Loan modification and bankruptcy are two different approaches to addressing the threat of foreclosure. Loan modification might only pause foreclosure, while bankruptcy might stop it altogether, and is typically the better option for debtors in extreme financial distress. Loan modification is not always an option, either. You cannot modify your mortgage without the bank’s approval, and the bank does not have to change the loan terms. While our lawyers may suggest loan modification if you are facing temporary financial hardship, we may suggest bankruptcy if a sheriff’s sale is looming. Bankruptcy is also a more effective way to prevent foreclosure for homeowners with debts other than mortgage debt. Bankruptcy is only effective at stopping foreclosure when homeowners choose the right chapter, which our lawyers can help ensure. Call Young, Marr, Mallis & Associates today at (215) 701-6519 for a free case evaluation from our Pennsylvania bankruptcy lawyers. When is a Loan Modification Better for Stopping Foreclosure in Pennsylvania? Instead of going to court for a bankruptcy case, loan modification allows homeowners to negotiate with lenders and alter their existing mortgage contracts. While lenders aren’t always willing to engage in loan modification, our lawyers can see if it is the right option to stop foreclosure in your case. Suppose your mortgage is the only loan you have defaulted on, and you have a long-standing history of making timely payments to your lender. If we do not have to worry about repaying other debts as well, we can focus on negotiating new mortgage terms that both you and the lender can live with, if the lender is willing. With a loan modification, you and your lender agree to changes, but you must continue making your mortgage payments as scheduled. Because of this, loan modification is generally only suitable for those facing temporary financial hardship, and do not require a total temporary stay on mortgage payments. Lenders don’t have to agree to loan modification, so it isn’t an option for all homeowners facing foreclosure in Pennsylvania. It’s also only well-suited for particular situations, so our lawyers may not recommend it in your case. When is Bankruptcy Better for Stopping Foreclosure? Bankruptcy first stops foreclosure by putting an automatic stay on all payments. Rather than renegotiating terms with your lender and continuing to make payments, you’ll receive a pause on all mortgage payments as we navigate your bankruptcy case and create a repayment plan. Foreclosure Letter Received If you have already received a notice of foreclosure from your bank, you may need to file for bankruptcy to prevent foreclosure. At this point, the bank may not be willing to discuss loan modification seriously. It can proceed relatively quickly with foreclosure if you do not file for bankruptcy or “cure” your mortgage, meaning make all outstanding payments. Ongoing Financial Hardship If you’ve begun defaulting on your mortgage loan because of ongoing financial hardship, bankruptcy may be the best option to stop foreclosure in your case. Illness, death, and divorce can significantly change a homeowner’s income and ability to pay their current mortgage for the foreseeable future. If you don’t expect your financial situation to change any time soon, allow our lawyers to file a bankruptcy petition on your behalf in Pennsylvania. Loan Modification Request Denied Your lender has no obligation to discuss loan modification. Even if this is your first time defaulting on your loan and you approach the lender immediately after falling only slightly behind, the bank may still deny your request. When this happens, the best option to protect your house from foreclosure may be to file for bankruptcy, which can offer a long-term solution to your problem. Impending Sheriff’s Sale Once you get notice of a sheriff’s sale, the automatic stay from a bankruptcy case may be the only way to stop foreclosure and keep your house. The lender must give you at least a 30-day notice of a sheriff’s sale of your home. Although 30 days is not a long time, our Pennsylvania bankruptcy lawyers can prepare and file a bankruptcy petition within this timeframe. As long as the automatic stay goes into effect before the sheriff’s sale concludes, the bank cannot move forward with taking and selling your home. Additional Debts Even if you are relatively up to date with your mortgage payments, having other debts could put you at risk of losing your home. Other creditors might seek repayment by any means possible, potentially forcing you into a sale. While this is not the same as foreclosure, it does yield a very similar result. Loan modification may not be an option if you have other debts that must be addressed, but filing for bankruptcy can be. What Type of Bankruptcy is Better for Stopping Foreclosure? Not all bankruptcy chapters for consumers are as effective at stopping foreclosure. While virtually all bankruptcy cases receive an automatic stay, Chapter 13 addresses debt differently and is best suited for preventing foreclosure altogether. You might not permanently stop foreclosure if you file Chapter 7 bankruptcy. This bankruptcy chapter liquidates the debtor’s assets to repay creditors, such as mortgage lenders. For most debtors, their biggest asset is their home, so Chapter 7 is not the best for protecting their house. Pennsylvania doesn’t have a homestead exemption that lets debtors exempt their homes from liquidation, making filing Chapter 7 very risky if you’re facing foreclosure. Chapter 13 is preferred for stopping foreclosure. Chapter 13 forces the lender to negotiate a new payment plan, which may even result in a total restructuring of the mortgage, making it more affordable for the homeowner. There is no risk of asset liquidation during Chapter 13 bankruptcy, provided that debtors complete their repayment plans in full. Get Help with Your Bankruptcy Case in Pennsylvania Today Call Young, Marr, Mallis & Associates at (215) 701-6519 for a free case discussion with our Philadelphia, PA bankruptcy lawyers.

There are various ways in which a person or multiple people may own a home. Perhaps one of the most common ways is tenancy by the entirety. In short, this type of homeownership occurs when a married couple jointly owns a home. The great thing about tenancy by the entirety is that your home may be completely shielded from creditors if you file for bankruptcy. The way tenancy by the entirety works is that both spouses who own a home together own 100% of the home. They do not each own 50% of the house. Each spouse owns 100% of the home together. This means that if only one spouse files for bankruptcy, creditors cannot seize the home because it is 100% owned by the other spouse, who has no involvement with the creditors. This kind of protection is typically only extended to married couples, including same-sex married couples. Your attorney can help you claim this protection when you or your spouse files a petition for bankruptcy. Contact our Pennsylvania bankruptcy lawyers for a free, confidential case review by calling Young, Marr, Mallis & Associates at (215) 701-6519. How Tenancy by the Entirety Works in Pennsylvania Bankruptcy Cases When filing for bankruptcy, you might be very concerned about what could happen to your house. Depending on how you file, your properties and assets, including your house, may be seized and liquidated to pay your debts. However, if you own a home in a tenancy by the entirety with your spouse, your home may be protected from creditors. When a married couple purchases a home together, they do not split ownership 50/50. Instead, both are legally considered to own 100% of the house. As such, if only one spouse files for bankruptcy, creditors may not seize the home because the other spouse also owns it entirely. Creditors may not seize assets that 100% belong to someone else. If you own your home with your spouse, be sure to discuss tenancy by the entirety protections with your bankruptcy attorney. While you might not be able to protect all your assets, you might be able to protect your home. Who Benefits from Tenancy by the Entireties Protection? Again, there are different ways in which more than one person may own a home together. Generally, only married couples may take advantage of tenancy by the entirety protections, if they purchased it together while already married. Same-sex married couples should also be eligible for this protection. Unfortunately, this protection may not cover those who own a house together but are not married. If you file for bankruptcy and there is a co-owner of your home, such as a friend or sibling, discuss it with them and your attorney. How to Claim Tenancy by the Entirety Protection in a Pennsylvania Bankruptcy Case If you file for bankruptcy and want to claim tenancy by the entirety protection, you should discuss this with your lawyer. This type of protection may not be automatic, and creditors must be informed about who owns the home. You may need to include this information when you file your initial bankruptcy petition. Depending on how you file, our Allentown, PA bankruptcy lawyers may need to provide a complete list of your assets, accounts, and property. When we do, we must include details about joint ownership, including properties occupied by tenants by the entirety. Limitations on Protection for Tenancy by the Entirety in Pennsylvania Tenancy by the entirety may only apply to assets jointly owned by a married couple. If you and your spouse jointly own your house, you may be considered tenants by the entirety, and you each own 100% of the home. If only you file for bankruptcy, your creditors cannot force a sale of your house to pay your debt. However, assets or properties that are not jointly owned may not be so protected. For example, suppose you own your home and your spouse moved in with you after getting married, but your spouse does not legally own the house. In that case, the house would not be shielded from bankruptcy proceedings under tenancy by the entirety protection. Your home or other assets may similarly be left unprotected if your spouse also files for bankruptcy with you. In that case, any assets you own together may be fair game for creditors, including your house. How Do I Know if I Qualify for Tenancy by the Entirety Protections? If you are unsure whether you can protect your home using a tenancy by the entirety protection, you should talk to your lawyer before you file your petition. Are you married? This protection typically only applies to married couples, including same-sex married couples. If you own a home with a partner but are unmarried, you may need to explore other legal options. Have you and your spouse comingled assets, or do you have separate finances? Often, when one spouse files for bankruptcy, the other spouse may be affected if they share assets and accounts. For example, if you file for bankruptcy because of credit card debt, but your spouse is also named on these accounts, they may have to file with you. In that case, certain assets might not be protected. What to Do if You are Not Protected by Tenancy by the Entirety? If you find that your home is not protected, you may consider taking advantage of federal homestead exemptions. Under federal law, you may exempt up $31,757 of your home’s equity from the bankruptcy process. This is doubled if you and your spouse file for bankruptcy together. Unfortunately, Pennsylvania does not offer any homestead exemptions, and the federal option may be your only choice. The homestead exemption might not help you keep your home, but it may protect some of the value from the sale. Call Our Pennsylvania Bankruptcy Lawyers for Help Today Contact our Philadelphia, PA bankruptcy lawyers for a free, confidential case review by calling Young, Marr, Mallis & Associates at (215) 701-6519.

 Inc. is reporting that business bankruptcy filings increased by 30%. The article can be found at https://www.inc.com/melissa-angell/small-business-bankruptcies-surged-30-percent-this-past-year-will-tariffs-accelerate-that/91221717Michael Hunter of EPIC is quoted in the article as stating that the cause of this increase is a constellation of factors: including higher interest rates, inflation, record debt, and global geopolitical uncertainty. Interestingly, Mr. Hunter also states that bankruptcy filing will continue to rise for the rest of 2025 and 2026.Most small businesses file under Subchapter V (of chapter 11) which is  simpler and  more affordable than chapter 11. The Subchapter V debt limit is presently $3,424,000.00.-Subchapter V provides a simplified reorganization process with shorter deadlines, such as a plan filing deadline within 90 days of the bankruptcy filing-Subchapter V cases eliminate certain expenses such as no United States Trustee quarterly fees and no creditor committees unless ordered for cause.-Only the debtor may file a reorganization plan in Subchapter V-Subchapter V does not require a separate disclosure statement, reducing administrative burden and costs.-Subchapter V eliminates the "absolute priority rule," allowing owners to retain equity even if creditors are not paid in full, and permits confirmation without creditor class acceptance as long as the plan is fair and equitable.- A Subchapter V Trustee is appointed to assist the debtor and facilitate negotiations with creditors, but does not operate the business.Clients or professionals with questions about business reorganizations or Subchapter V should contact Jim Shenwick, EsqJim 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!

Don’t sit on your Bankruptcy Eligiblity: It’s a moving target In January, Larry came to talk to me about Chapter 7 bankruptcy eligiblity. He had a car repossession and about $25,000 in charged off credit cards. He was planning to get married and hoped to buy a house in a few years. His fiancé warned him they could never buy a house if he didn’t fix his credit. Great, I promised, we can do a Chapter 7 bankruptcy to do exactly what you want. Last month, in August, he came back, ready to go. But meanwhile, he had lost his Chapter 7 bankruptcy eligibility. In February, Larry got as $4.00 an hour raise. He lost Chapter 7 bankruptcy eligiblity. How Did Larry Lose Eligiblity? In January, Larry was making $34.00 per hour. But in February, he got a raise to $38.00 an hour. In Virginia, as of April 2025, $77,420.00 is the cut-off for automatic eligibility for a single person, no children. His raise put him over the limit. Instead of clearing all his debts, he’ is forced to keep paying through the bankruptcy court in Chapter 13 for another five years! Instead of being easily eligible to get a mortgage in two years (assuming enough family income), he’d need one of the few lenders who will work with him to get court approval. That can be a trap!  Because Larry needs to show the court he can now afford to buy a home, the Chapter 13 trustee can say, Larry now can afford a bigger bankruptcy payment. (Getting a mortgage in Chapter 13 is not hopeless. Here are two lenders who reach out to people in Chapter 13 bankruptcy: NEXA and Peoples Bank. I don’t know much about either one.) Conclusion Trump says his casino bankruptcies are “brilliant.” Some people say that bankruptcy should be a last resort. On the other hand, Donald Trump says using the bankruptcy laws can be “brilliant.” Either way, when you get to that point, remember that bankruptcy eligiblity can be a moving target. Whether a billiant move or a last resort, don’t misss your chance. PS Being over the Income Cut Off Isn’t Always the End of Chapter 7 Bankruptcy Eligiblity Being a few dollars an hour over the cut off for automatic eligiblity doesn’t always means you can’t file Chapter 7.  We do dozens of those ever year.  But there needs to be unusual budget factors to help you pass the means test. Those budget factors that can help you get approved for Chapter 7 can include: Child support Help for elderly family Back taxes Major, on-going medical expenses A really, really big car payment Larry didn’t have any of those. When he lost his automatic income eligiblity, he was stuck in Chapter 13.   The post Bankruptcy Eligiblity is a Moving Target appeared first on Robert Weed Virginia Bankruptcy Attorney.

When you file for bankruptcy, there are many areas of money you have that might be taken and put toward your outstanding debts to clear away as much as possible.  This can leave you with less than you might hope in remaining assets, but the wildcard exemption is often a big help for Pennsylvania bankruptcy petitioners to keep some money aside. “Exemptions” are areas of money and property that are blocked from being liquidated to cover your debts.  Exemptions exist for different areas of property you need to keep, like your house, your car, and the tools you use for work.  The wildcard exemption is a catch-all that allows you to put it towards any other property, cash, or accounts you want to protect from liquidation.  Pennsylvania’s exemption is only $300, but if you use the list of federal exemptions instead, you can protect up to $17,475 in some cases, or at least $1,675. For help with a bankruptcy case, call Young, Marr, Mallis & Associates’ Pennsylvania bankruptcy lawyers at (215) 701-6519 today. How Do Exemptions Work in a Pennsylvania Bankruptcy Case? In a Chapter 7 bankruptcy case, the bankruptcy court will go over what assets, property, money, and accounts you have, then take as much of it as the law allows to put it toward your debts.  Once everything available is taken and put toward the payment, the rest of the debt is wiped away. The understanding here is that you have so much debt that you could never pay it off with your current income, and so much of it has to just be cleared away. Exemptions lay down the rules about what property is protected from liquidation.  This tries to leave you with the things you need to continue getting by, as well as many things that it would be rude to strip away from someone going through hard financial times. What Type of Bankruptcy Do Exemptions Apply To? These exemptions we are discussing here apply to Chapter 7 bankruptcy. Petitioners typically get two options for bankruptcy: Chapter 7 is “liquidation bankruptcy,” which seizes available assets and sells them to put the proceeds toward the outstanding debts. Anything left over after liquidating as much as can be liquidated gets cleared away. Chapter 13 is “reorganization bankruptcy,” which allows debtors to reorganize their debts into one payment and pay it off over time. To file under Chapter 7, you usually need to have a low income level through a means test.  If your income and assets are low enough to qualify, the debts can be wiped away after putting a lot of your property toward them, but there is no expectation you will lose everything you have.  The exemptions are there to ensure you still have property and some money to fall back on after the bankruptcy is completed. Under Chapter 13, your assets are not liquidated.  Instead, you rely on having enough income to pay down your debts, and you follow your repayment plan to wipe away your debts.  Nothing needs to be sold off or seized, so there is no need for exemptions. List of Exemptions Available Under the federal list of exemptions found in 11 U.S.C. § 522(d), you can protect certain amounts for the following things: Your home One car The furniture in your home, along with everyday household items like clothes, books, appliances, pets, etc. Personal or family jewelry Other property (this is the wildcard exemption) Professional “tools of the trade” Life insurance you hold Life insurance held for you Health aids Social security and other public benefits Awards from certain cases (e.g., crime victim awards, wrongful death awards, life insurance payments) Certain retirement funds. That fifth exemption for “other property” is what we call the “wildcard exemption.” Under Pennsylvania law, the exemptions are a bit different.  For example, we have no homestead exemption for your primary residence.  However, petitioners are allowed to choose which set of exemptions to use.  That means our Pennsylvania bankruptcy lawyers can advise you on your choice and let you know if there is any reason you should choose the Pennsylvania list instead of the federal list. How Much is the Wildcard Exemption in Pennsylvania? As mentioned, we have both a Pennsylvania exemption and a federal exemption.  The Pennsylvania wildcard exemption is only $300, and there are other exemptions missing (e.g., a homestead exemption for your house).  Because of this, most petitioners will probably use the federal exemption instead. How Much is the Federal Wildcard Exemption for Bankruptcy? The exemptions are updated periodically and published in the Federal Register.  As of the writing of this article, the current wildcard exemption is set at $1,675. Note that the way the wildcard exemption is worded in § 522(d)(5), there is additional money that can be set aside through this exemption as well.  If you do not take the home exemption under § 522(d)(1) – which is $31,575 – then you can put up to $15,800 of that toward your wildcard exemption, too. That’s great if you don’t own a house in the first place: you can put the full $15,800 plus $1,675 toward your wildcard exemption for a total wildcard exemption of $17,475. What Does the Wildcard Exemption Cover for a Pennsylvania Bankruptcy Case? The wildcard exemption is essentially a catch-all exemption, allowing you to protect anything that isn’t protected under the other categories.  This can include any property or possessions that aren’t even listed in other categories. This makes the wildcard exemption primarily used for the following: Cash Checking and savings accounts Stock portfolios and investment accounts Other accounts that aren’t covered Collectible items Other personal items not protected by other exemptions. You can also use it to save property that goes over the limit in other categories.  For example, the automobile exception under (d)(2) protects up to $5,025 in value for your car.  If your car is worth $10,000, you couldn’t save the whole car under the automobile exception.  Instead, you can put the full automobile exception plus $4,975 of your wildcard exemption toward your car to keep it from liquidation. Call Our Pennsylvania Bankruptcy Lawyers for Help Today Call Young, Marr, Mallis & Associates’ Pennsylvania bankruptcy lawyers at (215) 701-6519 for a free case review.

Law Review: Hampson, Christopher D., "Bespoke, Tailored, and Off-the-Rack Bankruptcy: A Response to Professor Coordes's 'Bespoke Bankruptcy'" Ed Boltz Fri, 09/05/2025 - 16:34 Available at:   https://scholarship.law.ufl.edu/facultypub/1234 Abstract: Toward the end of every semester that I teach bankruptcy, I let my students vote on which “non-traditional” insolvency regimes they would like to study, including municipal bankruptcy, sovereign bankruptcy, and financial institutions. What I am really trying to do is convey to the students that the default procedures and substantive rules in Chapters 7 and 11 of the U.S. Bankruptcy Code do not apply to all types of enterprises. Summary: In *Bespoke, Tailored, and Off-the-Rack Bankruptcy: A Response to Professor Coordes’s “Bespoke Bankruptcy”*, Professor Christopher Hampson expands Coordes’s taxonomy of “bankruptcy misfits” into three categories: Off-the-rack bankruptcy – the default Chapters 7 and 11 structure, with liquidation as the constant background threat. Tailored bankruptcy – Congress begins with the Code and tweaks it for a specific group, e.g., Chapter 12 or Subchapter V. Bespoke bankruptcy – a separate statutory regime built from scratch for entities “too important to fail” or whose governance or public role makes the standard model unworkable, e.g., Chapter 9 municipalities, PROMESA territorial cases, or Dodd-Frank bank resolutions. Hampson emphasizes that “misfit” status hinges on substantive differences, not whether the law is located in Title 11. Governance constraints (elected officials in municipalities, regulatory oversight in bank failures) often drive bespoke designs. He notes Coordes’s list of possible candidates—utilities, churches, nonprofits, public universities, mass tort defendants, and tribal corporations—and urges evaluating whether each needs tailoring or a fully bespoke regime. Tailoring is appropriate when standard Code processes suffice with moderate adjustments; bespoke is reserved for when off-the-rack solutions cannot work at all. Commentary: For consumer bankruptcy practitioners, this framework resonates with the Fourth Circuit’s Trantham v. Tate approach, which underscored the flexibility in Chapter 13 to craft nonstandard plan provisions so long as they comply with § 1322(b) and confirmation standards. Hampson’s “tailored” category suggests Congress could—and debtor’s counsel already can—create procedural or substantive adjustments within the Code to better fit certain consumer debtor populations. In other words, *Trantham* opens a door for “micro-tailoring” inside individual cases, while Hampson describes “macro-tailoring” by statute. Potential “bespoke” or “tailored” consumer bankruptcy categories could include: Attorney Fee Only Bankruptcy – Somewhere between a Chapter 7 and a Chapter 13 case that allows for immediate  filing of the bankruptcy without payment up-front of attorneys fees and then discharge once  those have been paid.  This has been haphazardly accomplished with bifurcated fee agreements,  low-pay Chapter 13s and conversions.  Student loan–heavy debtors – Tailored provisions to permit discharge or structured repayment without undue hardship litigation, potentially modeled on Subchapter V’s streamlined timelines and mediation focus.  This includes the  bespoke Buchanan  provisions,  which allow or continue enrollment in IDR plans. Medical debt bankruptcies – Tailored rules prioritizing preservation of access to care, limiting the impact on future insurance coverage, or limiting impact on credit scores due to the innocent nature of the debt. Gig economy/variable income debtors – Tailored income determination and plan modification rules that account for income volatility and avoid serial defaults. Elderly debtors – Bespoke or heavily tailored regimes that protect retirement income and simplify plan administration when debt structure is modest but repayment ability is constrained by age and health. Natural disaster victims – A bespoke chapter (or subchapter) providing extended plan moratoria, expedited lien stripping for uninhabitable homes, and coordinated FEMA/insurance claim handling. Home preservation–focused debtors – Tailored provisions expanding mortgage cure rights beyond § 1322(b)(5), deferred payment of non-exempt equity to unsecured creditors,  requiring servicer transparency akin to online access following  In re Klemkowski.  The mortgage modification programs adopted by many bankruptcy courts across the country,  including all three districts in North Carolina are tailored for this. Mass consumer fraud victims – Group Chapter 13 plans combining streamlined proof-of-claim defenses with coordinated recovery from common wrongdoers. Consumer attorneys could, post-Trantham, experiment with nonstandard plan language to simulate these regimes in individual cases—e.g., a “Student Loan Chapter 13” provision requiring mediation and fixed interest amortization; or a “Disaster Recovery Chapter 13” with seasonal payment step-ups. The test will be whether courts view these as permissible tailoring or an impermissible rewrite of the Code. If Congress takes up bespoke consumer bankruptcy, these categories could be codified much like Chapter 12 was for farmers and Sub V for small businesses—starting as an emergency measure and, if successful, becoming a permanent feature of the Code.   With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document bespoke_tailored_and_off-the-rack_bankruptcy_a_response_to_pro.pdf (245.52 KB) Category Law Reviews & Studies

Law Review (Policy): Lederer, Anneliese and Kushner, Andrew- The Shady Side of Solar System Financing Ed Boltz Thu, 09/04/2025 - 15:56 Available at:   https://www.responsiblelending.org/research-publication/shady-side-solar-system-financing Executive Summary: Rising energy costs and the increasing environmental threats posed by climate change are causing a growing number of American homeowners to turn to the financial services sector to pay for energy-efficient renovations and upgrades to their homes. This segment of a broader financial market, known as consumer green lending, provides financing for many consumer products designed to have a positive environmental impact and provide potential energy cost savings. As of 2023, 4.4% of all residential homes in the United States had solar power systems installed, with Hawaii, California, and Arizona having the greatest percentages of homes powered by residential solar systems. The solar finance industry is significantly smaller than the mortgage market; however, its reliance on securitization for capital and an estimated $3.89 billion in asset-backed securities represents a growing economic footprint. The clean energy transition in the United States will not succeed and will not be equitable without broad adoption by low-to-moderate income (LMI) consumers. This will require a clear understanding of the consumer benefits of clean energy, as well as effective state and federal consumer protection regulations. Key Findings: Elements of solar financing products and sales processes are identical to those used by predatory subprime lenders in 2007 to target low- and moderate-income and minority borrowers. GoodLeap, Sunlight Financial, Mosaic, Sunrun, and Sunnova together account for 80% of the residential solar loan market, according to the most recently available public estimate. Solar financing agreements often leave homeowners in a worse economic situation than before the door-to-door salesperson visited them. This solar debt elevates the risk that the consumer will lose their home to bankruptcy or foreclosure. The price of the solar system typically is substantially inflated if a consumer finances a system. This allows door-to-door sellers to falsely represent that borrowers are getting financing with a low nominal payment rate when most of the financing cost is hidden in the inflated price of the solar panel system. This markup amount is not revealed to the homeowner, and installers are often forbidden from disclosing the markup. Commentary: For consumer bankruptcy practitioners, the treatment of solar panels and their financing remains a tangle of unresolved issues. In some cases, panels are clearly fixtures subject to mortgage liens; in others, they remain personal property under a UCC-1 filing. Lease and PPA arrangements add another layer, often looking less like ownership and more like a burdensome executory contract. As the CRL report shows, the sales and financing practices themselves can be fertile ground for Truth in Lending, UDTPA, or Holder Rule claims—if the forced arbitration clauses don’t shut the courthouse door. The confusion shows up in bankruptcy schedules and plan treatment. Is the panel lender a mortgage creditor whose collateral is part of the home? Or a creditor secured by personal property with an inflated claim that could be bifurcated or crammed down? Should the system be assumed, rejected, or stripped? And when the financing includes hidden “dealer fees” or an unperfected lien, can we challenge the claim entirely? Courts vary widely in approach, and the law has not settled—meaning that debtors with identical panels may get wildly different outcomes depending on jurisdiction, trustee, and even how the panels were bolted down. Given the aggressive and sometimes predatory nature of solar financing, consumer bankruptcy attorneys should: Scrutinize loan documents for arbitration clauses, hidden fees, and inflated prices used to mask interest rates. Investigate lien perfection—many UCC filings describe the panels but don’t comply with fixture filing requirements. Consider whether claims are subject to setoff or recoupment based on state UDAP laws or the FTC Holder Rule. Prepare to educate the court on why a purported “fixture” might still be personal property—and why that matters for valuation and claim treatment. Subject  solar panel finance creditors to discovery to  obtain accurate details about both their lending practices and the resale value for used solar panels. In short, solar panel financing in consumer bankruptcy is like the early days of mortgage securitization litigation—confusing, inconsistent, and ripe for both creditor overreach and debtor defense. Until appellate guidance or legislative reform arrives, practitioners will need to navigate a patchwork of interpretations and be ready to litigate classification, lien validity, and consumer protection violations alongside the usual plan feasibility and disposable income issues. Finally, CRL and the authors of this report would perform a great public service by extending their investigation into how solar panel debt is treated in consumer bankruptcy cases nationwide. Review of the wealth of data available in bankruptcy cases through PACER  could shed light on the inconsistent treatment of these claims, expose whether predatory financing survives discharge, and inform both policymakers and courts on how best to protect debtors caught between green energy aspirations and high-pressure, high-cost financing schemes. NACA Webinar:    What to Do with Solar Panels in Bankruptcy. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document solar_panels_in_bankruptcy_flowchart.pdf (30.07 KB) Document crl-shady-side-solar-financing-jul2024.pdf (945.47 KB) Category Law Reviews & Studies

Bankr. E.D.N.C.- J Smith v. IRS- Bankruptcy Court Determination of Eligibility for ERC Ed Boltz Wed, 09/03/2025 - 16:40 Summary: In J Smith Civil, LLC v. United States (Bankr. E.D.N.C. Aug. 7, 2025), Judge Callaway granted summary judgment for the IRS in an adversary proceeding seeking over $1 million in Employee Retention Credit (ERC) tax refunds. Under the CARES Act, a business qualifies for the ERC only if its operations were “fully or partially suspended” due to a compulsory governmental order tied to COVID-19. J Smith argued that North Carolina’s Executive Orders, OSHA/CDC guidance, and other pandemic disruptions forced it to suspend one-third of its construction operations in Q2 2020 and Q2 2021. The court held that Executive Order 121 explicitly exempted all “construction” from closure, that OSHA/CDC documents were nonbinding guidance (not “orders”), and that general pandemic impacts such as quarantines and supply delays did not meet the statutory standard. Because J Smith could not identify a qualifying governmental order that required it to suspend operations, the court found no material factual dispute and ruled for the United States. Commentary: This decision is not just a COVID-era tax case; it is a procedural roadmap for how bankruptcy courts can handle fact-intensive disputes about government benefits or entitlements. The opinion is notable for three reasons. First, it applies the post-Loper Bright directive that courts must independently construe statutory terms, treating agency guidance as persuasive but not controlling. Second, it draws a sharp line between binding “orders” and nonbinding “recommendations,” a distinction that will matter in future disputes over statutory triggers for financial relief. Third, the court’s structured approach—starting with statutory eligibility, then parsing the factual record for qualifying events—offers a clear procedural template for similar determinations. That structure could be readily adapted in consumer bankruptcy matters far beyond the ERC. For example, in Chapter 13 cases where debtors seek to compel turnover or crediting of federal or state benefits—think student loan payment credits toward Public Service Loan Forgiveness (PSLF), income-driven repayment forgiveness, or tax-based credits like the Child Tax Credit—the same two-step process could apply: Identify the exact statutory eligibility criteria (including whether they are “presumption-in” or “presumption-out” like the ERC), and Determine whether the debtor can prove those criteria with admissible evidence, not just assumptions or guidance. For PSLF in particular, a debtor might allege that payments made through a confirmed Chapter 13 plan must be counted toward the 120-payment requirement. The PSLF statute and regulations define what counts as a “qualifying payment” and under what “qualifying repayment plan.” Just as in J Smith, the court could resolve the issue by (a) interpreting the statutory and regulatory definitions without deference to agency gloss that contradicts the text, and (b) making factual findings on whether the debtor’s Chapter 13 payments satisfy those definitions—perhaps through stipulated facts or a short evidentiary hearing. In short, J Smith reinforces that these determinations are ripe for resolution through targeted summary judgment or similar procedural devices. When applied to consumer cases, that efficiency can cut through bureaucratic intransigence, clarify statutory entitlements, and, in PSLF scenarios, potentially unlock years of loan forgiveness credit for debtors before their bankruptcy cases close. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document jsmith_v._irs.pdf (249.03 KB) Category Eastern District

Law Review (Note): Daniels, Haley- Insurers Have Standing to Object to Reorganization Plans Ed Boltz Tue, 09/02/2025 - 17:03 Available at:   https://scholarship.law.stjohns.edu/bankruptcy_research_library/372/ Abstract: Section 1109 of title 11 of the United States Code (the "Bankruptcy Code") allows any "party in interest" to raise, appear, and be heard on any issue in a chapter 11 bankruptcy case. The term party in interest is not otherwise defined in the Bankruptcy Code. The United States Supreme Court has interpreted the phrase to describe a party that has a sufficient stake in the outcome of the bankruptcy reorganization. Importantly, Section 1128(b) of the Bankruptcy Code explicitly provides that a party in interest "may object to confirmation of a plan" in a chapter 11 case. The United States Supreme Court has held that an insurer with a significant financial stake is a party in interest with the right to object to a proposed chapter 11 reorganization plan. The significance of the insurers’ financial stake and thus bankruptcy standing to object to the plan are usually dependent on if the reorganization plan is defined as "insurance neutral." A plan is insurance neutral if it does not increase the reorganizing debtor’s insurance provider’s financial obligations or risks. If a reorganization plan is insurance neutral, an insurer will not have bankruptcy standing; if it is not insurance neutral, the insurer will have bankruptcy standing. This article analyzes why insurers, in chapter 11 bankruptcy cases, have standing under the Bankruptcy Code as parties in interest, allowing for their objections to the confirmation of a chapter 11 debtor’s plan. Part I will describe the traditional understanding of a legal party in interest. Part II will discuss the decision In re Thorpe Insulation Co., highlighting the facts, reasoning and holding of what becomes almost a precursor to the holding in Truck Ins. Exch., combining the previous definitions of a party in interest as well as an introduction to insurance neutral plans with asbestos liability claims specifically. Part III then explains Section 524(g) trusts created in response to asbestos liability claims, and finds, using case law, that in these specific cases, it is rare that insurers will be found lack standing. Next, in Part IV, the article will move to a detailed discussion of the analysis of Truck Ins. Exch. alone, providing an overview of the facts of the case, the influences for the Court’s analysis in defining Section 1109(b), and the logic behind the conclusion that the insurers had standing. Finally, the article will conclude in Section V with a summary of the modern case law analyzed in the article, and a concise rule of law as it relates to the specific issues considered in the other sections. Commentary: The lesson from Truck Ins. Exch. is that “insurance neutrality” is the dividing line. In the consumer Chapter 13 context, most insurance issues—like routine continuation of coverage—are neutral and give the insurer no real stake in the case. But when the bankruptcy plan or orders dictate how claim proceeds are used, release the debtor’s liability in ways that impair the insurer’s defenses, or alter the timing or manner of payments, insurers could be treated as parties in interest with standing to object. That said, in consumer cases, courts tend to be cautious about opening the door to every tangentially interested insurer, so a clear showing of direct, non-incidental financial impact would be needed to avoid having such objections dismissed as beyond the scope of § 1324.   Chapter 13 does not have § 1109(b)’s broad party-in-interest language (it instead using  a mishmash of "creditors" and  and without a listing of potential types of "parties in interest" under § 1324 and § 1302/§ 1307 for who may object), but courts often borrow standing principles across chapters when interpreting “party in interest” in § 1324(a). The Truck Ins. Exch. rationale could allow various insurers—life, health, auto, homeowners—to participate in a Chapter 13 if the plan, motions, or adversary proceedings materially alter their obligations. Examples could include: Car insurers if the plan proposes to treat a pending total-loss claim in a way that affects subrogation rights or the insurer’s payout obligations. Homeowners’ insurers if a motion to approve repairs or settle claims from a property loss affects lien priorities or distribution of insurance proceeds. Health insurers if the plan addresses pending personal injury claims in which the insurer has a contractual reimbursement/subrogation right. Life insurers in rare cases where a policy’s cash surrender value is pledged or surrendered as part of the plan, directly impacting policy obligations. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document insurers_have_standing_to_object_to_reorganization_plans.pdf (287.9 KB) Category Law Reviews & Studies

Law Review (Note): Galletti, Michael- The Valuation of Crypto Currency Mining Property Under 11 U.S.C. § 506(a)(1) Ed Boltz Fri, 08/29/2025 - 16:03 Available at: https://scholarship.law.stjohns.edu/bankruptcy_research_library/374/ Abstract: Section 506(a)(1) of title 11 of the United States Code (the "Bankruptcy Code") provides that a secured creditor's claim is "a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property . . . and is an unsecured claim to the extent that the value of such creditor's interest . . . is less than the amount of such allowed claim." The valuation of collateral is determined "in light of the purpose of the valuation and of the proposed disposition or use of such property." However, the Bankruptcy Code is silent on which valuation method courts should employ. The United States Court of Appeals for the Third Circuit noted in In re Heritage Highgate, Inc. that "Congress envisioned a flexible approach to valuation whereby bankruptcy courts would choose the standard that best fits the circumstances of a particular case." The Supreme Court elaborated in Associates Commercial Corp. v. Rash that the lower courts must evaluate the "actual" use of the property by the debtor in its valuation analysis. This article analyzes the valuation of crypto currency mining assets under section 506(a)(1) in bankruptcy cases. The nature of crypto currency mining provides unique challenges in the valuation step. The mining process requires hundreds of sophisticated “miners,” potentially costing over $10,000 each, and requiring significant energy resources that are usually provided by individualized agreements with public and private utilities. Part I of this article discusses the valuation of special use property. Part II discusses potential valuation methods available to the court. Commentary: In what appears to be the first and only decision valuing cryptocurrency mining facilities under §506(a)(1), Bay Point Capital Partners v. Thomas Switch Holding—affirmed all the way to the Eleventh Circuit—the court classified the property as “special use” because of its substantial (15 MW) dedicated electrical infrastructure, lack of comparable properties, and limited alternative uses. That designation drove the choice of the cost approach over income or sales-comparison methods, with the court relying heavily on the testimony of an appraiser who actually defined “special use.” For practitioners, the lesson is clear: in cases involving unique, infrastructure-intensive collateral—whether crypto mines, data centers, or otherwise—the fight will be over the expert who gets to set the definitional terms, and once “special use” status is secured, the cost approach will often follow, producing a higher valuation for secured creditors and less for unsecureds.   Following a still largely untested idea from Billy Brewer,  while crypto mining itself isn’t “producing” electricity, these facilities often operate under custom, high-capacity utility service agreements—sometimes with embedded rights, rate discounts, or infrastructure upgrades that are essentially inseparable from the property. If those agreements are characterized as energy transmission/distribution assets, that could bring the property within the scope of § 363(h)(4).  Then even though  § 363(h) allows a trustee to sell both the estate’s and a co-owner’s interest in property, if certain conditions are met,   subsection (h)(4) prohibits the sale of jointly owned  property if  unless it “is not used in the production, transmission, or distribution, for sale, of electric energy or of natural or synthetic gas for heat, light, or power.” With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document the_valuation_of_crypto_currency_mining_property_under_11_u.s.c._506a1.pdf (273.68 KB) Category Law Reviews & Studies