FEWER COLLEGES MARKETING CREDIT CARDS COULD SIGNAL SHIFT TO PREPAID CARDS
Fewer colleges are marketing credit cards to their students, according to a Consumer Financial Protection Bureau report released yesterday, but the decline might not signal good news for consumers, The Hill reported. The near-70 percent drop over the last four years in the number of agreements that colleges and universities have with financial institutions to market credit cards to students could be an indicator that prepaid cards are on the rise as a credit substitute. The CFPB credits the Credit Card Accountability, Responsibility and Disclosure Act of 2009 for the decline in college credit card agreements, but agency officials worry schools are crafting prepaid agreements with banks that carry fewer protections. According to the report, agreements with colleges and universities fell from 1,035 agreements in 2009 to about 336 agreements in 2013, but the CFPB said that it could represent a shift in marketing partnerships from credit cards to other products like debit and prepaid cards. "Financial institutions are cutting more deals with colleges and universities to market student banking products that require less disclosure," CFPB Director Richard Cordray said. Read the full report.
FORECLOSURE PROTECTION BILL FOR SERVICE MEMBERS PASSES IN BOTH HOUSE, SENATE
The U.S. Senate and the House of Representatives have both unanimously voted to pass a bill that gives military service members who have recently returned from duty added protection from foreclosure, DSNews.com reported today. S.2404, the "Foreclosure Relief and Extension for Service members Act of 2014," unanimously passed in the Senate on Thursday and in the House on Friday. The bill, sponsored by Sen. Sheldon Whitehouse (D-R.I.), extends until January 2016 a provision that sets one year as the timeframe in which a service member's house is protected from foreclosure upon his or her return from active duty, if the mortgage was obtained before the service member was an active member of the military. The Commission on the National Guard and Reserves had submitted a report that prompted the foreclosure protection extension from 90 days to nine months in 2008. The period was extended to nine months as part of the Service Members' Civil Relief Act (SCRA) in 2008 and lengthened further to one year in 2012 as part of a bill introduced by Sen. Whitehouse. The one-year period was set to expire at the end of December and would have reverted back to its pre-2008 rate of 90 days at the beginning of 2015. The bill that Whitehouse introduced back in May called for the permanent adoption of the one-year foreclosure protection period. Read more.
REPORT: AUTO LOAN DELINQUENCY RATE TO MARGINALLY INCREASE IN 2015
TransUnion's annual auto loan forecast calls for auto loan debt to continue to rise to $18,244 by the end of 2015, marking 19 consecutive quarters of increases since Q1 2011, when auto loan debt per borrower stood at $14,954. The TransUnion forecast calls for the national auto loan delinquency rate (the ratio of borrowers 60 or more days past due) to end 2014 at 1.20 percent and increase slightly to 1.27 percent at the end of 2015. Since 2007, the auto loan delinquency rate has been as low as 0.86 percent in Q2 2012 and as high as 1.59 percent in Q4 2008. On average, the delinquency rate during the fourth quarter between 2007 and 2013 was 1.29 percent. Read more.
REAL ESTATE RECOVERY UNEVEN AS U.S. HOME STARTS FELL IN NOVEMBER
The residential real estate recovery in the U.S. can best be described as plodding, with the industry taking a step back in November for the first time in three months, Bloomberg News reported today. Housing starts declined 1.6 percent, the first drop since August, to a 1.03 million annualized rate from a revised 1.05 million pace in October that was stronger than previously estimated, figures from the Commerce Department showed today in Washington, D.C. The decrease was led by a plunge in the South as other areas registered gains. Building permits also fell last month, indicating that a surge in construction is probably not in the cards for the immediate future. One positive aspect for the housing industry is that the recent turmoil in financial markets has pushed down interest rates, which, combined with a strengthening job market, means that homebuying will be within reach for more Americans next year. Read more.
ABI MEMBERS INVITED TO TRY BLOOMBERG BNA'S RECENTLY LAUNCHED BLOOMBERG LAW BANKRUPTCY TREATISE
Bloomberg BNA welcomes ABI members to try the Bloomberg Law: Bankruptcy Treatise, an online-only resource recently launched to help attorneys find information and conduct legal research in the fast-moving, procedurally complex area of bankruptcy. The Bankruptcy Treatise integrates the news content of Bloomberg BNA's bankruptcy news coverage with over 600 chapters and more than 13,000 pages of content and expert analysis from over 60 renowned judges, law professors and practitioners. The Bloomberg BNA editorial team, with input from outside contributors, will update the material as bankruptcy rules change and courts apply and react to them, ensuring that all aspects of federal bankruptcy law and local rules are current. Practitioners will be pleased to discover that Bloomberg Law: Bankruptcy Treatise includes expert commentary and analysis for all 92 different local rule sets throughout the country, providing unique insights across jurisdictions. For more information on Bloomberg Law: Bankruptcy Treatise and to request a free trial of Bloomberg Law, please click here.
USTP NOTICE OF PROPOSED RULEMAKING ON CHAPTER 11 MONTHLY OPERATING REPORTS
Section 602 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) authorizes the U.S. Trustee Program (USTP) to issue rules requiring uniform periodic reports by debtors in possession or trustees in non-small business cases under chapter 11. The USTP just published in the Federal Register a notice of proposed rulemaking seeking public comment on the proposed rule and periodic report forms. The proposed rule is published in the Federal Register at 79 FR 66659 (Nov. 10, 2014) (to be codified at 28 C.F.R. pt. 58). The proposed rule, along with the proposed periodic report forms and instructions, may be viewed on the USTP's website. The proposed rule may also be accessed at www.regulations.gov. All public comments must be submitted on or before January 9, 2015, via www.regulations.gov. Please note that the proposed rule and forms only apply in chapter 11 cases filed by debtors that are not small businesses. Small business debtors are already required to use Official Form 25C, "Small Business Monthly Operating Report."
NEW CASE SUMMARY ON VOLO: KHAN V. BARTON (IN RE KHAN; 9TH CIR.)
Summarized by Emil Khatchatourian of Foley & Lardner LLP
Affirming the bankruptcy court, the Ninth Circuit Bankruptcy Appellate Panel held that mandatory subordination of a creditor's claims was not required and that the bankruptcy court did not err in overruling the debtors' respective claims objections and dismissing adversary proceedings alleging mandatory subordination under § 510(b) with prejudice. Disallowance of a creditor's claims does not follow from mandatory subordination, as "subordination relates to the order of distribution among a debtor's creditors, not whether a claim is allowed under the Code." In any event, the creditor's claims were not subject to mandatory subordination under § 510(b), as mandatory subordination relates to corporate debt and the distribution of corporate assets; § 510(b) is inapplicable in an individual debtor's case. Therefore, the bankruptcy court did not abuse its discretion in converting the debtors' cases to chapter 7.
There are more than 1,500 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI's Volo website.
NEW ON ABI'S BANKRUPTCY BLOG EXCHANGE: CFPB TAKES ACTION TO END STUDENT "DEBT RELIEF" SCAMS
A recent blog post examined the Consumer Financial Protection Bureau's (CFPB) action yesterday to put an end to two student "debt relief" scams that illegally tricked borrowers into paying upfront fees for federal loan benefits. The CFPB, in a joint filing with Florida's Attorney General, shut down student debt relief company College Education Services and separately filed a lawsuit against Student Loan Processing.
Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.
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