Bankr. E.D.N.C.: In re Lamb- Burden of Establishing Cram-Down Value lies with the Debtor Ed Boltz Tue, 11/05/2024 - 15:55 Summary: The bankruptcy court  denied the confirmation of the debtors' Chapter 13 plan after objections from NewRez LLC (Shellpoint). The Lambs proposed to reduce Shellpoint’s claim on their mobile home to $6,000, treating the rest as unsecured, based on the property’s alleged value. Shellpoint objected, arguing the value was too low, and provided a J.D. Power Report indicating a higher value. At the hearing, Larry Lamb testified about the home’s deteriorated condition, including roof leaks, broken HVAC, and water damage. However, he did not provide a clear basis for his $6,000 valuation, and no expert valuation was presented by either party. The court found Lamb’s valuation unsupported by sufficient objective evidence, such as a comparable market price or industry-standard value like NADA to "discern any basis for that figure." The court ruled that the burden of proof for valuing the property in a cram-down scenario rests on the debtor. Since the Lambs did not sufficiently prove the $6,000 value by a preponderance of the evidence, the court sustained Shellpoint’s objection and denied confirmation without prejudice, allowing the Lambs an opportunity to present stronger evidence of the mobile home’s value. Commentary: This case should not be understood to hold that a debtor's valuation of property is not sufficient,  but merely that the debtor must be able to provide a basis for the court to discern how the debtor reached that value.  A valuable counter-example, also from the E.D.N.C.,  is  In re Ward,  where the debtor explicitly testified that  based on her "independent knowledge of sales and events affecting home values in her neighborhood", the tax value was accurate.  Perhaps had Mr.  Lamb here testified  that,  based on his independent knowledge,  having lived in a mobile home for at least 25 years (almost certainly longer than anyone else in the courtroom for that hearing),  and knowing the costs of repairs, the $6,000 value was accurate and perhaps even generous to Shellpoint. In response,  the debtor,  who still has the right to propose a new plan,  should perhaps send discovery to Shellpoint requiring it to produce evidence of how much it has actually sold used mobile homes in the last 10 years compared to the J.D. Power NADA values for each of those mobile homes.   Compilation and production  of that data would certainly assist the court in discerning the validity of J.D. Power value,  but Shellpoint might reconsider the return on investment in complying with such discovery, particularly in a dispute that at worst would result in a $25,000 cram-down and loss. To read a copy of the transcript, please see: With proper attribution,  please share this post.  Blog comments Attachment Document in_re_lamb.pdf (219.2 KB) Category Eastern District

Student Debt Relief: Nonbankruptcy Hardship Relief for Student Loans under the Higher Education Act Ed Boltz Tue, 11/05/2024 - 01:15 Available at: https://www.regulations.gov/document/ED-2023-OPE-0123-32489 Executive Summary: These proposed regulations would clarify the use of the Secretary's long standing authority to grant a waiver of some or all of the outstanding balance on a Federal student loan. (1) Under this proposed rule, the Department would specify how the Secretary would exercise discretionary authority to grant waivers using the following standard: the Secretary would determine that a borrower is experiencing or has experienced hardship related to the loan: (1) that is likely to impair the borrower's ability to fully repay the Federal government, or (2) that renders the costs of enforcing the full amount of the debt not justified by the expected benefits of continued collection of the entire debt (proposed § 30.91(a)). The proposed regulations would then provide a non-exhaustive list of factors the Secretary may consider in deciding whether to grant relief (proposed § 30.91(b)). Then, proposed § 30.91(c) would provide a process by which the Secretary may grant individualized automatic relief through a predictive assessment based on the factors in proposed § 30.91(b). Should the Secretary choose to exercise such discretion, proposed § 30.91(c) would provide immediate, one-time relief as soon as practicable. And, proposed § 30.91(d) would provide a primarily application-based process by which the Secretary may provide additional relief on an on-going basis. The proposed regulations describe two different pathways that the Secretary could take to exercise discretion to grant a waiver in instances where the borrower meets the hardship standard in proposed § 30.91(a). We describe those pathways in greater detail in the preamble below to assist the public in understanding how the proposed regulations would operate and to clarify terminology to guide such a discussion. The first pathway would be a “predictive assessment,” pursuant to proposed § 30.91(c), under which the Secretary would consider information in the Department's possession to determine whether the borrower meets the proposed standard for hardship in § 30.91(a) such that their loans are at least 80 percent likely to be in default within the next two years. The Department would make a predictive assessment that considers factors indicating hardship (described in proposed § 30.91(b)) and may, in the Secretary's discretion, then provide immediate relief by granting waivers to eligible borrowers, without requiring any action by those borrowers to seek that relief. The second pathway, which is under proposed § 30.91(d), would be a determination based on a “holistic assessment” of the borrower's circumstances (based on the factors in proposed § 30.91(b)) that meets the proposed hardship standard for waiver specified in proposed § 30.91(a). This assessment would focus on borrowers who are not otherwise eligible for the immediate relief under proposed § 30.91(c) and who are not eligible for relief sufficient to redress their hardships through other Department programs supporting student loan borrowers. Under this pathway for relief, the Department would conduct a holistic assessment of the borrower's hardship based on information about the borrower's experience with the factors in proposed § 30.91(b) obtained through an application or based on information already within the Department's possession, or a combination of the above. A borrower would be eligible for relief if, based on the Department's holistic assessment, the Department determines that the borrower is highly likely to be in default or experience similarly severe negative and persistent circumstances, and other options for payment relief would not sufficiently address the borrower's persistent hardship. The two pathways for relief described above, namely the immediate relief in proposed § 30.91(c) and the additional relief in proposed § 30.91(d), would operate separately and distinctly from each other and would therefore be fully severable. Because these proposed regulations only concern waivers due to hardship, these proposed hardship waivers would therefore also be separate and distinct from other proposed rules related to waivers of Federal student loan debt. (2)   Table 2.1—Summary of Proposed Provisions Provision Regulatory section Description of proposed provision Standard for waiver due to likely impairment of borrower ability to fully repay or undue costs of collection § 30.91(a) Provides that the Secretary may waive up to the outstanding balance of a Federal student loan held by the Department if the Secretary determines that the borrower has experienced or is experiencing hardship related to such a loan such that the hardship is likely to impair the borrower's ability to fully repay the Federal government or the costs of enforcing the full amount of the debt are not justified by the expected benefits of continued collection of the entire debt. Factors that substantiate hardship § 30.91(b) Provides a non-exclusive list of factors the Secretary could consider in determining whether a borrower meets the standard for waiver based on hardship. Immediate relief for borrowers likely to default § 30.91(c) Provides that the Secretary may consider the borrower's factors indicating hardship described in proposed § 30.91(b) to exercise discretion to waive all or some of outstanding loans held by borrowers who the Secretary determines have experienced or are experiencing hardship such that their loans are at least 80 percent likely to be in default in the two years after the publication of the proposed regulations. Process for additional relief § 30.91(d) Provides that the Secretary may rely on data obtained from an application or by any other means, or potentially a combination or both, to provide relief for borrowers who are highly likely to be in default or to experience similarly severe and persistent negative circumstances, and other payment relief options do not sufficiently address the borrower's persistent hardship. Commentary: The non-exhaustive list of factors related to the borrower that the Secretary may consider  under Proposed § 30.91(b)  in determining whether a borrower meets the hardship standard for relief under these regulations include: Household income; Assets; Type of loans and total debt balances owed for loans described in proposed 30.91(a), including those not owed to the Department; Current repayment status and other repayment history information; Student loan total debt balances and required payments, relative to household income; Total debt balances and required payments, relative to household income; Receipt of a Pell Grant and other information from the Free Application for Federal Student Aid (FAFSA) form; Type and level of institution attended; Typical student outcomes associated with a program or programs attended; Whether the borrower has completed any postsecondary certificate or degree program for which the borrower received title IV, HEA financial assistance; Age; Disability; Age of the borrower's loan based upon first disbursement, or the disbursement of loans repaid by a consolidation loan; Receipt of means-tested public benefits; High-cost burdens for essential expenses, such as healthcare, caretaking, and housing; The extent to which hardship is likely to persist; and Any other indicators of hardship identified by the Secretary. While this does not explicitly recognize the filing of a bankruptcy or the likelihood of a bankruptcy as a factor in this nonbankruptcy hardship relief,  § 30.91(c)  would evaluate for nonbankruptcy hardship  relief if the debtor is "at least 80 percent likely to be in default in the two years after these proposed regulations are published."  Unless a Chapter 13 plan, which under the Bankruptcy Code must last at least 36 or 60 months,  provides for substantial  and regular payments of student loans during this period, the likelihood of their default is well above 80%, if not virtually certain, arguably qualifying for non-bankruptcy hardship relief. Of course,  all of this depends on the results of  the 2024 presidential election. With proper attribution,  please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document ed-2023-ope-0123-32489_content.pdf (556.29 KB) Category Student Loan Debt

Bankr. M.D.N.C.: In re Quevedo- EITC not Exempt as "support payment" & Division of Tax Refund between spouses Ed Boltz Tue, 11/05/2024 - 00:25 Summary: The  Bankruptcy Court for the Middle District of North Carolina sustained the objection filed by the Chapter 7 trustee against the debtor's claimed exemptions for their 2023 federal and state tax refunds—$10,035 federal and $1,490 state—based on North Carolina’s statutory exemptions for at N.C.G.S.  § 1C-1601(a)(12)  for “support payments” and with the Female Debtor's wildcard exemption. The trustee objected, arguing that the tax refunds, specifically the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC), do not qualify as “support payments” under N.C. Gen. Stat. § 1C-1601(a)(12),  which protects  "funds that have been received or to which the debtor is entitled, to the extent the payments or funds are reasonably necessary for the support of the debtor or any dependent of the debtor."    The court agreed, interpreting the statute as applying only to alimony, support, and child support payments within a family law context, not tax credits. The court rejected the debtors' interpretation, which would make nearly any financial support eligible for exemption, as overly broad. Additionally, the trustee argued that Bellido could not claim ownership of the refunds through the wildcard exemption since she had no taxable income or withholdings for 2023.   In that regard, the court ruled that the correct method for allocating joint tax refunds in bankruptcy cases should be based on the “separate filings rule,” which calculates each spouse’s share as if they filed individually. This approach, consistent with IRS guidelines, more accurately reflects individual ownership in joint refunds than the 50/50 division suggested by the debtors. As a result, the trustee’s objection was sustained, disallowing the claimed exemptions. The court ordered the ruling to be followed in contested cases, advising that trustees and debtors negotiate to avoid unnecessary litigation. Commentary: As usual  when ruling on exemptions,  the court began with the presumption that "exemption laws are to be liberally construed in favor of the debtor and allowance of the exemption."  That presumption,  however,  seems to always be little more than a feather on the scales  and which,  even when other IRS Guidance describes the purpose of the EITC being to  "[help] low- to moderate-income workers and families get a tax break" ,  is outweighed by trustee demands and hard-hearted courts concerned that protection the EITC as  "funds reasonably necessary for the support of the debtor or any dependent of the debtor"    would be an over-extension that would render the other sections of  N.C.G.S.  § 1C-1601(a)(12) superfluous. Research from the Center on Budget and Policy Priorities  report Policy Basics: The Earned Income Tax Credit has shown that  "that families mostly use the EITC to pay for necessities such as food and housing, and in some cases, for education or training to boost their job prospects and earning potential."  Recognition of this purpose and usage of EITC funds,  together with a full application of the "reasonable"  limitation in  N.C.G.S.  § 1C-1601(a)(12,  would have allowed both a liberal construction that still conservatively examined the need for the EITC funds. Certainly this is another example of how North Carolina's exemptions need to be reformed  or even the federal bankruptcy exemptions  more uniformly provide for the protection of these funds,  regardless of how stingy an opt-out state might be.   In choosing the "separate filings rule" for determining how much of a tax refund belongs to each spouse,  the bankruptcy court selected the most complicated resolution.  This will encourage consumer debtors attorney to prepare these sort of hypothetical tax returns,  increasing the costs of filing bankruptcy for low- to moderate-income workers and families (but heck-  they've got EITC funds and would certainly prefer to pay their own lawyer than hand those over to  some Chapter 7 trustee),  delaying the filing of their bankruptcy so the EITC funds can be reasonably used for the support of their family,  or diverting  those debtors into Chapter 13 cases,  where the trustees generally have a greater willingness to adopt a negotiated resolution (because unlike with Chapter 7 Trustees, their personal pecuniary interests are not meaningfully impacted by seizing funds.) With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document 23-80195_quevedo_-_order_sustaining_trustees_objection_to_amended_exemptions.pdf (806.22 KB) Category Middle District

Entering 2025, more and more Americans are falling behind on their bills as consumer debt continues to skyrocket. US households are relying more heavily on credit cards in order to meet basic needs and combat the mounting economic pressures — rising inflation, historically high auto loan payments, soaring student loan debt, insufficient retirement savings, and more. We’ll dive into key factors behind this consumer debt crisis and explore potential debt relief solutions, including personal bankruptcy. As Inflation Increases, So Does Financial Insecurity The cost of living in 2024 still remains higher than in previous years, despite the Fed attempting to lower and stabilize inflation at their 2% target rate. According to an October 2024 Bank of America survey, nearly 45% of Americans perceived themselves as living paycheck to paycheck. Housing, transportation, and utilities are getting more expensive, forcing individuals and families to make difficult choices like maxing out their credit cards or cutting back on essentials. Groceries alone have gone up by 2.3% compared to this period last year. The US Department of Agriculture (USDA) reported a 2.5% increase for the cost of meats, and a 40% spike for the cost of eggs. Stronger Reliance on Credit Cards for Basic Needs  With high inflation and stagnant wages, many Americans have turned to credit cards as a lifeline for covering basic needs. The Federal Reserve Bank of New York reported that credit card debt in the US has now surpassed $1.14 trillion dollars, which is 5.8% higher than the same period last year. It only pushes consumers to persistent debt with the average AP Rs having now reached a record-high of 22.8%, according to the Federal Reserve Board. Consequently, Americans are struggling to make minimum payments. The risk of penalties and lower credit score make borrowing even more costly. Read our blog article on how to clear your debt when you have maxed out credit cards. The Costly Resurgence of Student Loan Payments The COVID-19 pause on student loans set interest rates to 0%, which gave borrowers an opportunity to pay student loans interest-free or take a break from paying altogether. However, in September 2023, the 3-year long administrative forbearance came to an end. Now there are over 46 million borrowers with an outstanding total balance of $1.75 trillion dollars in federal and private student loan debt, paying an estimated $500 per month. This financial strain has borrowers resorting to deferred payments, income-driven repayment plans, or applying for a student loan discharge. Rainy Day Funds Are Depleting & Disappearing With a lack of emergency funds comes a lack of financial preparedness. According to Bankrate’s 2024 annual emergency fund report, 56% of US adults wouldn’t be able to pay for an emergency expense of $1,000 or more. This could be a trip to the emergency room, unexpected car repair, or income to pay for expenses while between jobs. Financial advisors generally suggest setting aside at least 3 to 6 months of living expenses for life emergencies. Start rebuilding your rainy day fund by opening up a savings account and budgeting your expenses each month. Seek a Way Out with Debt Relief Programs If your debt continues to pile up and starts to feel unmanageable, consider bankruptcy, debt consolidation, and other debt relief options. Chapter 7 bankruptcy wipes out all unsecured debts like credits cards or medical bills in exchange for selling some of your assets, often taking a few months to complete. Chapter 13 bankruptcy lets you keep your assets and puts you on a reorganization plan to pay back a portion of your debt over a 3-5 year timeframe based on what you can afford. Yes, your credit scores will be impacted, but they offer a fresh start for what may seem like an inescapable cycle of debt. Also, the stigma of bankruptcy has lessened over the years as many Americans have recognized that it’s more important to regain their financial stability than handle an uphill battle all by themselves. Safely & Confidently Navigate Bankruptcy with Lakelaw If you’re struggling with debt, you don’t have to go through this alone. Financial challenges can be overwhelming, but facing them is a true sign of strength, not failure. At Lakelaw, we will take care of you with the kindness, courtesy, respect, professionalism, and dedication that has been our hallmark since we were founded in 1999. We’ve been named one of the best bankruptcy law firms in the country by Best Lawyers, Super Lawyers, U.S. News & World Report, Martindale-Hubbell, and Lawdragon. We also have over 50 5-star reviews across Google and Yelp. Get a Free Confidential Consultation The post America’s Silent Consumer Debt Crisis appeared first on Lakelaw.

4th Cir.: Trantham v. Tate- Nonstandard Chapter 13 Bankruptcy Provisions Ed Boltz Sat, 11/02/2024 - 18:51 Summary: The Fourth Circuit Court of Appeals reversed the decisions by the  bankruptcy and district court decision that rejected Trantham's proposed Chapter 13 bankruptcy plan, which allowed for property to vest in her at the plan’s confirmation rather than at the final decree, as mandated by the local form. The lower courts had required adherence to the local form's default vesting provision for consistency and efficiency, despite finding that Trantham's plan was "not contrary to" the Bankruptcy Code. The appellate court emphasized that the debtor has the exclusive right to propose a plan, including its vesting terms, as long as it adheres to the Bankruptcy Code. Since the Code allows property to vest in the debtor upon plan confirmation (with that actually being the express Congressional default), the court ruled that the local form’s default provision could not override this right.   If the trustee objects, it is the Trustee  who bears the initial burden of “going forward with evidence as to [her] objection.” Commentary: A really great victory by Todd Mosley, with assistance from Richard Cook and NCBRC. Vesting Provisions The specific nonstandard provision in this case concerned when  assets of the estate would revest in the debtor,  with the option generally either being at confirmation or discharge.   Some commentators have  fretted or threatened vesting assets in the debtor at confirmation would allow creditors to  enforce their liens when the debtor defaults in making the payments post-confirmation  without seeking relief from the automatic stay.  And while some sections of 11 U.S.C. § 362(a) only prohibit actions against "property of the estate", (a)(5)  in contrast prohibits "any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title...." (Emphasis and color added.)    Mortgage servicers,  who nearly always bring foreclosures against the named owners of the property and not in rem,  would also be restricted by (a)(1) in the "commencement or continuation ... of [an]  action or proceeding against the debtor."  The same would hold for pre-petition judgment creditors under (a)(2).  It would be surprising to learn that in the 7th Circuit,  where, following  In re Cherry, 963 F.3d 717, 718 (7th Cir. 2020),   it seems like it is the unbreakable "norm" that property vests in the debtor at confirmation, creditors are completely unfettered by the automatic stay.   The Fourth Circuit did clearly reaffirm that  when a debtor experiences a “substantial and unanticipated” change of income from selling property that vested in him at plan confirmation, the trustee maintains the ability to seek to modify the debtor’s plan  so that unsecured creditors can recoup such income. See Murphy v. O’Donnell (In reMurphy), 474 F.3d 143, 154 (4th Cir. 2007) Many Chapter 13 Trustees nonetheless seem terrified (and elation by some debtors attorneys ) that if assets vest in the debtor at confirmation,  the power and information asymmetries will allow debtors to sell assets and quickly and quietly make final payments under their plans,  such that the Trustee will not have an opportunity to discover and recover any appreciation in those assets and seek a modification under 11 U.S.C.  § 1329 to modify the dividend to unsecured creditors.   Those  fears (and giddiness) are undercut by the simple fact that most such sales  will still involve lenders, either being paid off and/or providing financing,  who will continue to insist on obtaining bankruptcy court approval.  Explicitly placing an obligation of disclosure to the Trustee of direct payments (other than as provided in the plan) on creditors in Local Rules  would bolster this further. These scales can also be further rebalanced if more bankruptcy trustees take a page from the long-standing practice in the Middle District of North Carolina of recording a notice of bankruptcy  with every County Registrar of Deed where a debtor owns real  property.  That would put real estate attorneys and title insurers on notice of the bankruptcy and even an obligation to disclose a sale,  since apparently those parties are unable to otherwise spend 10¢ on a PACER search. General Provisions More important,  however,  than the vesting question (which tends to occupy the attentions of both  judges and debtor's attorneys most noted for their intransigence),  Trantham stands for the proposition that Chapter 13 debtors have the "exclusive right to propose plans"   that include any "provision [that] is consistent with the Code and isn’t otherwise proposed in bad faith or forbidden by law, the   bankruptcy court “shall confirm” the plan with that tailored provision."  Confirmation with such provisions is permitted even over the objection of a creditor if the Disposable Income test and Hypothetical Liquidation Requirement are satisfied. Too often Chapter 13 Trustees and bankruptcy judges insist that all consumer cases must be cookie cutter versions of each other (while at the same time bemoaning that kind of representation by consumer debtors' attorneys), making  “efficiency and consistency”  for administration by  the Trustee essential.  The sort of bespoke plan provisions that are approved de rigueur in Chapter 11 plans  are then rejected out of hand.  See, e.g. ,  In re Parkman, 589 B.R. 567 (S.D.Miss.  2018.)   That pearl clutching aside,  attached is also a set of potential non-standard plan provisions,  drawn from many of Buzzy Stubb's individual Chapter 11 cases and the wisdom of Max Gardner,  which do not violate the Bankruptcy Code and  would often greatly benefit Chapter 13 debtors .  The Buchanan provisions,  allowing participation in Income Driven Repayment plans for student loans during  Chapter 13 are another example  of the creativity and flexibility that Trantham now clearly allows.   Similarly,  an "estimated duration" plan,  which allows the debtor can request discharge,  as soon as she satisfies her priority and secured obligations and any required dividends to unsecured creditors, regardless of the number of estimated months the plan was proposed and anticipated to last,  was favorably cited to by the 4th Circuit here from  In re Sisk, 962 F.3d 1133 (9th Cir. 2020).  Whether the plan could require the Trustee, rather than the debtor herself,  to  move for plan completion and discharge would again now depend on if shifting that obligation was contrary to the Bankruptcy Code,  not just burdensome to the Trustee. Concurrence: Judge Wilkinson's concurrence is as important as the gravemen in this case-    The absolutist positions taken by the district court and the debtor here both neglect an essential ingredient in the bankruptcy process: “[N]egotiation and collaboration among numerous parties.” In re Ottawa Bus Serv., Inc., 498 B.R. 281, 288 (D. Kan. 2013). The principle of collaboration was lacking in this case. (Emphasis added.) This absolutist  lack of collaboration (which could  also be imputed to the Chapter 13 Trustee and the bankruptcy court)  was and unfortunately can be particularly problematic in Chapter 13 cases  where overzealous and obdurately stubborn parties stake out doctrinaire positions  with little interest or incentive to seek accommodation.  Hopefully Judge Wilkinson's admonition for "negotiation and collaboration" to us "soldiers on the ground"  will be heeded by all sides. Prudential Standing for Appeal While leaving a full decision of this "open question"  for another day,  the 4th Circuit,  relying on In re Sisk, 962 F.3d 1133 (9th Cir. 2020),  also expressed skepticism regarding an overly strict application of prudential standing "when the appellant is the party below and remains integrally connected to the issues on appeal.”    This could mean that debtors have the right to object to claims even when the lack of a pecuniary interest might make them a "person only slightly aggrieved." Additional Commentary: NCBRC:  Debtor’s Right to Propose Chapter 13 Plans Affirmed by Fourth Circuit: Flexibility Over Local Form Defaults ABI Journal:  Rules Are Made to Be Broken ... if in Conflict with the Code Rochelle's Daily Wire:  Revesting on Discharge in Chapter 13 Can’t Be Mandated, Fourth Circuit Says Seymour, Jonathan, The Limited Lifespan of the Bankruptcy Estate: Managing Consumer and Small Business Reorganizations (January 1, 2021).  With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document trantham_v._tate_4th_cir_opinion_rev_dist_court.pdf (270.73 KB) Document non-standard_provisions_2017.12.20_1.pdf (77.98 KB) Category 4th Circuit Court of Appeals

Genetic Testing Company 23AndMe Expected To Declare Bankruptcy There are certain types of companies that you almost expect to go under with the economy’s current state. Brick-and-mortar retailers and fast casual restaurants seem to be dropping left and right. But a well-known company in the biotech sector now appears to be on the brink of collapse, and experts predict that it will soon file for bankruptcy. This isn’t just a chilling indicator of how the American economy is doing. Millions of customers have trusted their most personal information- their DNA- with 23AndMe over the years. And if 23AndMe is required to sell its assets due to a bankruptcy filing, customer information could be sold to advertisers and researchers.  Millions of people have used 23AndMe’s services over the years, with a valuation of $3.5 billion when the company went public in 2021. But by 2023, the company reported a net loss of over $300 million, and its shared fell below $1. In October 2023, the company was rocked by scandal when hackers gained access to almost 7 million customers’ private information. Upon first reading, it may seem like the information obtained from 23AndMe’s genetic tests should be protected by HIPAA, or the Health Insurance Portability and Accountability Act. This law protects the privacy of medical patients’ health data, which can be used by major corporations for a variety of purposes. However, 23AndMe is considered a direct-to-consumer company rather than a traditional healthcare provider. That means that HIPAA doesn’t protect the data that 23AndMe has collected from its customers over the years. So if you’ve done a 23AndMe test in the past and start seeing advertisements that seem eerily perfect for you, it may not be a coincidence. 23AndMe’s user agreement gives the company the right to retain its customers’ information for “as long as necessary.” Rumors of 23AndMe’s downfall have been swirling for months, as the company began laying off employees last year. In September 2024, it shut down its internal research group, only contributing more to suspicions of an imminent bankruptcy. Some blame the company’s struggles on the fact that it is a one-time service. While 23AndMe has offered a subscription-based model in the past, most people simply want the results of their DNA test and to be done with the company. However, it also issued an announcement last month that it would be offering a subscription service of semaglutide injections. This is the active ingredient in medications like Wegovy and Ozempic which are becoming increasingly common weight loss treatments. In October 2024, all seven of 23AndMe’s independent directors resigned from the board. They blamed the exit on CEO Ann Wojcicki’s business strategies and work towards making the company private. This kind of mass exodus can be devastating to a company that is already floundering. Many expect that 23AndMe will soon declare bankruptcy. Considering your own bankruptcy filing in Phoenix or Tucson, Arizona? Our team makes it easy with skillful representation and flexible payment plan options starting at zero dollars down. For more information, call 480-470-1504 for your free consultation.  Bankruptcy For 23AndMe Versus An Average Debtor Despite never being a profitable company, 23AndMe once held a high valuation and was considered a leader in genetic testing. Corporations like 23AndMe are ineligible for chapter 13 bankruptcy, which is the second most common form of personal bankruptcy. The first most common, chapter 7, can also be used by businesses struggling with debt. Businesses (and under some rare and limited circumstances, individuals) can also use chapter 11 bankruptcy to address debt issues. If 23AndMe files for bankruptcy, it will most likely be a chapter 11 case. Chapter 7 requires a corporate debtor to close its business, and can be infeasible for companies with complex debt structures. Most of the time, when you hear of a company declaring bankruptcy in the news, it is a chapter 11 bankruptcy filing. Chapter 11 bankruptcy creates an opportunity for the company to stay in operation.  How does a business get to avoid financial responsibilities yet stay running with a chapter 11 bankruptcy filing? Upon filing for bankruptcy, a business, or any other type of debtor, becomes protected from creditors by the automatic stay. One of the most useful protections from the automatic stay is that it freezes lawsuits and prevents creditors from filing new ones while the bankruptcy is in good standing. This is usually one of the first steps that a creditor will take to collect an unpaid debt. It can be a huge distraction and drain of resources if a company is already struggling to stay afloat. It can also stop creditor actions like repossessions, which make it more difficult for a company to continue conducting business in order to earn income and pay their debts. The protections from the automatic stay can be crucial to a company’s ability to survive a bankruptcy case.  Once under the shield provided by the automatic stay, the chapter 11 bankruptcy debtor can make proposals to a committee of its creditors on how it can emerge from debt. This could be converting debt into equity, downsizing the business, selling assets, shifting business strategies, finding new investors, or finding a buyer for the company. There is no set path for a business to follow if it files for chapter 11 bankruptcy. The committee will vote to approve or deny any proposals made by the debtor. If the committee denies a proposal by the debtor, they can also come up with and submit a proposal to rid the company of its debt.  As one can imagine, it can take quite a while to get the debtor and committee to reach an agreement, and would generate more significant legal fees the longer it takes. There are special provisions available for small business chapter 11 bankruptcy debtors that take away the requirement that a creditor committee be formed. The company generally must have less than $7.5 million in debt to qualify as a small business for chapter 11 bankruptcy purposes.  Chapter 7 For Small Businesses Filing for chapter 11 bankruptcy is often beyond the needs (and means) of small business owners looking for a clean slate. Chapter 7 can be used to discharge unsecured debts and allow the business owner to open a similar venture, if they wish. If the business assets are covered by bankruptcy exemptions or easy to replace, the debtor can open up a new business after closing their first one through chapter 7 bankruptcy. The bankruptcy can clear credit cards, personal loans, and other unsecured nonpriority debts, as well as personal debts- the most common in the United States being medical bills.  Chapter 7 bankruptcy is much more uniform than chapter 11 bankruptcy. It is typically completed within 6 months, but cases are often discharged in as few as 3 months. A trustee is assigned to each case and will inform the debtor of any additional information that is needed. The debtor will attend a 341 Meeting of Creditors, which is generally held 4-6 weeks after filing. Creditors can attend the hearing or have 60 days after the hearing to object to their debts being discharged. Debtors must meet certain requirements to qualify for chapter 7 bankruptcy, with income being the most common factor causing ineligibility.  Want To Learn More About Your Arizona Bankruptcy Options? Schedule Your Free Consultation With Our Firm Today The failure of big companies like 23AndMe just go to show that anyone can end up filing for bankruptcy. Whether you own your own business or earn your living some other way, bankruptcy can address debts and keep creditors at bay. Our Phoenix and Tucson bankruptcy team has represented clients just like you and can present you with reasonable expectations about your potential filing. We also understand just how difficult it can be to pay for bankruptcy while dealing with debt, so you can also check to see if you qualify for our zero down payment plan option. To get started today for free with your consultation, call 480-470-1504.  MY AZ LAWYERS Email: [email protected] Website: www.myazlawyers.com Mesa Location 1731 West Baseline Rd., Suite #100 Mesa, AZ 85202 Office: 480-448-9800 Phoenix Location 343 West Roosevelt, Suite #100 Phoenix, AZ 85003 Office: 602-609-7000 Glendale Location 20325 N 51st Avenue Suite #134, Building 5 Glendale, AZ 85308 Office: 602-509-0955 Tucson Location 2 East Congress St., Suite #900-6A Tucson, AZ 85701 Office: 520-441-1450 Avondale Location 12725 W. Indian School Rd., Ste E, #101 Avondale, AZ 85392 Office: 623-469-6603 The post Genetic Testing Company 23AndMe Expected To Declare Bankruptcy appeared first on My AZ Lawyers.

Genetic Testing Company 23AndMe Expected To Declare BankruptcyThere are certain types of companies that you almost expect to go under with the economy’s current state. Brick-and-mortar retailers and fast casual restaurants seem to be dropping left and right. But a well-known company in the biotech sector now appears to be on the brink of collapse, and experts predict that it will soon file for bankruptcy. This isn’t just a chilling indicator of how the American economy is doing. Millions of customers have trusted their most personal information- their DNA- with 23AndMe over the years. And if 23AndMe is required to sell its assets due to a bankruptcy filing, customer information could be sold to advertisers and researchers. Millions of people have used 23AndMe’s services over the years, with a valuation of $3.5 billion when the company went public in 2021. But by 2023, the company reported a net loss of over $300 million, and its shared fell below $1. In October 2023, the company was rocked by scandal when hackers gained access to almost 7 million customers’ private information. Upon first reading, it may seem like the information obtained from 23AndMe’s genetic tests should be protected by HIPAA, or the Health Insurance Portability and Accountability Act. This law protects the privacy of medical patients’ health data, which can be used by major corporations for a variety of purposes. However, 23AndMe is considered a direct-to-consumer company rather than a traditional healthcare provider. That means that HIPAA doesn’t protect the data that 23AndMe has collected from its customers over the years. So if you’ve done a 23AndMe test in the past and start seeing advertisements that seem eerily perfect for you, it may not be a coincidence. 23AndMe’s user agreement gives the company the right to retain its customers’ information for “as long as necessary.”Rumors of 23AndMe’s downfall have been swirling for months, as the company began laying off employees last year. In September 2024, it shut down its internal research group, only contributing more to suspicions of an imminent bankruptcy. Some blame the company’s struggles on the fact that it is a one-time service. While 23AndMe has offered a subscription-based model in the past, most people simply want the results of their DNA test and to be done with the company. However, it also issued an announcement last month that it would be offering a subscription service of semaglutide injections. This is the active ingredient in medications like Wegovy and Ozempic which are becoming increasingly common weight loss treatments. In October 2024, all seven of 23AndMe’s independent directors resigned from the board. They blamed the exit on CEO Ann Wojcicki’s business strategies and work towards making the company private. This kind of mass exodus can be devastating to a company that is already floundering. Many expect that 23AndMe will soon declare bankruptcy.Considering your own bankruptcy filing in Phoenix or Tucson, Arizona? Our team makes it easy with skillful representation and flexible payment plan options starting at zero dollars down. For more information, call 480-470-1504 for your free consultation. Bankruptcy For 23AndMe Versus An Average DebtorDespite never being a profitable company, 23AndMe once held a high valuation and was considered a leader in genetic testing. Corporations like 23AndMe are ineligible for chapter 13 bankruptcy, which is the second most common form of personal bankruptcy. The first most common, chapter 7, can also be used by businesses struggling with debt. Businesses (and under some rare and limited circumstances, individuals) can also use chapter 11 bankruptcy to address debt issues. If 23AndMe files for bankruptcy, it will most likely be a chapter 11 case. Chapter 7 requires a corporate debtor to close its business, and can be infeasible for companies with complex debt structures. Most of the time, when you hear of a company declaring bankruptcy in the news, it is a chapter 11 bankruptcy filing. Chapter 11 bankruptcy creates an opportunity for the company to stay in operation. How does a business get to avoid financial responsibilities yet stay running with a chapter 11 bankruptcy filing? Upon filing for bankruptcy, a business, or any other type of debtor, becomes protected from creditors by the automatic stay. One of the most useful protections from the automatic stay is that it freezes lawsuits and prevents creditors from filing new ones while the bankruptcy is in good standing. This is usually one of the first steps that a creditor will take to collect an unpaid debt. It can be a huge distraction and drain of resources if a company is already struggling to stay afloat. It can also stop creditor actions like repossessions, which make it more difficult for a company to continue conducting business in order to earn income and pay their debts. The protections from the automatic stay can be crucial to a company’s ability to survive a bankruptcy case. Once under the shield provided by the automatic stay, the chapter 11 bankruptcy debtor can make proposals to a committee of its creditors on how it can emerge from debt. This could be converting debt into equity, downsizing the business, selling assets, shifting business strategies, finding new investors, or finding a buyer for the company. There is no set path for a business to follow if it files for chapter 11 bankruptcy. The committee will vote to approve or deny any proposals made by the debtor. If the committee denies a proposal by the debtor, they can also come up with and submit a proposal to rid the company of its debt. As one can imagine, it can take quite a while to get the debtor and committee to reach an agreement, and would generate more significant legal fees the longer it takes. There are special provisions available for small business chapter 11 bankruptcy debtors that take away the requirement that a creditor committee be formed. The company generally must have less than $7.5 million in debt to qualify as a small business for chapter 11 bankruptcy purposes. Chapter 7 For Small BusinessesFiling for chapter 11 bankruptcy is often beyond the needs (and means) of small business owners looking for a clean slate. Chapter 7 can be used to discharge unsecured debts and allow the business owner to open a similar venture, if they wish. If the business assets are covered by bankruptcy exemptions or easy to replace, the debtor can open up a new business after closing their first one through chapter 7 bankruptcy. The bankruptcy can clear credit cards, personal loans, and other unsecured nonpriority debts, as well as personal debts- the most common in the United States being medical bills. Chapter 7 bankruptcy is much more uniform than chapter 11 bankruptcy. It is typically completed within 6 months, but cases are often discharged in as few as 3 months. A trustee is assigned to each case and will inform the debtor of any additional information that is needed. The debtor will attend a 341 Meeting of Creditors, which is generally held 4-6 weeks after filing. Creditors can attend the hearing or have 60 days after the hearing to object to their debts being discharged. Debtors must meet certain requirements to qualify for chapter 7 bankruptcy, with income being the most common factor causing ineligibility. Want To Learn More About Your Arizona Bankruptcy Options? Schedule Your Free Consultation With Our Firm TodayThe failure of big companies like 23AndMe just go to show that anyone can end up filing for bankruptcy. Whether you own your own business or earn your living some other way, bankruptcy can address debts and keep creditors at bay. Our Phoenix and Tucson bankruptcy team has represented clients just like you and can present you with reasonable expectations about your potential filing. We also understand just how difficult it can be to pay for bankruptcy while dealing with debt, so you can also check to see if you qualify for our zero down payment plan option. To get started today for free with your consultation, call 480-470-1504. MY AZ LAWYERS Email: [email protected]: www.myazlawyers.comMesa Location1731 West Baseline Rd., Suite #100Mesa, AZ 85202Office: 480-448-9800Phoenix Location343 West Roosevelt, Suite #100Phoenix, AZ 85003Office: 602-609-7000Glendale Location20325 N 51st Avenue Suite #134, Building 5Glendale, AZ 85308Office: 602-509-0955Tucson Location2 East Congress St., Suite #900-6A Tucson, AZ 85701Office: 520-441-1450Avondale Location12725 W. Indian School Rd., Ste E, #101Avondale, AZ 85392Office: 623-469-6603The post Genetic Testing Company 23AndMe Expected To Declare Bankruptcy appeared first on My AZ Lawyers.

When written properly and containing the appropriate information, hardship letters can stop or pause foreclosure. To write a hardship letter on your behalf to stop foreclosure, our lawyers must identify the specific reason why you defaulted on your mortgage and offer a solution that convinces the lender to agree to mortgage forbearance or loan modification. Examples of undue financial hardships include job loss, illness, and divorce. Because we must offer supporting documents alongside hardship letters and borrowers have little time to respond to notices of intent, it is important to have our lawyers start drafting this letter as soon as possible. Suppose the lender refuses to entertain your hardship letter. In that case, our lawyers may be able to convince the judge assigned to your case that you are experiencing undue financial hardship, and the bank may not foreclose on your home. For a free case assessment from our Pennsylvania mortgage foreclosure defense lawyers, call Young, Marr, Mallis & Associates today at (215) 701-6519 or (609) 755-3115. How to Write a Hardship Letter to Your Lender to Stop Foreclosure By clearly explaining a difficult financial situation due to a recent life change or another major event, our lawyers may convince your lender to agree to forbearance or loan modification to stop foreclosure. Much of the introductory information in a hardship letter should include the borrower’s personal information, such as their name and contact information. This allows the bank to easily identify you and your loan after receiving the hardship letter. Our mortgage foreclosure defense lawyers will then discuss the specifics of the undue financial hardship that has caused you to default on your loan. Being diagnosed with a serious illness or condition that makes you unable to work or perform at the same earning capacity could qualify you for forbearance. This would temporarily pause your mortgage payments, giving you time to get your finances in order before they resume. Whatever the cause of your financial hardship, whether it is a recent divorce, the death of a borrower, job loss, illness, a natural disaster, or unforeseen expenses, our lawyers must expressly explain the situation in the letter. We will also propose our solution to the situation and your specific goals. For example, many borrowers wish to stop foreclosure to keep their homes, so our lawyers may propose a loan modification in the hardship letter after thoroughly reviewing the current mortgage terms and your financial limitations. Hardship letters that are incomplete or fail to explain the situation to banks may be somewhat ignored by lenders, who may want to proceed with foreclosure. Lenders do not have to agree to forbearance or loan modification unless compelled by a judge, even after being informed of a borrower’s undue financial hardship. How Long Do You Have to Stop Foreclosure with a Hardship Letter? After you get a notice of intent to foreclose from your lender, you will only have a short period to explain your current financial difficulties and get the bank to agree to an alternative solution before it can file a foreclosure petition in court. Because of this, it is crucial to have our lawyers quickly assess your finances, write a hardship letter, and negotiate with your bank. Banks can typically file mortgage foreclosure petitions in court 30 days after sending a notice of intent to foreclose to a borrower. As soon as you get this notice, explain the reason why you defaulted to our lawyers, and we can confirm whether or not it is considered an undue financial hardship and proceed accordingly. Offering supporting documents alongside hardship letters can increase the likelihood that the bank will take our requests for forbearance or loan modification seriously. For example, if a sudden job loss made you default on your loan, our lawyers may provide income and bank statements to confirm your lack of income and strengthen your hardship letter. If a recent medical diagnosis contributed to your defaulting, we may offer medical statements so the bank appreciates the severity of the situation. Having time to organize this supporting evidence is important, so take the notice of intent seriously after you receive it in the mail. Can You Convince a Judge to Stop Foreclosure Because of Financial Hardship? Suppose your lender refuses to consider your hardship letter and wants to proceed with a judicial foreclosure to get paid faster. In that case, our lawyers can explain your challenging financial situation to the judge assigned to your case, who may agree that the bank cannot take your home. This is only possible if you live in a judicial foreclosure state that requires cases to go through the courts, like Pennsylvania and New Jersey. For this to happen, our lawyers must present evidence of your undue financial hardship. Judges may be more likely to delay foreclosure because of financial hardship if it is temporary. For example, suppose you recently lost your job because of company-wide layoffs. In that case, our lawyers can demonstrate that you are actively seeking reemployment to convince the judge that your current situation is temporary and you will be able to satisfy the loan terms shortly. Though judges do not always dismiss foreclosure complaints because of undue financial hardship, they might oversee loan modification during the judicial foreclosure process, especially if homeowners are struggling financially. Not every homeowner defaults on their mortgage because of exceptional financial hardship, which can put them in a difficult situation should their lenders initiate foreclosure proceedings. In these instances, our lawyers may suggest filing for bankruptcy. Because of the automatic stay associated with bankruptcy, lenders cannot continue with foreclosure after borrowers file. Instead, they will be repaid during the bankruptcy case, which a judge will also oversee. Call Our Lawyers for Help Stopping Mortgage Foreclosure For help with your case, call Young, Marr, Mallis & Associates’ Philadelphia mortgage foreclosure defense lawyers at (215) 701-6519 or (609) 755-3115.

USA Today has an article on why so many businesses are closing or filing for Bankruptcy. At Shenwick & Associates we seeing an increase in small businesses either closing or filing for  Bankruptcy. https://www.usatoday.com/story/money/2024/09/29/small-businesses-inflation-struggles/75405075007/?gnt-cfr=1&gca-cat=p Jim Shenwick, Esq  917 363 3391  [email protected] Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!

Owning a home is often more difficult than many people realize. Not only are you responsible for upkeep and maintenance, but you must always stay on top of mortgage payments. If you have fallen behind and are afraid that foreclosure is on the horizon, talk to our legal team about entering loss mitigation. This legal process might help you negotiate with lenders or creditors so that you can avoid foreclosure. Loss mitigation is available in New Jersey to those facing foreclosure. It allows you to meet with creditors and negotiate the terms of your mortgage so that, hopefully, foreclosure can be avoided. While loss mitigation is not successful in every case, it has helped many people in debt keep their homes. To be eligible, you must file for bankruptcy under Chapter 11, 12, or 13, and the property involved must be real property. Loss mitigation may allow you to modify your loan or work out some other agreement with your creditor. Your first step is hiring an experienced attorney to help you negotiate. Get a free case evaluation from our New Jersey mortgage foreclosure defense lawyers with Young, Marr, Mallis & Associates when you call (609) 755-3115. How Loss Mitigation May Affect Foreclosure in New Jersey New Jersey’s loss mitigation program may be available to certain people filing for bankruptcy and is designed to help people avoid losing real property, such as their home. Essentially, the program allows debtors and creditors to arrange formal meetings or hearings to discuss the terms of the debtor’s loan or mortgage and hopefully work out an agreement that allows creditors to get the money they are owed and debtors to keep their homes and avoid foreclosure. Whether or not loss mitigation can help you prevent foreclosure depends on your unique circumstances and what happens during negotiations. Perhaps our New Jersey mortgage foreclosure defense lawyers can help you rework your mortgage terms so that you can better afford payments. Maybe the creditors will accept a smaller lump sum payment instead of the total value of all your missed payments. It all depends on whether the parties can reach an agreement. Remember, loss mitigation is about give and take. While you might be able to avoid foreclosure, the creditor in your case will be looking to get what they want, too. If you have missed far too many mortgage payments or there is simply no way for you to catch up on payments, loss mitigation might not be of much help. The best way to find out is to ask your bankruptcy attorney. Who Can Participate in New Jersey’s Loss Mitigation Program? To participate in the loss mitigation program, you need to meet certain eligibility requirements. These requirements are not incredibly strict, and many people in debt or facing foreclosure of real property may be eligible. Even so, you should speak to an attorney about the program and whether you can participate as soon as possible. First, you must be a debtor filing for bankruptcy under Chapter 11, 12, or 13. If you are in debt and worried about the future of your home and mortgage but have not filed for bankruptcy, you might not be able to engage in loss mitigation. Talk to a bankruptcy attorney about how to get your case started and whether loss mitigation might be available. Second, the property at the heart of your case must be real property in which you hold an interest. Loss mitigation does not apply to personal property such as vehicles, furniture, jewelry, or other valuables. Because of this, loss mitigation might not work well for people facing bankruptcy but who do not actually own property. For example, if you are a renter filing for bankruptcy, the loss mitigation program might not be very useful. Third, the debt in your case should involve some kind of loan or line of credit. A mortgage, lien, or other credit secured by property usually suffices. Creditors may also participate or even initiate loss mitigation proceedings. You may be eligible to participate if you are a co-debtor or even a third party as long as your participation is necessary or desired by the main parties involved. Possible Outcomes of Loss Mitigation for People Facing Foreclosure in New Jersey The loss mitigation program is not foolproof, but it can help people in debt come to agreements with creditors and avoid foreclosure. One possible outcome is that you and the lender on your mortgage may agree to modify the terms of your mortgage. This might mean reducing monthly payments to something more affordable. Another possibility is that your lender or creditor may agree to allow you to enter a forbearance period. No payments need to be made when a mortgage or loan is on forbearance. This period may help you get your finances in order and hopefully resume mortgage payments after the forbearance period. You might also work out an agreement to extend payment deadlines. If you are past due on payments or are very close to being past due, the lender or creditor, in your case, might be persuaded to adjust these dates so you have more time to get the necessary funds. Still, you might avoid foreclosure without keeping your home. For some, keeping their home is simply not a realistic possibility. To avoid foreclosure and the associated hit to your credit, you might agree to a short sale or otherwise sell the home without a foreclosure. How a Lawyer Can Help You During Loss Mitigation and Foreclosure in New Jersey While loss mitigation might not take place in a courtroom, you should still have an attorney to help you. Remember, you typically can only participate in loss mitigation if you have also filed for certain bankruptcy chapters, meaning you should already be working with a bankruptcy attorney who can assist you with loss mitigation. The whole purpose of the loss mitigation program is to work out agreements with lenders and creditors, and a great deal of negotiating is involved. Negotiation can be difficult, and it is best to have an attorney with strong negotiation skills. Your lawyer can also assess the situation and advise you on the realistic possible outcomes of loss mitigation. This way, you know the best and worst possible outcomes for your specific situation and can make stronger plans to hopefully get what you need. Call our New Jersey Mortgage Foreclosure Defense Attorneys for Assistance Get a free case evaluation from our Trenton, NJ mortgage foreclosure defense lawyers with Young, Marr, Mallis & Associates when you call (609) 755-3115.