand for “external corroboration” of mental suffering parallels a recurring challenge in consumer bankruptcy and debt-collection litigation — the undervaluation of psychological injuries. As I’ve said (perhaps too colorfully) before, consumer lawyers could take a page from personal injury practitioners. Just as PI attorneys are accused (often unfairly) of having “a chiropractor in every glovebox,” consumer advocates need to develop relationships with psychologists and mental-health professionals who can testify to the genuine, measurable trauma inflicted by financial abuse. The scholarship bears this out. The seminal “Life in the Sweatbox” study by Katherine Porter, Deborah Thorne, Robert Lawless, and Pamela Foohey demonstrates that consumers often spend years trapped in a pre-bankruptcy purgatory — juggling debts, fielding collection calls, and enduring what the authors memorably describe as “slow financial asphyxiation” before finally seeking bankruptcy relief. During this “sweatbox” period, families exhaust retirement funds, borrow from relatives, and suffer cascading emotional and physical distress — all to avoid the perceived stigma of bankruptcy until they are, quite literally, out of options.   The UK’s “Debts and Despair” report documents that nearly half of people in arrears felt harassed, and 50% reported suicidal thoughts linked to debt collection contact. Similarly, Debt Collection Pressure and Mental Health (2024) found a statistically significant correlation between repeated creditor contact and depressive symptoms among young adults. Even another credit reporting organization,  Equifax,  reports that "[t]here's a strong link between debt and poor mental health. People with debt are more likely to face common mental health issues, such as prolonged stress, depression, and anxiety." Together, these data reveal that financial harm is inseparable from psychological harm. The FCRA’s remedial structure — permitting “actual damages” for emotional distress — recognizes this, but as Brown demonstrates, federal courts continue to require a clinical translation of distress into medical or diagnostic evidence. Absent such testimony, even a man falsely branded a felon may be told his sleepless nights are worth no more than $2,500. Takeaway: Judge Schroeder’s ruling may be defensible as a matter of evidentiary rigor, but it exposes a deeper disconnect between how courts conceptualize “harm” and how ordinary people actually experience it. Emotional and psychological injuries—especially those tied to financial humiliation, job loss, or harassment—are real, measurable, and often debilitating, yet they remain undervalued when judges require “medical” corroboration for what is, as David Graeber reminded us in Debt: The First 5,000 Years, a human experience intertwined with obligation, shame, and power since the dawn of civilization. To bridge that gap, consumer attorneys should not only improve how they prove emotional distress—but also reconsider who should decide it. A jury of one's  peers, drawn from the same economic and social fabric as the plaintiffs who face abusive credit reporting, debt collection, or financial exclusion, is far more likely to understand the toll of sleepless nights, collection calls, and the loss of dignity that accompany financial hardship. Federal judges, by contrast, tend to approach such claims with institutional skepticism and often little shared experience. As a result, the difference between $2,500 and $100,000 in emotional-distress damages may depend less on the facts than on the decision maker. To shift that balance, consumer advocates should: Document distress contemporaneously — Encourage clients to seek counseling early and to preserve records of anxiety, sleeplessness, and family impact. Retain qualified mental-health professionals — Expert testimony can connect “financial harassment” to observable physical and psychological outcomes such as hypertension, depression, and alcohol misuse. Link causation clearly — Tie those symptoms directly to the statutory violation, whether under the FCRA, FDCPA, or related consumer-protection laws. Push for jury determinations — Where feasible, frame emotional-distress damages as questions for jurors, whose empathy and lived experience make them better arbiters of intangible human harm. Educate courts — Through briefing and expert testimony, remind judges that financial distress and emotional harm are not speculative—they are predictable, documented, and tragically common. Until courts internalize this reality, plaintiffs may continue to win the liability battles yet lose the damages war—a familiar fate for those still living, as Porter, Thorne, Lawless, and Foohey put it, in the Sweatbox. Conversely, creditors and debt collectors facing credible allegations of consumer-rights violations might take note: accepting a default judgment with minimal judicial damages may sometimes be the wiser course than risking a jury’s verdict from twelve citizens who know too well what it feels like to answer the phone with dread. With proper attribution,  please share. To read a copy of the transcript, please see: Blog comments Attachment Document brown_v._first_advantage_ii.pdf (135.37 KB) Category Middle District

4th Cir.: In re Bestwall LLC (4th Cir. Oct. 30, 2025) — Solvent Debtor Allowed in Texas Two-Step Bankruptcy, En Banc Rehearing Denied over Fiery Dissent Ed Boltz Fri, 10/31/2025 - 18:31 Summary: The Fourth Circuit, by an 8–6 vote, declined to rehear Bestwall LLC v. Official Committee of Asbestos Claimants en banc, leaving intact the panel’s decision upholding bankruptcy jurisdiction for a solvent debtor created through the notorious “Texas Two-Step.” Judge King issued a fiery dissent (taking the surprising step of naming by  name the position of each of his fellow judges), calling the case a “manufactured sham Chapter 11” that allows a multibillion-dollar corporation to use bankruptcy as a shield against accountability to dying asbestos victims. Background: Georgia-Pacific’s Texas Two-Step Georgia-Pacific, long a defendant in asbestos litigation, used a Texas divisional merger to split itself into two entities: Bestwall LLC, which inherited nearly all asbestos liabilities but few assets or operations, and New Georgia-Pacific, which retained the profitable businesses and the billions in assets. After a brief five-hour Texas reincarnation, both companies relocated—Bestwall to North Carolina—and three months later Bestwall filed for Chapter 11. Although completely solvent thanks to a “funding agreement” from its parent, Bestwall obtained the automatic stay under §362 and a companion injunction halting all asbestos suits nationwide. As Judge King described, this maneuver was “a concerted boardroom effort designed to pause active civil tort litigation, consolidate thousands of asbestos-related claims, and extract more favorable settlement terms from their suffering and dying victims through litigation delay.” Constitutional Argument: What Does It Mean to Be “Bankrupt”? Judge King’s dissent framed the issue as a constitutional one under Article I, Section 8—the Bankruptcy Clause—which grants Congress power to enact “uniform Laws on the subject of Bankruptcies.” Drawing from Founding-era history and early English and American law, he argued that “bankruptcy” was meant only for those who are truly insolvent or honest but unfortunate, not for corporations with “billions in assets seeking a tactical litigation advantage.” “The Constitution,” he warned, “does not permit Congress or the courts to authorize bankruptcy as a strategic weapon of the powerful.” By treating financial distress as “irrelevant,” the Fourth Circuit majority, he wrote, “rewrites the Constitution to suit the needs of a profitable tortfeasor” and “strips tens of thousands of asbestos victims of their Seventh Amendment right to a jury trial.” An Oversight: Solvency Does Not Equal Security Yet Judge King’s otherwise eloquent dissent misses an important nuance familiar to every consumer bankruptcy practitioner: solvency on paper does not always mean financial stability in practice. Thousands of Chapter 13 debtors across the Fourth Circuit are technically solvent—they own homes with equity, maintain retirement accounts, and even have positive disposable income. They seek bankruptcy not because they are “insolvent” in a balance-sheet sense, but because they face unmanageable liquidity crises, judgment collections, medical bills, or foreclosure threats. Congress, in crafting modern bankruptcy law, deliberately moved away from the rigid insolvency test that once defined bankruptcy under the 1800 Act. Financial distress—not insolvency—became the touchstone, recognizing that even solvent individuals and businesses may need court protection to reorganize debts, preserve assets, or ensure fair distribution among creditors. Thus, while Judge King’s historical appeal to the “honest but unfortunate” debtor is emotionally and morally powerful, it risks overstating the constitutional bar against solvent debtors, sweeping in those ordinary families who use Chapter 13 precisely to avoid collapse rather than to exploit it. Still, the contrast between an honest wage-earner struggling to save a home and a conglomerate like Georgia-Pacific—profitable, tax-advantaged, and litigation-savvy—underscores the dissent’s essential moral point: there is a difference between using bankruptcy to survive and using it to manipulate. The Human Toll Since Bestwall’s 2017 filing, nearly 25,000 asbestos claimants have died, including more than 10,000 from mesothelioma, without ever reaching trial. All litigation remains frozen while Bestwall, which has no employees or business operations, and its parent continue to profit. “The sacred right of the asbestos claimants to pursue justice through the tort system…has been placed on hold by a solvent profitable enterprise called Bestwall,” King lamented. Echoes from 1983: Bankruptcy as an “Escape Chute” King cited Judge Young’s warning in Furness v. Lilienfield (D. Md. 1983) that solvent corporations were abusing Chapter 11 “to evade pending litigation.” Forty years later, King wrote, that “gross abuse” has metastasized: corporations now create shell entities like Bestwall to halt tort suits while continuing to operate and profit. “Chapter 11 was designed to give those teetering on the verge of a fatal financial plummet an opportunity to reorganize—not to give profitable enterprises an opportunity to evade liability.” Commentary: Judge King’s dissent may stand as the most forceful moral indictment yet of the Texas Two-Step—but it paints with a brush too broad for the realities of modern consumer and small-business bankruptcy. Financial distress, not insolvency, is the real dividing line between legitimate reorganization and abuse. That said, the dissent’s central warning is unassailable: when billion-dollar corporations use bankruptcy courts to shield assets and suffocate victims’ claims, they transform a system built for mercy into one for manipulation. If the “honest but unfortunate” debtor has long symbolized bankruptcy’s redemptive purpose, then Bestwall represents its inversion—the use of bankruptcy not to start fresh, but to stay rich. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document bestwall_llc_v._official_committee_of_asbestos_claimants.pdf (176.32 KB) Category 4th Circuit Court of Appeals

Law Review (Economics): Hollenbeck, Brett and Larsen, Poet and Proserpio, Davide, The Financial Consequences of Legalized Sports Gambling Ed Boltz Thu, 10/30/2025 - 16:55 Available at:   https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4903302 Abstract: Following a 2018 ruling of the U.S. Supreme Court, 38 states have legalized sports gambling. We study how this policy has impacted consumer financial health using a large and comprehensive dataset on consumer financial outcomes. We use data from the University of California Consumer Credit Panel, containing credit rating agency data for a representative sample of roughly 7 million U.S. consumers. We exploit the staggered rollout of legal sports betting across U.S. states and evaluate two treatment effects: the presence of any legal sports betting in a state and the specific presence of online or mobile access to betting. Our main finding is that overall consumers' financial health is modestly deteriorating as the average credit score in states that legalize sports gambling decreases by roughly 0.3%. The decline in credit score is associated with changes in indicators of excessive debt. We find a substantial increase in average bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies. We also find that financial institutions respond to the reduced creditworthiness of consumers by restricting access to credit. These results are substantially stronger for states that allow online sports gambling compared to states that restrict access to in-person betting. Together, these results indicate that the ease of access to sports gambling is harming consumer financial health by increasing their level of debt.  Commentary:  From Casino Floors to Courtrooms Bankruptcy attorneys have long seen gambling debts as a guaranteed bet for financial ruin—often a moral failing and then a line item in the Statement of Financial Affairs to be sheepishly acknowledged and hopefully quickly forgiven. But the world of gambling has changed faster than the Bankruptcy Code’s assumptions. Gone are the days when compulsive gamblers had to drive hours to Atlantic City or Las Vegas. Today, the casino lives on the phone—always open, algorithmically tuned, and cross-promoted during every football game. And as this study shows, once gambling becomes as accessible as checking Instagram, it starts showing up in credit reports—and in bankruptcy filings. Bankruptcy courts have historically taken a dim view of gambling losses, often equating them with “bad faith” or dismissing them as “self-inflicted wounds.” That moral lens made sense when gambling required planning and travel. But today’s “disordered gambling” is less vice than vulnerability—an addiction intensified by tech platforms designed to maximize engagement, just as social-media apps do. Judges and trustees may soon need to rethink the reflexive skepticism toward debtors whose credit cards, payday loans, or even mortgages collapsed under the weight of DraftKings, FanDuel, or BetMGM. Policy Recommendations: From Punishment to Protection Congress and state legislatures could help mitigate the harm in several ways: Bankruptcy Reform for Disordered Gambling – Amend §523(a)(2)(C) to clarify that gambling-related credit card advances are not per se presumptively nondischargeable, especially when incurred in the context of documented gambling disorder.  This is especially true as the credit card lenders that make on-line gambling possible are  hardly  innocent naifs,  but actually actively promoting this behavior. Mandatory Gambling Self-Exclusion in Credit Underwriting – Require financial institutions and credit bureaus to allow consumers to flag gambling transactions or block gaming-related merchant codes, similar to existing “voluntary credit freeze” mechanisms. Tax Revenue Earmarks – Dedicate a fixed percentage of sports-betting tax revenue to fund state treatment programs for gambling addiction and financial counseling. (Currently, many states allocate less than 1% of gaming taxes to addiction services.) CFPB Oversight – Direct the Consumer Financial Protection Bureau to study predatory lending practices tied to gambling losses, including the use of debt consolidation or cash-advance products marketed to problem gamblers. Maybe in 2029? Identifying and Helping Clients: For Attorneys: Consumer bankruptcy lawyers can expect to see more clients whose budgets crumble from gambling losses—but few will volunteer that information. Warning signs include: Unexplained cash withdrawals or “Venmo”-style transfers with sports-related notations.\ Frequent small transactions on debit/credit statements at odd hours. Missing paychecks or “mystery loans” from family or friends. Obsessive secrecy or shame around finances, often cloaked as “bad investing.” Gentle inquiry helps. Ask, “Do you use any betting apps or online gaming platforms?” rather than “Do you gamble?” The former sounds like routine intake; the latter sounds like judgment. For Existing Clients: Offer confidential referrals and normalize treatment as part of financial recovery—just as you would refer for credit counseling or mental-health care. Bankruptcy can be positioned not as failure but as the financial detox necessary to reclaim stability before relationships, housing, or hope are lost. Resources for Clients: Attorneys can provide these evidence-based and anonymous resources: National Council on Problem Gambling (NCPG): www.ncpgambling.org 24-hour helpline (1-800-522-4700) with chat and text support. Gamblers Anonymous: www.gamblersanonymous.org peer-support meetings nationwide and online. NC Problem Gambling Program: morethanagame.nc.gov free treatment and counseling for North Carolina residents. National Suicide Prevention Lifeline: 988 — critical if gambling losses have triggered despair or suicidal thoughts. Final Thoughts As gambling becomes as easy as scrolling a phone, the line between “sports fan” and “debtor” is blurring. This isn’t the old Vegas high-roller—it’s the Uber driver in Greensboro betting $10 parlays during lunch. Bankruptcy courts will increasingly see these debtors not as moral failures but as casualties of a legalized, algorithmic addiction. If the law’s purpose is a “fresh start,” it must evolve to recognize that some losses come not from vice, but from design. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document the_financial_consequences_of_legalized_sports_gambling.pdf (330.54 KB) Category Law Reviews & Studies

Facing the Loss of Your Home? Call Us for Help! If you have received a foreclosure summons, a notice of acceleration, or a foreclosure date from your lender, the Fort Worth bankruptcy attorneys at Allmand Law Firm, PLLC may be able to help. From the date the foreclosure notice is sent, you could have as little as three weeks to save your home. For this reason, you will need to act quickly. Ignoring foreclosure notices won’t make them go away. Similarly, falling further behind on your mortgage payments will only increase the risk of foreclosure. If you want to save your home, you should move quickly to secure the help of a skilled foreclosure defense lawyer. Contact Allmand Law Firm, PLLC today to request your free consultation. How Allmand Law Firm, PLLC Can Assist You Having helped tens of thousands of debtors throughout the Fort Worth area, Allmand Law Firm, PLLC has the skill, experience, and resources to help you fight the loss of your home. Whether you have already received a notice of foreclosure or you have started to fall behind on your mortgage payments, you can turn to us for the help you need. If you are facing foreclosure, our firm may be able to help you: Stop, halt, or prevent foreclosure proceedings End your mortgage on favorable terms Avoid potential tax liability from foreclosure Lessen unsecured debt while keeping your home Minimize the impact on your credit history Fight Foreclosure Through Chapter 13 Bankruptcy There are several different foreclosure defense methods, including short sales, deeds in lieu of foreclosure, and filing for Chapter 13 bankruptcy. Chapter 13 is one of the most popular methods of fighting foreclosure because it allows you to repay your mortgage arrears over three to five years. If you stay current on your mortgage and pay back your arrears by the end of your bankruptcy, you should be able to keep your home. Contact Our Board Certified Bankruptcy Expert If you are facing the loss of your home, Allmand Law Firm, PLLC should be your next call. During a free financial empowerment session, we’ll help you understand your options. How can you benefit from working with our team? We have helped tens of thousands of debtors in Texas We have more than two decades of collective experience Reed Allmand is a board certified bankruptcy specialist Our firm has been featured on CBS News, Fox News & ABC Take control of your finances by enlisting the help of our Fort Worth bankruptcy lawyers. We are not here to judge – we are here to help you toward a better future. The post Stop Foreclosure in Fort Worth, TX appeared first on Allmand Law Firm, PLLC.

Many debtors considering bankruptcy know they need a bankruptcy attorney; but they are afraid of what it will cost and of course how they will pay the fees. If you’re considering filing for bankruptcy and are worrying about how you will pay bankruptcy attorney fees, you’re not alone. To take away the mystery of bankruptcy attorney fees, let’s take a look a number of factors that will determine the cost of your bankruptcy attorney fees: The complexity of your bankruptcy case. The amount of time the bankruptcy attorney will be required to devote to the case. Whether you are filing a Chapter 7 or Chapter 13 bankruptcy. The amount of assets involved in the case. And those are just a few of the determining factor. That’s why there is no one-size fits all for bankruptcy attorney fees. The cost for filing a bankruptcy involving $1 million in assets will not cost the same as filing a bankruptcy for $30,000 in assets. The only way that a bankruptcy attorney can give a debtor an accurate fee quote is to sit down and discuss the bankruptcy case with the debtor. After discussing the bankruptcy case with the debtor, the bankruptcy attorney can discuss what assets can be used to pay the fees and other payment options that may be available. Many debtors view bankruptcy attorney fees as just another bill; but that’s a huge mistake in perception. The fees paid for a bankruptcy attorney is an investment in your financial future. The post I Know I Need A Bankruptcy Attorney–But I’m Afraid Of The Costs appeared first on Allmand Law Firm, PLLC.

Most debtors file for bankruptcy as a last ditch effort to dig themselves out of the hole when their debt troubles are just too much to handle. But often their last stop right before bankruptcy is debt settlement. There are a lot of companies out there that offer debtors the opportunity to settle their debts with creditors for “pennies on the dollar.” Sound too good to be true? Well, many debtors coming to bankruptcy court after going through “debt settlement” have found that at least in their case, it is too good to be true. What a lot of debt settlement companies fail to tell their customers is that debt settlement is risky and not guaranteed. The debt settlement companies require upfront fees; but they can’t guarantee the debtor that the creditor will accept the debt settlement offer. Many debtors go through debt settlement and still end up having to file bankruptcy because their creditors would not accept the debt settlement offer. The other problem with debt settlement is that many debtors, actually most debtors are not good candidates for debt settlement. The best candidates for debt settlement are people who have so much income and/or assets that bankruptcy is not a viable or easy option. These people can afford to pay debt settlement fees and can afford to pay for the taxes owed on the forgiven debt. Yes, debt settlement leaves a tax bill. Any debtor considering debt settlement should speak with a bankruptcy attorney first to find out if bankruptcy would be a better option. The post Debt Settlement Or Bankruptcy? appeared first on Allmand Law Firm, PLLC.