Law Review (Economics): Choi, James J. and Huang, Dong and Yang, Zhishu and Zhang, Qi, How Good is Ai at Twisting Arms? Experiments in Debt Collection (April 2025). NBER Working Paper No. w33669 Ed Boltz Tue, 10/14/2025 - 17:41 Available at:   https://ssrn.com/abstract=5215980 Abstract: How good is AI at persuading humans to perform costly actions? We study calls made to get delinquent consumer borrowers to repay. Regression discontinuity and a randomized experiment reveal that AI is substantially less effective than human callers. Replacing AI with humans six days into delinquency closes much of the gap. But borrowers initially contacted by AI have repaid 1% less of the initial late payment one year later and are more likely to miss subsequent payments than borrowers who were always called by humans. AI’s lesser ability to extract promises that feel binding may contribute to the performance gap. Commentary: A recent study published by the National Bureau of Economic Research  examining Chinese consumers’ reactions to debt collection, including the use of AI-driven “collectors,” offers interesting insights—but while its conclusions rest heavily on psychological and behavioral  research conducted by U.S. scholars on fairness, compliance, and emotional response in debt collection and originated in the American context leaves substantial questions about how transitive those findings really are between  the sharply different regulatory and social environment in China and the United States (let alone elsewhere.) In China (with a full admission that I'm only a North Carolina Bankruptcy Expert!), consumer bankruptcy remains rare, with only limited pilot programs in a handful of provinces and far fewer formal protections for over-indebted individuals. Without leaning too hard on cultural generalizations,  collection practices therefore tend to rely on social pressure and moral appeals, often leveraging family networks and reputational risk, rather than the structured statutory regimes familiar to U.S. practitioners. Against this backdrop, the finding that Chinese consumers respond more favorably to “empathetic” or “respectful” AI collectors may reflect local cultural expectations about deference and face-saving, rather than a universal truth about human-machine interaction. By contrast, in the United States, debt collection operates within a robust legal framework of consumer protection—anchored by the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), and state Unfair and Deceptive Trade Practices Acts (UDTPA) such as North Carolina’s § 75-1.1. While social stigma and moral hazard  still play a substantial role,  these laws don’t merely regulate behavior; they define the very boundaries of communication. A U.S. consumer must be told who is collecting the debt, how much is owed, and how to dispute it—and harassment or misrepresentation is strictly prohibited. Moreover, Chapter 7 and Chapter 13 bankruptcy provide predictable, court-supervised debt-relief channels unavailable to most Chinese consumers, fundamentally altering both the power dynamics and the perceived legitimacy of collection efforts. Given that backdrop, an AI debt collector operating in the United States would almost certainly be required not only to disclose that it is a debt collector, but also that it is an artificial intelligence system. Failure to do so could violate the FDCPA’s prohibitions on “false, deceptive, or misleading representations,” particularly if the AI’s design made a consumer believe they were conversing with a human being. The CFPB’s 2024 digital-communication guidance and the FTC’s emerging policies on AI transparency both suggest that accuracy of identity and medium are integral to consumer protection. (The viability of these policies,  however,  may be in doubt under the current U.S.  administration.) The deeper lesson, then, is that technology doesn’t operate in a vacuum. It reflects the social and legal system that deploys it. Where Chinese law emphasizes harmony and moral rehabilitation over statutory procedure, AI may simply mechanize social pressure. In the United States, by contrast, our debt-collection system—grounded in disclosure, due process, and the constitutional promise of a “fresh start” through bankruptcy—would demand that even machines play by the same rules of fairness and honesty that govern human collectors. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document ai-debt-collection-20250331.pdf (3.47 MB) Category Law Reviews & Studies

Some People file Bankruptcy After They Drained their TSP Some people file bankruptcy after they drained their TSP. Those people, people I meet as a bankruptcy lawyer, should have talked to me sooner and left their money safely in their TSP. One of the many wonderful advantages of the TSP is this: your creditors can’t get to it. (Well, an angry ex-spouse can get to it in divorce. And so can the IRS).  But, if you owe money on a credit card or personal loan. even if they take you to court with a Virginia warrant in debt, and get a judgment and a garnishment, they can’t touch the TSP. Suppose you’ve been RIF’d, or DOG Ed, you need a place to live, you need to eat, you probably need a car. But how important is it to pay those credit cards? If you can, you’d like to protect your credit score. But compared to having enough to buy groceries…. Borrowing from the TSP is drastic action, it’s a last resort. Some people also say that bankruptcy is a last resort. So if you arrived at that last resort, think about what’s better for you. “Just business.” Is Bankruptcy Really a Last Resort? For some people, the decision to file bankruptcy is “just business.”  In fact, one famous person bragged, “I’ve used it three, maybe four times; came out great.”  Remember, the purpose of bankruptcy is to help you. The Supreme Court said, way back in 1934, bankruptcy relief is in the “public interest.” The country is better off if you can take care of yourself and your family. The Bank of America and Amex can take care of themselves. The post Is It Smart to Borrow from my TSP to Pay my Credit Cards? appeared first on Robert Weed Virginia Bankruptcy Attorney.

If you are considering filing bankruptcy, it can be difficult to know which chapter to choose: Chapter 7 vs. Chapter 13. Bankruptcy can be daunting, and the process often seems complex. There are eligibility requirements to consider, as well as a different timeline for each chapter. It’s best to seek the assistance of an experienced Dallas bankruptcy lawyer. Call Allmand Law Firm, PLLC today at 214-974-3278 to learn about your options. We can help you determine which chapter of bankruptcy best suits your situation. What Are the Benefits of Filing Bankruptcy? Bankruptcy is a legal process that can help you manage your debts when they become overwhelming. You may be able to completely eliminate or restructure your debt so that it is easier to pay. Filing bankruptcy can also stop legal procedures such as repossession of your car or foreclosure on your house. Creditor harassment will also be stopped through the bankruptcy process. Although you may be aware that bankruptcy is a logical choice for you, you may be unsure of whether to choose Chapter 7 vs. Chapter 13. A skilled attorney can help you understand the difference and start the legal process for you. What Is Chapter 7 Bankruptcy? Often called “liquidation bankruptcy,” Chapter 7 bankruptcy eliminates most of your debt quickly and efficiently. Unsecured debts, such as credit cards and medical bills, may be discharged completely. Secured debt, such as car loans and mortgages, may either be eliminated through liquidation of that property and payment to the creditor, or reaffirmed so you can keep your belongings. You must qualify for Chapter 7 bankruptcy through a Means Test. The test will determine if your income is low enough and if you have little or no disposable funds. If you make too much money, you may not qualify for Chapter 7. You may be considering Chapter 7 vs. Chapter 13 and be unsure of which is right for you. Consider the following reasons that you might choose Chapter 7 bankruptcy: You do not have enough income to repay your debts. You need to quickly manage your debts. Most of your debt can be discharged through bankruptcy. If you would rather get out of debt quickly and start rebuilding right away, Chapter 7 may be right for you. By discussing your specific situation with a skilled Chapter 7 vs. Chapter 13 bankruptcy attorney, you can find out which options are in your best interests. What Is Chapter 13 Bankruptcy? Chapter 13 is often called “reorganization bankruptcy.” It allows debtors to develop a manageable repayment plan for debts so that they can retain their personal property while paying it off. Repayment plans often allow the debtor to reduce interest rates and eliminate late fees and penalties that may have been applied to past due accounts. When considering qualification for Chapter 7 vs. Chapter 13, it’s important to know that Chapter 13 does not require proof of eligibility through a Means Test. However, you must be able to show that you have sufficient income to repay your debts through a repayment plan. If you are unsure about whether Chapter 7 vs. Chapter 13 is right for you, consider the following reasons to file for Chapter 13 bankruptcy. You: Do not qualify to file for Chapter 7 through the Means Test. Want to repay your debts over time. Want to keep your nonexempt property. Would like to completely avoid foreclosure or repossession of your property. Have debts that cannot be discharged through Chapter 7. Have a codebtor or someone who has signed loans with you. Chapter 13 will give you an option to restructure your debt into a manageable payment plan that you can repay over time. Instead of dealing with the situation quickly over the course of a few months, such as with Chapter 7, you can discuss options with creditors and retain your property as you repay them over a three to five year period. How Long Does Chapter 7 vs. Chapter 13 Bankruptcy Take? The timelines associated with Chapter 7 vs. Chapter 13 differ greatly. Because Chapter 7 basically eliminates all debt quickly, it can take between four and six months after you file the case. However, Chapter 13 requires completion of payments over a three to five-year time period. Thus, your bankruptcy will be complete in a much shorter time period with Chapter 7; however, Chapter 13 may allow you to retain more of your personal property. The Bankruptcy Process: Chapter 7 vs. Chapter 13 The bankruptcy process is similar between Chapter 7 vs. Chapter 13. You must take the following steps for both types of bankruptcy: Take a credit counseling course within 180 days before filing bankruptcy File a bankruptcy petition in federal court Submit information about your debts, assets, income, and expenses Attend a 341 Meeting of Creditors with your attorney between 20 and 40 days after you file bankruptcy Complete secondary counseling within 45 days after the Meeting of Creditors The major difference is that you will have to qualify for Chapter 7 through a Means Test, and you will have to show proof of sufficient income through a payment plan for Chapter 13. At the end of the bankruptcy process, your remaining debt will be discharged for both Chapter 7 and Chapter 13. Differences Between Chapter 7 vs. Chapter 13 While both Chapter 7 and Chapter 13 bankruptcy can help you manage your debt and regain control of your financial future, the two bankruptcy chapters function differently. Some of the key differences between Chapter 7 vs. Chapter 13 include the process and characteristics of each. Who Can File Chapter 7 vs. Chapter 13? While individuals may file for either Chapter 7 or Chapter 13, businesses can only use Chapter 7. A sole proprietor operating a business with their own name connected to business debt may use Chapter 13. However, a business other than a sole proprietorship may not use Chapter 13. Eligibility Differences Between Chapter 7 and Chapter 13 In order to qualify for Chapter 7 bankruptcy, you must qualify using a Means Test. Although there is no means test for Chapter 13, you still must qualify according to the amount and type of debt that you have. In order to file Chapter 13, you cannot have more than $394,725 of unsecured debt or $1,184,200 of secured debt. If you do not qualify for either Chapter 7 or Chapter 13, you may have to use another type of bankruptcy, such as Chapter 11. How Long Does It Take: Chapter 7 vs. Chapter 13 One of the biggest differences between Chapter 7 and Chapter 13 is the length of time it takes to conclude the bankruptcy. Chapter 7 is a relatively quick process and can take four to six months. However, Chapter 13 typically takes three to five years to fully complete the payment plan. What Happens to Property? With Chapter 7 bankruptcy, you may be forced to liquidate, or sell, all of your nonexempt property in order to pay creditors. However, you get to keep most of your property in a Chapter 13 bankruptcy and repay creditors over time. Getting to Start Over With Chapter 7 vs. Chapter 13 While you are able to start fresh with both Chapter 7 and Chapter 13 bankruptcy, you can get a quicker start with Chapter 7. With Chapter 13, you retain many of your debts for several years and still have to pay much of them back. However, Chapter 7 immediately eliminates most of your debt and you can start over. It can be difficult to know if Chapter 7 vs. Chapter 13 is right for you. It’s best to consider all of the pros and cons of each type of bankruptcy and ask a knowledgeable lawyer about your options. By understanding your finances and how bankruptcy will impact you over time, you can make a positive decision about which chapter will work best for you. Contact a Bankruptcy Lawyer When Considering Chapter 7 vs. Chapter 13 When deciding between Chapter 7 vs. Chapter 13, you should evaluate the pros and cons associated with both. A skilled bankruptcy lawyer can help you understand your legal options and guide you through the process. Allmand Law Firm, PLLC has helped countless clients achieve financial security by filing bankruptcy and managing debt effectively. Call us today at 214-974-3278 for a consultation to consider your options. The post Chapter 7 vs. Chapter 13 Bankruptcy appeared first on Allmand Law Firm, PLLC.

If you are facing overwhelming debts, Chapter 13 bankruptcy can help you get your financial situation under control. But what are the benefits of Chapter 13? In a Chapter 13, you may be able to repay your debts while retaining your property. You also don’t have to endure the never-ending cycle of debt payments, fees, and interest charges. You can start fresh after a few years of properly managed debt repayment. Call Allmand Law Firm, PLLC, today to find out more about the benefits of Chapter 13. What Is Chapter 13 Bankruptcy? Chapter 13 bankruptcy, often called “reorganization bankruptcy,” allows you to organize your debt into a manageable payment plan that usually lasts three to five years. Although you will be repaying some of your debt, that which is not paid off may be eliminated in some circumstances at the end of the payment plan. You have many options for managing your debt in a Chapter 13 plan. Benefits of Chapter 13 Bankruptcy vs. Chapter 7 Bankruptcy Chapter 7 bankruptcy, often called “liquidation bankruptcy,” is quite different from Chapter 13. With Chapter 7, you may be required to liquidate, or sell, your assets and property to repay debts. However, Chapter 13 allows you to keep most of your property. Additional benefits of Chapter 13 over Chapter 7 include the following: You Can Avoid Foreclosure With Chapter 13 One of the biggest benefits of Chapter 13 includes the avoidance of foreclosure. When you file, an automatic stay will stop foreclosure proceedings immediately. Then, you may make up for missed payments on home mortgages. Those missed payments may be rolled into your total debt amount, or you may renegotiate the terms. Chapter 7 does not allow you to make up for missed payments. Your mortgage payment may be included in your debt payment plan, and you will have a longer period of time to make reasonable payments. Your payments will be based on your disposable income and monthly budget amount. With Chapter 7, you may lose your home if you’re unable to afford payments. You Can Avoid Repossession of Your Property With Chapter 13 Chapter 7 bankruptcy expects you to sell much of your property to repay debts. However, Chapter 13 allows you to keep that property, including cars and more. Your payments will be rolled into a payment plan that lasts for three to five years, and you will have an opportunity to catch up on past due payments. Chapter 13 Will Only Show on Your Credit Report for Seven Years Another of the benefits of Chapter 13 vs. Chapter 7 is that Chapter 13 will be reported on your credit report for a shorter period of time. Chapter 13 is reported for seven years, and Chapter 7 is reported for 10 years. This gives you three more years to rebuild credit without bankruptcy on your report if you use Chapter 13. Your Income Won’t Disqualify You From Filing Chapter 13 While you must pass a Means Test to verify that you don’t make too much money to qualify for Chapter 7, one of the benefits of Chapter 13 is that you don’t have to make a certain amount of income. If you don’t qualify for Chapter 7, you will likely qualify for Chapter 13. Although there are limits on the amount of debt you can have to file Chapter 13, there are no limits on your income. Other Benefits of Chapter 13 You don’t have to be embarrassed if you file for bankruptcy. Many people use Chapter 13 to reorganize and continue meeting payment obligations in a more manageable way. Some other benefits of Chapter 13 include the following: You Can Reschedule Secured Debts If you have secured debts that are connected to property, then you can extend payments over a longer period of time. This will allow you to lower payments and make them more manageable for you. You can include secured debts in your overall payment plan, and the bankruptcy trustee will allow you to propose a monthly payment amount based on your monthly budget. This will allow you to keep your property that is connected to secured debt, while paying for things in a way that benefits you. You Can Reorganize Non-Dischargeable Debt Through Chapter 13 Many people seek Chapter 13 because they have debt that cannot be discharged. If you owe arrears on alimony or child support, or have past due taxes, you may not be able to discharge them. However, you can include these debts and others in a payment plan through Chapter 13 bankruptcy. You can pay these debts in full over three to five years and become debt-free. Chapter 13 Protects Your Co-Signers One of the benefits of Chapter 13 is that you don’t push all of your debt onto your co-signers. You will be retaining responsibility for your debts, but simply reorganizing them. If you file Chapter 7 or discharge the debt from your responsibility, then the creditor may go after your cosigners. If you have signed a loan with a friend, family member, or business partner, this can create strained relationships. By filing Chapter 13, you can avoid this situation and retain responsibility for the debt. You Don’t Have Direct Contact With Your Creditors If you are in debt and have gotten behind on payments, then you likely have dealt with creditor harassment. The phone calls and letters you receive can be embarrassing and stressful. One of the benefits of Chapter 13 is that you will no longer have to deal with this creditor contact. Your creditors will be paid according to the Chapter 13 payment plan, and your bankruptcy attorney or bankruptcy trustee will manage the payments and other contact with the creditors. Learn More About the Benefits of Chapter 13 The benefits of Chapter 13 can help you become debt-free and start your financial life again with a clean slate. If you have questions about Chapter 13 or how it can help you, contact Allmand Law Firm, PLLC today. The post What Are the Benefits of Chapter 13? appeared first on Allmand Law Firm, PLLC.

If you don’t respond properly to a foreclosure notice, your lenders may get a default judgement and take your home. We know what lenders need to hear after sending foreclosure notices or filing complaints, and can help you respond to news of a possible foreclosure. We can respond to a foreclosure notice by contacting your lender about a loan modification. Not all lenders are open to modifying current loans, especially if the borrower has fallen very far behind. If the lender follows the foreclosure letter with a foreclosure complaint, we can file an answer on your behalf, addressing each aspect of the lender’s complaint. For many homeowners, the best way to stop foreclosure is to file for bankruptcy, and we can oversee your case. For a free and confidential case evaluation from our Philadelphia foreclosure defense attorneys, call Young, Marr, Mallis & Associates now at (215) 701-6519. How Do You Respond to a Foreclosure Notice Letter in Philadelphia? When homeowners default in Pennsylvania, lenders must inform them of their intent to foreclose, typically by sending them an Act 91 notice of foreclosure letter. Promptly responding to an Act 91 foreclosure notice is crucial, as the bank may move forward with foreclosure after about 30 days. Read the Notice First, you should carefully read the notice from your lender with our attorneys. The notice will state that you are at least 3 months delinquent on your mortgage and that you are at risk of foreclosure if you cannot make the outstanding payments soon. It will also have information about potential state-funded assistance that we can see if you qualify for. The notice may even warn of the earliest possible sheriff’s sale of your property if you don’t stop foreclosure. Review Mortgage Documents To respond appropriately to a foreclosure notice, we must review all of your mortgage documents. These documents provide more information about your monthly mortgage payments, your income at the time of approval, interest rates, the total loan amount, the loan term, and more. The mortgage documents may even reveal predatory lending, which we can use to prevent foreclosure. Apply for HEMAP Assistance Suppose you qualify for help through the Homeowners’ Emergency Mortgage Assistance Program (HEMAP). If you cannot “cure” your mortgage or make all outstanding payments through no fault of your own, HEMAP may help. You have 33 days from receiving the notice to have a face-to-face meeting with an HEMAP-approved consumer credit counseling agency in Philadelphia. Negotiate with Lender An Act 91 notice tells you that your lender intends to file an official foreclosure complaint against you within the coming weeks or months if you cannot catch up. Lenders may send this letter as soon as they can after borrowers default, but they may still be open to renegotiating mortgage contracts. Avoiding a foreclosure case saves your lender time and resources, too, which they often prefer. When we negotiate with lenders, we suggest new arrangements that are more feasible for you, but that your lender can be happy with. For example, we may propose extending the loan term to achieve more affordable monthly payments. File for Bankruptcy Suppose you do not qualify for HEMAP assistance or your lender refuses to renegotiate the mortgage. In that case, we may advise you to respond to a foreclosure notice by filing for bankruptcy in Philadelphia. When you file your bankruptcy claim, any attempts to collect debt must cease, including foreclosure cases. How Do You Answer a Foreclosure Complaint in Philadelphia? You respond to a foreclosure notice or a complaint filed against you by filing an official answer with the court yourself. Party Information When drafting an answer to a foreclosure notice, our Pennsylvania foreclosure defense attorneys will include both the defendant’s and plaintiff’s information. In this type of case, the homeowner would be the defendant, and the mortgage lender would be the plaintiff. Address Complaints We must then respond to each paragraph of the complaint filed by the plaintiff. In an answer, the defendant may admit to a specific issue raised, admit and deny it in part, deny it, or deny it because they do not have enough information. New Matter The final “new matter” section of an answer to a foreclosure complaint is where our lawyers can present the affirmative defense we plan to use in the foreclosure case, such as predatory lending. If a lender took advantage of you when initially providing your mortgage loan and you have since defaulted, the judge may decide the lender cannot move forward with foreclosure. FA Qs About Answering a Foreclosure Notice in Philadelphia What if You Ignore an Act 91 Notice of Foreclosure Ignoring an Act 91 notice of foreclosure eliminates any potential for negotiating new mortgage terms with your lender. Instead, it may move forward with filing an official foreclosure complaint in court as soon as possible. How Long Do You Have to Answer an Official Foreclosure Complaint? You have only 20 days to respond to an official foreclosure complaint filed in court by your lender. If you do not answer within that timeframe, the judge may enter a default judgment against you, and the lender may proceed with foreclosure. What Chapter of Bankruptcy is the Best Answer to a Foreclosure Notice? Chapter 13 bankruptcy is better for addressing non-dischargeable debts, such as outstanding mortgage payments. You do not have to liquidate assets during Chapter 13 bankruptcy, but you do if you file Chapter 7 bankruptcy in Philadelphia. There isn’t a specific homestead exemption for Chapter 7 bankruptcy filers in Philadelphia, who may end up losing their homes through liquidation to repay lenders. Call Our Philadelphia Lawyers for Help with a Foreclosure Case Call the Allentown, PA foreclosure defense attorneys of Young, Marr, Mallis & Associates at (215) 701-6519 for a free case assessment.

Bloomberg Law has an excellent article titled “Covid Loans That Boosted Businesses Now Push Them to Bankruptcy” concerning SBA EIDL loans and the bankruptcy filings by the businesses that received them and the guarantors who guaranteed those loans. The article can be found at https://news.bloomberglaw.com/bankruptcy-law/covid-loans-that-boosted-businesses-now-push-them-to-bankruptcyThe article states that many businesses that received SBA EIDL are filing for chapter 7 bankruptcy and the guarantors of those loans are filing for bankruptcy as well.  SBA EIDL loans over $200,000.00 required a personal guarantee from the principal.The article states that by the end of 2024, the SBA had charged off 370,000 EIDL loans worth about $47 billion and was trying to collect on another $14.7 billion in loans that had been delinquent for at least three months.At Shenwick & Associates we are receiving many phone calls from SBA EIDL loan borrowers who cannot repay those loans.Clients or advisors who have questions about SBA EIDL loans or the SBA enforcement remedies should contact Jim Shenwick, Esq at 917 363 3391 or [email protected] click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minJim Shenwick, Esq  917 363 3391  [email protected] Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15minWe held individuals & businesses with too much debt!

N.C. Ct. of Appeals: Irish Creek HOA v. Rogers - Foreclosure Set Aside as Covid-Era Service was Insufficient Ed Boltz Wed, 10/01/2025 - 18:05 Summary: Trenita Rogers bought her Winterville home in 2010, subject to the Irish Creek HOA. In 2021, after allegedly failing to pay $1,391.23 in assessments, the HOA filed liens and moved forward with foreclosure. Notice was attempted by certified mail during the USPS’s Covid-19 “contactless” protocol—where carriers often signed “C19” themselves instead of obtaining the addressee’s signature—and by sheriff posting without a proper court order. Rogers never appeared at the foreclosure hearing, and the property was sold at auction in 2022 after a lengthy upset bid process, ultimately bringing over $221,000. Rogers claimed she had never actually been served, that she did not recall receiving HOA bills, and that she would have cured the arrears had she known of the hearing. She moved to set aside the foreclosure under Rule 60, but both the Clerk and Superior Court rejected her arguments, finding service sufficient and her neglect “inexcusable.” The trial court even ordered her to pay over $26,000 in attorney’s fees to the HOA, the trustee, and the purchaser for bringing a “meritless” motion. When Rogers attempted appeal, the Superior Court dismissed it for failure to timely serve the proposed record on appeal under Rule 11(b), citing her supposed lack of diligence and candor. Holding: The Court of Appeals reversed. First, it found the trial court abused its discretion by dismissing the appeal without applying the Dogwood framework for whether a procedural violation was a “substantial failure” or “gross violation.” More importantly, it held that USPS Covid-19 contactless protocols did not satisfy the strict requirements of Rule 4 service by certified mail. With no signature of Rogers or even her initials, there was no valid service, and thus no jurisdiction for the foreclosure order. The Court reversed the denial of Rogers’ Rule 60 motion, vacated the attorney fee awards, and remanded for consideration of remedies, including whether the purchaser was a good-faith buyer and whether the foreclosure price was adequate. Commentary: This case illustrates how procedural shortcuts in service can unravel an entire foreclosure years later, especially when courts and trustees relied on the USPS’s makeshift Covid protocols. The appellate court rightly emphasized that the purpose of certified mail service is to prove actual notice, and “Covid-19” scrawled by a mail carrier does not create jurisdiction. It is also a cautionary tale about the tendency of trial courts to punish homeowners with crushing attorney fee awards when they contest foreclosures. Rogers was saddled with nearly $30,000 in fees for daring to argue she had not been served—a position ultimately vindicated by the Court of Appeals. The panel’s decision to vacate those awards restores some balance. Finally, the case tees up important questions on remand: what happens to the purchaser, who paid over $220,000 in upset bids, and whether the sale price was “grossly inadequate” under North Carolina law. This tension between protecting homeowners from defective process and protecting finality for bidders will continue to play out. To read a copy of the transcript, please see: Blog comments Attachment Document irish_creek_hoa_v._rogers.pdf (213.29 KB) Category NC Court of Appeals

Bankr. M.D.N.C: In re Rogers- Postpetition Fees, Rule 3002.1, and N.C.G.S. § 45-91 Ed Boltz Mon, 09/29/2025 - 17:40 Summary: Following In re Owens and In re Peach from the W.D.N.C.,  Judge Kahn weighed in on the increasingly thorny interplay between Rule 3002.1 notices of postpetition fees and North Carolina’s Mortgage Debt Collection and Servicing Act (§ 45-91). Here, the debtor, Christopher Rogers, was not personally liable on the mortgage note—his non-filing spouse was—but the couple’s residence was encumbered by a deed of trust in favor of SIRVA Mortgage. The loan was contractually current at filing, yet SIRVA filed a proof of claim asserting a projected escrow shortage and, later, a Rule 3002.1(c) notice claiming a $400 “proof of claim fee.” At the same time, SIRVA sent the debtor’s spouse separate state-law notices under § 45-91 listing over $950 in “BNK ATTY FEES & COSTS.” The debtor, relying on In re Owens (Whitley, J.) and the recent In re Peach (Beyer, J.), objected, arguing that this “dual booking” practice violated Rule 3002.1’s disclosure mandate. Court’s Ruling Violation of Rule 3002.1(c): Judge Kahn held that SIRVA’s conflicting notices ran afoul of Rule 3002.1, which was designed to prevent hidden or undisclosed fees from ambushing Chapter 13 debtors after plan completion. Interpretation of § 45-91: The court rejected SIRVA’s strained reading that the statute requires servicers to “assess” every conceivable fee, even those never intended to be collected. Instead, “assess” means impose—not merely “note” or “disclose.” Thus, notices of waived or phantom fees were not required. No Safe Harbor in Federal/State Regulations: Other federal mortgage servicing regulations (e.g., RESPA’s Reg. X, TILA’s Reg. Z) only require reporting of transactions that actually credit or debit the account, not ghost fees. Adoption of Owens and Peach: Like Judges Whitley and Beyer, Judge Kahn ruled that subjective creditor intent is irrelevant; if fees are assessed to the account, they must be noticed under Rule 3002.1. Remedy: The court disallowed both the $400 proof of claim fee and the undisclosed $551.69 of additional charges, and prohibited SIRVA from ever seeking to recover them against the debtor or the property. Commentary: This decision reinforces a bright-line “use it or lose it” approach to Rule 3002.1. Servicers cannot play a double game—filing sanitized notices in bankruptcy court while simultaneously sending borrowers conflicting state-law statements padded with attorney’s fees. The ruling also provides much-needed clarity on § 45-91, reading it in its plain sense as a consumer protection measure designed to limit fees, not generate paperwork for phantom charges. This aligns with legislative intent to protect homeowners from abusive servicing practices and avoids the absurdity of requiring disclosure of fees the creditor admits it cannot collect. Practically, this case is a reminder that debtor’s counsel must stay vigilant. Here, counsel Koury Hicks deserves praise for spotting the discrepancy and forcing judicial review. Without objection, those $951 in “assessed” fees might have lurked as a future foreclosure trap, exactly the problem Rule 3002.1 was enacted to prevent. The opinion joins Owens and Peach in building a solid body of North Carolina precedent insisting on full transparency and accountability from mortgage servicers. One suspects that repeated violations may soon warrant harsher sanctions under Rule 3002.1(i) and § 45-91, especially if servicers continue to shrug off the rule as mere paperwork.  Whether those arise in bankruptcy courts or through class action lawsuits elsewhere remains to be seen. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document in_re_christopher_rogers.pdf (714.61 KB) Category Middle District

M.D.N.C.: Danny K. v. Experian- FCRA Claim Forced into Arbitration by Credit Monitoring Click-Through Ed Boltz Fri, 09/26/2025 - 15:17 Summary: In this case, a veteran found his home purchase delayed because Experian could not generate his credit report—an error caused by Experian’s system refusing to recognize his legal last name, “K.” As a result, he was forced into a higher-rate variable mortgage and an extra month of rent. He sued under the Fair Credit Reporting Act. Experian’s defense, however, was not to correct the obvious error but to argue that the case should never see the inside of a courtroom. Relying on its “CreditWorks” monitoring product, Experian claimed the plaintiff had agreed to binding arbitration when he clicked through an online enrollment form. That arbitration clause was drafted with sweeping reach, explicitly covering FCRA claims, and even included a delegation clause that gave the arbitrator—rather than the court—the power to decide whether Experian had waived arbitration by waiting nearly a year to raise it. Judge Schroeder, following Fourth Circuit precedent in Austin v. Experian and similar cases, agreed with Experian, compelled arbitration, and stayed the case. Commentary: This decision highlights the collision between consumer rights under the Fair Credit Reporting Act and the near-ubiquitous arbitration clauses buried in credit monitoring services. What begins as a straightforward FCRA violation—wrongly reporting a consumer’s name and costing him thousands of dollars—ends not in open court but in private arbitration. For consumer bankruptcy attorneys, the lesson is clear: our clients often unwittingly give up their right to sue when they sign up for “free credit monitoring” or identity theft protection products, sometimes encouraged by creditors themselves after a data breach. The arbitration clauses in these agreements are drafted to funnel virtually every dispute, including FCRA and FDCPA claims, out of the courts. And once in arbitration, damages are often narrower, discovery more limited, and precedent nonexistent. Is arbitration so bad? Consumers and their advocates almost uniformly resist arbitration clauses, seeing them as creditor-friendly traps. The perception is that arbitration denies transparency, limits discovery, and stifles precedent, all to the detriment of consumers. But this perhaps reflexive aversion deserves closer thought. If arbitrators are truly neutral and professional, consumers might  actually welcome arbitration. Speedier and lower-cost adjudications would benefit debtors much more than protracted litigation. If, on the other hand, arbitrators are venal and corrupt—as many suspect—then consumers might still find a silver lining or two . Self-interested arbitrators,  seeing a gravy train of  consumer rights claims,  might decide that favoring those consumers is likely to keep more cases coming.  Additionally, because the creditor pays the filing and administrative fees, flooding arbitration providers with FCRA, FDCPA, and consumer finance claims could impose massive costs on repeat players like Experian, forcing either quicker settlements or systemic change.  This paradox underscores that arbitration need not be the end of consumer remedies—it might, if strategically embraced, become a tool for pressure. Still, the loss of public precedent is profound, especially in areas like credit reporting and debt collection where systemic patterns matter. For now, district courts remain the only reliable venue for shaping consumer protection law—but only if consumers can avoid clicking “I Agree.” For instructions on how to get a credit report but avoid  "click-through",  see my previous post  regarding Austin v. Experian. With proper attribution,  please share this post.  To read a copy of the transcript, please see: Blog comments Attachment Document danny_k_v._experian.pdf (220.28 KB) Category Middle District

If you file for bankruptcy in Pennsylvania, you may be able to claim a homestead exemption to protect some of the equity in your home. However, there is no homestead exemption under Pennsylvania law. Instead, you must claim federal bankruptcy exemptions to get the federal homestead exemption. If this exemption is insufficient, your attorney may help you determine other ways to protect your assets. Homestead exemptions may help you protect some of the equity in your home from the bankruptcy process. Unfortunately, these exemptions often do not protect all your equity, and some bankruptcy petitioners might find the homestead exemption insufficient. If this is the case, you may consider whether your home is protected under tenancy by the entirety protections. Alternatively, filing under Chapter 13 bankruptcy may help you retain your home and avoid liquidation entirely. Get a free, private case review from our Berks County, PA bankruptcy lawyers by calling Young, Marr, Mallis & Associates at (215) 701-6519. Does Pennsylvania Have a Homestead Exemption? When filing for bankruptcy, there may be numerous exemptions that allow you to protect certain assets or properties from creditors. There may be different exemptions offered by the State of Pennsylvania and the federal government. While a homestead exemption may help you protect some of the equity in your home, this exemption only exists in the federal list of exemptions. Since Pennsylvania law doesn’t have a homestead exemption, your only option is to claim federal exemptions. When you do this, you have to take the rest of the federal exemptions, too; you cannot use some state and some federal. If you claim the federal homestead exemption, you are limited on how much equity in your home you can shield from creditors. Limits to the Homestead Exemption The federal homestead exemption under 11 U.S.C. § 522(d)(1), you may exclude up to $31,575 of the equity in your home if you file for bankruptcy on your own. If you file jointly with your spouse, the exemption limit doubles. However, if your equity in the home exceeds the exemption, you may lose money through liquidation. In that case, it may be better to protect your home with your spouse by claiming tenancy by the entirety protections. This usually means only one of you can file for bankruptcy. If the home is protected under tenancy by the entirety protections, the spouse who did not file for bankruptcy can sell it and use the proceeds to pay your creditors. As long as you have not yet entered bankruptcy proceedings, you can sell your home on your own to avoid having it liquidated. What Happens if the Homestead Exemption is Too Low? If the homestead exemption is too low to shield your home from bankruptcy completely, creditors may force the sale of your house. While the homestead exemption may help you protect some of the equity in your home, it might not protect all of it. This means that when the home is sold, you may only receive the amount allowed by the exemption, and creditors will take the rest. Options Other Than the Homestead Exemption to Protect Your House in Pennsylvania If the exemption limits are too low for you, talk to our Philadelphia bankruptcy lawyers about other ways you may protect your home during bankruptcy. It is possible that other legal options may help you completely shield your home from creditors. Tenancy By the Entireties Exception If you are married, and your spouse owns your home with you, you may be considered tenants by the entirety. This means you each own 100% of the house, rather than splitting ownership 50/50. In that case, creditors cannot force the sale of the home if you file for bankruptcy independently from your spouse. Since your spouse also owns 100% of the house, and they did not file for bankruptcy, the house cannot be seized and sold. Use Chapter 13 Instead of Chapter 7 Since liquidation only occurs under Chapter 7, and exemptions are only needed under that chapter, another option to protect your home is to file for Chapter 13 bankruptcy. Under this chapter, your assets and properties are not liquidated and sold to pay your debts. Instead, you devise an aggressive (yet feasible) payment plan to catch up on your missed payments. No assets would be sold off, and you might be able to keep your home. How Your Marriage Affects the Homestead Bankruptcy Exemption Under federal law, a person filing for bankruptcy may protect up to $31,575 in their home’s equity during the bankruptcy process. If you are filing for bankruptcy jointly with your spouse, this limit is doubled. Since each spouse claims the full federal homestead exemption, you can each protect $31,575 of equity in your home for a total of $63,150. Are There Other Exemptions I Can Use to Protect My House from Bankruptcy? While other exemptions exist, they might not necessarily be designed specifically for your house or other real property. For example, you may claim exemption for various items of personal property, your vehicle, retirement accounts, and other assets. However, there is usually only one homestead exemption. How an Attorney Can Help You with Homestead Exemptions During Bankruptcy If the homestead exemption is not enough to help you, talk to your attorney. They may help you evaluate other legal options. One possibility is that your attorney may negotiate with your creditors to hold off on seizing your house. In some cases, creditors may be persuaded to avoid taking adverse legal action against bankruptcy petitioners in exchange for at least a portion of the debt owed and proof that you can keep up with a payment plan going forward. If retaining your house is just not possible, you may consider selling your house before entering bankruptcy. This might help you net a larger profit from the sale and pay your debts without worrying about assets being seized and liquidated. Contact Our Pennsylvania Bankruptcy Lawyers About Protecting Your Home Get a free, private case review from our West Philadelphia, PA bankruptcy lawyers by calling Young, Marr, Mallis & Associates at (215) 701-6519.