In These Times has an article about a 64 year old taxi medallion owner/driver who is fighting back against NYC. See the post at  https://inthesetimes.com/article/new-york-taxi-workers-alliance-medallion-debt-organizing

 One of the celebratory aspects of the National Conference of Bankruptcy Judges is the recognition of judges, attorneys and others receiving awards from various groups. I went to as many programs I could. Congratulations to the following honorees!The Bankruptcy Inn Alliance of the American Inns of Court recognized two judges, making up for the lost year of Covid. There are currently fourteen Bankruptcy Alliance Inns, including a new one in North Carolina. I am a member of the Larry E. Kelly Inn of Court in Austin-San Antonio, Texas. Judge Judy Fitzgerald (retired) from Pittsburgh was the 2020 award recipient. She has her own Inn of Court named for her. I got to know Judge Fitzgerald from the Commercial Law League of America where she was very active.Judge Harlan "Cooter" Hale from Dallas was the 2021 award recipient. Judge Hale will be retiring next year among what he described to me as a generational shift in the bankruptcy judiciary. Judge Hale is a member of the John C. Ford Inn of Court in Dallas. He said that when he took the bench, one of his duty stations was in Wichita Falls, Texas. When he traveled there, Judge Ford's robes were still hanging there and he wore them in honor of his predecessor.Judge Laura Taylor Swain (S.D. N.Y.) received the Lawrence P. King Award for Excellence in Bankruptcy. Judge Swain is one of a select group of bankruptcy judges to be appointed to an Article III bench. She was appointed as a Bankruptcy Judge in the Southern District of New York in 1996 despite not having practiced bankruptcy. In 2000, President Clinton appointed her to the District Court bench. In 2017, she was appointed by Chief Justice Roberts to preside over the PROMESA debt restructuring cases in Puerto Rico. She will become chief judge of the Southern District of New York later this year. Judge Randolph Haines (retired) received the William Norton Judicial Excellence Award. While serving on the bankruptcy bench in Arizona, he wrote the opinion in Bliemeister v. Industrial Commission (In re Bliemeister), 251 B.R. 383 (Bankr. D. Ariz. 2000) which held that sovereign immunity did not preclude the Bankruptcy Court from determining that a debt owing to a state agency had been discharged. The Supreme Court relied upon his analysis in Tennessee Student Assistance Corp. v. Hood, 124 S.Ct. 1905 (2004).The American Bankruptcy Institute presented its Annual Service Award to the ABI staff in recognition for their heroic service during the year of Covid.The ABI also recognized John Penn of Perkins Coie and Bob Keach of Bernstein Shur. Both men are former Presidents of the ABI. Mr. Penn was praised for his Zelig-like presence at many important times during the life of the ABI while Mr. Keach was recognized as the co-chair of the ABI’s Commission to Study the Reform of Chapter 11 and his work on legislative reform. 

   In Dr. Gil Center for Back, Neck and Chronic Pain Relief v. Rigney (In re Rigney), 2021 Bankr. LEXIS 2824, Case no 4:20-bk-12437-NWW, Adv No 4:21-ap-01002-NWW (Bankr. E.D. Tenn. 12 Oct 2021) the court denied a request for taxation of fees in a complaint filed under §§523(a)(2)(A), (a)(4), and (a)(6).  The case arose from a prepetition auto accident and an assignment of insurance benefits to the plaintiff.  The defendant received $25,000 from insurance, but failed to pay the $4,835 owed to the doctor's office.  The defendant then filed for relief under chapter 7, and on 14 September 2020 the plaintiff filed a complaint for nondischargeability under the above sections.  The §523(a)(2)(A) count was dismissed by summary judgment on 8 July 2021, and the remaining issues tried on 16 August 2021, resulting in a judgment for the defendant.  A request for taxation of fees was then timely filed on 27 August 2021.  The court first examined the language of §523(d).    If a creditor requests a determination of dischargeability of a consumer debt under subsection (a)(2) of this section, and such debt is discharged, the court shall grant judgment in favor of the debtor for the costs of, and a reasonable attorney's fee for, the proceeding if the court finds that the position of the creditor was not substantially justified, except that the court shall not award such costs and fees if special circumstances would make the award unjust.11 U.S.C. 523(d).  This section requires satisfaction of four elements: 1) the creditor requests a determination of dischargeability under 11 U.S.C. 523(a)(2),  2) the debt is a consumer debt, 3) the debt is discharged, and 4) the creditor's position lacks substantial justification.1   While the debtor bears the burden of proof on the the first 3 elements, the creditor must show that it's position was substantially justified.2   If the creditor fails this showing, then the court considers whether special circumstances would make an award of fees unjust.3  Finding the first three elements met in this case, the court examined the details of the application.  The defendant's request for $12,120 in fees did not break down the fees devoted to defending the §523(a)(2)(A) count as opposed to defending the other counts.  Clearly any fees incurred after the dismissal of that count by summary judgment would not be recoverable, as the statute only permits fees for defense of that count.  As to fees incurred prior to dismissal of the §523(a)(2)(A) count, it was not possible for the court to determine how much of the time was spent in defense of that count as opposed to the other counts in the complaint.    Even if such fees were broken down by each count, the court still found that the Plaintiff was substantially justified in asserting its claim under §523(a)(2)(A), and therefore no fee shifting was justified.  The Court noted that §523(d) was modeled after the Equal Access to Justice Act, under which 'substantially justified' has been interpreted to mean that the claim has a reasonable basis in both law and fact.4   Under §523(d) a creditor must show 1) there is a reasonable basis for the facts asserted, 2) there is a reasonable basis in law for the legal theory proposed, and 3) there is support for the legal theory based on the alleged facts.5   While the summary judgment order found that there was no evidence that the defendant made any false representations in order to obtain medical treatment, §523(a)(2)(A) also encompasses debts incurred by actual fraud.  Actual fraud does not require a misrepresentation by the debtor, but includes acts of deceit, artifice, trick or design intended to hinder, delay, harm, or cheat another.6  The allegation in the complaint that defendant misappropriated insurance proceeds in which the plaintiff had a legal interest, if accompanied by the required fraudulent intent, could constitute actual fraud as contemplated under 11 U.S.C. 523(a)(2)(A).  This provides the reasonable basis in law for the plaintiff's reliance on §523(a)(2)(A) in the complaint.1 See, e.g. Rochester Hills Chrysler Plymouth v. Phillips (In re Phillips), 135 B.R. 758, 763 (Bankr. E.D. Mich. 1993).↩2 See e.g. Am. Sav. Bank v. Harvey (In re Harvey), 172 B.R. 314, 317 (B.A.P. 9th Cir. 1994).↩3 Phillips, 153 B.R. 1t 763↩4 Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988).↩5 Fia Card Serv. N.A. v. Dunbar (In re Dunbar) No. CV 11-159-M-DWN, 2012 U.S. Dist. LEXIS 67852, 2012 WL 1757427 at *2 (D. Mont. 2012).↩6 Haney v. Copeland (In re Copeland), 291 B.R. 740, 760 (Bankr. E.D. Tenn. 2003).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, Fl 33609-1703813 870-3100https://hillsboroughbankruptcy.com

Below is an update from the United States Trustee Program regarding the Emergency Rental Assistance Program as of September 2021. This information is regarding COVID-19 pandemic relief for both renters and landlords. You may be able to take advantage of options to keep you in control of your property and your financial situation. “If you are a renter having trouble paying your rent or a landlord who has lost rental income due to challenges presented by the COVID-19 pandemic, help may be available. Through funding from the U.S. Department of the Treasury’s Emergency Rental Assistance (ERA) program, there are a wide variety of state and local programs that offer assistance—including financial assistance—to those who are struggling to make ends meet. Provided below are links to learn more about ERA programs in your local area, including how they work and who is eligible, as well as other important information to help you navigate these difficult times. ERA programs can vary based on locale since flexibility is given to states to develop programs that best suit the needs of their communities. For more general information on assistance programs, visit: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/ For ERA program links in your local area, visit: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/find-help-with-rent-and-utilities/ To get answers to frequently asked questions, visit: For Renters: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/emergency-rental-assistance-for-renters/ For Landlords: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-landlords/ To talk with a no-cost Department of Housing and Urban Development-approved housing counselor who can help you understand your options, make an action plan, and even help you apply for rental assistance, call (800) 569-4287 or visit https://www.consumerfinance.gov/find-a-housing-counselor/.”   Para la versión en español, haga click aquí. The post Emergency Rental Assistance Program- UPDATE appeared first on Allmand Law Firm, PLLC.

A continuación se muestra una actualización del Programa de Fideicomisarios de los Estados Unidos con respecto al Programa de Asistencia de Emergencia para el Alquiler a partir de septiembre de 2021. Esta información se refiere al alivio de la pandemia de COVID-19 tanto para inquilinos como para propietarios. Es posible que pueda aprovechar las opciones para mantener el control de su propiedad y su situación financiera. Si usted es un inquilino y está teniendo problemas para pagar el alquiler o es un propietario que ha dejado de devengar ingresos de alquiler debido a los retos presentados por la pandemia de COVID-19, podría recibir ayuda. Por medio de fondos provenientes del programa de Asistencia de Emergencia para el Alquiler (ERA por sus siglas en inglés) del Departamento del Tesoro de EE.UU., existe un sinnúmero de programas locales y estatales que brindan ayuda, incluso asistencia financiera, a aquellas personas que estan luchando para llegar a fin de mes. A continuación encontrará los enlaces para recibir más información sobre el programa ERA en su región, incluyendo cómo funciona y quién puede recibir ayuda, al igual que otra información importante que podrá ayudarle a superar estos momentos difíciles. El programa ERA puede variar según la región, ya que los estados tienen la flexibilidad de adecuar los programas a las necesidades de sus comunidades locales. Para obtener más información sobre los programas de asistencia, visite: https://www.consumerfinance.gov/es/coronavirus/asistencia-hipotecas-y-viviendas/ Para los enlaces del programa ERA en su región, visite: https://www.consumerfinance.gov/es/coronavirus/asistencia-hipotecas-y-viviendas/protecciones-arrendatarios/encuentre-ayuda-para-pagar-renta-y-servicios/ Para encontrar respuestas sobre las preguntas más frecuentes, visite: Para los inquilinos: https://www.consumerfinance.gov/es/coronavirus/asistencia-hipotecas-y-viviendas/protecciones-arrendatarios/asistencia-de-emergencia-a-inquilinos/ Para los propietarios (en inglés): https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-landlords/ Para hablar sin costo alguno con un asesor de vivienda aprobado por el Departamento de Vivienda y Desarrollo Urbano sobre sus opciones, un plan de acción o ayuda para solicitar la asistencia de emergencia para el alquiler, llame al (800) 569-4287 o visite (en inglés) https://www.consumerfinance.gov/find-a-housing-counselor/.   For the english version, click here. The post PROGRAMAS DE ASISTENCIA DE EMERGENCIA PARA EL ALQUILER appeared first on Allmand Law Firm, PLLC.

This is a combination of two programs. One of the NCBJ plenary sessions offered a Shark Tank like program where three lawyers pitched their proposals to reform the Bankruptcy Code. Meanwhile, at the ABI luncheon, Bill Brandt and Robert Keach offered their prognostications as to what might actually change in the Code. Since both programs involved legislation, I have chosen to combine them here. As you read through this article, you should note that the first part contains the idealism of would-be reformers while the second part contains the realpolitik.  Shark Tank Student Loans In the first program, John Rao of the National Consumer Law Center offered his proposal to amend 11 U.S.C. Sec. 523(a)(8) to rollback dischargeability of student loans to the law as it existed in in 1998 when student loans could be discharged after seven years or on a showing of undue hardship.  He said that the seven-year period deals with the concern that people can come straight out of school and file bankruptcy. He said it's not a complete solution. He said we still need to deal with cost of higher education.  To make the case for change, he gave the illustration of Karen in Arkansas. She borrowed $10,000 thirty years ago. She never used her degree. Over thirty years, she paid $20,000 but still owed $106,000. Mr. Rao said that there is something fundamentally broken with a system if that is how we treat our debtors. Now the federal student loan creditors can garnish her Social Security and tax refunds and even the Earned Income Tax Credit. There is no statute of limitations on federal student loans so her debts will only disappear when she dies.  Why did Congress change the law?  (Congress changed the law in 2005 to add some private student loans to the list of non-dischargeable debts and eliminate the ability to discharge student loans after seven years). He pointed out that there was not a single Congressional hearing or GAO report on abuse. He characterized the change in law as a Congressional gimmick to balance the budget.  Mr. Rao was asked if his proposal would protect the public fisc. There are $1.7 trillion in federal student loans. Why not require payment of disposable income over period? Mr. Rao responded that most debts are performing. Only about 10% in default. There is no evidence that denying discharge increases revenues to government. Instead, the federal government can capitalize the interest and seek returns that would make a predatory lender blush. The problem with requiring debtors to complete a chapter 13 is that about 50% of Chapter 13 debtors never get a discharge. Mr. Rao was asked about his proposal to leave undue hardship in in his proposal. He was asked whether it be better to have objective criteria for undue hardship. Mr. Rao said that objective criteria would help but we already have a workable standard for undue hardship in connection with reaffirmation agreements and it would make sense to use that standard. However, he pointed out that the debtors who need relief the most can't afford to litigate.  He was asked whether his proposal would roil the markets. Wouldn't lenders increase the price to address the risk? He pointed out that the pricing only affects private lenders. When private loans were made non-dischargeable in 2005 there was either no decrease in rates or an actual increase based on different studies. President Biden has proposed cancelling some student loan debt. Doing this would be a stimulus to economy according to Moody's as more people would be able to buy homes and have children. However, requiring bankruptcy to get that cancellation would avoid the moral hazard of general cancellation.  KER Ps   Metta Kurth pitched a proposal to close loopholes to BACPA's limitations on "pay to stay." She called her proposal "stop the heist." In 2005, BAPCPA limited Key Employee Retention Programs ("KER Ps") by requiring that a company demonstrate three things: that the person receiving the KERP has received a better offer, that their services are essential and that the amount of the KERP is either not more than 10 times the mean amount paid to non-management employees for similar purposes or, if no similar amounts were paid out in the prior year, it did not exceed 25% of any similar payment made to an insider during the prior year. 11 U.S.C. Sec. 503(c).      Some companies shifted away from KER Ps and went to "keeps," incentive payments to be earned for meeting certain benchmarks. Ms. Kurth said that "keeps" had a greater sense of integrity. However, other companies made an end run around the KERP rules by simply making these payments pre-petition. She gave the example of JC Penney which paid out $7.5 million to four executive five days before the petition.  Ms. Kurth proposed to amend 11 U.S.C. Sec. 548 in three ways: (a) Existing Sec. 548(a)(1)(B)(ii)(IV) states that insider compensation given for less than reasonably equivalent value and outside of the ordinary course of business can be recovered as a fraudulent transfer. She would extend this to apply to all insider compensation given during the 90 days before bankruptcy. (b)  She would also add a provision that insider compensation would be presumed to be for less than reasonably equivalent value if it was greater than the normal pre-bankruptcy compensation and did not meet the requirement for a KERP; and (c)  Make non-dissenting directors who approve compensation in violation of this provision liable similar to state laws applicable to illegal dividends.  She was asked if companies would just give out insider bonuses 91 days before bankruptcy if her proposal was adopted. She answered that the petition date is often fluid and that 90 days will catch most abuse.  She said that her proposal would motivate companies to use a "keep" or stay within guardrails for KER Ps during the runup to the petition. She acknowledged that her proposal would not fix the imbalance in executive compensation. 20 years ago, executives earned 70 times the wage of their typical worker while today that ratio is now 200 times. She said that she was not trying to fix entire system, just the perception of abuse. (Ed.: While I admire Ms. Kurth's enthusiasm, her proposal would continue the trend of making the Bankruptcy Code resemble the Tax Code in its complexity. The problem with ever more specific prohibitions is that ever more clever lawyers will find ways around them. To be very clear, she had identified a very real and very serious problem. My quibble is with the specifics of her proposal rather than the need for it) The Means Test Eric Brunstad proposing the means test as the gateway for determining substantial abuse. He proposed going back to the standard existing before BAPCPA when Bankruptcy Judges had discretion to find substantial abuse based on the circumstances of the case rather than a statutory presumption.  He said that the means test was a solution in search of a problem that never existed and a bad solution at that. He said that judges know abuse when they see it and have ample tools to address it when it actually arises. He asked the rhetorical question of where did the means test come from? He said it came from the history of credit card underwriting. At one time, credit card underwriting was done on an individual basis. Then it went to a portfolio underwriting system. The model predicted 4% default rate. As time went on, credit cards became less profitable. He said that the credit card companies wanted to squeeze a couple more bucks out of the system by making bankruptcy more difficult and expensive to pursue. (Ed. Prof. Ronald Mann described this as the "sweatbox" in an influential paper).  He said that the means test was a very inefficient solution. If you are $1 above the test, you are deemed to be a substantial abuse.  Prof. Brunstad said that the empirical data said abuse was not out there. He also said that a one size fits all test was not useful. He quoted Tolstoy who said, "All happy families are alike; each unhappy family is unhappy in its own way.” He said that by analogy, every abusive debtor is abusive in its own way.  He stressed that there was not a problem with too many people filing bankruptcy. According to Sen. Elizabeth Warren, 43 million people were in financial distress after the Great Recession, but only 1.5 million filed bankruptcy.  He said that people do not file for bankruptcy willy-nilly He repeated the proverb that you can't get blood out of stone and then described the means test as a very expensive blood test for the stone. He said that this kind of discretionary thing (i.e., ferreting out abuse) is what bankruptcy judges are paid to do. He also said that there is a huge externality problem. He asked who gets the benefit and who bears the cost? The credit card companies reap the benefit from debtors who continue to pay because they cannot afford to file bankruptcy. The cost is borne by higher fees paid by debtors. He said that if a debtor is required to file chapter 13, it is like a 25% tax.  In the end, the audience voted to invest in all three proposals. Unfortunately, legislative reform depends on a dysfunctional Congress, not what bankruptcy judges and professionals would like to see. That offer a nice segue into the second legislative program I watched. ABI's Program on Legislative Likelihoods The three proposals contained in the Shark Tank program were each thought provoking. However, when the American Bankruptcy Institute put on a program on likely changes to legislation, it focused on different proposals altogether. Bill Brandt and Robert Keach are both ABI members who have been active in proposing legislation. Although ABI does not take positions on legislative as a group, its individual members have been active in lobbying Congress. I want to stress that the very opinionated and outspoken Mr. Brandt and Mr. Keach were speaking for themselves rather than for the ABI as an institution.  SubChapter V Mr. Brandt started the conversation off with discussion of SubChapter V. He said that when it was passed, the debt limit of $2.7 million was too low. Shortly after it was passed, they were able to increase the limit to $7.5 million but only on a temporary basis. Now he said that the goal would be to increase the limit to $20 million. However, at higher limits, SubChapter V would take on more of a hybrid nature. He said that U.S. Trustee fees would need to kick in at somewhere between $7.5 million to $10.0 million to keep the program funded. He also said that legislation would likely give courts the option to have a creditors' committee beginning at $12-$15 million. He said that if the debt limit was increase to $20 million, it would cover 95% of Chapter 11 cases. He said that this would take the wind out of the venue issue, which he described as "our abortion issue." This raises two very interesting questions. Was he assuming that mega SubChapter V cases would not be forum shopped? If the law allows forum shopping and litigants see an advantage to doing so, why would they stop? Also, it wouldn't address the problem of the large public companies seeking out favorable venues to the detriment of smaller creditors, employees, retirees and other constituencies. Also, as a Texan, I am very familiar with the emotions triggered by abortion. On the one hand are those with moral certainty about the importance of lives as yet unborn while on the other there is the moral certainty of those who want to control their own bodies. Abortion stirs the outrage of moral certainty in its combatants. Is bankruptcy venue really that divisive or was Mr. Brandt merely engaging in hyperbole?  Mr. Keach acknowledged that he had lost the debate over having a facilitating trustee in SubChapter V and that it was good that he lost. He described the trustee as one of the reasons why the Small Business Reorganization Act has worked so well. Mr. Brandt said that raising the SubV debt limit could make its way into a reconciliation bill because it would raise fees. He also explained that because the support of Sen. Grassley was critical that SubChapter V was intentionally made similar to Chapter 12. Venue Mr. Brandt had a very cynical view on venue reform. He said that with this President and Rep. Nadler chairing the House Judiciary Committee, venue would be a non-starter. He said that venue was a good way for Sen. Cornyn and Sen. Warren to raise a lot of money but that it would not be a factor for the balance of this decade. Mr. Keach said that the option to allow affiliate filings was designed to placate New York bankruptcy lawyers but "no one in New York believes that." (Ed.: Dissenting Opinion here. For the last three years, Sens. Cornyn and Warren have worked together on a venue bill. This year bills have been introduced into the Senate and House at an earlier stage with more co-sponsors than before. As cases like Purdue Pharma draw national outrage, bankruptcy venue will continue to build momentum. However, I must acknowledge that our scrappy, grass-roots crusade has very determined and well-organized opposition).  Mr. Brandt said that there was a study that concluded that the bankruptcy industry had the same effect for the Delaware economy as having a minor league baseball team would have. He also said that having increased debt limits for SubChapter V would be a pretty good second choice for the venue reformers.  Mr. Brandt noted that the fire for venue reform has weakened as the New York-Delaware duopoly has expanded to include Houston and Virginia. (Ed.: Dallas, TX, Corpus Christi, TX and Charlotte, N.C. have also been the recipients of recent attempts at forum shopping. Will forum shopping become so widespread as to draw a collective "meh" from the bar? As the blogger, I get to ask the questions, but I honestly don't have an answer). He said that 10-15% of the Senate will always oppose venue reform making it an uphill battle.  He also said that another needed reform would be to allow a single asset real estate debtor to be a SubV debtor if it was a landlord to a small business debtor. Third Party Releases Mr. Keach mentioned that when Jon Oliver did a program on third party releases, he had a researcher spend an hour with Mr. Keach. He said that Mr. Oliver gave the issue a very serious presentation. He then said that the issue was not going anywhere. He characterized it as a solution in search of a problem. He said that it was not the bankruptcy system that was broken but the tort system. He said that bankruptcy delivers money to victims faster and more efficiently than the tort system. He said that it is easy to forget that what we are about is compensating people. He said that if you want to punish people, prosecute them. "If you can't prosecute them, then shut up." Mr. Brandt said that legislation barring third party releases even with an opt out were going nowhere. He said it was a chance for Democrats to say that they voted against Darth Vader.  Student Loans Mr. Brandt said that the Fresh Start Bill proposed by Sen. Dick Durbin is the closest bill that might actually achieve passage. It would reinstate dischargeability after ten years and is close to the ABI Commission's proposal. However, he said it was "probably not a this year thing." He added that bankruptcy reform always starts out with consumer provisions. He indicated that it would not be this Congress. Probably the next Congress or the one after that and it would be part of a bill with lots of ornaments on it. He said that one problem with achieving bankruptcy reform is that there is not an association of past and future debtors but that student loan borrowers vote. Unfortunately, they cannot afford campaign contributions.  Mr. Keach said that the purveyors of private student loans hired really good lobbyists in the past but that maybe the problem is becoming too significant to ignore. Final Thought: I really appreciated the fact that Mr. Brandt and Mr. Keach didn't pull any punches. I may not have agreed with them, but they certainly gave their unvarnished opinions without resorting to polite euphemisms. 

 NAVY VETERAN’S STUDENT LOANS RULED NONDISCHARGEABLE BY A FEDERAL DISTRICT COURT JUDGE Last year, a Navy veteran’s student loans, totaling $221,000 were discharged in bankruptcy by Southern District of New York Chief Bankruptcy Judge Cecilia Morris. The citation to the case is In re Rosenberg, 610 BR 454 - Bankr. Court, SD New York 2020. The student loans resulted from the veteran attending college and law school. Judge Morris, ruled that the $221,000 of student loans were an undue “hardship”to the veteran and that they would be discharged in his chapter 7 personal bankruptcy filing. Chief Judge Morris wrote in her opinion discharging the student loans that  “she wouldn't perpetuate "myths" that it's impossible to discharge student debt through bankruptcy”.A federal court judge recently reversed that decision. A bankruptcy court decision, like those rendered by a bankruptcy judge, can be appealed to a Federal District Court. The student loan creditor appealed Judge Morris's decision, and it was reversed. The case has been remanded back to Bankruptcy Court for further hearings on the issue of undue hardship. Kevin Rosenberg, the veteran, was devastated by the decision. The Federal judge reversed that decision because Mr. Rosenberg had failed to demonstrate undue hardship using the Brunner standard. According to Brunner, "undue hardship" occurs when debtors cannot maintain a minimum standard of living, their circumstances will not improve, and they have made a good-faith effort to repay their student loans.An excellent article about this topic can be found on the Business Insider website at https://www.businessinsider.com/veteran-student-loan-debt-forgiveness-revoked-bankruptcy-discharge-2021-10. The Brunner standards are so difficult to meet and the cost of litigation is so high that most debtors do not attempt to discharge their student loans in personal bankruptcy.  In this case, Mr. Rosenberg was the exception. As shown in this case, student loan borrowers are at a disadvantage when attempting to discharge their student loans on the basis of bankruptcy. Certain lawmakers, however, are advocating for making the discharge of student debt easier in bankruptcy, and in August this year, Senate Majority Whip Dick Durbin and Texas Sen. John Cornyn introduced the FRESH START Through Bankruptcy Act of 2021. After 10 years, this bill would enable borrowers to discharge federal student loans through bankruptcy. Prior to a law change, student loans that were outstanding for 7 years could be discharged in bankruptcy. According to this author, bankruptcy is a mechanism for the discharge of many types of debt and student loans should be able to be discharged with certain limitations and conditions. The proposed FRESH START legislation is a good step in that direction. James Shenwick 212 541 6224 [email protected]  

This panel, including Judge Christopher Lopez from the Southern District of Texas and Josiah Lindsay from Fortress Investment Group, contained a wealth of information. The panel generally covered the economic health of the African American community, the disparate impact of Covid on the African American community and how Minority Deposit Institutions (MD Is) and Community Financial Development Institutions (CFDI) can help to alleviate those conditions.  Some Sobering Economic Facts The panelists discussed some sobering conclusions from the McKinsey Institute for Black Economic Mobility's recent report titled The economic state of Black America: What is and what could be. I have linked to the report here for those who are interested.    Their first conclusion was that if the wage gap between Black and White Americans were closed, it would help bring 2 million African Americans into middle class for the first time. African Americans are concentrated in lower paying jobs. Nearly half of Black workers are concentrated in healthcare, retail, and accommodation and food service. 35% of all nursing assistants are Black. 33% of bus drivers and security guards are Black. While the median wage in the U.S. is $42,000, 43% of Black workers earn less than $30,000 Mr. Lindsay pointed out that many Black workers were in public facing jobs that were affected the most by Covid and that many are choosing not to return to these jobs. He gave the example of going to a Best Buy and only finding maybe five people working there.  Additionally, many Black communities are consumer deserts in need of greater fresh food, affordable housing, broadband and healthcare providers. Instead of going to Costco, everybody gets their meat from the place they simply call "market" with meat of questionable provenance. The median Black household has 1/8 the net worth of median White family. This is due to lower paying jobs and a lack of intergenerational wealth transfers. African Americans could not get home loans due to redlining. As a result, they missed out on the suburbanization of America. Because Black families did not have as much access to home ownership, they were not able to pass wealth on to the next generations. The McKinsey report estimates that diminished inheritances account for 60% of the difference in wealth between White and Black Americans. Home ownership is one area where racial disparities are present. For White families, there is a 74% level of home ownership, while the figure for Black families is only 44% Mr. Lindsay emphasized that home equity is often access to capital for small businesses. If a person can't accumulate capital in the form of a house and then transfer that wealth to the next generation, he and his descendants will have fewer opportunities. Mr. Lindsay said that his grandfather fought in World War II. When he got back from the war, he didn't have access to GI Bill and didn't have access to veteran subsidized loans to buy homes because the government didn't allow minorities to access programs. (Ed.: this is an example of what people mean by systematic or structural racism).   During the PPP loan process, companies that were well banked came out ahead. The first tranche of PPP loans was to customers of large banks. Minority small business owners had to wait, by and large, for the third tranche. Judge Lopez pointed out that 80% of African Americans aspire to higher education. However, student loan debt is extremely high and interest rates are extremely high. Added to this, it's hard to discharge student loan debt. For someone trying to aspire, trying to get an undergraduate degree, if things don't work out, their options are limited. Mr. Lindsay related that he was on his school's reunion committee. He said that when he asked what it currently costed to attend, he almost fell out of his chair. He said it was literally three times the cost from when he was there.  MD Is and CDF Is The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) recognized that minority depository institutions provide important financial services to historically underserved communities and minorities To qualify as an MDI, either 51% or more of voting stock must be owned by minority individuals or a majority of the board of directors must consist of minorities and the community served must be predominantly minority.   FIRREA says there is a need to preserve MD Is. They have shrunk since 2008 from the 200s to 144. Many had to had to merge to survive Mr. Lindsay stated that "capital is the grease that allows economic activity to take place." He said that MD Is know the community and know how to evaluate borrowers in ways other financial institutions would not. MD Is are where your local church is going to get its loan for a building or individuals will get their car loan Judge Lopez told a great story about his experience with an MDI. When he went to college, there was a table where he could get a t-shirt and a credit card. The t-shirt meant that he could avoid washing clothes for another day. The credit card meant that he could go to Marshall Fields and run up his balance. This was when he learned about minimum payments. His mother told him that he got himself into the mess and he could get himself out. Later, he went to the local branch of Unity National Bank, an MDI, met with the Bank President and was provided a loan. He said that the power of MD Is is that someone believed in him.  Mr. Lindsay said that we need these institutions to provide the grease for economic activity where the president could see you and not just spit out an algorithm that says no. The primary mission of a CDFI is community development 60% of their financing activities must be targeted to low and moderate income or underserved communities Many MD Is are also CDF Is. Many CDF Is are credit unions They often offer no cost and low-cost checking and saving accounts for first time customers as well as second chance checking accounts They offer mortgage loans to encourage home ownership and commercial loans that give small businesses alternatives to predatory lenders (ed.: think Merchant Cash Advance companies). They also provide financial education. Judge Lopez said that when he went to get the car loan mentioned above, the bank also provided him with financial literature to read. Judge Lopez said that he comes from Flushing, Queens where there is a huge Asian community. He said it helps when people see a bank where someone who would want to start a small business wouldn't have to worry about language barriers. One benefit of MD Is and CDF Is is that they are in the community. They can see guy the has a food truck and wants to double his business. This guy might not be able to get a loan from JP Morgan Chase or Wells Fargo. However, the local entity in the community can know that it is a viable business if you know the person. Investing in local businesses adds revenue to the community. Judge Lopez said that many minorities will feel that you will be turned down if you go to the big bank. There is a perception about how big banks work, especially when you don't have collateral. 94% of Black small businesses are sole proprietorships, such as a barber shop or a food truck. These are the types of people who are reluctant to seek funding from a big bank.  The speakers said that the effect of Covid on minority-owned businesses was pretty scary. Mr. Lindsay said that before Covid, 1 million minority owned businesses employed 8.7 million workers and generated $1 trillion in economic output. During Covid, 41% of Black-owned businesses were wiped out, representing a lot of jobs, but also a lot of sole proprietorships. 32% of Latinx businesses faced the same fate. 26% of Asian-owned businesses were lost.  Unfortunately, the location of Covid cases coincided with the locations of Black owned businesses. This makes it harder for businesses to start over when they have a foreclosure or an eviction on their record. Mr. Lindsay said that the people who will provide capital to those businesses are likely to be MD Is and CDF Is.   Mr. Lindsay also said that the hope was that PPP loans would blunt effect of the pandemic. However, they didn't reach certain communities. If you didn't have that bank relationship, you didn't get in on round one. 42% of phase one loans went to larger businesses although they only account for 4% of total businesses. Minority owned businesses didn't get into the program until round three and by then it was too late.  The speakers said that the death of George Floyd was a wake-up call to corporate America. After Mr. Floyd's death, individuals and corporations started investing in MD Is and CDF Is, including 100,000 new customer accounts. Netflix, Yelp, Wells Fargo and Uber are all corporate entities that have moved resources into financial institutions that serve underrepresented communities. They said that the murder of George Floyd made corporate America realize that there were two Americas. Mr. Lindsay said that there was a wakeup call that we've got to change how we've been deploying capital. He said that for the first time since I have been on wall street for 20 years, senior management is paying more than lip service to minority investment. He said that they manage pension funds and a lot of those employees who contributed to pension funds are minorities.  Mr. Lindsay said that he knew maybe five people who look like him who do what he does in the whole country. He said that the biggest barrier is people's uncomfortable view of giving an individual a chance. He told the story of how he was able to break into the financial sector. His first career was as an engineer. He worked as a process engineer and a research engineer at a plant making carbon fiber. When he went to law school, his summer associate jobs were focused on intellectual property which did not interest him. He began calling alums of Virginia to pick their brain. One graduate recommended attending an investment conference where there would be 500 scions of business. However, he was a 3L and the conference cost $5,000 which he didn't have. He said that a week later the person's assistant called and said that were was a student program that only cost $500, which he could afford. When he attended, he realized that he was the only student there. He said he realized that Mr. Tucker's doing a solid; he created a student fee for one person. He said his benefactor was being mindful of helping a person interested in business who didn't even know what that business was. 

Long Beach Post reports that a federal judge froze $2.4 million in assets for Urban Commons Queensway founders, Taylor Woods and Howard Wu. This freeze in assets in based on Wu & Woods using COVID relief funds that were meant for the Queen Mary for “wrongful purposes.” U.S. Bankruptcy Court Judge Christopher Sontchi stated that Woods and Wu applied for the protection program loan without their company’s consent and that the two men “misrepresented or lied” to the United States government so they could receive money meant as a protection program loan for the Queen Mary ship, but use it for wrongful purposes instead. Woods says the loan was applied for by mistake and the two said, “There was never any intention to do anything inappropriate by any party involved”. Sontchi contradicts this statement by saying the two men knowingly made false statements in order to receive the loan from the Small Business Association, transferred the money to another company, and then made the funds essentially disappear. From the article: “The judge also noted that attorneys for Urban Commons Queensway have submitted to the bankruptcy court evidence of multiple lawsuits and judgments against Woods and Wu for ‘fraud, breach of repayment obligations, and other loan defaults.'” This fraudulent evidence includes Woods & Wu falsely promising to develop a hotel in order to recieve the lease to the Queen Mary in November 2016, ignoring warnings from a city auditor and approving a $23 million bond to jumpstart repairs on the ship, and essentially driving their company into the ground and into bankruptcy. The Urban Commons Queensway bankruptcy is due to the exorbitant losses felt by many who were connected to the company, some who poured donations and savings into the Queen Mary. Many of these investors had to resort to filing lawsuits against the company, which forced the company to file for bankruptcy. The Queen Mary is now back in the hands of the city for the first time in 40 years. The ship is still closed due to the repairs needed to the ship and the COVID-19 pandemic. Many Long Beach locals are upset by the behavior of Woods & Wu and feel it’s a betrayal of the communities trust. The post Bankruptcy Judge Freezes $2.4 Million In Assets For Ex-Operators Of Queen Mary appeared first on Allmand Law Firm, PLLC.

 https://www.wnyc.org/story/city-council-review-citys-debt-relief-program-taxi-medallion-owners/