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2 weeks 3 days ago

The FTC alleged that Midwest Recovery, and owners Brandon M. Tumber, Kenny W. Conway and Joseph H. Smith, collected more than $24 million from consumers on such debts, largely by debt parking.
What is “debt parking”, also known as “passive debt collection?”
debt collectionAccording to an article by the Federal Trade Commission “FTC” – debt parking can result in a consumer only finding out that a purported debt exists when his or her credit report is accessed in connection with buying a car or home, opening a credit card, or seeking employment. While the debts may not be valid, consumers can feel pressured to pay them off.
“The defendants parked fake or questionable debts on people’s credit reports and then waited for them to notice the damage when they were trying to get a loan or a job,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “The defendants used this illegal ‘debt parking’ to coerce people to pay debts they didn’t owe or didn’t recognize.”
80 and 97 percent of the debts it investigated were inaccurate or not valid
The FTC’s complaint alleges that Midwest Recovery received thousands of complaints each month about the purported debts from consumers, with the company itself finding that between 80 and 97 percent of the debts it investigated were inaccurate or not valid. In addition to payday lending debts, the complaint notes that the company parked significant quantities of medical debt, which is often a source of confusion and uncertainty for consumers because of the complex, opaque system of insurance coverage and cost sharing.
In one example from the complaint, a consumer was told when applying for a mortgage that an outstanding $1,500 medical debt placed on his credit report by Midwest Recovery had lowered his credit score and jeopardized his purchase. The consumer contacted the hospital to whom the debt was owed, who told him that he only owed an $80 co-pay. In spite of that, Midwest refused to remove the $1,500 debt and threatened the consumer with a lawsuit if he didn’t pay.
The FTC’s complaint alleges that the company and its owners, Brandon M. Tumber, Kenny W. Conway, and Joseph H. Smith, violated the FTC Act, the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), and the FCRA’s Furnisher Rule.
Under the terms of the settlement, Midwest Recovery and its owners will be prohibited from debt parking and pursuing consumers for alleged debts without a reasonable basis. The settlement also requires Midwest Recovery and Tumber to contact credit reporting agencies and request all debts reported by the company be deleted from consumers’ credit reports.
The settlement includes a monetary judgment of $24.3 million
The settlement includes a monetary judgment of $24.3 million, which is partially suspended based on an inability to pay. Tumber and the company will be required to pay $56,748, and Tumber will also be required to sell his stake in another debt collection company and provide the proceeds from that sale to the FTC. In addition, Midwest Recovery will be required to surrender all of its remaining assets. If the defendants are found to have misrepresented their ability to pay, the full amount of the judgment would become immediately payable.
debt collector

.fusion-body .fusion-builder-column-1{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-1 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-1{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:debt collectorHas anyone ever contacted you demanding payment for a debt you don’t owe?  My guess is ‘yes’.  Not only does this happen all the time, it is a something some debt collectors set up on purpose.  They report a false claim and then wait for you to check your credit report.  Only then do you take action to remove the fake report – which will take several months, if at all.  Unfortunately, you do not discover that false claim until you need a clean credit report in order to purchase that new home or car.   Which means you need that report to be clean now, not several months from now.  That results in many people paying to remove the false report, which is exactly what the company reporting the fake debt wanted.  This is somewhat like rewarding the thief for robbing your home.
The moral – ALWAYS pull your credit reports at least once a year in order to determine if someone is parking a false or misleading debt.  You can do this for free at AnnualCreditReport.com.  

@media only screen and (max-width:980px) {.fusion-title.fusion-title-2{margin-top:0px!important;margin-bottom:6px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-2{margin-top:10px!important;margin-bottom:10px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-2{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-2 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-2{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-1 {border-radius:10px;}.fusion-button.button-1.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-1.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
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.fusion-body .fusion-builder-column-5{width:75% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-5 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 15px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 15px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}.fusion-body .fusion-flex-container.fusion-builder-row-4{ padding-top : 0px;margin-top : 5;padding-right : 0px;padding-bottom : 0px;margin-bottom : 20px;padding-left : 0px;}
The post Midwest Recovery Systems Received Millions Collecting Fake Debts appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.


4 days 13 hours ago

A bankruptcy proceeding has pros and cons, be it a Chapter 7 liquidation or a Chapter 13 reorganization. While filing bankruptcy can help, keep in mind that not all types of debt can be wiped out when you file for bankruptcy. Bankruptcy proceedings can wipe out your credit card debt, medical debt, and certain tax debt but not alimony, child support, student loans, and other secured debt. Below are other things that will help you see how declaring bankruptcy may or may not help with your financial problems.
How can a bankruptcy petition help you?

  • If you are dealing with debt from credit card companies or medical bills, consider filing a petition in bankruptcy. When you file bankruptcy under Chapter 7, the outstanding balance in your credit card is considered unsecured debt. This can be part of a bankruptcy discharge. You would not have to pay back your creditor or lender if what you owe is considered as a discharged debt.
  • Bankruptcy Filing While you will have to pay off your unsecured debts in a Chapter 13 bankruptcy case, you will have a longer period to repay. Pursuant to bankruptcy law, your payment plan will likely last for three or five years. Furthermore, a portion of your unsecured debt may eventually be discharged by the bankruptcy court.
  • While a Chapter 7 petition for bankruptcy cannot prevent the repossession of nonexempt property by a secured creditor, most of your personal property would be exempt. Bankruptcy filings must be pursuant to state law particularly in this aspect. Note that bankruptcy exemptions vary from state to state.
  • Most bankruptcy cases cannot have your student loan debt eliminated. However, if you are struggling financially and are planning on filing for bankruptcy, your student loan may be forgiven if you can establish what is called undue hardship. 
  • Even if you filed for bankruptcy, criminal fines and penalties will likely not be forgiven. Debts from DUI-related deaths or injuries will also remain even after a Bankruptcy Chapter 7 is dismissed.
  • An automatic stay is essentially bankruptcy protection from creditor harassment and collection activities. Aside from protecting you from debt collectors, bankruptcies and automatic stay can help stop foreclosure or repossession and can even help stop wage garnishment.

Seek legal help from an experienced bankruptcy attorney early on. This will allow you to learn more about the bankruptcy process and how to file properly. Talk to a bankruptcy lawyer from our firm who will help you get a fresh start and rebuild your financial future. Call us at the Northwest Debt Relief Law Firm for bankruptcy information and legal assistance.
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The post Pros and Cons of a Bankruptcy Filing appeared first on Vancouver Bankruptcy Attorney | Northwest Debt Relief Law Firm.


2 weeks 4 days ago


Senator Elizabeth Warren has introduced a law to radically change the consumer bankruptcy practice entitled the Consumer Bankruptcy Reform Act of 2020.
This revolutionary document would make dramatic changes to bankruptcy practice.

  1. Chapter 7 and 13 is eliminated and replaced with a single system called Chapter 10.
  2. Student Loan debts become dischargeable just like any other debt.
  3. Discharges are issued immediately upon confirmation of payment plans instead of waiting until all payments are made.
  4. Discharges would be issued without the requirement of a payment plan (what Chapter 7 currently offers) to families whose income is less than 130% of the median income for their state.  For a Nebraska family of 4, the current median income level is $96,749, so debtor’s whose family income is less than $125,773 would be eligible for immediate discharge in Chapter 10.  For a single debtor the income cutoff would be $66,101.
  5. Credit counseling requirements are eliminated.
  6. Past due rent payments are discharged but landlords may not terminate the lease as long as future rent is paid on time.
  7. Telephone/Zoom Court hearings. Debtors would no longer have to attend the required trustee meeting in person and the meeting must not conflict with a debtor’s work schedule.
  8. Spending habits become irrelevant: Bankruptcy courts would no longer focus on how a debtor spends their money. Rather, median income levels would determine the amount paid back to unsecured creditors with few debtors having to pay back anything at all.
  9. Three types of payments plans are created: Repayment Plans for unsecured debts.  Residence Plans for delinquent mortgage payments.  Property Plans for non-mortgage secured debts, like cars or furniture.  A debtor may be enrolled in three plans at the same time.
  10. Attorney fees may be paid after the case is filed, but attorneys may not sell their unpaid fees for quick cash.
  11. Trustees may not dismiss unpaid cases but rather must enforce a lien. In current chapter 13 cases, a debtor who fails to pay monthly payments may have their case tossed out of court without a discharge.  New Chapter 10 instead issues an immediate discharge upon plan confirmation and gives the trustee a judgment lien that the trustee may use to enforce the plan, which basically requires the trustee to sue and garnish the debtor.
  12. Federal property exemption laws would apply to all cases and allow an individual to shield $30,000 of personal property from creditors.

The Chapter 10 proposal is revolutionary to the core.  This is a radical manifesto that would rip through consumer bankruptcy practice. And, unfortunately, because of its radicalness, it probably has zero chance of ever being enacted into law and squanders the current opportunity to achieve real bankruptcy reform.
What is also clear about this proposal which was endorsed by 74 law school bankruptcy professors, is that it rejected any input from those professionals, judges, trustees and attorneys engaged in consumer bankruptcy practice.
There are so many problems with this proposed law that it is hard to begin.  Here is a short sampling of some of the obvious defects of this political manifesto.

  • Student Loans.  Is it really wise or fair to allow students to discharge their entire student loan debt two seconds after they graduate college? Wouldn’t it be wiser to delay eligibility for student loan discharges for a period of 10 or more years? I cannot see how voters would approve of allowing privileged college students to immediately discharge taxpayer subsidized education without making any effort to repay a single dime of debt.
  • 130% of Median Income Qualification.  Under current consumer bankruptcy law, the court may require a debtor who clearly can afford to repay some or all of their debt to enter a payment plan.  Not so with chapter 10.  Under chapter 10 we no longer review a debtor’s spending choices or ability to pay.  Rather, we only require debtors with income over 130% of median income levels to pay back anything to unsecured creditors.  Under this rule the vast majority of higher income debtors who currently must offer payment to creditors would immediately qualify for a no payment case.  Would voters approve of that change?
  • Unpaid Rent Dischargeable.  Chapter 10 proposes that past due rent be dischargeable but that landlords be forced to continue the lease as long as future rent is paid on time. But doesn’t this just encourage debtors who must file bankruptcy to stop paying rent knowing that they can stop evictions and skip paying past due rent when the bankruptcy is filed? Will this cause landlords to increase the amount of security deposits charged to all renters?
  • Mass Resignation of Trustees.  I would anticipate that the majority of trustees now serving in chapter 7 and 13 cases would consider resignation if chapter 10 were passed. Why?  Chapter 13 trustees who mange payment plans could no longer dismiss cases for nonpayment but would rather be required to enforce a judicial lien through garnishments. Is that feasible? Probably not. Chapter 7 trustees could almost never claim property under chapter 10 since new federal exemptions would protect almost every debtor’s property.  And since trustee meetings must now be scheduled when they do not interfere with a debtor’s work schedule, do we really expect trustees to conduct meetings during evening hours or weekends? This is madness!
  • Attorney Fees.  The chapter 10 proposal to allow attorneys to collect fees after this case is filed is sensible, but this proposal prohibits attorneys from selling their unpaid fees to investors.  What these law professors do not seem to understand is that this proposal changes nothing since the risk of not being paid has not changed.  Bankruptcy attorneys are not going to start filing complicated cases on an installment plan just because they are allowed to.  Only the most financially stable debtors will be able to take advantage of this change, but for lower-income debtors the attorneys will still have to collect all their fees up front since the risk of not being paid is not alleviated.  That is why allowing attorneys to factor their receivables is actually a good thing for lower-income debtors since it encourages attorneys to file cases for little money down if a market for their unpaid receivables exist.  Rather than outlawing the selling of receivables the better option is to allow the US Trustee and the courts to review the factoring arrangement for reasonableness.  When law professors and lawmakers fail to gather input from those who actually prepare cases, this is the type of misguided legislation that results.
  • Enforcement of Payment Plans.  Under the current payment plans offered in Chapter 13, the failure to make payments will result in a dismissal of the case.  Not so with Chapter 10.  Rather, the Discharge of debts is immediate upon plan confirmation and the bankruptcy trustee is given a Judgment Lien to enforce payment.  This is completely unrealistic. Bankruptcy trustees are not going to take the extraordinary steps to garnish debtors who fail to make the bankruptcy payment.  Honest but unfortunate debtors lose jobs and relocate frequently.  Tracking down judgment debtors is a difficult and expensive process.  Bankruptcy trustees depend on a steady flow of payments to fund their office, and taking away the power to dismiss cases will result in a devastating cash flow crisis that will cause trustees to resign from office at alarming rates.  The only reason a majority of debtors make the monthly bankruptcy payment is the fear that a dismissed case will allow creditors to resume garnishments and foreclosures.  Take away that fear and payments to trustees will slow overnight.
  • $30,000 Property Exemption.  The proposal to give every debtor a $30,000 property exemption will virtually eliminate a claim of assets in the vast majority of cases. As a result, income for bankruptcy trustee’s will decline substantially.  Several chapter 7 trustees tell me that their profits have shrunk considerably over the years due to greater reporting duties imposed on them and from greater property exemption laws approved by state legislatures.  Some trustee’s say they make little to no income from their trustee duties and they already question why they keep the job.
  • Remote 341 Hearings.  I fully endorse the concept of making remote Section 341 meetings with the trustee permanent.  Since COVID-19 these hearings are currently conducted via telephone conference calls, and the process is working well.  However, the new requirement that the hearings not conflict with a debtor’s work schedule is just nonsense.  These hearings only take a few minutes to complete and the debtor is given a month advance notice of the hearing date.  Many debtors complete these hearings on a cell phone by taking a half-hour break from work.  If necessary the hearing are rescheduled if the debtor is not able to attend.  To require that trustees conduct meetings when the debtor is off work in the evening or on weekends is insane.  Trustees will resign before they agree to this.
  • Post-Petition Mortgage Payments.  When a debtor falls behind on mortgage payments after a case is filed, the bank will normally file a Motion for Relief from the Automatic Stay when three or four payments are missed.  The proposed Chapter 10 law says that creditors may not take advantage of state law enforcement procedures until a post-petition mortgage payment is 120 days past due.  So does this mean that the automatic bankruptcy stay is automatically lifted when payments are 120 days past due? If so, this represents a great weakening of the protection to homeowners.  In chapter 13 cases the banks don’t even request relief until a loan is 60 to 120 days delinquent, and when that happens we routinely work out payment plans to cure the default over 6 months.  Under Chapter 10, however,  no such repayment agreements are available if the bank just waits until an account is 120 days past due.  This is less protection.
  • Median Income Calculations.  Chapter 10 still requires debtors to submit six months of paystubs and other income verification documents to their attorneys to determine their median income level.  What???  This is horrible. Do these law professors have any idea how difficult it is to obtain six months of financial records? This is what the Bankruptcy Reform Act of 2005 imposed and it directly resulted in the cost of bankruptcy cases to double and triple.  It is so obvious that the writers of this legislation have never actually prepared a bankruptcy case.  Why is it necessary for a minimum wage worker to submit a six-month income calculation when it is perfectly obvious from their last paystub and tax return that that only earn minimum wage? Such debtors do not keep paystubs and they change jobs frequently. The nightmare of collecting income documents stays the same under this “reform” bill.

I remember preparing bankruptcy cases prior to the Bankruptcy Reform Act of 2005. Bankruptcy fees were cheap and we didn’t have to collect six months of paystubs or bank statements or tax returns.  But we did have to prove up on every case and explain how we determined a debtor’s income.  Bankruptcy trustees did a good job of reviewing monthly budgets and they frequently pushed higher income debtors out of chapter 7 if they felt a payment could be made to creditors.
In some ways the practice before 2005 was too lax. It does make sense to require debtors to submit a recent paycheck stub, tax return and bank statement to the trustees for review.  It does make sense to impose a duty on bankruptcy attorneys to verify the accuracy of the petition they file.  Some reforms were overdue, but the reform act of 2005 was 99% punitive and unwise.  The law was so poorly drafted that it took a decade of court appeals to figure out what it even said.
The Bankruptcy Reform Act of 2020 is some of the worst written law I have ever read.  This legislation would destroy the current system and lead to mass confusion and trustee resignation. The drafters of the legislation seem not to see how vague and uncertain it’s provisions are and this will lead to massive litigation to figure out what he darn document says, just like the 2005 reform bill did.  But what is worse, 40 years of case law interpreting chapter 13 cases will be through into the trash and courts will struggle to interpret the mechanics of the new law.
Bankruptcy attorneys will, however, greatly benefit from the confusion this new law will usher in.  Bankruptcy fees will soar with the complexity of these cases while immediate discharge orders will make them seem like magicians to their clients who are ostensibly immune from not making required payments.  This law is nothing less than a radical economic manifesto that no sensible Congress should ever consider enacting into law.
 
Image courtesy of Flickr and Mark Ramsay


2 weeks 5 days ago

CFPB Sues Encore Capital Group, Midland Funding, Midland Credit Management, and Asset Acceptance Capital Corp for Collecting Debts Beyond Statute of Limitations without disclosing debts were uncollectable, and other illegal acts

debt collectingOn September 8, 2020, the Consumer Financial Protection Bureau (Bureau) filed suit in federal district court in the Southern District of California against Encore Capital Group, Inc., and its subsidiaries, Midland Funding, LLC; Midland Credit Management, Inc.; and Asset Acceptance Capital Corp. The companies are headquartered in San Diego, California and together comprise the largest debt collector and debt buyer in the United States, with annual revenue exceeding $1 billion and annual net income exceeding $75 million. Encore and its subsidiaries are currently subject to a 2015 consent order with the Bureau based on the Bureau’s previous findings that they violated the Consumer Financial Protection Act (CFPA), Fair Debt Collection Practices Act (FDCPA), and the Fair Credit Reporting Act. The Bureau alleged that Encore and its subsidiaries have violated the terms of this consent order and again violated the FDCPA and CFPA. On October 15, 2020, the Bureau filed a proposed stipulated final judgment and order to settle the lawsuit. If entered by the court, the stipulated final judgment and order will require Encore and its subsidiaries to pay $79,308.81 in redress to consumers and a $15 million civil money penalty. The settlement will also require Encore and its subsidiaries to make various material disclosures to consumers, refrain from the collection of time-barred debt absent certain disclosures to consumers, and abide by certain conduct provisions in the 2015 consent order for five more years.
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.fusion-body .fusion-builder-column-1{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-1 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-1{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:debt collectorMidland Funding and Asset Acceptance Capital are in the news AGAIN.  In 2015 Encore and its subsidiaries (including Midland Funding and Asset Acceptance) signed a consent order acknowledging that they were suing consumers without providing the required loan documentation.  These companies were knowingly suing consumers on debts that were noncollectable (beyond the statute of limitations). They promised not to continue with these illegal acts.  Well, so much for promises – they continued these illegal acts. 
You can bet that the complaints the CFPB and FTC know about are just the tip of the iceberg, because most consumers don’t know that many debt collectors are using illegal tactics to collect on debts, that may not even be their debts, or are completely uncollectable.

@media only screen and (max-width:980px) {.fusion-title.fusion-title-2{margin-top:0px!important;margin-bottom:6px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-2{margin-top:10px!important;margin-bottom:10px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-2{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-2 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-2{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-1 {border-radius:10px;}.fusion-button.button-1.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-1.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
.fusion-body .fusion-builder-column-4{width:25% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-4 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-4{width:100% !important;order : 0;}.fusion-builder-column-4 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-4{width:100% !important;order : 0;}.fusion-builder-column-4 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}

.fusion-body .fusion-builder-column-5{width:75% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-5 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 15px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 15px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}.fusion-body .fusion-flex-container.fusion-builder-row-4{ padding-top : 0px;margin-top : 5;padding-right : 0px;padding-bottom : 0px;margin-bottom : 20px;padding-left : 0px;}
The post Midland Funding, Encore Capital Group, Asset Acceptance Sued for Violating Consent Order appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.


2 weeks 6 days ago

Find The Right Bankruptcy Lawyer For You
Reprint from a great California bankruptcy attorney – Cathy Moran
Picking  the  right bankruptcy lawyer  is a lot like picking the right head coach for a sports team.Coach
It doesn’t assure success, but without the right professional, success is a whole lot harder to come by.
Bankruptcy is a specialized area of law that can be far more complex than appears on the surface. The issues are not always obvious or simple.
It is not just about filling out forms.

  • Assessing whether you should file and when is critical.
  • Your assets and your financial future are at stake.

While price is the easiest selector,  it  is not a good basis for choosing a bankruptcy lawyer.
So, how do you find a reliable professional?
What’s important in a lawyer
Bankruptcy is a field where empathy and communication skills are as important as knowledge of the law.
Pick a lawyer who can help you work through the issues, alternatives, and implications of your choices.

  • Pick a lawyer with whom you are comfortable, one whom you can ask questions and get responses you understand.
  • Pick a lawyer who either specializes in bankruptcy or does a large part of his/her practice in the field.
  • Ask questions until you understand what your choices are.
  • Don’t be afraid to interview a lawyer and leave without retaining the lawyer.

Finding that lawyer
Look for a certified specialist or a lawyer with substantial experience in bankruptcy.
A  generalist may be able do a simple bankruptcy, but may not be able to tell if your case is truly “simple”.
Local bar associations have referral panels of bankruptcy lawyers.  Find them in your phone book.
Interview lawyers until you find one who suits you.  Ask about their experience with cases like yours. Ask how many cases he/she handles a year, and the length of time he/she has been practicing bankruptcy law.
Find someone with whom you communicate well.
Get agreement in writing
Understand what services are included in the quoted fee.  Does it include

Usually, the flat fee covers only the standard services or the foreseeable issues in a bankruptcy case.  Some things, like whether there will be a challenge to the discharge of a certain debt, can’t be foreseen at the beginning of the case, and may therefore trigger further fees.
Exploit your lawyer’s expertise
Disclose everything about your financial condition.  Without all the information, your rights cannot be protected.
All too often, information that a client withholds because they think it is troublesome presents no problem, if disclosed.  Failing to tell the whole truth can create a problem where none existed before.
Read carefully the representation agreement, the draft schedules, the court’s notices and communications from your lawyer.  Ask questions if you don’t understand at first;  inaccurate or incomplete information can have serious and unpleasant consequences.
Provide promptly information and feed back when requested so that court deadlines can be met.
Take responsibility for your case.  You are the person with the best handle on the facts of the case and the one most affected by the case’s outcome.  Your lawyer can file a bankruptcy with you, but not for you.
Read more

More extensive discussion of finding and interviewing a bankruptcy lawyer.
Image © corbisrffancy – Fotolia.com

.fusion-body .fusion-builder-column-1{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-1 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-1{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:bankruptcy attorney“CHEAP” or “EASY” does not mean it is the best way to do something or to hire someone.  You can take a shortcut to fix your roof, but it will still leak in a few months.  The cost to fix something after it is done incorrectly is much more expensive than to do it correctly the first time. 
Never choose a professional based solely in price because you will always find bad professionals willing to do a terrible job, but hope you are stupid enough not to realize the problems they are creating until it is too late.  For instance, once the bankruptcy is filed it is probably too late to get out of it.  Just like you should check out the licensing agencies for your contractor, doctor or plumber, you should also check out the State Bar for your prospective attorney.  Also, look at reviews, but understand bad professionals will have fake reviews.  I don’t say any of this to scare you, only to make sure you know the importance of taking your time to find good professionals.

@media only screen and (max-width:980px) {.fusion-title.fusion-title-2{margin-top:0px!important;margin-bottom:6px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-2{margin-top:10px!important;margin-bottom:10px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-2{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-2 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-2{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-1 {border-radius:10px;}.fusion-button.button-1.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-1.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
.fusion-body .fusion-builder-column-4{width:25% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-4 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-4{width:100% !important;order : 0;}.fusion-builder-column-4 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-4{width:100% !important;order : 0;}.fusion-builder-column-4 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}

.fusion-body .fusion-builder-column-5{width:75% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-5 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 15px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 15px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}.fusion-body .fusion-flex-container.fusion-builder-row-4{ padding-top : 0px;margin-top : 5;padding-right : 0px;padding-bottom : 0px;margin-bottom : 20px;padding-left : 0px;}
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2 weeks 6 days ago

Debt Collectors Can Demand Payment on Facebook Once You ‘Friend’ or ‘Follow’ Them

According to an article in PaymentsJournal and the Register debt collectors now have the authority to make their payment demands public on Facebook, Twitter and other social media platforms
debt collectorAccording to The Register – Debt collectors will be allowed to chase people over their social media accounts under new rules approved by the US Consumer Financial Protection Bureau (CFPB).
That means that your new Facebook friend request could come from an agency hounding you over that unpaid medical bill, next Twitter direct message chasing car payments, next Instagram interaction more financial than social. 
November 27, 2020, the Consumer Financial Protection Bureau (currently under the control of the Trump administration) recently ruled that debt collections agencies can now use social media outlet like Facebook and Twitter to try to recover outstanding debt. Further, email and text dunning notices are also fair game. The CPFB says it is simply modernizing the debt collection process to allow it to use more modern means of connecting to those who owe money.
The rules were released at the end of October but had gone largely unnoticed outside the industry because there was no mention of “social media” in the CFPB’s announcement and you had to dig inside its 132-page report [PDF] to discover the crucial changes.
Don’t assume that the person sending the friend request is going to say they are with a debt collector, they have a financial incentive to mislead you into thinking their request is innocent.
Also, email and text messages are now also an official part of a debt collector’s arsenal, raising both privacy and harassment concerns. The rules also state that an agency can contact consumers by phone up to seven times a week about each debt owed.

What is the debt collectors incentive?
Debt collectors are paid a percentage of whatever they collect from the borrower.  Therefore, there is significant financial incentive for the debt collector to lie, coerce or bully the borrower into paying the debt collector rather than buying food or paying rent.  You can imagine the fraud that will follow this ruling.  Debt collectors will and are, blackmailing the borrower into paying by threatening to tell all the borrower’s friends about the debt.

Statute of Limitations
Every state has a set of laws called the ‘statutes of limitations‘.  That means that once a certain time period passes the right to sue is gone.  For intance, in Arizona the right to collect on a contract is usually six years.  What debt collectors don’t share is that by paying just one penny the borrower has restarted the statute of limitations.  The debt collectors promise to give the borrowers additional time “if only they pay a small amount, say $25”.  Once that payment is made the statute of limitations starts all over.  DON’T FALL FOR THIS.
The debt may not even be yours
There have been numerous horror stories of people being publicly harassed and embarrassed over debts they didn’t even owe, due to bad record keeping by debt agencies.

As an article in Slash Gear reports:

Many people and consumer protection agencies are against the new regulations. Consumer Reports created a petition this week, aiming to stop abusive debt collection. The petition warns that the collectors could harass people even if they don’t owe money.

.fusion-body .fusion-builder-column-7{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-7 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-7{width:100% !important;}.fusion-builder-column-7 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-7{width:100% !important;}.fusion-builder-column-7 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-3{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-3{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:debt collectorOur private lives are more public today than ever before.  Social media gives anyone a look into our personal lives, whether their intentions are good or evil.  Personally, I know that everyone wants to pay their bills, but circumstances now make that impossible.  A financially healthy family can be devastated by medical expenses, unemployment, divorce, or now COVID. 
For more than three decades I have helped people deal with their financial challenges, and have never met a client who says “I WANT to file bankruptcy”.  Instead, the discussion starts with “I don’t know what to do.  If I feed my family then I cannot afford to pay my credit cards.  Even though I explained the situation to the debt collectors, they just garnished my wages and took all the money in my bank account.  Now I can’t pay the rent. I must stop this bleeding before my family is homeless.”  

@media only screen and (max-width:980px) {.fusion-title.fusion-title-4{margin-top:0px!important;margin-bottom:6px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-4{margin-top:10px!important;margin-bottom:10px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-8{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-8 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-8{width:100% !important;order : 0;}.fusion-builder-column-8 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-8{width:100% !important;order : 0;}.fusion-builder-column-8 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-6{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-2 {border-radius:10px;}.fusion-button.button-2.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-2.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
.fusion-body .fusion-builder-column-10{width:25% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-10 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-10{width:100% !important;order : 0;}.fusion-builder-column-10 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-10{width:100% !important;order : 0;}.fusion-builder-column-10 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}

.fusion-body .fusion-builder-column-11{width:75% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-11 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 15px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 15px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-11{width:100% !important;order : 0;}.fusion-builder-column-11 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-11{width:100% !important;order : 0;}.fusion-builder-column-11 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}.fusion-body .fusion-flex-container.fusion-builder-row-8{ padding-top : 0px;margin-top : 5;padding-right : 0px;padding-bottom : 0px;margin-bottom : 20px;padding-left : 0px;}
The post Warning – Debt Collectors ‘Friending’ You on Facebook Make Public Demand for Payment appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.


3 weeks 8 hours ago

CFPB and State Attorneys General Settle with Nationstar, aka Mr. Cooper, accused of unfair and deceptive practices
Nationstar MortgageOn December 7, 2020, the Consumer Financial Protection Bureau (Bureau) filed a complaint and proposed stipulated judgment and order against Nationstar Mortgage, LLC, which does business as Mr. Cooper (Nationstar). The Bureau alleges that Nationstar violated multiple Federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed homeowners. Nationstar is one of the nation’s largest mortgage servicers and the largest non-bank mortgage servicer in the United States. The proposed judgment and order, which the court entered on December 8, 2020, requires Nationstar to pay approximately $73 million in redress to more than 40,000 harmed borrowers. It also requires Nationstar to pay a $1.5 million civil penalty to the Bureau. Attorneys general from all 50 states and the District of Columbia and bank regulators from 53 jurisdictions covering 48 states and Puerto Rico, the Virgin Islands, and the District of Columbia settled with Nationstar the same day and their settlements are reflected in separate actions, concurrently filed in the United States District Court for the District of Columbia. The orders in the Bureau’s and the States’ actions have yielded nearly $85 million in recoveries for consumers to date and over $6 million more in fees and penalties. They are also part of a larger government effort, which also includes assistance from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the United States Trustee Program, to address Nationstar’s alleged unlawful mortgage loan servicing practices.

student loan
To read the complaint and Stipulated Judgment and Order click below:

.fusion-body .fusion-builder-column-1{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-1 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-1{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:NationstarNationstar, aka Mr. Cooper, is one of the largest mortgage servicers in the country.  Why they find it necessary to defraud their customers is beyond me.  Read the complaint filed by the Consumer Financial Protection Bureau, which mirrors the complaints filed by all the State Attorney Generals.  According to the complaint Nationstar : (1) failed to identify thousands of loans with existing in-flight modifications and, as a result, failed to recognize some transferred loans with pending loss mitigation applications or trial modification plans, or failed to identify and honor other borrowers’ loan modification agreements; (2) foreclosed on borrowers to whom it had promised foreclosure holds while they applied for loss mitigation relief; (3) improperly increased
borrowers’ permanent, modified monthly loan payments; (4) failed to timely disburse borrowers’  tax payments from their escrow accounts; (5) failed to properly conduct escrow analyses for borrowers during their Chapter 13 bankruptcy proceedings; and (6) failed to timely remove private mortgage insurance from borrowers’ accounts. Each of these acts or failures violated the law. 

By now you are very tired of me asking “why”.  Why does a wealthy and powerful company find it necessary to prey on the least able to protect themselves?  Do you think Nationstar is going to pull millions of dollars out of their pockets to pay these fees and penalties?  Think about it!

@media only screen and (max-width:980px) {.fusion-title.fusion-title-2{margin-top:0px!important;margin-bottom:6px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-2{margin-top:10px!important;margin-bottom:10px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-2{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-2 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-2{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-1 {border-radius:10px;}.fusion-button.button-1.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-1.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
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.fusion-body .fusion-builder-column-5{width:75% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-5 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 15px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 15px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}.fusion-body .fusion-flex-container.fusion-builder-row-4{ padding-top : 0px;margin-top : 5;padding-right : 0px;padding-bottom : 0px;margin-bottom : 20px;padding-left : 0px;}
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3 weeks 8 hours ago

CFPB Settles with Discover Bank, the Student Loan Corporation and Discover Products for violating a consent order and other unlawful practices

December 22, 2020 Consumer Financial Protection Bureau issued a consent order that Discover must pay at least $10 million to consumers, and $25 million as a penalty for their unfair acts and practices.  Below is a reprint of the CFPB’s announcement and Order.
The Bureau previously issued a consent order against Discover in July 2015 (2015 Order). The Bureau’s 2015 Order was based on the Bureau’s finding that Discover misstated the minimum amounts due on billing statements as well as tax information consumers needed to get federal income tax benefits. The Bureau also found that Discover engaged in illegal debt collection practices. The Bureau’s 2015 Order required Discover to refund $16 million to consumers, pay a penalty, and fix its unlawful practices servicing and collection practices. The Bureau found that Discover violated the 2015 Order’s requirements in several ways. Discover misrepresented the minimum loan payments consumers owed, the amount of interest consumers paid, and other material information, such as interest rates, payments, due dates, and the availability of rewards, among other things. Discover also did not provide all of the consumer redress the 2015 Order required.

The Bureau found that Discover engaged in unfair acts and practices by withdrawing payments from more than 17,000 consumers’ accounts without valid authorization and by cancelling or not withdrawing payments for more than 14,000 consumers without notifying them. This conduct violated the CFPA, EFTA, and Regulation E. The Bureau also found that Discover engaged in deceptive acts and practices in violation of the CFPA by misrepresenting to more than 100,000 consumers the minimum payment owed and to more than 8,000 consumers the amount of interest paid. Some consumers ended up paying more than they owed, others became late or delinquent because they could not pay the overstated amount, while others may have filed inaccurate tax returns.
Today’s order prohibits Discover from making any misrepresentations about minimum payments consumers owe, the amount of interest consumers paid, and other material servicing terms. The order also prohibits Discover from withdrawing loan payments from consumers’ bank accounts in amounts or at times not authorized by consumers.

student loanThe consent order can be found at: https://files.consumerfinance.gov/f/documents/cfpb_discover-bank-et-al_consent-order_2020-12.pdf

.fusion-body .fusion-builder-column-7{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-7 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-7{width:100% !important;}.fusion-builder-column-7 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-7{width:100% !important;}.fusion-builder-column-7 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-3{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-3{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:stydent kianMost students in higher-education are looking for ways to improve their future, and that of their family.  Yes, there are a few who see student loans as “free money” and damn the consequences of taking out these loans.  But, I am going to ignore that group and focus on the honest borrowers. 
Honest borrowers assume that their student loan lender will be honest and treat them with respect.  Unfortunately, we are seeing time after time that the banks and student loan companies and servicers just see the borrowers as easy marks and cash registers.  Among other things, they mislead the borrowers about the cost of the loans and about the options to work out payments during difficult times.  The successful future of our country depends on quality education for everyone.  Right now student loan lenders are preying on the most vulnerable members of our society – those who see higher education as the path to a better life, but cannot afford to pay for that costly education.

@media only screen and (max-width:980px) {.fusion-title.fusion-title-4{margin-top:0px!important;margin-bottom:6px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-4{margin-top:10px!important;margin-bottom:10px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-8{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-8 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-8{width:100% !important;order : 0;}.fusion-builder-column-8 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-8{width:100% !important;order : 0;}.fusion-builder-column-8 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-6{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-2 {border-radius:10px;}.fusion-button.button-2.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-2.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
.fusion-body .fusion-builder-column-10{width:25% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-10 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-10{width:100% !important;order : 0;}.fusion-builder-column-10 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-10{width:100% !important;order : 0;}.fusion-builder-column-10 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}

.fusion-body .fusion-builder-column-11{width:75% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-11 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 15px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 15px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-11{width:100% !important;order : 0;}.fusion-builder-column-11 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-11{width:100% !important;order : 0;}.fusion-builder-column-11 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}.fusion-body .fusion-flex-container.fusion-builder-row-8{ padding-top : 0px;margin-top : 5;padding-right : 0px;padding-bottom : 0px;margin-bottom : 20px;padding-left : 0px;}
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3 weeks 8 hours ago

The Paycheck Protection Program (the second round):

paycheckOn December 27, 2020 a new bill was signed into law, now referred to as the Consolidated Appropriation Act of 2021, or ‘CAA’, This bill is 5,593 pages long (knowing how the legislative process works, there is no a single person involved who knows the entire bill and the consequences of the various provisions).  Only time will tell how this new law will help or hurt us.

The PPP funding is a very small part of the entire Consolidated Appropriation Act and will be important to all businesses, including mine.  This second round of funding for businesses, is referred to as PPP2.  Businesses who applied for the first round (PPP1) can apply for additional funds under PPP2.

The following is a summary from Steven Goldstein and Joe Keene, of Sacks Tierney and is reprinted for educational purposes only.

PPP Loan Program
The new law includes renewed funding of $325 billion for small business loans, including $284 billion for the Paycheck Protection Program (PPP), providing forgivable loans to first- and second-time small business borrowers. The new round of PPP loans, referred to as PPP2, will be available to first-time qualified borrowers and for businesses that previously received a PPP loan. Previous PPP loan recipients may apply for another loan of up to $2 million (down from the $10 million maximum in the original PPP loan program), provided they meet the following criteria:

  • Have 300 or fewer employees (the threshold for the original PPP loans was 500 employees)
  • Have used or will use the full amount of their first PPP loan
  • Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.

PPP2 loans also will permit first time borrowers from the following groups:

  • Businesses with 500 or fewer employees that are eligible for other SBA7(a) loans
  • Sole proprietors, independent contractors, and eligible self-employed individuals
  • Not-for-profits, including churches
  • Accommodation and food service operations with fewer than 300 employees per physical location.

The costs eligible for PPP2 loans include those that were eligible under the original PPP loan program–payroll, rent, covered mortgage interest, and utilities—and now include an expanded list that consists of the following (original PPP loans can be used for these new eligible costs so long as the loan has not yet been forgiven):

  • Certain expenditures for operations, such as payments for any business software or cloud computing service that facilitates business operations, product or service delivery, payroll processing and tracking expenses, or human resources expenses.
  • Costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance.
  • Expenditures made to a supplier of goods for goods that are essential to the operations of the borrower at the time when the expenditure was made, and are made under a contract or purchase order that was in effect at any time before the covered period of the PPP loan (for perishable goods, the contract must be in effect before or at any time during the covered period of the PPP loan).
  • Costs related to personal protective equipment, which includes a broader concept of that term, such as drive-through window facilities, physical barriers, or health screening capabilities.

Loan amounts remain up to 2.5 times average monthly payroll costs, as in the original loan program, except that eligible accommodation and food service operations can borrow up to 3.5 times their average monthly payroll costs. As with the original PPP loan program, to be eligible for full loan forgiveness, all borrowers will have to spend no less than 60% of the funds on payroll over a covered period of between 8 and 24 weeks.
The new law creates a simplified forgiveness application process for loans of $150,000 or less. Under that process, a borrower shall receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the covered loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount.
One of the most significant changes is to allow businesses to deduct the costs covered by their PPP loans on their federal tax returns, even if the PPP loan is forgiven. This supersedes IRS guidance that stated that expenses could not be deducted. It is important to note that this applies only to federal taxes; each state must determine if these costs can be deducted for state income tax purposes, and the approach to this likely will vary from state to state.
If a PPP loan borrower also received an EIDL loan, including a $10,000 advance on that loan, the borrower was required to deduct that advance from the amount of the PPP loan that is forgiven. This deduction requirement has been eliminated.
The new law also sets aside funds available to support first- and second-time PPP borrowers with 10 or fewer employees, first-time PPP borrowers that have recently been made eligible, and for loans made by community lenders.
Debtors and trustees in bankruptcy cases are now eligible to apply for a PPP2 loan, under the supervision and approval of the bankruptcy judge handling the bankruptcy case.
Other Provisions of Interest to Small Businesses
The new law includes several other provisions that impact small businesses:

  • The current employee retention credit created under the CARES Act is extended until June 30, 2021. The credit also is expanded to include a 70 percent credit for up to $10,000 in creditable wages per quarter, and the requirement that gross receipts decline has been reduced to a 20 percent decline (it previously required a 50 percent reduction).
  • The refundable payroll tax credits for paid sick and family leave, enacted in the Families First Coronavirus Response Act (FFCRA), is extended through the March 31, 2021. Employers who provide leave under the terms of FFCRA can continue to receive a federal tax credit for leave through that date. The law is unclear as to whether employers are required to provide leave under the FFCRA terms through that extended date.
  • The new law includes a tax break for corporate meal expenses up to 100 percent (as opposed to the current cap of 50%), so long as the expenses are for food and beverages provided by a restaurant. This provision is effective for expenses incurred after December 31, 2020 and expires at the end of 2022.
  • The payroll tax deferral repayment period is extended through December 31, 2020. The President issued an executive order in 2020 that allowed employers to defer the employee side of payroll taxes for the last months of 2020. Employers who took advantage of this deferral now have until December 31, 2021 to repay these taxes.
  • There are many additional or expanded targeted loan or grant programs, including $20 billion for targeted grants through the Economic Injury Disaster Loans Program for businesses in low income communities; $15 billion in dedicated funding for grants to live venues, independent movie theatres, and cultural institutions; dedicated set-asides for very small businesses and lending through community-based lenders like Community Development Financial Institutions and Minority Depository Institutions: and expanded PPP eligibility for 501(c)(6) nonprofits, including and local newspapers, TV and radio broadcasters.
  • The new law provides $120 billion to extend enhanced unemployment benefits for jobless workers, who will receive a $300-a-week unemployment subsidy available through March 14, 2021. It also extends the maximum number of weeks an individual may claim benefits through regular state unemployment and enhanced unemployment benefits to 50 weeks.
  • The current CDC residential eviction moratorium is extended through January 31, 2021. The new law also provides $25 billion of assistance to tenants in arrears on their rent. This assistance can be utilized for past due rent, future rent payments, and utility bills.

Sacks Tierney has qualified attorneys to answer your questions about these provisions and to help guide your business if you wish to apply for and obtain any of the assistance available through the bill’s provisions above.

.fusion-body .fusion-builder-column-13{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-13 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-13{width:100% !important;}.fusion-builder-column-13 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-13{width:100% !important;}.fusion-builder-column-13 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-5{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-5{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:paycheckHow will we all be harmed if small businesses disappear?  To answer that question – think back to your favorite experiences – shopping, meeting friends for coffee, meandering through unique boutiques or gathering to watch holiday celebrations.  None of these experiences include large chain stores, instead they are centered around small businesses.  We all want to be seen as a person, not just someone standing in long line to buy milk.  Now ask yourself how you want the world to look for your children, grandchildren, or all future generations. 
Now I think you are prepared to answer the question – “how will we be harmed if small businesses disappear”. 
@media only screen and (max-width:980px) {.fusion-title.fusion-title-6{margin-top:0px!important;margin-bottom:6px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-6{margin-top:10px!important;margin-bottom:10px!important;}}– Diane L. Drain.fusion-body .fusion-builder-column-14{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-14 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 30px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 45px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-14{width:100% !important;order : 0;}.fusion-builder-column-14 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-14{width:100% !important;order : 0;}.fusion-builder-column-14 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-10{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}.fusion-button.button-3 {border-radius:10px;}.fusion-button.button-3.button-3d{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}.button-3.button-3d:active{-webkit-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);-moz-box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);box-shadow: inset 0px 1px 0px #fff,0px 5px 0px #003d00,1px 7px 7px 3px rgba(0,0,0,0.3);}Click here for steps to your free bankruptcy consultation
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.fusion-body .fusion-builder-column-17{width:75% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-17 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 15px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 15px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-17{width:100% !important;order : 0;}.fusion-builder-column-17 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-17{width:100% !important;order : 0;}.fusion-builder-column-17 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}.fusion-body .fusion-flex-container.fusion-builder-row-12{ padding-top : 0px;margin-top : 5;padding-right : 0px;padding-bottom : 0px;margin-bottom : 20px;padding-left : 0px;}
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3 weeks 1 day ago

How Does the Consolidated Appropriation Act Intersect with Bankruptcy?
December 27, 2020 Congress passed the longest bill ever – 5,600 pages. The Consolidated Appropriation Act “CAA”, I can only assume, like so many of the other laws created by the Legislative branch, that this huge Act contains lots of special interest provisions, but I regress.  My focus here is to discuss how this Act interconnects with bankruptcy (note – the entire Bankruptcy Code is less than 200 pages).  The following is reprinted for educational purposes only.


According to a blog by David Warfield and David Farrell, Thompson Coburn, LLP, there are nine amendments to the Bankruptcy Code in the CAA.  Below are brief descriptions of each of these amendments.  It is possible that these interpretations of the new Act will change with new legislation or court decisions, so never assume what you read one day will be interpreted the same way the next day.
A brief description of the amendments follows.
1. PPP loans to debtors (or trustees)
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020, created the Paycheck Protection Program (the “PPP”), the now-familiar forgivable loan program administered by the Small Business Administration (“SBA”). Almost immediately after the passage of the CARES Act, debtors began applying for PPP loans, triggering a controversy about the availability of such loans to companies in bankruptcy. The SBA consistently opposed PPP loans for debtors, and the caselaw around the country was inconsistent. As recently as December 22, 2020, the Eleventh Circuit held that debtors could not obtain PPP loans. See USF Federal Credit Union, et al. v. Gateway Radiology Consultants, P.A., 2020 WL 7579338 (11th Cir. December 22, 2020).
The CAA addresses the PPP loan issue but regrettably only adds to the uncertainty. The CAA amends the Bankruptcy Code to permit PPP loans to certain debtors. However, the statute also says such PPP loans will be available only if the SBA Administrator sends a letter to the Director of the Executive Office for United States Trustee acquiescing to PPP loans in bankruptcy. Therefore, the new statute seemingly delegates to the SBA administrator the discretion whether to approve PPP loans during bankruptcy, so we do not yet know whether these PPP loans will be available.
Assuming the SBA Administrator acquiesces to PPP loans in bankruptcy, the loans will be available: (a) only in cases filed after the date the SBA sends the aforementioned letter to the Office of the United States Trustee, and (b) only to certain types of debtors, namely Subchapter V small business debtors, Chapter 12 family farmer debtors, and self-employed Chapter 13 debtors. This provision, if it becomes effective, will sunset on December 27, 2022.
2. Chapter 13 discharge available even if certain plan payments have not been made
The CAA amends Section 1328 to give the bankruptcy court discretion to grant a discharge to a Chapter 13 debtor even though the debtor defaulted on or after March 13, 2020 in not more than three monthly payments under a residential mortgage because of a material COVID-19 related financial hardship. Furthermore, the court can also grant a discharge to a debtor whose confirmed plan provides for curing defaults on a residential mortgage, and the debtor has entered into a qualifying loan modification or forbearance agreement with the lender. This does not mean the debtor will be discharged of the mortgage debt, but a debtor will be eligible to receive a plan discharge of other debts even though the debtor did not pay all mortgage payments when due under the plan. This provision sunsets on December 27,2021.
3. No discrimination because of bankruptcy filing
The CAA amends Section 525 of the Bankruptcy Code to provide that no person may be denied relief under three enumerated CARES Act provisions solely because the person is or was a debtor in a bankruptcy case. The three CARES Act provisions are: (a) the foreclosure moratorium and right to request forbearance (15 U.S.C. § 9056), (b) the forbearance of mortgage payments for multifamily properties (15 U.S.C. § 9057), and (c) the temporary moratorium on eviction filings (15 U.S.C. § 9058). This provision sunsets on December 27, 2021.
4. CARES forbearance claims; modification of Chapter 13 plan
Under the CARES Act, mortgagors under federally-backed residential and multifamily mortgages can request payment forbearance because of COVID-19 hardships. In the case of federally-backed residential mortgage, the forbearance period can be as long as 12 months. At the end of the forbearance periods, the mortgagor must pay the deferred mortgage payments in a lump-sum. These deferred mortgage payments caused significant procedural and administrative complications in Chapter 13 cases. To remedy these complications, the CAA allows qualified servicers to file a proof of claim for the deferred payments, even if the claims bar date has passed. The CAA also authorizes debtors to modify a confirmed Chapter 13 plan to address the deferred payment plan. If the debtor fails to modify his plan, the bankruptcy court (on its own motion), the U.S. Trustee’s office, the Chapter 13 trustee and/or any party in interest may move for such a modification. These changes sunset in on December 27, 2021.
5. Extended time for performance under an unexpired non-residential real property lease in a Subchapter V case
The CAA amends Section 365(d) of the Bankruptcy Code to allow the court to extend a Subchapter V small business debtor’s time to perform under an unexpired lease of non-residential real property if the debtor is experiencing or has experienced a material financial hardship due, directly or indirectly, to COVID-19. The extension is limited to 60 days after the filing unless the court finds the debtor is continuing to experience a COVID-19 financial hardship, in which case the court may extend the period for an additional 60 days. Any deferred obligations that are unpaid at confirmation constitute administrative expenses, but the debtor may spread the payments out over time under the confirmed plan. These changes apply only to cases commenced under Subchapter V, and they sunset in two years on December 27, 2022.
6. Extended time to assume or reject an unexpired non-residential real property lease
The CAA amends Section 365(d)(4)(A) of the Bankruptcy Code to give the debtor (or trustee) 210 days after the order for relief to assume an unexpired non-residential real property lease, thereby extending the period under prior law by an additional 90 days. This change applies to cases under all chapters, and it sunsets in two years on December 27, 2022.
7. Preferences
The CAA amends Section 547 to prohibit a debtor or trustee from avoiding payments made by a debtor during the preference period for “covered rental arrearages” and “covered supplier arrearages.” To qualify for the exemption, (a) the debtor and the counterparty must have entered into a lease or executory contract before the filing, (b) they must have amended the lease or contract after March 13, 2020, and (c) the amendment must have deferred or postponed payments otherwise due under the lease or contract. The preference exemption will not apply to the payment of fees, penalties, or interest imposed in the post-March 13, 2020 amendment. This provision sunsets in two years on December 27, 2022.
8. Utilities
The CAA amends Section 366 of the Bankruptcy Code to prohibit a utility from discontinuing utility services to an individual debtor so long as the individual debtor pays the utility company for services rendered in the twenty-day post-filing period and continues to make all other postpetition utility payments, even if the individual debtor did not otherwise provide the utility company with adequate assurance of payment. This provision sunsets in one year on December 27, 2021.
9. Customs duties
The CAA amends Section 507(d) of the Bankruptcy Code so that a party that pays the United States government a customs duty on behalf of an importer is subrogated to the government’s priority status under Section 507(b)(8)(F) for customs duties. This provision benefits customs brokers and forwarders who frequently pay the government for customs duties on behalf of their importer-clients. This provision sunsets in one year on December 27, 2021.
David Warfield is the co-chair of Thompson Coburn’s Financial Restructuring Group. David Farrell represents secured lenders, securitization participants, unsecured trade creditors, creditors’ committees, and buyers and sellers of distressed businesses.

.fusion-body .fusion-builder-column-1{width:100% !important;margin-top : 0px;margin-bottom : 0px;}.fusion-builder-column-1 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-1{width:100% !important;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:980px) {.fusion-title.fusion-title-1{margin-top:15px!important;margin-bottom:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:10px!important;margin-bottom:10px!important;}}MUSINGS BY DIANE:The last few years has shined a spotlight on a dirty little secret known only by a few.  That being the role of the politician is the same as that of the magician – to mislead their audience.  Unfortunately, the politician can cause significant long term consequences when misleading their audience (you and me).  It will take years, if ever, to uncover what this latest bill (5,600 pages of legal mumble-jumble) hides.  Meanwhile, those who really need help are left with $600 to buy a few groceries.  Very few small businesses will survive COVID, those who do will be faced with a long climb to rebuild. 
One good thing came out of COVID – that was to question the way we conduct business or share information.  It is my hope that we will never return completely to our pre-COVID business structures.  Instead, we learned that we can still do our jobs while taking care of our family and walking the dog.  We realized that family and friends are just as important as our jobs and that we can take time for ourselves without feeling guilty.
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