Law Review (Book): Lubben, Stephen- To Protect Their Interests: The Invention and Exploitation of Corporate Bankruptcy Ed Boltz Tue, 03/03/2026 - 14:43 Available at:  https://cup.columbia.edu/book/to-protect-their-interests/9780231213110/ Summary: Chapter 11 corporate bankruptcy proceedings are commonly thought of as a tool to protect the broader economy from the failure of large firms, even though the biggest players reap the greatest rewards. In the conventional telling, modern corporate reorganization began in the 1890s, with J. P. Morgan leading a noble effort to protect bondholders from the depredations of corporate insiders. What does this story leave out, and how do the true origins of bankruptcy law shed light on its present-day uses and abuses? To Protect Their Interests is a groundbreaking historical account of how corporate bankruptcy became what it is today—a forum for battles between well-heeled insiders. Stephen J. Lubben strips away the myths surrounding the history of corporate restructuring, showing that it emerged a decade before Morgan, when the robber baron Jay Gould strove to keep control of his railroad by working out a compromise with a handful of wealthy investors. The 1885 restructuring of Texas and Pacific Railway set the pattern for future corporate reorganizations: insider dealing, elite manipulation of the legal system, and judicial deference. Lubben traces the evolution of the bankruptcy system through a series of major cases involving companies such as W. T. Grant and Toys “R” Us, demonstrating that it has always been a way for the powerful to maintain power. Revealing the sordid origins of bankruptcy law, this book also considers the limited prospects for reform. Commentary: Control, Venue, and the Enduring Power Struggle in Bankruptcy Stephen Lubben’s To Protect Their Interests is, at its core, a history of control. While it is nominally about corporate insolvency—moving from railroad receiverships through modern Chapter 11—it reads as a continuous case study in how sophisticated debtors and their financial backers have always sought to dictate the terms of reorganization by choosing the forum, shaping the process, and minimizing oversight. Lubben’s narrative reminds us that bankruptcy law has never been merely about distributing value; it has been about who gets to steer the ship during distress and who emerges holding the wheel afterward. From Jay Gould to the Texas Two-Step: Venue as Strategy: Lubben traces how late-19th-century railroad reorganizations, orchestrated by figures like Jay Gould and J.P. Morgan, used equity receiverships as proto-bankruptcies. These were not neutral judicial proceedings; they were curated events. Friendly courts were selected. Receivers were aligned with management. Committees were structured to ensure continuity of control. The entire point was to “protect their interests”—and those interests were the insiders’ and dominant creditors’, not dispersed stakeholders. The modern echo of that dynamic is unmistakable in contemporary mass-tort restructurings and the so-called “Texas Two Step.” Whether by divisional mergers, strategic entity creation, or venue engineering, the animating principle remains constant: secure a forum where the debtor—or the capital structure controlling it—can manage the process with minimal interference from trustees, regulators, or even an overly inquisitive judge. Lubben’s great contribution is not simply recounting these episodes, but showing their continuity. The tools change; the objective does not. Control during the case determines leverage over plan formulation, claim valuation, and ultimately the distribution of enterprise value. Control after the case determines who actually owns the reorganized entity. Everything else is, in many respects, procedural detail. Avoiding Oversight: Trustees, the SEC, and the “Nosy Judge” Problem Another throughline in Lubben’s history is the persistent corporate debtor impulse to avoid external supervision. Early receiverships sidestepped robust judicial involvement. Later iterations of bankruptcy prompted the creation of SEC oversight precisely because Congress recognized that reorganization could become an insiders’ game. The subsequent retreat from SEC involvement in Chapter 11 did not eliminate the instinct to manage the forum—it simply shifted the battlefield to venue selection and case architecture. One cannot read this history without seeing how modern corporate debtors seek to cabin the influence of: Independent trustees (rare in large Chapter 11 cases); Government oversight (now largely through the U.S. Trustee rather than the SEC); Judges whose enthusiasm for aggressive case management might disrupt the negotiated script. The historical lesson is sobering: procedural reforms repeatedly attempt to rebalance power, but sophisticated repeat players adapt, using structure and venue to reclaim the initiative. The Stark Contrast: Consumer Bankruptcy as a Regime of Scrutiny If To Protect Their Interests chronicles the steady expansion of autonomy for corporate debtors, it simultaneously highlights—by contrast—the intensely supervised environment imposed on consumer debtors. A consumer Chapter 7 or Chapter 13 debtor: Hostility to  selecting a “friendly” or even merely "convenient" venue; Faces an automatic trustee investigation and extended supervision; Even though 11 U.S.C. §1321 provides that "The debtor shall file a plan",  Chapter 13 Trustees routinely object to those plans for the benefit of otherwise silent and absent creditors; Is subject to mandatory documentation, means testing, and §341 examination; and  Encounters routine judicial scrutiny on even modest plan provisions. The asymmetry is striking. Corporate debtors can often choreograph complex restructurings in jurisdictions selected for predictability or debtor-friendliness. Consumers, by contrast, are funneled into a tightly regulated, trustee-driven process in which even small discretionary expenditures or asset valuations can draw objection. In short, Lubben’s history implicitly confirms what consumer practitioners experience daily: the Bankruptcy Code is functionally bifurcated. Corporate reorganization is a "negotiated" process. Consumer bankruptcy is an audited entitlement program. A Provocative Question: Could Consumers Replicate the Playbook? Lubben’s work invites an uncomfortable hypothetical. If venue engineering and entity structuring are legitimate tools for corporate debtors, could consumers theoretically deploy similar strategies? Imagine a consumer forming a wholly owned shell corporation in a perceived debtor-friendly jurisdiction, placing certain assets or liabilities into that entity, filing the corporate case first, and then filing a personal bankruptcy relying on the corporate case to anchor venue. On paper, this is merely the retail version of strategies routinely used in large Chapter 11 filings. Would courts welcome the increased filings? Or would they recoil at what suddenly looks like “forum shopping” when individuals practice it rather than massive enterprises? History suggests the answer. Courts and policymakers have repeatedly tolerated aggressive venue strategies when employed by sophisticated corporate actors, often framing them as efficiency-enhancing or necessary for complex restructurings. But when similar creativity appears in consumer cases, it is more likely to be labeled bad faith or manipulation of the system. That double standard exposes the deeper truth Lubben’s book reveals: the tolerance for procedural innovation correlates closely with the perceived legitimacy and economic importance of the debtor. Railroads, asbestos defendants, and mass-tort conglomerates are treated as systemically significant reorganizations deserving procedural flexibility. Individual wage earners are treated as risks to the integrity of the system if they attempt comparable maneuvers. Would Courts Compete for Consumer Cases? Lubben’s historical account of courts positioning themselves as preferred forums for major reorganizations raises a further question: if consumers could replicate these tactics at scale, would certain jurisdictions begin competing for those filings? One suspects not. Consumer cases are high-volume but low-fee and administratively burdensome. Unlike mega-Chapter 11s, they do not generate prestige, professional fees, or the institutional attention that large restructurings command. The economic incentives that quietly encourage venue flexibility for corporate debtors simply do not exist in the consumer context. Indeed, the likely response would be doctrinal tightening: more aggressive policing of venue, expanded findings of bad faith, and perhaps legislative amendments aimed at closing the perceived loophole. In other words, the system that accommodates structural ingenuity in corporate insolvency would likely move quickly to suppress it in consumer practice. Final Thoughts: Control as the Central Axis of Bankruptcy Lubben’s To Protect Their Interests ultimately teaches that bankruptcy history is less about statutory evolution than about governance: who controls the case, who controls the negotiations, and who controls the reorganized enterprise. For corporate debtors—from Gould’s railroads to modern mass-tort defendants—success has often meant retaining meaningful control throughout the process while minimizing intrusive oversight. For consumer debtors, the process begins with surrendering control to trustees, compliance regimes, and judicial supervision, in exchange for the promise of a fresh start. That divergence is not an accident of doctrine; it is the product of historical development shaped by economic power and institutional priorities. Lubben’s work forces us to confront whether our modern bankruptcy system still “protects their interests”—and whose interests those really are. Blog comments Category Book Reviews

If your phone rings with yet another unsolicited pitch for a loan you never asked about, a warranty you don’t need, or a credit card offer from a company you’ve never heard of, you’re not powerless. Federal law gives you the right to sue—and collect real money for every illegal call. The Telephone Consumer Protection Act (TCPA) is one of the strongest consumer protection statutes on the books. It imposes strict penalties on companies that make automated or prerecorded calls to your cell phone without your consent. And unlike most federal claims, you don’t need a government agency to enforce it. You can file suit yourself. This guide explains what the law covers, how to identify the companies behind the calls, and how to build a case that makes robocallers pay. The numbers: The TCPA awards $500–$1,500 per illegal call or text, carries a four-year statute of limitations, and TCPA filings doubled in 2025—making it one of the most actively litigated consumer protection laws on the books. What the TCPA Actually Prohibits The TCPA targets several specific practices. If you’re receiving unsolicited loan pitches by robocall, chances are the caller is violating multiple provisions simultaneously. Autodialed or prerecorded calls to cell phones without prior express written consent. For marketing calls, verbal consent isn’t enough—the law requires written permission. If you never signed up for anything, every call is a separate violation. Do Not Call Registry violations. If your number is registered at donotcall.gov and you’re still receiving telemarketing calls, that’s an independent violation—even from live callers, not just robocalls. Calls after you’ve revoked consent. Under FCC rules effective April 2025, you can revoke consent by any reasonable means—saying “stop,” texting “STOP,” or telling the caller to remove you. The company has 10 business days to comply. Every call after that is a willful violation at the $1,500 tier. AI-generated voice calls. The FCC has ruled that AI-generated voices qualify as “artificial or prerecorded” under the TCPA. A call that sounds human but is actually AI is still covered. Calls outside permitted hours. Telemarketing calls before 8:00 a.m. or after 9:00 p.m. in your time zone violate the TCPA regardless of consent. Step 1: Build Your Evidence File Before you can sue, you need proof. Start documenting every unwanted call right now—even before you know who’s behind them. What to Record for Every Call Screenshot your call log immediately. Date, time, and the number displayed. Don’t rely on memory. Save every voicemail. Prerecorded messages are direct evidence of a TCPA violation. Back them up to cloud storage or email them to yourself. Keep your phone bills. Carrier records show incoming call history and can be used to trace the source. Retain them for the full four-year limitations period. Keep a written log. Note whether the call was a prerecorded message or live person, what product or service was pitched, and whether you told them to stop calling. Don’t delete anything. Keep your phone handset through any litigation to prevent spoliation issues. Step 2: Identify the Caller This is the critical challenge. Robocallers hide behind spoofed numbers, shell companies, and third-party lead generators. But they can be found. Answer and Extract Information The most effective identification technique is counterintuitive: pick up the phone. Stay on the line, get transferred to the “live agent,” and before providing any personal information, ask: What company are you with? What’s your website? What’s your mailing address? Can you send me something by email? Even one of these details can be enough to identify the entity behind the calls and serve a complaint. Use Technology and Public Records Reverse phone lookups. Services like Hiya, Nomorobo, CallerSmart, or even a Google search of the number can sometimes reveal the company or lead generator behind it. Check the FCC’s Robocall Mitigation Database. All voice service providers must certify their STIR/SHAKEN implementation status. This can help identify which VoIP provider originated the call. Search it at fcc.gov/robocall-mitigation-database. STIR/SHAKEN attestation data. The FCC’s caller ID authentication framework enables carriers to verify that caller ID information is legitimate. While there’s no private right of action under STIR/SHAKEN itself, the authentication data makes identifying robocallers in TCPA litigation far more practical. Your carrier may provide this information upon request. Subpoena carrier records. Once litigation is filed, you can subpoena your carrier’s call detail records and, through the originating carrier, trace back to the entity that placed the call. The Industry Traceback Group (ITG) also traces illegal robocalls back to their originating provider, and their data can surface through discovery. Step 3: Confirm Your Legal Claims For unsolicited loan marketing robocalls to your cell phone, you likely have multiple independent violations per call—each carrying its own statutory damages. No prior express written consent. Did you ever sign up, fill out a form, or click “I agree” authorizing calls from this company? If not, every call is a $500 violation—or $1,500 if the court finds it was willful. DNC Registry violation. If your number is registered and you’re receiving telemarketing calls, that’s a separate violation even without an autodialer. Failure to honor opt-out. Did you tell them to stop? Under the April 2025 FCC rule, they must comply within 10 business days. Every call after that is willful. No caller identification. TCPA regulations require telemarketers to identify themselves and the entity they represent and provide a callback number. Failure to do so is an additional violation. Do the math: if a loan company has called you 20 times without consent, that’s potentially $10,000–$30,000 in statutory damages for your individual claim alone. The threat of class-wide exposure gives you significant settlement leverage. Step 4: File and Litigate You can bring a private action under the TCPA in federal or state court. You don’t need to show actual damages—statutory damages are automatic. Here’s how to maximize your position. File complaints with the FCC and FTC. Report violations at fcc.gov and ReportFraud.ftc.gov. These won’t litigate for you, but they create a public record of the caller’s behavior that strengthens your case. Consider both individual and class claims. If the same company is blasting robocalls to thousands of people, a class action multiplies the damages exponentially—and your leverage with it. Name the right defendants. Go after the company whose product is being marketed, not just the call center. The TCPA applies to the entity “on whose behalf” the call is made, which means the lender or lead buyer can be liable even if they hired a third-party dialer. Pursue FDCPA claims in parallel. If the robocalls relate to debt collection rather than marketing, you may have additional claims under the Fair Debt Collection Practices Act, which provides separate damages. Your Robocall Action Plan Register your number on the National Do Not Call Registry at donotcall.gov if you haven’t already. Start logging every unwanted call—date, time, number, content. Screenshot your call log and save voicemails. Answer the next robocall and extract the company name, website, email, or mailing address. Tell the caller to stop. Say “stop calling me” clearly. Note the date. This starts the willful-violation clock. Run reverse lookups on the calling numbers. Check the FCC’s Robocall Mitigation Database. Keep your phone and phone bills. Do not switch devices or delete records during the limitations period. File complaints with the FCC and FTC to create a public record. Consult with a consumer protection attorney to evaluate your claims and file suit. Key Legal Developments to Know TCPA law is evolving rapidly. A few developments that strengthen your hand in 2025–2026: FCC consent revocation rule (effective April 2025). Consumers can now revoke consent by any reasonable means—”stop,” “quit,” “end,” “opt out,” “cancel,” or “unsubscribe.” Companies get 10 days, then every subsequent contact is willful. AI voice calls are covered. The FCC’s February 2024 Declaratory Ruling confirmed that AI-generated voices are “artificial or prerecorded” under the TCPA. Companies can’t dodge the law by using natural-sounding AI. STIR/SHAKEN is making callers traceable. The FCC’s caller ID authentication framework, mandated by the TRACED Act, makes it increasingly difficult for robocallers to hide behind spoofed numbers. While there’s no private right of action under STIR/SHAKEN, the data it generates is invaluable in TCPA litigation. Courts are setting standards independently. A 2025 Supreme Court decision shifted TCPA interpretation authority from the FCC to the courts, meaning judges now set their own standards—and many are ruling favorably for consumers. If robocall harassment has contributed to financial stress or overwhelming debt, you don’t have to face it alone. Lakelaw’s bankruptcy attorneys have helped thousands of people find a fresh financial start. Contact us today for a free, confidential consultation. Get a Free Confidential Consultation The post Fight Back Against Robocallers: A Lawyer’s Guide to Suing Under the TCPA appeared first on Lakelaw.

How Fraudsters Exploit Lawyers, Trust Accounts, and the Prestige of Your License By David P. Leibowitz You went to law school to help people, not to become a money mule. But to a new breed of international fraudster, your law license, your trust account, and your professional instinct to help a client in need make you the perfect target. These scams aren’t crude. They’re engineered to exploit the specific mechanics of legal practice—IOLTA accounts, escrow obligations, the duty to act on a client’s behalf, and the time pressure of transactions. The FBI has issued repeated warnings. State bars across the country post new alerts nearly every month. Yet lawyers keep falling for these schemes, sometimes to the tune of hundreds of thousands of dollars, because the scams are designed to look exactly like the legitimate work lawyers do every day. If you handle collections, real estate closings, business transactions, or any matter that involves receiving and disbursing funds, you need to read this. The Fake Collection Client This is the most widespread scam targeting lawyers, and the FBI has flagged it repeatedly. Here’s how it works: you receive an email—often from someone overseas—asking whether you handle debt collection in your state. The story is always plausible. A foreign company is owed money by a U.S.-based debtor. They need local counsel to send a demand letter and collect the funds. You agree. You send the demand letter. And then something remarkable happens: the debtor agrees to pay immediately—in full, no negotiation, no pushback. A cashier’s check arrives at your office, often drawn on a Canadian bank or another institution that’s difficult to verify quickly. You deposit it into your IOLTA account. Your “client” asks you to wire the proceeds—minus your fee—to an overseas account. Days later, your bank notifies you that the check was counterfeit. The funds are clawed back. But the wire you sent is gone. And because it came out of your trust account, you are personally liable for every dollar. Red Flags Unsolicited contact from an overseas “client” you’ve never met, often with a vague or generic email address. The debtor capitulates immediately with no negotiation—the fastest, easiest collection of your career. Payment arrives by cashier’s check, often from a Canadian or foreign bank, sometimes for more than the alleged debt. The client pressures you to wire funds quickly, before the check has fully cleared—often citing an “urgent business need.” Communication is exclusively by email. The client resists phone calls, video conferences, or any verification of identity. How to Protect Yourself Never disburse funds until a check has fully cleared. Cashier’s checks can take weeks to be returned as counterfeit. Your bank’s “available balance” is not confirmation that funds are good. Verify the client independently. Search the company name, check business registries, and insist on a video call before accepting the engagement. Be suspicious of any collection where the debtor pays without resistance. In what universe does a debtor immediately agree to pay a demand letter in full, from a lawyer they’ve never heard of? Call the issuing bank directly to verify the cashier’s check—using a number you find independently, not one printed on the check itself. The Real Estate Wire Intercept Business email compromise has become the most financially devastating form of cybercrime targeting the legal profession. The FBI’s 2024 Internet Crime Report documented over 21,000 BEC complaints with losses exceeding $2.7 billion—and real estate transactions are among the most frequently targeted. Here’s the scenario: you’re handling a closing. Somewhere in the email chain, a hacker has been quietly monitoring the thread—often for weeks. At the critical moment, just before closing, someone in the transaction receives an email that appears to come from you, from the title company, or from the lender. It contains “updated” wire instructions. The email uses the right logos, the right tone, and references the correct property and transaction details. The only thing different is the account number—which now routes to a fraudster’s account. Red Flags Last-minute changes to wiring instructions sent via email, especially close to the closing date. Subtle changes to email addresses—a single character swap, a different domain extension, or a display name that doesn’t match the actual address. Unusual urgency in the request: “This needs to go out today” or “time is of the essence.” The email thread feels slightly off—different formatting, a different signature block, or a tone that doesn’t match the sender’s normal style. How to Protect Yourself Establish a firm policy: wiring instructions never change by email. Communicate this to all parties at the outset of every transaction. Verify all wiring instructions by phone using a known number—never a number from the email itself. Enable multi-factor authentication on all firm email accounts. A compromised inbox is the most common entry point for these attacks. Train every person in your office who touches financial transactions. Paralegals, assistants, and bookkeepers are often the ones who actually initiate wires. Escrow and Trust Account Abuse Your IOLTA account is a laundromat waiting to happen—at least, that’s how criminals see it. Money that passes through a lawyer’s trust account acquires a veneer of legitimacy. Sophisticated fraud rings know this, and they’re engineering scenarios designed to push funds through your escrow in ways that make you an unwitting participant in money laundering. Common setups include: an overseas “client” asks you to hold funds in escrow pending a business transaction that never quite materializes, or a new client asks you to receive a wire, hold it briefly, and forward it to a third party minus your fee. The transaction may be framed as an equipment sale, a consulting agreement, or a settlement of a foreign dispute. The funds are real—but they’re stolen. And when law enforcement traces the money, the trail leads to your trust account. Red Flags A client asks you to receive and forward funds with no substantive legal work beyond holding money. The transaction structure doesn’t make legal sense. Why does an equipment sale between two foreign parties need a U.S. lawyer to hold escrow? Multiple parties you can’t independently verify—the “buyer,” “seller,” and “client” may all be the same person or organization. The client is indifferent to your fee or offers an unusually generous retainer for minimal work. How to Protect Yourself Never let your trust account be used as a payment pass-through. If the primary purpose of your engagement is to receive and forward funds rather than provide legal services, walk away. Know your client. Conduct due diligence that goes beyond a signed engagement letter. Verify corporate registrations, confirm identities, and understand the economic substance of the transaction. Understand your obligations under anti-money laundering frameworks. While the U.S. hasn’t adopted the ABA’s recommended “gatekeeper” rules in full, the ethical and criminal exposure is real. Consult your state bar’s ethics hotline if a potential engagement feels unusual. Most bars are happy to help you spot a scam before it becomes a disciplinary matter. The Overpayment Scam A variation on the collection scam, but worth its own section because it’s devastatingly effective. A new client retains you for a straightforward matter—a contract dispute, a personal injury settlement, a family law collection. A check arrives, but it’s for more than the agreed amount. The client apologizes for the “error” and asks you to deposit the check, keep your fee, and wire the overage back. The check is fraudulent. The “error” was the whole point. And you’ve just wired clean money from your trust account to a criminal. How to Protect Yourself Any overpayment followed by a request to return the excess is a scam. Full stop. Legitimate clients do not accidentally overpay and then urgently need the difference wired to a third-party account. Return overpayments by the same method they arrived. If a check came in, send a check back to the same account. Never wire a refund from a check deposit. Wait for final clearance—not “available funds.” Banks make funds “available” long before a check has truly cleared. Cashier’s checks drawn on foreign banks can take weeks to bounce back. AI-Powered Impersonation Artificial intelligence has made these scams dramatically more convincing. Fraudsters now use AI to generate flawless legal correspondence, clone the voices of known contacts, and create deepfake video. A scammer posing as a foreign client can now produce emails that read like they were written by a sophisticated business professional—because they were written by an AI trained on corporate communications. More alarmingly, the FBI has warned of criminal operations that impersonate existing law firms and real attorneys, complete with cloned websites and fabricated bar credentials, to victimize people who’ve already been scammed once. Your name and your firm’s reputation can be weaponized without your knowledge. How to Protect Yourself Monitor your firm’s online presence. Periodically search for your name, your firm name, and your bar number to check for impersonation websites or fraudulent use of your credentials. Don’t rely on the quality of written communications as a trust signal. AI has eliminated grammatical errors as a reliable red flag. A perfectly written email no longer means a legitimate sender. Verify voice and video. If a client or counterparty calls with an urgent financial request, hang up and call back at a known number. AI voice cloning is now available to anyone. The Lawyer’s Fraud Prevention Checklist Eight Rules to Protect Your Practice Never disburse trust funds until checks have irrevocably cleared. “Available” doesn’t mean “good.” Verify every new client’s identity independently—especially those who contact you unsolicited from overseas. Insist on live communication. Clients who refuse phone or video calls are a serious red flag. Never wire funds to a third party you haven’t independently confirmed. Treat wiring instruction changes as hostile until verified by phone. If a collection or transaction seems too easy, it’s probably a trap. Refuse to let your trust account be used as a pass-through. Document your due diligence. If you’re ever investigated, your file should show what you checked and when. If You Suspect You’ve Been Targeted Speed matters. If you’ve deposited a suspicious check or wired funds based on a potentially fraudulent instruction, act immediately. Contact your bank’s fraud department and request an immediate recall of any outgoing wires. Recovery rates drop sharply after the first 24 hours. Notify your state bar. Most bars have dedicated scam reporting channels and will not treat your report as a disciplinary matter. File a report with the FBI’s IC3 at ic3.gov and with the FTC at ReportFraud.ftc.gov. Notify your malpractice carrier immediately. Prompt reporting is typically a condition of coverage. Preserve all communications—emails, texts, checks, wire confirmations. These are evidence. Alert colleagues in your local bar. Scammers often work geographic regions systematically. If they targeted you, they’re targeting other lawyers in your area. There is no shame in being targeted. These are professional criminals running industrial-scale operations. The shame would be in not warning your colleagues. Share this guide with every lawyer you know. If fraud has left you or your clients facing overwhelming debt, you don’t have to face it alone. Lakelaw’s bankruptcy attorneys have helped thousands of people find a fresh financial start. Contact us today for a free, confidential consultation. Get a Free Confidential Consultation The post You’re the Mark, Counselor appeared first on Lakelaw.

 My law firm is representing a number of jewelry vendors who have sold goods to Saks, prior to their Chapter 11 bankruptcy filing. I am proud to announce that I was quoted in a New York Post article on the Saks Chapter 11 bankruptcy filing article. A link to the article can be found at https://nypost.com/2026/02/18/business/saks-and-neiman-low-on-luxury-goods-as-fashion-labels-fret-over-court-battle-with-amazon/Clients or their advisors who have questions about being paid on their Saks receivables prior to the bankruptcy filing or about being paid for goods shipped after the Saks bankruptcy filing should contact Jim Shenwick, Esq Jim Shenwick, Esq 917 363 3391 [email protected] Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt! & creditors in Bankruptcy cases

M.D.N.C. — Custer v. Dovenmuehle (IV): Transparency Wins Again — No Sealing of Documents at Summary Judgment (Post B- Bankruptcy Practice Tips and Sample Documents) Ed Boltz Fri, 02/13/2026 - 16:20 Below is a practitioner-focused review of what can be gleaned from the Custer v. Dovenmuehle record you provided — not as a case summary, but as a toolbox for attacking mortgage Proofs of Claim in Chapter 13, both against Dovenmuehle and other servicers who use similar practices. I focus on what Custer alleged, what DMI admitted (or couldn’t), and how those themes translate into objections, discovery, and plan practice in consumer cases. I. What Custer’s case reveals about how servicers actually operate Even without a merits ruling yet, the unsealed discovery tells us a great deal about how at least one major sub-servicer behaves — and where consumer lawyers can push back in bankruptcy. A. “Optional” fees that are functionally unavoidable Key takeaways from the admissions and depositions: DMI treated phone payments as a fee-generating channel, not an accommodation. The practice existed for “20-plus years” (Braun depo, pp. 36–39 of Ex. D). The fee was not tied to any borrower default or special service; it was a routine way to pay. Fees were set by market benchmarking, not cost accounting. In Interrogatory No. 8, DMI admits it raised fees based on what “others in the industry” were charging — not on its own costs. There is no evidence DMI ever analyzed its actual cost of processing payments. This matters enormously in bankruptcy, because it undermines any claim that the charge is a “reasonable fee” recoverable under § 506(b) or the loan documents. DMI could not (or would not) identify its “actual cost.” In Response to RFA No. 7, DMI said it lacked information to calculate its own costs. That admission is gold for debtors: if the servicer can’t quantify cost, it is very hard for them to justify a post-petition charge as “actual, necessary, and reasonable.” II. What this means for Proofs of Claim in Chapter 13 Here are practical ways to translate Custer into claim litigation. 1. Attack “pay-to-pay” and similar junk fees as unenforceable components of the claim When a Proof of Claim includes: “Processing fees” “Pay-by-phone fees” “Convenience fees” “Payment handling fees” “Transaction fees” You now have a template for objection: Arguments you can make (a) Not authorized by the mortgage or note. DMI tried to rely on boilerplate language that the lender may charge fees not “expressly prohibited.” That is backwards. Many courts require affirmative authorization, not mere absence of prohibition. Use: The mortgage terms (often FNMA/FHLMC uniform instruments) Servicing guides State law (in NC, NCDCA and UDTPA principles) (b) Not a recoverable charge under § 506(b). Even if a fee exists, a secured creditor can only recover post-petition fees if they are: Provided for in the agreement, AND Reasonable and necessary Custer shows that at least one servicer set fees by market comparison, not by cost — which undercuts “reasonableness.” (c) Not a “cost of cure” under § 1322(b)(5). If the debtor is curing arrears, “convenience fees” are not properly part of arrears unless: They are contractually required, and They actually relate to default. Custer shows these fees were routine, not default-based. 2. Use discovery strategically in bankruptcy cases Borrow from Custer’s playbook. Useful discovery requests in claim litigation: Cost inquiry (mirroring Custer RFA No. 7): Ask the servicer to admit or produce: The actual cost of processing a phone payment The vendor charge (e.g., ACI) Any internal analysis of profitability Whether fees exceed cost If they say “we don’t know,” that helps you argue the fee is per se unreasonable. Policy inquiry: Request documents showing: When the fee was adopted Why it was increased Whether the increase was revenue-driven Whether any borrower alternatives existed (free channels) Loan-type screening (Exhibit B themes). The record shows DMI had internal coding to decide which loans were charged the fee. In bankruptcy, ask: What criteria were used? Were some borrowers exempt? Why? Did this change over time? Inconsistencies can support UDTPA-style unfairness arguments. 3. Recharacterize these fees as disguised interest or impermissible add-ons Bankruptcy courts are increasingly skeptical of servicers using fees to supplement revenue. You can argue: These are not “costs of collection” but a revenue stream. If so, they should be treated as unsecured claims — or disallowed entirely — rather than secured arrears. This parallels arguments used in: Property inspection fee litigation Force-placed insurance cases “Default service” fee challenges Custer gives you evidentiary support that at least some servicers treat these as profit centers. III. Implications beyond Dovenmuehle Although this case is against DMI, the practices described are industry-wide. If any of these servicers include: “Convenience fees,” “Processing fees,” or “Payment channel fees” Custer can be cited as evidence that these charges are typically market-based rather than cost-based. IV. How this fits into Chapter 13 litigation strategy Step 1 — Read the Proof of Claim closely Look for: Added fees post-petition Unexplained “miscellaneous” charges Line items not tied to escrow, taxes, insurance, or principal/interest Step 2 — File a targeted objection Grounds: Not authorized by contract Not reasonable under § 506(b) Not part of arrears under § 1322(b)(5) Violates state law (NCDCA/UDTPA in NC) Step 3 — Serve limited discovery (if necessary) Model requests inspired by Custer: Identify actual cost of processing payment Produce vendor invoices (ACI or equivalent) Explain how fee was set Produce any analysis of profitability Identify when fees changed and why Step 4 — Use the burden of proof Remember: the creditor bears the burden to prove its secured claim amount is correct once you object. Custer shows many servicers cannot substantiate these fees with real cost data. V. Big-picture takeaway for consumer lawyers Custer is not just about one borrower or one servicer. It exposes a pattern: Mortgage servicers often impose “optional” payment-channel fees that are set by industry custom, not by actual cost, and are not clearly authorized by the mortgage. That pattern is deeply vulnerable in Chapter 13. Blog comments Attachment Document model_objection_pigeon_foreclosure_mill.docx (37.05 KB) Document discovery_template_pigeon_foreclosure_mill.docx (36.56 KB) Category Middle District

M.D.N.C. — Custer v. Dovenmuehle (IV): Transparency Wins Again — No Sealing of Documents at Summary Judgment (Post A) Ed Boltz Fri, 02/13/2026 - 16:13 Summary: Short take: In yet another skirmish in the Custer v. Dovenmuehle litigation, Chief Judge Catherine Eagles refused to let either side keep key summary-judgment materials under seal—especially the evidence about “pay-to-pay” fees. If Dovenmuehle wants to defend its business model, it will have to do so in the sunlight. What happened As the parties teed up cross-motions for summary judgment, both sides filed exhibits and briefing under temporary seal. Dovenmuehle Mortgage, Inc. (“DMI”) then sought to keep significant portions sealed, including: What DMI pays its vendor (ACI) to process phone payments; ACI contracts and invoices; Internal data about fee exceptions; and Information about which loan types are subject to the “pay-to-pay” fee. Custer, for his part, had filed a bank statement as an exhibit showing two payments to DMI—but the page also included his bank name, partial account number, balance, and unrelated transactions. Judge Eagles denied both motions to seal, with two important nuances: Custer’s bank statement (Exhibit L). The Court agreed that Custer’s irrelevant personal banking details should not be public—but criticized counsel for filing them unredacted in the first place. Rather than seal the whole exhibit, the Court ordered plaintiff’s counsel to submit a redacted replacement page limited to the two DMI payments. Once replaced, the exhibit would be fully unsealed. DMI’s business information. Although the Court had allowed some of this material to remain sealed at the class certification stage, Judge Eagles held that the balance shifts at summary judgment, where public access is at its constitutional apex. Because a central question in the case is whether DMI’s phone-payment fee is unlawful under the North Carolina Debt Collection Act and the UDTPA, the Court ruled that the public has a strong interest in knowing: What it actually costs DMI to provide the service; and Whether the fee is profit-driven or cost-based. DMI failed to show a “compelling interest” narrowly tailored enough to justify secrecy, so its request to seal was flatly denied. Result: The Clerk was ordered to unseal Custer’s brief (after redaction of the bank page) and to unseal DMI’s sealed materials in full. Why this matters — and how it fits with Custer I & II This decision is not just a procedural sideshow; it is very much of a piece with the earlier Custer rulings previously chronicled: Custer I — “No default required” (Nov. 6, 2024 post) Judge Eagles previously held that a borrower need not be in default to have a viable claim under the North Carolina Debt Collection Act. That ruling opened the door for routine mortgage servicing practices—like pay-to-pay fees—to be scrutinized even for current borrowers. ? Connection to today: If DMI is charging a fee that is allegedly “unfair,” “unconscionable,” or not authorized by contract, the public should be able to see the economics behind it. Transparency is part of accountability. Custer II (Nov. 21, 2025 post) You previously highlighted how Custer’s claims survived aggressive arguments that his loss-mitigation-related fees were somehow insulated from state law. ? Connection to today: The sealing order underscores that this case is not just about one borrower’s annoyance—it’s about systemic servicing practices affecting thousands of North Carolinians. When a practice is widespread, the public interest in transparency is at its zenith. Custer III — Class Certification granted (your Jan. 7, 2026 post) At class certification, the Court recognized common questions about DMI’s pay-to-pay practice and certified a class—while allowing some cost data to remain sealed for the moment. ? Connection to today: Judge Eagles essentially said: That was then; this is now. At summary judgment, secrecy gives way to the First Amendment. The very information that might show whether the fee is excessive is now presumptively public. Commentary: This ruling is vintage Chief Judge Eagles: careful on doctrine, pragmatic on procedure, and skeptical of reflexive secrecy. Two themes jump out: Sunshine as substance, not just process. DMI wanted to litigate in the shadows—arguing that its fee structure was commercially sensitive. But when a fee is alleged to violate North Carolina consumer law, secrecy becomes part of the problem. The public cannot evaluate whether a practice is abusive if the numbers are hidden. Class actions change the stakes. Once a class is certified, the case stops being about George Custer alone. It becomes a public dispute over mortgage servicing practices in North Carolina. That status justifies greater openness. A gentle but pointed rebuke to counsel. The Court did Custer a favor by allowing a redacted replacement instead of simply denying the motion outright. But the message was clear: lawyers should not dump sensitive personal data into the record and then ask the Court to clean it up. What to watch next With the cost data now not only in the open record  but also attached for everyone to pick through, expect: A sharper fight over whether the pay-to-pay fee is “reasonable,” “cost-based,” or simply a revenue stream; Potential expert battles on damages; and Possibly, stronger settlement pressure on DMI now that its numbers will be public. If Judge Eagles ultimately rules that the fee violates the NCDCA or UDTPA, this case could become a leading precedent for attacking junk mortgage servicing fees across North Carolina—much like Bland and Greene reshaped the rent-to-own landscape. To read a copy of the transcript, please see: To read a copy of the transcript, please see: Blog comments Attachment Document custer_v._dovenmuehle.pdf (206.47 KB) Document dovenmuehle_mortgage_unsealed_documents.pdf (20.78 MB) Category Middle District

 Many clients contact us after they have defaulted on their SBA EIDL loan and it is transferred to the Department of Treasury (“Treasury” ) or Treasury Offset Program (TOP) for collection.  Seven payments must have been missed for the loan to be transferred to Treasury and when the loan is transferred, a 30% penalty is added to the loan balance.What will occur, and what can a client do when the loan is sent to Treasury by the SBA?I Borrowers can seek a “recall” back from Treasury to the SBA in limited circumstances. A. Procedural/notice defects: If the borrower never received the required 60‑day notice from SBA before TOP referral (e.g., bad address, no notice in portal), you may be able to argue the referral was improper and request recall based on lack of proper notice. Also if you made your payments or were in default for fewer that 7 months you may have grounds to recall the loan. B. Hardship: In some cases, documented hardship (permanent disability, closure of the business, bankruptcy, disaster, or offset of income that would create an inability to meet basic living expenses) can be used to request recall or, at minimum, a suspension or limitation of offsets.C. Intent and ability to cure: If the borrower can promptly cure arrears and credibly stay current going forward, SBA may agree to pull the loan back for servicing rather than keep it at Treasury.In our experience, recall is very hard to do and we will not handle those cases for clients. II What can Treasury do to collect the defaulted loan?Once the debt is at Treasury (usually via the Treasury Offset Program, or “TOP”), the government adds a 30% penalty  fee to  the outstanding balance increasing the amount due.Treasury or TOP can offset federal payments, including federal income tax refunds, some state tax refunds (in participating states), and certain federal payments such as 15% of  Social Security benefits payable to an individual borrower or a guarantor of a defaulted SBA loan. Those businesses that do work for the Federal government, may see a portion of the receivables due from the Federal Government taken by TOP to repay the defaulted loan. Treasury can administratively garnish wages from an individual borrower or guarantor without first obtaining a civil judgment, subject to statutory notice and hearing requirements.The outstanding debt can be reported to credit bureaus, negatively affecting personal and/or business credit.Treasury can refer the matter to private collection agencies and, in certain cases, to the Department of Justice for litigation to reduce the debt to judgment and pursue enforcement remedies (e.g., execution, liens, etc.).Where there is a personal guaranty for the defaulted loan (COVID EID Ls over $200,000.00), the government can pursue the guarantor and reach personal assets, subject to usual exemptions and procedural protections.III. What can a  borrower do after the defaulted loan has been referred to Treasury?Negotiate with Treasury (or its contractors)If recall is not viable, your main tools are negotiation and structured resolution under Treasury’s collection framework. Forms will need to be filled out providing detailed financial information to the Treasury or the collection agencies. Installment agreements: Treasury (or its collection contractor) may accept a monthly payment arrangement based on verified financial information, sometimes in conjunction with partial resumption or limitation of offsets.Lump-sum compromise/Settlement: Treasury and DOJ have compromise authority for federal debts; in practice, compromises generally require showing inability to pay in full, limited assets, and that the compromise yields more than enforced collection is likely to produce.Suspension or modification of offsets: For debtors in financial hardship, TOP has procedures to challenge the offset or request suspension/reduction, typically via written objection and documentation (income/expense, medical issues, etc.).IV. Bankruptcy: In an appropriate case, a business, individual borrower or guarantor may want to file bankruptcy to stay collection activity, discharge the debt or seek repayment thru a Bankruptcy plan, approved by the Bankruptcy Court. V. Use of hardship and “uncollectibility” statusWhere the debtor is effectively judgment‑proof one can argue for “currently not collectible” status with limited or no active collection measures, based on age, disability, income below certain thresholds, or absence of non‑exempt assets.Borrowers or their advisors who have questions about defaulted SBA EIDL Loans and their transfer to the Department of Treasury should contact Jim Shenwick, Esq.Jim Shenwick, Esq  917 363 3391  [email protected] Please click the link to schedule a telephone call with me. https://calendly.com/james-shenwick/15minWe help individuals & businesses with too much debt!

Law Review: ​Drumbl, Michelle Lyon, Poverty, Fresh Starts, and the Social Safety Net (December 12, 2025). 98 Temple Law Review 57 (2025) Ed Boltz Thu, 02/12/2026 - 15:43 Available at SSRN: https://ssrn.com/abstract=6076686 Abstract: For decades low-income families have relied on the filing of individual income tax returns to claim critical social welfare benefits in the form of refundable tax credits, most notably the Earned Income Tax Credit and the Child Tax Credit. But what happens to those families when the social safety net is not enough to meet their financial obligations, and they must seek a fresh start by filing for bankruptcy? Summary: Michelle Lyon Drumbl’s article—Poverty, Fresh Starts, and the Social Safety Net—is one of those rare pieces that bridges tax law, bankruptcy law, and anti-poverty policy in a way that actually matters to real people (and to the consumer lawyers who represent them). At its core, Drumbl asks a deceptively simple question: If Congress designed refundable tax credits as part of the modern social safety net, why do bankruptcy systems so often treat them like disposable “estate assets” instead of lifelines? What the Article Does Well Reframes refundable tax credits as welfare—without the stigma. Drumbl carefully shows how the EITC and CTC function in practice like social benefits, even though they arrive through the tax system rather than a welfare office. She explains that this design choice—using the IRS rather than a social services agency—reduced stigma, lowered administrative costs, and made benefits feel “earned” rather than charitable. That matters enormously when bankruptcy judges are later asked whether these funds are “public assistance.” Explains why timing creates bankruptcy traps. A recurring theme is that the very features that make the EITC and CTC effective—lump-sum delivery and annual filing—also make them vulnerable in Chapter 7. If a debtor files bankruptcy before the refund hits the bank account, trustees often treat it as estate property, even when it is clearly intended to pay for rent, utilities, car repairs, or medical bills. Shows how outcomes depend almost entirely on geography. Drumbl maps the national landscape into four basic state approaches: States that explicitly exempt EITC (and sometimes CTC) in their exemption statutes; States that protect “public assistance” broadly enough to cover EITC; States that protect only state or local assistance (not federal benefits); and States that provide no protection at all. The takeaway is brutal: two equally poor debtors can have opposite results based solely on their zip code. Highlights how courts often want to help—but say their hands are tied. Drumbl surveys case law showing that bankruptcy judges are frequently sympathetic to debtors who need their refunds for basic survival—but still feel bound by narrow statutory language. The refrain is familiar to any consumer practitioner: “This is a problem for the legislature, not the court.” Uses COVID relief as a revealing case study. Drumbl notes that Congress temporarily excluded COVID recovery rebates from the bankruptcy estate entirely under 11 U.S.C. § 541(b)(11). That move implicitly recognized what advocates have long argued: some money should never be up for grabs by a Chapter 7 trustee. Ironically, Congress did not clearly extend that same protection to the expanded 2021 Child Tax Credit, leading to messy litigation and inconsistent results. Why In re Quevedo Matters (and why it should embarrass North Carolina) I have previously written about In re Quevedo (M.D.N.C.), and Drumbl’s framework makes that case even more stark. Quevedo is a textbook example of how the poorest debtors are often treated the worst in bankruptcy. In that case, a low-income debtor’s EITC refund was sliced up between the trustee and the debtor, even though the money was plainly needed for basic household support. The court treated the refund less like “family subsistence” and more like a piggy bank to be raided for unsecured creditors. Under Drumbl’s analysis, Quevedo sits squarely in the category of cases where: The credit is functionally public assistance, The debtor’s need is obvious, The judge is not hostile, Yet the statute still permits—and arguably compels—harsh treatment. That is not a “hard case making bad law.” It is a bad statutory framework producing predictable injustice. Contrast this with a debtor living just across the border in Virginia,  where the entire amount would have been protected. Quevedo illustrates exactly what Drumbl warns about: bankruptcy law has not caught up with the reality that refundable tax credits are now central to the social safety net. Commentary:  Where We Should Go From Here (Legislative Fixes) Drumbl’s most important contribution is not just diagnosis—it’s prescription: 1. A Federal Fix (the cleanest solution) Ideally, Congress should: Exclude EITC and refundable CTC from the bankruptcy estate entirely, similar to what it did for COVID rebates;  Create a uniform federal exemption specifically protecting these benefits in bankruptcy; and Excluding this amount from the calculation of Current Monthly Income under 11 U.S.C. §101(10A)(B)(ii). That would eliminate the arbitrary state-by-state lottery that currently determines whether poor families keep their safety net. Realistically, however, Congress moves slowly—if at all—on consumer bankruptcy issues. That makes state reform critically important. 2. A North Carolina Fix (the most practical near-term path) A proposed amendment to N.C.G.S. § 1C-1601(a)(12) is exactly the kind of targeted, sensible reform Drumbl’s article implicitly calls for. Under this proposal,  the exemptions in North Carolina would be amended to provide : “Alimony, support, separate maintenance, and child support payments or funds, and public benefits that have been received or to which the debtor is entitled, to the extent the payments or funds are reasonably necessary for the support of the debtor or any dependent of the debtor.” This is a smart move for several reasons: It clearly covers EITC and refundable CTC. By explicitly including “public benefits…to which the debtor is entitled,” this would remove the semantic gamesmanship trustees often use to argue that EITC is “just a tax refund.” It builds in a reasonableness standard. The “reasonably necessary for support” language aligns with long-standing exemption principles and prevents abuse while still protecting vulnerable families. It treats tax-based benefits like child support. That is normatively correct. If we exempt child support because it keeps children housed and fed, we should do the same for EITC—which often serves the identical purpose. It would prevent another Quevedo. Under this proposed language, a debtor like Quevedo would have a far stronger argument that her refund was untouchable. 3. Why this reform matters beyond bankruptcy Drumbl’s article—and the unfortunate result in Quevedo —together reveal something bigger: Bankruptcy is increasingly becoming the place where the social safety net is either reinforced or dismantled. If trustees can seize EITC refunds: Families miss rent Utilities get cut off Cars don’t get repaired Medical bills go unpaid Children suffer That is not what a “fresh start” is supposed to look like. This proposed amendment to exemptions would align North Carolina with the growing national recognition that refundable tax credits are not windfalls—they are survival money. Bottom line: Drumbl’s article provides the intellectual architecture; Quevedo provides the moral urgency; and the proposed statutory fix provides the practical path forward. If North Carolina wants to be a state that truly gives low-income debtors a fresh start—rather than a last haircut—it should adopt this amendment to § 1C-1601(a)(12). Anything less leaves us with a system where the poorest families continue to subsidize their creditors with the very funds Congress meant to keep them afloat,  turning the EITC into yet another form of corporate welfare. To read a copy of the transcript, please see: Blog comments Attachment Document poverty_fresh_starts_and_the_social_safety_net.pdf (538.28 KB) Category Law Reviews & Studies

Law Review: Gouzoules, Alexander, The Bankruptcy Judge and the Generalist Tradition (January 26, 2026). University of Missouri School of Law Legal Studies Research Paper No. 2026-09, 51:3 BYU Law Review 743 (2026), Ed Boltz Wed, 02/11/2026 - 14:57 Available at: https://ssrn.com/abstract=6135608 Abstract: The prevailing academic consensus is that bankruptcy judges are specialists presiding over specialized courts. This Article contends that this description is incomplete and, in some respects, inaccurate. Drawing on scholarly models of judicial specialization and historical surveys of the field, this Article contends that bankruptcy judges reflect a hybrid design choice: procedural specialization combined with substantive generalism. This model delivers many of the observed benefits of judicial specialization (including efficiency and technical competence) while preserving the cross-pollination of ideas and other benefits associated with the generalist tradition of American judging. This Article also reflects on contemporary developments—most notably the rise of the “complex case panel” that attracts a disproportionate number of large public company reorganizations. This trend has resulted in a handful of bankruptcy judges serving as de facto reorganization specialists. In doing so, it has disrupted the generalist design of the bankruptcy courts by increasing case concentration and attendant risks, including tunnel vision. By recharacterizing the bankruptcy judges as generalists as well as specialists, this Article offers a fresh lens for evaluating decision makers in the field. It also contributes to the broader literature on judicial specialization. Previous accounts have emphasized that particular institutions exist along a continuum between true generalism and focused specialization. Through a focus on the bankruptcy field, this Article suggests that procedural and substantive expertise represent separate and potentially independent dimensions of specialization. Summary: Alexander Gouzoules’ “The Bankruptcy Judge and the Generalist Tradition” is a quietly subversive article. It challenges a premise that bankruptcy lawyers, judges, and academics often take for granted: that bankruptcy judges are specialists in the same sense as tax judges, patent judges, or administrative law judges. Gouzoules’ central claim is more nuanced—and far more faithful to the lived reality of bankruptcy practice. Bankruptcy judges, he argues, are procedural specialists but substantive generalists, occupying a hybrid role that preserves the generalist tradition of American judging while delivering the efficiency and competence that specialization can bring . This is not just a semantic exercise. Gouzoules shows that how we conceptualize bankruptcy judges has real consequences for institutional design, prestige, legitimacy, and—ultimately—outcomes. The Core Insight: Procedural Specialization, Substantive Generalism Gouzoules’ key move is to separate procedure from substance, something much of the judicial-specialization literature fails to do. Bankruptcy judges undeniably specialize—but what they specialize in is process: the automatic stay, claims allowance, plan confirmation mechanics, valuation, mediation pressure, and the collective-action machinery of insolvency. On substance, however, bankruptcy judges are forced—by statute and design—to be generalists. A single docket can require facility with: state property law (Butner), tort law, contract law, labor law, environmental law, constitutional law, consumer protection statutes, and domestic relations spillover issues. In this sense, bankruptcy judging looks far closer to Article III generalism than is commonly acknowledged. Bankruptcy courts do not replace nonbankruptcy law; they apply it through a specialized procedural lens. That distinction matters. A Direct Contrast with Pardo: Permanence vs. Judicial Identity This framing sits in productive tension with Rafael Pardo’s “Specialization and the Permanence of Federal Bankruptcy Law”. Pardo’s focus is institutional and doctrinal: specialization as a mechanism for entrenchment—how bankruptcy law becomes sticky, insulated, and resistant to external legal change. His concern is that specialization hardens bankruptcy into a self-referential system. Gouzoules, by contrast, is asking a different (and complementary) question: What kind of judge is a bankruptcy judge supposed to be? Pardo worries about specialization as permanence. Gouzoules defends generalism as a design choice, one that has historically prevented bankruptcy from collapsing into a technocratic silo. Read together, the two pieces form a warning label and a blueprint. Pardo tells us what can go wrong when bankruptcy becomes too insular; Gouzoules explains why the system was originally structured to resist exactly that outcome. Corporate Chapter 11 vs. Consumer Bankruptcy: The Ugly Split Where Gouzoules’ article becomes most unsettling—and most relevant for consumer lawyers—is his discussion of modern case concentration, especially in large Chapter 11s. He notes that: a small number of judges now function as de facto reorganization specialists, particularly through complex-case panels and venue concentration, and this development actively undermines the generalist design of the bankruptcy courts. But the corporate side is only half the story. On the consumer side, the specialization/generalism divide takes on a darker tone. Gouzoules explicitly refers to consumer debtors as “a long stigmatized group”, and his framework helps explain why the treatment of consumer cases in “high prestige” districts is so troubling. In places like Delaware: consumer cases are often segregated to one or two judges, while other judges remain “pure,” high-status Chapter 11 specialists, creating a two-tier judiciary within the same court. That segregation is not neutral. It carries unmistakable institutional and cultural signals—about prestige, about value, and, unavoidably, about race and class. Consumer bankruptcy becomes the judicial equivalent of the service elevator: necessary, but carefully kept out of sight. This is specialization not as efficiency, but as containment. Why This Matters for Consumer Bankruptcy For consumer practitioners, Gouzoules’ article is quietly validating. It provides a theoretical foundation for something consumer lawyers have long known instinctively: consumer bankruptcy is not “simpler” law, it is broader law, applied under intense procedural pressure, and it demands judges who are genuinely comfortable as legal generalists. Segregating consumer cases does not just stigmatize debtors; it distorts judging. It encourages tunnel vision, reduces cross-pollination of ideas, and reinforces the false hierarchy that treats corporate distress as sophisticated and consumer distress as routine. Ironically, Gouzoules’ analysis suggests that consumer cases may be more faithful to the generalist tradition than elite Chapter 11 practice. Bottom Line Gouzoules reframes bankruptcy judging in a way that should make both corporate and consumer lawyers uncomfortable—but for different reasons. Bankruptcy judges were never meant to be cloistered specialists. They were designed to be generalist judges operating inside a specialized procedural system. When districts segregate consumer cases or funnel mega-cases to a handful of prestige judges, they are not perfecting the system—they are breaking it. In that sense, this article pairs perfectly with Pardo’s cautionary account. One shows how specialization hardens law; the other shows how it reshapes judges. Together, they underscore a simple but powerful lesson: bankruptcy works best when it resists the temptation to become too pure, too elite, or too specialized—for anyone. And while there is certainly no appetite in Congress or the rest of the quavering federal judiciary,  this points to yet another reason (along with Alexander Hamilton's still pertinent arguments in Federalist No. 78 regarding the "steady, upright, and impartial administration of the laws")  for lifetime tenure for bankruptcy judges as well.   With proper attribution,  please share.   To read a copy of the transcript, please see: Blog comments Attachment Document the_bankruptcy_judge_and_the_generalist_tradition.pdf (810.1 KB) Category Law Reviews & Studies

Legislation: Bankruptcy Administration Improvement Act of 2025 — Summary and Commentary Ed Boltz Mon, 02/09/2026 - 17:47 Bankruptcy Administration Improvement Act of 2025 — Summary and Commentary I. Big Picture The Bankruptcy Administration Improvement Act of 2025 does three principal things: Doubles the “no-asset” Chapter 7 trustee fee from $60 to $120 per case; Rebalances how filing and quarterly fees are allocated to fund the U.S. Trustee System; and Extends temporary bankruptcy judgeships created in 2020 from 5 years to 10 years. Congress presents the Act as necessary to keep the bankruptcy system self-funding, stabilize staffing, and preserve judicial capacity in both consumer and business cases. II. Chapter 7 Trustee Compensation — and the Indexing Lesson What changed The Act amends 11 U.S.C. § 330(b)(1) to raise the trustee’s base payment from $45 to $105, resulting in $120 total per no-asset case. Congress expressly relied on the Consumer Price Index to justify the increase, noting that $60 in 1994 would equal over $125 today in real purchasing power. The Act also directs how the remaining Chapter 7 filing fee is divided among the Treasury, deficit-reduction fund, and the U.S. Trustee System Fund. Why this matters beyond trustees Congress’s willingness to use inflation data to modernize trustee pay exposes a deeper inconsistency in bankruptcy policy: we index compensation, but we leave debtor protections frozen. If appropriate economic indexes are good enough to adjust trustee compensation, they are also good enough to modernize state exemptions that determine whether debtors can actually keep a home, a car, or basic property after filing. III. Fee structure and U.S. Trustee funding The Act converts certain percentage allocations to fixed dollar allocations to the U.S. Trustee System Fund and extends key deposit provisions through 2031. It also diverts $5.4 million per year (FY 2026–2031) from Chapter 11 quarterly fees to the general Treasury, with the remainder flowing to the UST Fund. Policy takeaway: Congress sought stability for the UST Program without raising consumer filing fees—a result that aligns closely with NACBA’s long-standing position. IV. What higher trustee pay should mean going forward With compensation now increased—explicitly justified by economic indexing—Chapter 7 trustees, the U.S. Trustee Program, and Bankruptcy Administrators should: Continue to scrutinize marginal “small-asset” cases where the only real beneficiaries are the trustee and trustee’s counsel, while the debtor loses property that produces little or no net benefit for creditors. Support (or at least stop opposing) exemption modernization, particularly in states where limits are badly outdated. Priority states for reform North Carolina: Replace or substantially raise the $35,000 homestead cap and tie future increases to an appropriate housing or cost-of-living index. Pennsylvania: Modernize homestead and personal-property exemptions that remain among the weakest in the country. New Jersey and Virginia: Update shelter and vehicle protections to reflect contemporary markets. If we are comfortable indexing trustee pay to economic reality, we should be equally comfortable indexing debtor protections to the same reality.   IV.  Exemption Reform — The Indexing Logic That Should Run Both Ways Congress’s decision to rely on the Consumer Price Index to justify doubling the Chapter 7 “no-asset” trustee fee carries implications that extend well beyond trustee compensation. By acknowledging that static dollar amounts become unfair and dysfunctional over time, Congress implicitly accepted a basic principle of bankruptcy policy: key dollar thresholds in the system should track real economic conditions rather than remain frozen for decades. That principle has long been applied—at least in part—to fees, budgets, and compensation within the bankruptcy infrastructure. What has been conspicuously absent is a comparable commitment to keeping consumer exemptions aligned with modern economic reality. Yet exemptions are just as central to the functioning of the system as trustee pay: they define whether an “honest but unfortunate” debtor actually receives a meaningful fresh start or instead emerges from bankruptcy worse off than before. If appropriate economic and housing-cost indexes are good enough to modernize what the system pays to administer cases, they are also good enough to modernize what debtors are allowed to keep when they file. Rather than arguing over a single metric like CPI, legislatures should commit to using appropriate, transparent financial and housing-price indexes so that exemptions rise with market conditions instead of quietly eroding over time. North Carolina as the case study North Carolina sharpens the contrast between frozen statutory exemptions and a housing market that has changed dramatically. The North Carolina homestead exemption in N.C.G.S. § 1C-1601 was last increased in 2009 and remains capped at $35,000. In 2009, the median sales price of an existing single-family home in North Carolina was about $155,000. Against that benchmark, a $35,000 homestead protected roughly 22% of the median home’s value. Today, however, the statewide median home price is approximately $385,000–$400,000. To protect the same share of housing value that the exemption covered in 2009 (about 22%), North Carolina’s homestead exemption would need to be roughly $85,000 today. Instead, the statute still protects less than 10% of a typical home’s value. This is not merely an inflation story; it is a story about policy neglect. By failing to index exemptions to any sensible measure of housing costs, North Carolina has allowed the practical value of its homestead protection to shrink to a fraction of what it once was—precisely the kind of outcome that undermines the fresh-start promise of bankruptcy. The National Consumer Law Center’s Exemptions Report Card (a press release regarding North Carolina is attached) has repeatedly flagged this weakness, and the market data make clear why reform is overdue. VI. Extension of temporary bankruptcy judgeships The Act amends the Bankruptcy Administration Improvement Act of 2020 (28 U.S.C. § 152 note) to extend multiple temporary bankruptcy judgeships from 5 years to 10 years, along with a related extension under the Bankruptcy Judgeship Act of 2017.  In North Carolina,  this appears to mean that the temporary judgeship in the Middle District has been extended. Why this matters for consumers: More judges = fewer backlogs, quicker hearings, and less procedural friction for Chapter 7 and 13 debtors who already face resource constraints.  This should also maintain the depth of the bankruptcy bench,  particularly in a time where the number of cases is rising. VII.   Here is your revised section, expanded to weave in ESCRA and the Student Loan Bankruptcy Improvement Act while keeping your original structure and policy thrust: What This Act Signals About Broader Bankruptcy Legislation Although the Bankruptcy Administration Improvement Act of 2025 is sensible and welcome on its own terms, it also represents a missed opportunity. Congress could have used this same vehicle to reinstate the higher debt limits for Chapter 13—and, for those who care about small-business reorganization, the parallel increase for Subchapter V—that expired in 2024. Those temporarily increased limits had real-world consequences. They made Chapter 13 available to many middle-income families who otherwise get pushed into Chapter 7, and they meaningfully expanded access to Subchapter V for small businesses that needed a workable reorganization tool. Their lapse has already begun to squeeze debtors out of reorganizational relief and back into liquidation frameworks that often serve neither debtors nor creditors particularly well. Still, the fact that Congress was able to move a bipartisan, technical bankruptcy bill—raising Chapter 7 trustee compensation, stabilizing U.S. Trustee funding, and preserving judicial capacity—demonstrates that there remains substantial, cross-party support for pragmatic bankruptcy legislation when issues are framed as system-improvement rather than ideological fights. That bipartisan opening is also visible in other consumer-focused bills now moving through Congress: The Ending Scam Credit Repair Act (ESCRA) (H.R. 306), introduced by Representatives McBride (D-DE) and Young Kim (R-CA), would protect consumers by barring credit-repair organizations from charging fees until six months after they have proven that a consumer’s credit score has actually improved, while increasing civil penalties for violations. Equally important for our bar, the bill would clearly and explicitly confirm that consumer bankruptcy attorneys may continue to provide lawful advice, counsel, and assistance to their clients—recognizing that bankruptcy lawyers are part of the solution for financially distressed families, not part of the problem. The Student Loan Bankruptcy Improvement Act of 2025 (H.R. 4444), introduced by Representative Luis Correa, would remove the word “undue” from the hardship standard in § 523(a)(8), making it meaningfully easier for courts to grant student-loan relief in appropriate cases and better aligning the statute with the traditional fresh-start principles of bankruptcy. Taken together with the trustee-fee legislation, these proposals suggest that Congress is again willing to engage in practical, bipartisan reform at the intersection of consumer protection and bankruptcy law. There is therefore good reason to hope that: the Chapter 13 debt-limit increase, and the parallel Subchapter V expansion can again gain traction and begin moving through Congress, either as standalone measures or as part of other legislation. In short, while this Act strengthens the administrative infrastructure of the bankruptcy system, it should also be read as a reminder that Congress—and state legislatures—can act in this space. That momentum should be harnessed not only to restore modern, realistic debt limits, but also to reform bankruptcy exemptions so that they expand, rather than contract, access to a meaningful fresh start and to provide greater protections and relief for student borrowers and consumers facing credit repair scams. To read a copy of the transcript, please see: Blog comments Attachment Document bankruptcy_administration_improvement_act_of_2025.pdf (203.72 KB) Document pr_nfs_-_north_carolina.docx (11.59 KB) Category North Carolina Exemptions Legislative History