Mortgage foreclosure can feel like the beginning of the end of your homeownership dreams. However, you may be able to reinstate your mortgage under the right conditions. In Pennsylvania, homeowners have a right to cure the default right up until just before the sheriff’s sale. Curing the default involves paying all past due mortgage payments and various other costs. This can be expensive, but you have the right to cure the default if you have the means. Some people get financial help from their family or use financial windfalls like inheritance to cure their defaults. An attorney can help you negotiate with lenders to delay foreclosure or find another solution. Alternatively, you may explore other options for debt relief, including bankruptcy. Obtain a confidential, free case analysis from our Pennsylvania mortgage foreclosure defense lawyers at Young, Marr, Mallis & Associates by calling (215) 701-6519. Your Right to Reinstate Your Mortgage in Pennsylvania In Pennsylvania, homeowners in foreclosure have a legal right to reinstate their mortgage by curing the default, according to 41 Pa.C.S. § 404(a). This is rarely simple or easy, but it is possible if you can find the necessary financial resources. Under subsection (b) of the statute, to cure the default, you must first pay all past-due mortgage payments so that your balance is current. Next, you must perform any obligations you would have had to perform if not for the default. Third, pay any fees the lender incurred during foreclosure. Finally, pay the late penalties you might have incurred. You may cure the default up until 1 hour before the foreclosure sale. Curing the default restores the homeowner to the same position as before, as if the default had not occurred. How to Cure a Default on Your Mortgage Depending on how far behind you are on your mortgage, and other costs associated with foreclosure, you might require a significant sum to cure the default and reinstate your mortgage. Below are some common methods worth exploring with an attorney. Some receive financial help from family or friends. Parents, siblings, or other loved ones with greater financial resources might loan you the money to cure the default. Many would prefer to take a loan from family rather than a bank. Others use inheritance to cure the default. If a relative recently passed away and you are awaiting a significant inheritance, our Pennsylvania mortgage foreclosure defense attorneys might convince the lender to pause foreclosure proceedings to give you enough time to get the money. Alternatively, if relatives have established a trust fund in your name, you may be able to access the funds early. If you are able to cure the default, just not fast enough, we may be able to postpone foreclosure. If your payments are on track to catch you up – e.g., after getting a new job – the lender might agree to delay foreclosure, giving you the time needed. How a Lawyer Can Help You Reinstate Your Mortgage Your attorney can communicate with lenders about your mortgage and impending foreclosure. Your lenders may be more willing to listen and compromise if a lawyer contacts them on your behalf. Additionally, your attorney might have a better understanding of navigating confusing legal and financial matters. Your lawyer can review the pre-foreclosure requirements. For example, you should have received notice from the lender before they initiated foreclosure. An Act 6 notice is required by law and must inform you about the foreclosure at least 30 days in advance. It must also explain why foreclosure is happening, your right to cure the default, and other details about the foreclosure. If you did not receive this notice or it was inadequate, your lawyer can help you fight the foreclosure. Your attorney should make sure the lender follows all proper procedures. Federal law under 12 C.F.R. § 1024.41(f) states that a lender may not foreclose for late mortgage payments unless the homeowner is at least 120 days delinquent. If the lender attempts to foreclose prematurely, your lawyer can intervene. What to Do if You Cannot Reinstate Your Mortgage in Pennsylvania If you cannot cure the default to reinstate your mortgage, filing for bankruptcy might help you avoid foreclosure. Depending on how you file, you might be able to keep your home. Automatic Stay When you file a bankruptcy petition, the federal bankruptcy court will impose an automatic stay under 11 U.S.C § 362(a). When this happens, lenders and creditors may not take legal action against you for unpaid debts. If legal action is pending, like a foreclosure, it must stop immediately. While the automatic stay is in effect, lenders are prohibited from contacting you about payment. Chapter 7 Chapter 7 bankruptcy involves liquidating your property and assets, including your home. The proceeds from the liquidation are then used to pay outstanding debts according to § 726(a). If debts remain, they may be eligible for discharge, and you would not be legally responsible for payment. While Chapter 7 bankruptcy might not allow you to keep your home, it can help you avoid foreclosure. This might be a viable option if you have debts other than your mortgage that are causing you to struggle financially. Chapter 13 Chapter 13 bankruptcy does not involve liquidating your assets, but rather reorganizes your debts and finances. Under § 1322(a), you must design an aggressive yet feasible payment plan to regain control of your mortgage and other debts. Once the court, creditors, and lenders approve the plan, you must maintain it for about 3 to 5 years. Many people are able to catch up with their mortgage this way and keep their homes. Our Pennsylvania Mortgage Foreclosure Defense Attorneys Are Here to Help You Obtain a confidential, free case analysis from the Philadelphia mortgage foreclosure defense lawyers at Young, Marr, Mallis & Associates by calling (215) 701-6519.

WDVA: Goldman Sachs v. Brown- Denial of motion to compel arbitration in Bankruptcy Ed Boltz Mon, 03/17/2025 - 17:59 Summary: The U.S. District Court for the Western District of Virginia affirmed a Bankruptcy Court decision denying Goldman Sachs Bank USA’s motion to compel arbitration in a case involving alleged violations of the automatic stay in bankruptcy. Plaintiffs Rhea Ann Brown and Gregory Kevin Maze, who filed for bankruptcy under Chapter 13 and Chapter 7, respectively, claimed Goldman Sachs continued to send collection communications regarding pre-petition Apple Card debts despite the automatic stay. Goldman Sachs sought to enforce arbitration based on the Apple Card Agreement, but the Bankruptcy Court ruled that enforcing arbitration would conflict with the Bankruptcy Code’s objectives, particularly the court’s authority to enforce the automatic stay and provide a centralized forum for resolving debtor-creditor disputes. On appeal, the District Court reviewed the Bankruptcy Court’s decision de novo and found that arbitration of constitutionally core claims—such as enforcing the automatic stay—would inherently conflict with the purpose of the Bankruptcy Code. The court emphasized that the automatic stay is a fundamental protection for debtors, preventing collection efforts outside the bankruptcy process. Because compelling arbitration would undermine this protection and the Bankruptcy Court’s role in overseeing the bankruptcy proceedings, the District Court held that the Bankruptcy Court properly exercised its discretion in denying the motion. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document moodfabrics.com-mdf316-hana-pattern-letter-a4-tiled.pdf (940.67 KB) Category Western District

A short sale is when someone sells their home for less than they owe on the mortgage. This is not ideal, but it may alleviate significant debt. However, not everyone may go through a short sale, and you must prove that it is necessary for your situation. Many homeowners pursue short sales because they are in financial distress and need to relieve debt quickly to avoid foreclosure or bankruptcy. If you do not mind selling your home, this can be a viable option. However, the lender may pursue a deficiency judgment and demand that you pay the balance on the mortgage. As such, we must accurately evaluate the property to obtain the maximum sale price. Contact our Pennsylvania mortgage foreclosure defense lawyers at Young, Marr, Mallis & Associates for a free case review by calling (215) 701-6519. Short Sales in Pennsylvania A short sale is when a homeowner sells their home for less than the mortgage. Many homeowners may still owe money to the lender after the sale. This is not a great situation, but a short sale may help you avoid foreclosure. Not just anyone may execute a short sale. You may only do so with the bank’s approval, and our mortgage foreclosure defense lawyers will help you prove to the bank why a short sale is necessary. First, we must demonstrate your financial hardship with proof of your earnings. Pay stubs, tax returns, and bank statements may suffice. If you are unemployed, we may need to explain why. Perhaps you were suddenly laid off, and comparable work is unavailable. Maybe you are injured and can no longer work. We also need a comparative market analysis showing that there is very little chance of selling the property for anything close to the mortgage value. Often, sellers still owe money on their mortgage after a short sale, and lenders may pursue deficiency judgments to recover the difference. Why Homeowners Choose Short Sales Homeowners often pursue short sales to avoid foreclosure, which has a much harsher impact on a person’s credit than a short sale. Homeowners may prefer a short sale because they plan to obtain a loan to buy a different, more affordable home. Foreclosure might damage their credit to the point that obtaining a home loan is not possible for a long time. Economic conditions may also influence a homeowner’s decision to pursue a short sale. Changes in the neighborhood, job market, and overall economy may cause property values to plummet, making it harder for homeowners to afford mortgage payments. Homeowners may choose to go through a short sale because the lender is unlikely to pursue a deficiency judgment. In some cases, lenders may declare the debt paid in full after a short sale, which is much better for your credit. If the lender indicates that they will pursue a deficiency judgment that you cannot afford, you may consider other options, like bankruptcy. How an Attorney Can Help During a Short Sale in Pennsylvania First, your attorney can help you prove to the bank that you need a short sale. Remember, you cannot enter a short sale just because you want to. You need the lender’s approval and evidence to support your case. An experienced attorney should know how to obtain a comparative market analysis and prove your financial hardship to the bank. Second, your lawyer can help you convince the lender not to pursue a deficiency judgment. If the lender pursues a deficiency judgment, you must repay them the difference between the sale price of your house and what you owe on the mortgage. A lawyer may persuade the lender to take the money from the sale and let the rest go, especially if they can show there is almost no way you can pay. Next, your lawyer should compare your legal options. While a short sale can help some homeowners, it is not for everyone. If your financial problems go beyond your mortgage, something like bankruptcy might be a better option. Deciding Between Short Sales and Bankruptcy Whether a short sale or bankruptcy is more helpful depends on your situation and what you want. Both may help alleviate significant debt, but they have different impacts on your credit and future financial options. If you plan to buy a different home soon, a short sale might be a better option. Short sales tend to be easier on your credit, and you may be eligible for a new home loan in only a few short years. Alternatively, bankruptcy may remain on your credit history for 7 to 10 years, depending on which chapter you file. If you have large debts other than your mortgage that you cannot afford, a short sale might not be as helpful as you think. While it might help you with your mortgage debt, you must still handle your other debts. Bankruptcy might be more effective at wiping out your debt, giving you a fresh start. How to Prepare for a Short Sale in Pennsylvania Begin preparing for a short sale by contacting a lawyer. Your attorney should help you gather important legal documents, including your mortgage and any communications you have had with the lender. You should also gather information necessary to establish financial hardship. Next, prepare the property for sale. Is there anything you can do to improve the value? If possible, making repairs and improvements may increase your home’s value and get you a better sale price. Other factors, like neighborhood conditions and the overall economy, may be out of your control. With your lawyer, contact the bank about a short sale. If they are open to the sale and are not interested in a deficiency judgment, your lawyer can help you move forward. If a deficiency judgment seems more likely, we may want to pause and reconsider your options. Contact Our Pennsylvania Mortgage Foreclosure Defense Attorneys for Help Contact our Philadelphia mortgage foreclosure defense lawyers at Young, Marr, Mallis & Associates for a free case review by calling (215) 701-6519.

NC Ct. of App.: In re Godfrey- Ratification of Forged Mortgage Ed Boltz Thu, 03/06/2025 - 20:58 Summary: The North Carolina Court of Appeals reversed the trial court’s decision denying judicial foreclosure  which involved a home equity line of credit (HELOC) secured by a deed of trust executed in 2003 by Virginia Lee Godfrey and Harry Craig Dees II. The Trustee Services of Carolina, LLC sought foreclosure after Ms. Godfrey defaulted on the HELOC, but the trial court denied the foreclosure based on her claim that her signatures on the HELOC documents were forged.  The NC Court of Appeals  held that Ms. Godfrey's conduct conclusively ratified the HELOC, making her legally bound to the debt even if she did not sign it. Under the Ratification Doctrine a  person may become bound by a contract they did not sign if they later affirm or benefit from it knowingly. The court cited Goodwin v. Webb, which held that accepting benefits from an agreement with full knowledge amounts to ratification and found the following  actions by Ms.  Godfrey showed her ratification: Acknowledgement that the HELOC was a marital debt in a verified complaint during her 2018 divorce proceedings. Acceptance of sole responsibility for the HELOC as part of the equitable distribution judgment. Payments on the HELOC. Request that  subordination of the HELOC to refinance term mortgage loans in 2007 and 2013. Benefit from a previous HELOC payoff through the 2003 HELOC funds. Dissenting Opinion Summary: Judge Hampson dissented from the majority opinion, arguing that the trial court correctly found insufficient evidence to support ratification of the HELOC debt and deed of trust by Ms. Godfrey. He emphasized that the standard of review requires appellate courts to defer to the trial court’s findings if supported by competent evidence. Commentary: This is again why bankruptcy debtors are well advised to either list all debts in their bankruptcy petition as disputed or at least include some prophylactic language in the description of that debt that it is "Not Admitted",  since otherwise a creditor could assert that the mere scheduling of the debt was a ratification.  Similar language in  proposed plans,  such as  in the EDNC and MDNC  which state that "Confirmation of the plan shall not prejudice the right of the Debtor or Trustee to object to any claim." ,  should also be standard. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document in_re_godfrey.pdf (123.69 KB) Category NC Court of Appeals

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

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

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

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

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

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