Underdog Law Blog: Payday Lender Liable for Expenses Incurred Prosecuting its Bankruptcy Violation

Check out another great blog entry by Attorney Michael Fuller regarding the Ninth Circuit's recent decision in In re Snowden, a case that has a major impact on a consumer debtor's right to attorney fees in contested stay violation cases brought under 11 U.S.C. section 362(k). The court adopted a more abstract standard to determine whether a consumer debtor is entitled to attorney fees throughout a 362(k) action. The court asks whether the petition is using the stay as a "shield" or as a "sword." This inherently requires a factual analysis of the alleged stay violation, and whether or not the defendant has remedied the violation, with no strings attached. In conjunction with Schwartz-Tallard, it follows that absent this admission of liability by remediation, the defendant is subjected to ongoing liability for attorney fees under 362(k) until final adjudication.

See the article at the Underdog Law Blog here: http://www.underdoglawblog.com/2014/09/payday-lender-liable-for-expenses.html

Underdog Law Blog: Wells Fargo Gets Free Pass in Ninth Circuit

Check out Michael Fuller's blog entry on the Ninth Circuit's decision in In re Mwangi. There, the Ninth Circuit Court of Appeals upheld a controversial practice employed by Wells Fargo whereby it freezes debtor's bank accounts when they file Chapter 7 bankruptcy. The practice can put individuals in a helpless position, particularly when they need access to their accounts to pay for food, gas, and utilities following the filing of their Chapter 7 cases.



Underdog Law Blog: Wells Fargo Gets Free Pass in 9th Cir. Bankruptcy

Bank Ignores Bankruptcy Judge; Fails to Appear at Contempt Hearing

An Oregon consumer has asked a federal judge to hold one of the country’s largest banks in contempt of court. For a second time.

According to court documents filed by the consumer’s attorney, U.S. Bank N.A. violated the bankruptcy discharge last February by seizing wages from a checking account without notice.

After the bank refused to return the wages, a Eugene bankruptcy judge ordered it to appear and explain why it shouldn’t be held in contempt of court.

When the contempt hearing was called on May 8, only the judge and the consumer’s attorney were present.

For reasons unknown, the bank failed to appear.

U.S. Bank N.A. now faces another motion seeking a second contempt order, this time based on its failure to timely turn over documents in the case.

A motion filed by the consumer’s attorney on May 12 indicates the bank has received over a dozen notices of the contempt matter; several by certified mail.

In April, Wells Fargo Bank, N.A. settled similar charges that it had illegally seized $197 from one of its customer’s accounts during bankruptcy. The bank paid the customer $35,000 to settle without having to admit liability.

U.S. Bank N.A. is the deposit-products arm of U.S. Bancorp, the country’s fifth largest bank by assets.

[Case Number 13-62766-tmr7, Eugene, Oregon Bankruptcy Court]

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Private Student Loans Going Into Default When Co-Signer Dies or Files Bankruptcy

The New York Times reports that many private student loans contain provisions that allow the lender to declare the entire balance due and payable after a co-signer dies or files bankruptcy, even when the borrower is current on loan payments.

The Consumer Financial Protection Bureau (CFPB) published an advisory regarding this practice on April 22, 2014. The government agency has received an increasing amount of consumer complaints regarding the practice. While the CFPB does not state that the practice is illegal, it sternly warns private student loan borrowers about the real consequences when a co-signer dies or files bankruptcy.

The CFPB recommends that borrowers contact their private student loan servicer and request a "co-signer release", which can help both the borrower and the co-signer. Often, the lender will require a credit check and a history of timely payments before awarding a co-signer release. Sample request letters can be found on the CFPB's Website.

Sources

Perez-Pena, Richard, Student Loans Can Suddenly Come Due When Co-Signers Die, A Report Finds, The New York Times, April 22, 2014. http://www.nytimes.com/2014/04/22/us/student-loans-can-suddenly-come-due-when-co-signers-die-a-report-finds.html?_r=0.

Chopra, Rohit, Consumer advisory: Co-signers can cause surprise defaults on your private student loans, Consumer Financial Protection Bureau, April 22, 2014, http://www.consumerfinance.gov/blog/consumer-advisory-co-signers-can-cause-surprise-defaults-on-your-private-student-loans/.

San Bernardino to have bankruptcy "outline" by October 15

San Bernardino officials committed in bankruptcy court have an "outline" to aid in mediations with creditors by October 15. Paul Glassman, the city's bankruptcy attorney, said that "the council is fully supportive of whatever date the court sets" and that the "city got the message, so they're fully on board."

The goal of the mediation is to streamline the city's bankruptcy so that it can quickly put together a reorganization plan.

A status conference for the parties in bankruptcy was scheduled on October 2.

Source: Ryan Hagen, San Barnardino commits to bankruptcy plan 'outline' for mediation, THE SUN (Sept. 4, 2013), http://www.sbsun.com/government-and-politics/20130904/san-bernardino-commits-to-bankruptcy-plan-outline-for-mediation.

Michael Vick to Emerge from Successful Chapter 11 Bankruptcy

NFL quarterback Michael Vick has made arrangements to pay back the last of almost $20 million in debts to dozens of creditors, the Virginian-Pilot reported today. Vick's bankruptcy records show that he has paid about 75 percent of his debts. With this fall's salary from the Eagles and his endorsement income, he should be able to close out his case within months, his attorneys said. Kara Bruce, an associate professor of law at the University of Toledo Law School and the scholar in residence at the American Bankruptcy Institute in Alexandria, called it "impressive" for anyone to emerge from chapter 11 with creditors paid in full. While statistics are not available, "generally speaking, it's a rare situation," she said. "For most people, there's nothing to sell."

Source: American Bankruptcy Institute Newsroom, August 30, 2013
http://news.abi.org/headlines/michael-vick-to-emerge-from-bankruptcy

For Oregonians Facing Creditor Harassment

Check out Michael Fuller's consumer protection blog at www.underdoglawblog.com

Tupac’s Mother Settles Bankruptcy Claim Against Suge Knight, Founder of Death Row Records

http://blogs.wsj.com/bankruptcy/2013/08/27/tupacs-mother-settles-claim-against-suge-knight/

Rapper DMX Files for Chapter 11 Bankruptcy

Just days after his arrest on suspicion of DWI, famous rapper DMX filed for chapter 11 bankruptcy protection.

DMX filed in his case in the Bankruptcy Court for the Southern District of New York in Manhattan. He listed less than $50,000 in assets and $10 million in debt. He owes $1.24 million in child support and more than $21,000 on an auto lease. His primary asset is a 50% interest in property located in Mount Kisco, New York.

DMX is most well-known for his 1990's hit "Party Up (Up in Here)."

Source

The Wall Street Journal Bankruptcy Beat Blog, "Rapper DMX Files for Bankruptcy," Jacqueline Palank, July 30, 2013. http://blogs.wsj.com/bankruptcy/2013/07/30/rapper-dmx-files-for-bankruptcy/