E.D.N.C. Ace Funding Source v. Williams Land Clearing- Interlocutory Appeals Ed Boltz Fri, 10/04/2024 - 17:11 Summary: Ace Funding sought interlocutory leave to appeal the denial of its motion to dismiss a case brought by Williams Land Clearing in a dispute which originated from four revenue purchase agreements between the parties, which resulted in litigation in New York. Ace Funding obtained a default judgment against Williams Land Clearing in New York, but Williams Land Clearing later filed for Chapter 11 bankruptcy. In bankruptcy proceedings, Williams Land Clearing argued that the agreements were criminally usurious under New York law and sought to avoid the transfers of receivables and to disallow Ace Funding's claims. Ace Funding moved to dismiss the bankruptcy claims based on the Rooker-Feldman doctrine, which bars federal courts from reviewing state court judgments, and argued that the agreements' New York choice-of-law provision should apply. The bankruptcy court denied Ace Funding's motion, and Ace sought to appeal that decision. The district court analyzed Ace Funding’s motion under the standards for interlocutory appeals, which require: A  controlling question of law; Substantial grounds for difference of opinion; and  That an immediate appeal may materially advance the litigation.   The court found that neither issue raised by Ace Funding—the application of the Rooker-Feldman doctrine or the choice-of-law provision—met the necessary standards. The court concluded that Ace Funding’s disagreement with the bankruptcy court’s application of law did not justify an interlocutory appeal. As a result, Ace Funding's motion was denied. Commentary: With the decision in Bullard v. Blue Hills Bank that the denial of confirmation is not a final appealable order,  one option to seek review is through an interlocutory appeal, but this case shows the high standard for obtaining that relief.  Alternatively,  a debtor could,  if the bankruptcy court explicitly states  what would be required to confirm a case,  propose a plan that comports with those requirements and object to that plan- as a risky maneuver. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document ace_funding_source_v._williams_land_clearing.pdf (226.81 KB) Category Eastern District

Protection orders, usually called “protection from abuse” orders (PFA), are court orders that prevent defendants from contacting certain family members or loved ones. A PFA order may arise in domestic violence cases and is intended to protect victims, but it is often issued with little regard to the defendant’s rights. Violating the terms of a PFA order, even if the order is unfair, may lead to serious legal penalties. First, you can be arrested. Even something as simple as calling someone the order says you cannot contact may lead to a confrontation with the police. Second, you may be criminally charged with contempt. A PFA order is a court order, and when you violate a court order, the court tends to crack down hard. Call a lawyer immediately if you are accused of violating a PFA order. It is possible your actions do not violate the order, or someone is being dishonest. Whatever happens, contact your attorney immediately. Speak to our Philadelphia criminal defense attorneys at Young, Marr, Mallis & Associates by calling (215) 372-8667 and ask for a free case review. Consequences of Violating a Protection from Abuse Order in Philadelphia A protection from abuse order (PFA) is a court order common in domestic violence cases. Generally, it requires the defendant to stay away from specific people mentioned in the order, often a spouse or partner and perhaps their children. These orders are often used to separate alleged abusers from potential further victims, and courts tend to prioritize victims’ interests over the defendant’s rights. These orders often prevent defendants from contacting spouses, partners, children, and possibly other family or loved ones. Arrest for Violation of PFA Order If you allegedly violate a PFA order, you may be arrested. According to 23 Pa.C.S. § 6113(a), the police may arrest someone for a violation of a PFA order without a warrant as long as probable cause exists to support the arrest. The violation does not need to take place in front of the police or otherwise be observable to them. In short, this means that the police can arrest you for allegedly violating a PFA based on the words of others who might not be telling the truth. Discuss exactly how you were arrested with our Philadelphia criminal defense attorneys, as this information may be crucial to your defense. According to subsection (b) of the statute mentioned above, law enforcement may seize firearms, ammunition, and other weapons you have after arresting you for a PFA order violation. This is incredibly serious, as you have a Second Amendment right to have firearms and protect yourself. The authorities do not even have to prove that you did anything wrong to seize your firearms. On top of that, getting firearms returned can be a hassle, and it does not always happen. Criminal Charges for Violating a PFA Order In addition to being arrested for allegedly violating a PFA order, you might be criminally charged with contempt under § 6114(a). When the police, sheriff, or petitioner (i.e., the person who filed for the order) has filed a complaint regarding an alleged violation, the court may hold the defendant in contempt. While contempt charges are not the most serious offenses on the books, they may come with significant penalties that can make the underlying domestic dispute case all the more difficult. According to subsection (b) of this law, a sentence for contempt may include a fine of no less than $300 but not more than $1,000. You may also be sentenced to jail for up to 6 months. Alternatively, you may be similarly fined and sentenced to no more than 6 months of supervised probation. This can seriously complicate your case. For example, if you are in the middle of a divorce, it might be incredibly difficult to fight for custody of your kids while in jail for contempt charges. Where Do Protection from Abuse Orders in Philadelphia Come From? Protection from abuse orders may be issued when a person files a petition with the appropriate court alleging abuse. According to 23 Pa.C.S. § 6106(a), any adult or emancipated minor may file such a petition on their own behalf or on behalf of minor children or an incompetent adult. The petitioner must be able to explain the abuse and why they believe the order is necessary. Courts are aware that people sometimes exploit the system and file false claims of abuse. The PFA order is usually temporary at first and expires after a short while. However, another hearing may be held to determine if it should be made permanent. Permanent orders are not really permanent but may last for up to three years. When an order expires, the petitioner may ask the court to renew it. Many defendants find these orders to be very unfair. An initial temporary order may be issued in your absence and without your knowledge. Many defendants do not even learn about the order until after the court imposes it. What to Do if You Are Accused of Violating a Protection from Abuse Order in Philadelphia If you are bound by a protection from abuse order and someone has accused you of violating the order, your best bet is to contact a lawyer immediately. The police take violations of these orders very seriously and are likely going to make a move quickly. If someone has contacted the police about the alleged violation, they might be preparing to make an arrest as we speak. If the police come to arrest you, you should not resist, even if you know the accusations are false. Resisting the police is rarely helpful and usually makes problems worse. While cooperating is likely best, you should avoid answering questions from the police about the alleged violation. Your answers might incriminate you and be used against you later. Once you arrive at the police station, ask about calling a lawyer. Eventually, the police have to let you contact an attorney if you want to. Discuss the situation with your lawyer before talking to the police. If you truly did not do anything wrong, explain where you were and what you were doing when the violation supposedly occurred. Your lawyer can help you use whatever information you have to defend you. Contact Our Philadelphia Domestic Violence Defense Attorneys for Help Now Speak to our Philadelphia criminal defense attorneys at Young, Marr, Mallis & Associates by calling (215) 372-8667 and ask for a free case review.

4th Cir.: Lyons v. PNC II Ed Boltz Thu, 10/03/2024 - 17:49 Summary: In the case William T. Lyons v. PNC Bank, N.A., the U.S. Court of Appeals for the Fourth Circuit addressed two key issues involving the Truth in Lending Act (TILA) and the Real Estate Settlement Practices Act (RESPA), both related to Home Equity Lines of Credit (HELO Cs).   TILA Offset Provision: The court ruled that TILA’s offset provision, which prohibits banks from withdrawing funds from a consumer’s deposit account to offset credit card debt without prior authorization, applies to HELO Cs if accessed via a credit card. The district court's decision that TILA did not apply to HELO Cs was reversed, as the appellate court found that the term “credit card plan” should include HELO Cs where a credit card is used to access the credit. RESPA and CFPB’s Authority: The court affirmed that the Consumer Financial Protection Bureau (CFPB) has the authority to exempt HELO Cs from RESPA’s requirements, particularly regarding timely responses to borrower inquiries. RESPA’s protections for mortgage servicing errors do not apply to HELO Cs due to CFPB regulations, which already cover HELO Cs under other provisions. The appellate court thus reversed and remanded the TILA claim and affirmed the RESPA claim. However, in a dissenting opinion, Senior Judge Floyd argued that the term “credit card plan” in TILA should not include HELO Cs, pointing to regulatory and legislative distinctions between HELO Cs and credit cards. Commentary: In a previous decision,  Lyons v. PNC Bank, Nat’l Assoc., 26 F.4th 180 (4th Cir. 2022), the 4th Circuit found that the Dodd-Frank Act amended TILA and “prohibits consumer agreements related to residential mortgage loans from requiring the arbitration of claims” , including HELO Cs. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document lyons_v._pnc.pdf (234.64 KB) Category 4th Circuit Court of Appeals

What constitutes criminal drug possession is an evolving question, but it can still carry significant consequences in Pennsylvania for a conviction. If you are arrested for drug possession, it is vital to have attorneys defending you who know the best strategies to fight your charges. The police and prosecution can make a number of mistakes that will invalidate evidence and possibly get the case dismissed. Our team will first examine whether the police even had a constitutional right to search you. If the police have neither a warrant nor probable cause, the evidence should not enter your case. We can also fight the evidence against you, such as challenging test results and the prosecution’s handling of it. Also, if you were arrested for possession of a substance that you have a legal prescription for, it can be used as a defense. For a free, confidential review of your case with our Pennsylvania drug possession defense lawyers, contact Young, Marr, Mallis & Associates at (215) 372-8667. What Are Common Strategies for Defending Against Drug Possession Charges in Pennsylvania? While drug possession laws and attitudes are changing across the country, convictions for drug possession in Pennsylvania still carry steep penalties. Even possessing a small amount of a Schedule I or II substance can result in years in prison if convicted. Unlike neighboring states, possessing recreational marijuana is also still illegal in Pennsylvania. Fortunately, our Pennsylvania drug possession defense attorneys can help devise several strategies to fight your charges. The police and prosecution must follow countless procedures to comply with the law and might make a mistake anywhere along the way to trial. If we cannot defeat the charges outright, we might still be able to get the charges lowered. Argue Unlawful Search and Seizure Every single person in Pennsylvania has a Fourth Amendment right against unreasonable search and seizure. This means the police usually need a warrant based on probable cause, or probable cause and a warrant exception, like an emergency situation, before searching a suspect or their property. For example, police cannot search your home for drugs if they only have probable cause but no warrant and no emergency exists unless the suspect gives law enforcement permission to search their home. If the warrant does not specifically list your property or the evidence (i.e., drugs) they are looking for, we can argue that unlisted evidence recovered or evidence obtained from an area not listed in the search warrant be suppressed since it comes from an illegal search. If the court agrees, this will deprive the prosecution of critical evidence, and they might withdraw their case. Unlawful searches and seizures are much more common after traffic stops. However, the police must have reasonable suspicion of a crime or violation to pull you over but will have probable cause if they actually observe a traffic violation, like speeding or swerving between lanes. However, reasonable suspicion for the stop does not extend to searching your vehicle. If the police pulled you over because they suspected you of speeding, they could not search your vehicle unless they can articulate their probable cause to search, such as smelling marijuana coming from the car or seeing drug paraphernalia in plain view inside. Argue Other Constitutional Violations We can also fight drug possession charges if other constitutional rights of yours were violated during and after your arrest. For instance, the police not reading you your Miranda rights or continuing to interrogate you after requesting an attorney are constitutional violations of due process. Fight the Charges Sometimes, the police arrest people simply for being around drugs. However, the state must prove that the defendant actually possessed or intended to possess the substance. If you did not know the drugs were there and there is no evidence that you intended to possess them, like sandwich baggies or vials in your pocket, you should not be charged, let alone prosecuted. For instance, suppose the police raid your home that you share with other roommates and find drugs in one of their rooms but charge you too. There is no evidence that you possessed them or intended to – or that you even knew they were there – so you should not be guilty by association. Our attorneys also often find after reviewing a client’s case that the prosecution has overcharged them. In some cases, a prosecutor believes the facts support a certain level of charges, like possession with intent to distribute over simple possession. Our investigation can determine whether the evidence supports the charges and negotiate with the state to lower them, such as when cases are on the edge of the two charges and clients are willing to plea. Otherwise, the best strategy might be to go to trial, where they will not have the evidence to prove their case. Fight the Evidence Another common defense strategy in drug possession cases is to attack the evidence itself. Just because something looks or smells like a drug does not make it evidence in a criminal trial. The prosecution must have the substance tested to ensure it is what they charged you with possessing. We can challenge the authenticity of the substance collected and review lab procedures to determine whether it was properly tested. In some cases, labs take so long to process test results that we can argue violations of your right to a speedy trial. During this part of the investigation, we will also see if the “chain of custody” was broken. This refers to the procedures law enforcement must identify and transfer evidence. If the chain of custody was broken for any of the pieces of drug evidence against you, it raises the possibility that it was tampered with or switched and should be deemed inadmissible. Argue Medical Necessity Medical marijuana is legal in Pennsylvania, so having a valid prescription and following restrictions on how much you can have should be a complete defense to possession charges. If you were arrested but have a =prescription for marijuana possession, we can present it to the court to have the charges dropped. Call Our Pennsylvania Criminal Defense Attorneys Today for Help For your free case review with our Pennsylvania drug possession defense attorneys, call Young, Marr, Mallis & Associates at (215) 372-8667 today.

If you’re facing foreclosure, stopping it may be your number one priority, and our lawyers may help you succeed through loss mitigation efforts. Loss mitigation can often stop foreclosure, so do not panic if you recently got a letter of intent to foreclose in the mail, but do take it seriously. After you get this notice, our lawyers can see if you qualify for forbearance, which would pause your mortgage payments temporarily. Banks may agree to loan modification, particularly if our lawyers propose terms that benefit them as well as homeowners. Other loss mitigation options include short-selling your home or giving the bank the deed to your property in lieu of foreclosure, though you may be able to avoid losing your home altogether if you file for bankruptcy. This benefits many homeowners, especially those whose banks have standing to foreclose, as bankruptcy stops debt-collection efforts and provides a pathway to repayment. Call Young, Marr, Mallis & Associates today at (215) 701-6519 to get a free, confidential case assessment from our Pennsylvania mortgage foreclosure defense lawyers. How Can Loss Mitigation Stop Mortgage Foreclosure in Pennsylvania? Loss mitigation occurs when homeowners, our lawyers, and loan servicers negotiate or work together to resolve missed payments so a mortgage foreclosure case does not have to proceed. Common loss mitigation options include forbearance and loan modification. While short-selling your home or giving the lender the deed to your property in lieu of foreclosure may be less than ideal, it can help you avoid some of the more negative consequences of mortgage foreclosure. Forbearance Forbearance is not an option for all homeowners facing foreclosure; typically, only those dealing with serious financial hardships and who can show their need to pause mortgage payments are granted forbearance. Hardships that might qualify you for forbearance may include divorce, illness, natural disaster, losing your job, or even a sudden military deployment. The lender can choose whether or not to approve the forbearance request because of undue hardship. Suppose the bank continues pursuing foreclosure against you in court. In that case, our lawyers can explain your difficult financial situation to the judge, who may agree that the bank cannot take your home because of undue hardship. If the lender agrees to forbearance, your mortgage payments will stop temporarily, but you will still be responsible for paying the full amount once the period is over. Loan Modification Loan modification is typically the most common loss mitigation method to stop foreclosure and involves changing the existing terms of your mortgage agreement. When approaching loan modification, our Pennsylvania mortgage foreclosure defense lawyers must review your current contract and ability to pay. We may have to overhaul your financial information, including all income sources and expenses. We can then propose smaller, more affordable monthly payments for longer terms, which your lender may agree to so it can also avoid the time and resources spent on a judicial mortgage foreclosure case in Pennsylvania. Through loan modification, missed payments may be added to the mortgage balance, allowing you to start fresh, so to speak, without having to catch up with your lender. Short Sale or Deed-in-Lieu of Foreclosure Short sales can help those dealing with foreclosure avoid some of its most negative consequences, like the hit to their credit. If the lender agrees to a short sale, you could sell your home for less than what is owed on the mortgage, and then the lender will forgive any amount owed. Lenders might also agree to accept a home’s deed instead of pursuing mortgage foreclosure. This would also let you avoid the potential 100-point drop in credit score associated with a bank successfully petitioning for foreclosure in Pennsylvania. Short-selling your house or relinquishing the deed may be a last resort, and our lawyers can confirm whether or not this is necessary before you make any decisions on the matter. Does Loss Mitigation Always Stop Foreclosure in Pennsylvania? Banks do not always want to negotiate loss mitigation options, especially if mortgagees owe large amounts and are seriously delinquent. If the bank decides to proceed with its foreclosure complaint in court, our lawyers can prepare for this next step. Mortgage lenders are eager to be repaid, often by the quickest means possible and with the slightest risk. Because of that, lenders may be open to loss mitigation if homeowners have only missed just enough payments to put them at risk of foreclosure, meaning they are nearing being 120 days delinquent, which is the threshold for banks to start foreclosure cases. However, if the bank has standing to foreclose and you owe a larger amount, it may not entertain loan modification proposals or other negotiation attempts. If the bank believes it will get paid faster through foreclosure instead of loss mitigation, assume it will take that route. While exhausting loss mitigation options, our attorneys will also identify possible defenses to foreclosure, such as undue hardship or predatory lending. This will allow us to prepare for a possible trial and assess whether filing for bankruptcy would better benefit you. Like loss mitigation, bankruptcy can help you avoid some of the consequences of mortgage foreclosure. Chapter 13 bankruptcy won’t make you liquidate your assets to repay creditors, meaning your home will be protected during this process. Suppose foreclosure is imminent, or you have recently received a notice of intent to foreclose from your lender. In that case, our lawyers can immediately start reviewing your options for loss mitigation and making a plan. We can quickly determine if your lender is willing to negotiate or will aggressively pursue foreclosure. At this point, we can identify a defense or proceed with a bankruptcy case to safeguard your home. Call Our Pennsylvania Attorneys for Help with Your Foreclosure Case Today Call Young, Marr, Mallis & Associates at (215) 701-6519 for help with your case from our Pennsylvania mortgage foreclosure defense lawyers.

N.C. Ct. of App.: Anhui Omi Vinyl v. USA Opel Flooring- Fraudulent Conveyance under State Law Ed Boltz Tue, 10/01/2024 - 22:16 Summary: This case involves Anhui Omi Vinyl Co., Ltd. (Omi) suing USA Opel Flooring, Inc. (Opel), previously known as USA Flooring Importers, Inc., for a fraudulent transfer of real property. Omi claimed that Opel transferred assets from Surface Source USA NC, Inc. (Surface Source), a company that owed Omi over $1,000,000, with the intent to defraud creditors, violating the Uniform Voidable Transactions Act. Surface Source transferred its building to Opel while being sued by Omi, hindering Omi’s ability to collect on a judgment. The trial court ruled in favor of Omi, determining that the transfer was voidable as a fraudulent transfer because it was intended to hinder, delay, or defraud Omi. The court found multiple badges of fraud, such as Surface Source’s insolvency and the concealment of the transfer. Opel’s claim of good faith was rejected because the transfer was made with fraudulent intent, and Omi was awarded a judgment of $1,139,971.21. Opel appealed, but the North Carolina Court of Appeals upheld the trial court’s decision, finding no error in its conclusion that the transfer was voidable and that Opel’s good faith defense did not apply. The court also affirmed that the trial court had the authority to enter a judgment against Opel for the same amount as Omi’s judgment against Surface Source, effectively restoring Omi to its position as a judgment creditor. The court’s ruling affirmed the fraudulent transfer decision without addressing Opel’s alternative claim of successor liability. Commentary: While a fraudulent conveyance is almost certainly non-dischargeable in bankruptcy as fraud,  this case does,  relying on Hafner v. Irwin, 23 N.C. 490, 498 (1841),  remind that "[e]very contrivance to the intent to hinder creditors—directed to that end—is “malicious” that is to say, wicked..."  and meets the harder half of the requirement for nondischargeability under 11 U.S.C. 523(a)(6). With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document anhui_omi_vinyl_v._usa_opel_flooring.pdf (170.58 KB) Category NC Court of Appeals

4th Cir.: CCWB Asset Investments v. EBC Asset Investment- Distribution Methods in Federal Receivership Ed Boltz Tue, 10/01/2024 - 16:46 Summary: The case involves a court-appointed receiver tasked with distributing assets recovered from a Ponzi scheme involving over 230 investors who were defrauded by Kevin Merrill, Jay Ledford, and Cameron Jezierski. The appellants, two groups of investors (the Dean Investors and the Connaughton Investors), challenged the district court's approval of the receiver's plan to distribute the recovered assets. The receiver proposed to use the "Rising Tide" method to distribute funds.  The Rising Tide method: The Rising Tide method deducts from that recovery pre-Receivership withdrawals and distributions—unless they are rolled over. For instance, suppose A invests $100 in a Ponzi scheme but withdraws $50 before the scheme crumbles. Under the Rising Tide method, the receiver counts that $50-withdrawal as partial compensation for A’s loss, meaning A will receive less from the receiver’s distribution of the assets. Because the Rising Tide method requires subtracting previous withdrawals from an investor’s receivership recovery, investors who make withdrawals fare worse under that method than those who withdraw nothing. The Dean Investors, however, advocated for the "Maximum Balance" approach, which would not count reinvested withdrawals against their recovery. The court rejected this approach, stating that it had no precedent, was administratively difficult, and that the investors had benefited from the withdrawals, however small. The Connaughton Investors objected to the "Collateral Offset Provision," which reduced their distribution by amounts they had already recovered from third-party settlements. They argued this discouraged settlements, but the court upheld the provision, ensuring equitable recovery for all investors. Commentary: I would be interested in hearing from others about if and how both these concepts from federal receivership of Rising Tide and Collateral Offset  might apply in a bankruptcy case.  For example,  would either of these impact the distribution allowed to a unsecured creditor that received preferential payments prior to the bankruptcy? With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document ccwb_asset_investments_v._milligan.pdf (157.53 KB) Category 4th Circuit Court of Appeals

N.C. Ct. of App.: Adventure Trail of Cherokee v. Owens-Parole Evidence for Lease Ed Boltz Mon, 09/30/2024 - 19:22 Summary: The dispute arose over a lease agreement between the plaintiff and the mother of the defendant, William Fredrick Owens. The key issue involved whether the lease continued after the mother’s death in 2019 and if Mr.  Owens had any rights under the lease. Owens argued that the lease’s phrase "survivor of the Lessee" granted him rights to continue occupying the property. However, the trial court found that the phrase was ambiguous and a scrivener’s error, meaning it was mistakenly included. The court used parole evidence, which while normally prohibited to " to vary, add to, or contradict” language within a contract" can be used to understand “an ambiguous term may be explained or construed with the aid of parol evidence.” Drake v. Hance, 195 N.C. App. 588, 591, 673 S.E.2d 411, 413 (2009),  concluding that the lease terminated upon the mother's death and Owens had no continuing rights under it. Commentary: The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amended the Protecting Tenants at Foreclosure Act (PTFA)  notice to "successor in interest" tenants 90 days before requiring them to vacate the property and also allows those successor tenants with leases to remain in the property until the end of the lease term.    With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document adventure_trail_of_cherokee_v._owens.pdf (129.38 KB) Category NC Court of Appeals

W.D.N.C.: Vitalia v. Experian- FCRA Complaint failed to Plead Inaccuracies Ed Boltz Mon, 09/30/2024 - 18:18 Summary: Papa G. Vitalia filed a complaint against several defendants, including Early Warning Services, LLC (EWS), under the Fair Credit Reporting Act (FCRA). Vitalia alleged that EWS reported inaccurate information on his credit report, after once previously deleting that information, which resulted in him being denied credit from several banks. EWS filed a motion to dismiss the complaint, arguing that Vitalia did not provide enough factual details to support his claims. Specifically, EWS contended that: Vitalia did not sufficiently show what inaccurate information was reported; Vitalia failed to allege that EWS did not follow reasonable procedures to ensure accuracy; EWS does not provide credit reports, so any claims of credit denials were unrelated to EWS; The court agreed with EWS, finding that Vitalia's complaint lacked specific factual allegations to support his claims of inaccuracies and unreasonable procedures. As a result, the court recommended dismissing the complaint. Additionally, Vitalia’s claim of improper reinsertion of inaccurate information under 15 U.S.C. § 1681i(a)(5) also failed due to insufficient pleading. The court recommended that EWS’s motion to dismiss be granted. Vitalia was given 14 days to file objections to the recommendation. With proper attribution,  please share this post.  To read a copy of the transcript, please see:   Blog comments Attachment Document vitalia_v._experian_district_court.pdf (110.04 KB) Document vitalia_v._experian.pdf (199.76 KB) Category Western District

Law Review: Nosal, Jaromir and Stefania, Albanesi, Consumer Default After the 2005 Bankruptcy Reform (June 18, 2024). Ed Boltz Mon, 09/30/2024 - 18:13 Available at:   https://ssrn.com/abstract=4870978 or http://dx.doi.org/10.2139/ssrn.4870978 Summary: The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act is the most important reform of personal bankruptcy in the United States in recent years. This law left benefits of filing for bankruptcy mostly unchanged, but increased the monetary costs of filing, both for Chapter 7 and Chapter 13 bankruptcy. Using administrative credit bureau data from a nationally representative panel, we quantify the effects of the rise in filing costs exploiting geographical variation in this increase. We show that the increase in filing costs reduced Chapter 7 bankruptcy rates by 15% for newly financially distressed borrowers, but had no statistically significant effect on Chapter 13. We argue that this differential is consistent with binding liquidity constraints driving the response to the reform. Additionally, we find that the missing Chapter 7 bankruptcies lead to an increase in long term financial distress but also a limited rise in the rate consumers return to being current, while there is no evidence of substitution from Chapter 7 bankruptcy to Chapter 13 filing or foreclosure Commentary: This article "estimates ... that the average increase in attorney fees reduced...  Chapter 7 bankruptcy filing by 15% from the pre-[BAPCPA] ..., whereas there is no statistically significant effect for Chapter 13 filing."  And while many,  especially in the academic community, have bemoaned that consumers  file Chapter 13 cases,  often with a substantially reduced likelihood of discharge, instead of Chapter 7,  it has become  apparent that the increased cost of filing bankruptcy was  the true oblique goal of BAPCPA.   This does also call into question the likelihood that bankruptcy reform legislation,  most notably Sen. Warren's  Consumer Bankruptcy Reform Act,  which, while front-loading the discharge like in Chapter 7,  expands and adds truly admirable  options  for dealing with secured debt (almost a  "super Chapter 13"),  would result in more consumers actually being able to obtain relief.  All of these options  (smooshed into a single chapter)  could end up complicating the choices faced by consumers and their attorneys like some very expensive Ptolemaic orrery: And I know this is a heliocentric orrery-no one can build a Ptolemaic one nor a bankruptcy system that perfectly relieves debts while paying consumer attorneys their true worth either. As grappled with in multiple other forums and venues,  including the ABI Consumer Bankruptcy Report, court decisions regarding "bifurcated"  fee arrangements and Attorney Fee Only Chapter 13 cases,  the suggestion that attorney fees for Chapter 7 be allowed to be paid after the filing of the bankruptcy,  is a hollow solution.  Merely making the attorney's fees non-dischargeable does not mean those fees will be paid,  particularly as consumer bankruptcy attorneys would be loath to risk bar complaints and the even worse negative Google reviews,  by taking any action, let alone filing suit and seeking garnishment,  for those fees.  Nondischargeable does not mean paid.  With proper attribution,  please share this post.    To read a copy of the transcript, please see: Blog comments Attachment Document consumer_default_after_the_2005_bankruptcy_reform.pdf (572.28 KB) Category Law Reviews & Studies