Help Center

Study: BAPCPA May Have Removed Important Form of Financial Relief for Low-Income Debtors

 
 

April 16, 2015

 
home | newsroom | chart of the day | blogs | bankruptcy code and rules | statistics | legislative news | volo
  NEWS AND ANALYSIS

STUDY: BAPCPA MAY HAVE REMOVED IMPORTANT FORM OF FINANCIAL RELIEF FOR LOW-INCOME DEBTORS

A Congressional overhaul of U.S. bankruptcy law may be keeping financially struggling people out of bankruptcy court, but it hasn't kept them from going broke, researchers have found, Dow Jones Daily Bankruptcy Review reported yesterday. A new study from the Federal Reserve Bank of New York puts a spotlight on a pocket of financially struggling people who, researchers say, are too poor to file for bankruptcy after federal lawmakers changed the law in 2005 and made it more expensive. Specifically, the 49-page study found that a "sizable group of individuals exists that does not file for bankruptcy, but seems unable to pay off their debts." By cutting off the path to bankruptcy, BAPCPA may have removed the chance for a fresh start for those that need it most, the study said. "These individuals are concentrated at the bottom of the income distribution, and therefore they are the ones who would be expected to benefit most from the relief offered by personal bankruptcy," the researchers said. Read more. (Subscription required.)

Click here to read the Fed study.

FORECLOSURES RISE IN MARCH, FALL TO EIGHT-YEAR QUARTERLY LOW

A report by RealtyTrac today said that U.S. foreclosure activity rose sharply in March on an increase in bank repossessions, but dropped in the first quarter to the lowest mark in eight years, CollectionsCreditRisk.com reported today. Foreclosures were up 20 percent to a total of 122,060 last month, according to the RealtyTrac report. That increase pushed foreclosure activity up 4 percent from year-ago levels, the first annual rise since September 2010. A total of 313,487 properties were at some stage of the foreclosure process in the first three months of the year, down 7 percent from the previous quarter. It was also an 8 percent drop from the first quarter of 2014. Read more.

COMMENTARY: HOW WARREN'S BANKING AGENDA COULD INFLUENCE CLINTON

Hillary Clinton just kicked off her presidential bid on Sunday, but progressives have already begun a campaign of their own to shape the financial policy debate ahead of the 2016 elections, according to an American Banker today. Sen. Elizabeth Warren (D-Mass.) delivered a wide-ranging address on Wednesday, laying out an agenda for tending to "unfinished business" in the financial industry in the wake of the financial crisis and the Dodd-Frank Act. Warren repeatedly put to rest rumors that she plans to run for higher office, but her proposals appeared designed to influence the positions that Clinton and other presidential contenders take. Warren detailed a number of specific policy proposals designed to break up the big banks, punish bad financial actors and increase oversight on auto dealers and the so-called "shadow banking" system. It's not yet clear whether the Massachusetts senator is putting pen to paper on many of these proposals, according to the commentary, many of which would require legislation, but they are unlikely to gain traction in the short-term while Congress is under complete GOP control. Read the full commentary.

Sen. Warren will be providing the opening remarks tonight at ABI's 33rd Annual Spring Meeting.

STUDENT DEBT STRIKERS ARE DEMANDING LOAN RELIEF, AND MAY GET IT

The U.S. Education Department said that former Corinthian Colleges Inc. students, who have borrowed billions of dollars through the federal student-loan program, may have their debts forgiven if they can show they have been defrauded, Bloobmerg News reported yesterday. The federal agency on Tuesday fined the for-profit college chain $30 million, finding that its Heald business schools had misled students about job-placement rates. In making the announcement, the agency said that it was setting up a system to accept fraud claims and requests for forgiveness -- the first time it has done so on a mass scale. The department has received demands from at least 250 students to have their loans forgiven as borrowers staged what they called a "debt strike." It’s unclear how many former students will get relief and whether borrowers from years ago will qualify. The government will consider each borrower claim on a case-by-case basis, and students will have to prove both that they have been defrauded and injured by misstatements, the official said. Corinthian’s Heald College misstated 947 placement rates that inflated the employment prospects of graduates, the Education Department said Tuesday. Heald paid temporary agencies to hire its graduates to work at jobs on its own campuses for as little as two days and counted them as employed, the department said. Read more.

For further analysis of student loans and bankruptcy, be sure to pick up a copy of ABI's Graduating with Debt: Student Loans under the Bankruptcy Code.

 

DISCOUNTED SUBSCRIPTIONS TO AUDIO ABI JOURNAL AVAILABLE FROM MODIOLEGAL!

Subscribe now to our new streaming audio Journal, offered by ModioLegal. Narrated articles from each issue of the ABI Journal can now be accessed through your web browser -- on your computer, smartphone, or tablet -- for a low monthly fee. For a limited time, subscribe to this new service now for just $9.95 a month (regularly $12.95) with coupon code abi-early. Sign up for any audio Journal plan, and your first month is free! Go to http://www.modiolegal.com/subscribe to learn more, or send an email to accounts@modiolegal.com for a free demo.

NEW CASE SUMMARY ON VOLO: ADAM V. DOBIN (IN RE ADAM; 9TH CIR.)

Summarized by Emil Khatchatourian of Foley & Lardner LLP

Affirming the bankruptcy court, the Bankruptcy Appellate Panel of the Ninth Circuit held that the bankruptcy court did not err in granting summary judgment that the creditor's claim against the debtor was excepted from discharge under § 523(a)(15). The BAP reasoned that the trend in recent case law was to construe § 523(a)(15) expansively to cover a broader array of claims related to domestic relations within the discharge exception.

There are nearly 1,700 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: WHO IS HELPING CONSUMERS WITH DEFAULTED STUDENT LOANS?

As defaults on mortgage loans and credit card loans have fallen, providers who live on the profits of counseling people who default on those loans have turned their attention, and their advertising and marketing, to consumers who are in trouble on their student loans, according to a new blog post.

For further analysis of student loans and bankruptcy, be sure to pick up a copy of ABI's Graduating with Debt: Student Loans under the Bankruptcy Code.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

 

 

NEXT EVENT:

9th Annual Credit and Bankruptcy Symposium
May 7-8, 2015
Register Today!

UPCOMING EVENTS:

17th Annual New York City Bankruptcy Conference
May 14, 2015
Register Today!

ABI/St. John's Forty-Hour Bankruptcy Mediation Training
May 17-21, 2015
Register Today!

14th Annual Litigation Skills Symposium
May 19-22, 2015
Register Today!

5th Annual Memphis Consumer Bankruptcy Conference
June 5, 2015
Register Today!

22nd Annual Central States Bankruptcy Workshop
June 11-14, 2015
Register Today!
Early Bird Rate Goes Up Tomorrow!

Cross-Border Insolvency Symposium
June 18, 2015
Register Today!

22nd Annual Northeast Bankruptcy Conference
July 9-12, 2015
Register Today!

10th Annual Northeast Consumer Forum
July 9-11, 2015
Register Today!

Beijing Insolvency & Restructuring Symposium
July 13-14, 2015
Register Today!

20th Annual Southeast Bankruptcy Workshop
July 23-26, 2015
Register Today!

11th Annual Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015
Register Today!

 
   
  CALENDAR OF EVENTS
 

2015

May
- Credit and Bankruptcy Symposium
May 7-8, 2015 | Uncasville, Conn.
- New York City Bankruptcy Conference
May 14, 2015 | New York, N.Y.
- Forty-Hour Bankruptcy Mediation Training
May 17-21, 2015 | New York, N.Y.
- Litigation Skills Symposium
May 19-22, 2015 | Chicago, Ill.

June
- Memphis Consumer Bankruptcy Conference
June 5, 2015 | Memphis, Tenn.
- Central States Bankruptcy Workshop
June 11-14, 2015 | Traverse City, Mich.
- Cross-Border Insolvency Program
June 18, 2015 | New York

 

 


July
- Northeast Bankruptcy Conference
July 9-12, 2015 | North Falmouth, Mass.
- Northeast Consumer Bankruptcy Forum
July 9-11, 2015 | North Falmouth, Mass.
- Beijing Insolvency & Restructuring Symposium
July 13-14, 2015 | Beijing, China
- Southeast Bankruptcy Workshop
July 23-26, 2015 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015 | Hershey, Pa.

 

 
 
FDICABI Endowment FundABI Endowment Fund