What’s New in Bankruptcy?
Student Loans are inching toward normalization with other dischargeable debt in Bankruptcy
The Student Borrower Bankruptcy Relief Act has been initiated by the House to eliminate the Bankruptcy Code’s ambiguous barrier to student loan discharge, which has been read to require a showing of severe financial hardship if the debtor is forced to re-pay. This complements the judicial trend to discharge private student debt to effect the policy of…
Read MoreDemystifying Bankruptcy: Avoid “fraudulent transfers”
A salary raise by a distressed business entity for no services, or transfer of funds to a new entity for no value are prime examples of fraudulent transfers, as reasonably equivalent value has not been exchanged. These deals are vulnerable to unwinding, but with advance planning, the outcome can be a win-win for all.
Read MoreDemystifying bankruptcy: Start your prep 3+ months ahead
Planning is key. Payment by an insolvent entity for old debt is known as a “preference,” and the creditor may have to disgorge in bankruptcy if it received a greater payout than it would in Chapter 7. As the key to bankruptcy is equitable distribution, the creditor will be paid only its pro rata share. To…
Read MoreDemystifying post-Bankruptcy Credit Opportunities
Credit scores can begin an uptick fairly quickly after the completion of a bankruptcy case. Borrowing can begin within a few months via secured credit cards or credit-builder loans, and VA or FHA mortgages can be obtained within two years. Moreover, increasing innovations in fintech should yield more non-traditional opportunities. In sum, while bankruptcy may remain on …
Read MoreWill consumers recoup gift card claims in retail bankruptcies?
Gift card claims in bankruptcy are spotlighted in this article which highlights efforts by consumer advocates to put these claims at the head of the pay-out line, as well as provide support through an official court committee of consumer creditors. Note that retailers may shorten the deadline for collecting on the card.
Read MoreStudent Loan is discharged and Servicer required to pay loan in full
A creative move by a pro se debtor resulted in a successful discharge of its student loan via the Servicer’s default judgement, followed by a full pay-off of the loan by the Servicer to the Department of Education. In a recent bankruptcy court decision, the court sanctioned the Servicer for harassing the debtor post-bankruptcy, and required…
Read MoreThe scales are tipping as COVID-19 is increasingly found to be excluded from Business Interruption Insurance
As businesses struggle to survive COVID-19 closures, courts are continuing to find that Business Interruption policies do not cover pandemics. This is where the government needs to step in and help subsidize businesses per the model being followed in Canada. Otherwise, bankruptcy may be the only other option.
Read MorePrivate Student Loans continue to be discharged in bankruptcy
In yet another decision by a bankruptcy court, a private loan by Navient, a popular student loan lender, was discharged in Chapter 13. While government loans cannot be discharged, the recent COVID-19 legislation has now implemented the debt forgiveness previously promised to those working in the non-profit sector. This is a good sign for student…
Read MoreEmployees Entitled to Bankruptcy Heads Up & Job Security
Employees in California are newly entitled to a 15-day heads up of a utility’s bankruptcy filing, as well as job security for at least 6 months after the filing. PG&E Corp. was prompted to disclose its intent to file for chapter 11 by a new California law that includes this novel provision requiring a 15 day warning to employees…
Read MoreTips for Client Management of Financial Distress Issues: How can you help your business and individual clients who find themselves at risk?
Women Owned Law, December 7, 2018
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