||NEWS AND ANALYSIS
CONGRESSMAN INTRODUCES BILL TO FORGIVE STUDENT LOAN DEBTS DURING BANKRUPTCY
Rep. John K. Delaney (D-Md.) yesterday introduced H.R. 449, the "Discharge Student Loans in Bankruptcy Act," to allow student loan debt to be treated like other forms of debt that can be discharged in bankruptcy proceedings, AccountingToday.com reported today. According to a study by the Institute for College Access & Success, 69 percent of graduates from the class of 2013 graduated with student loan debt, owing an average of $28,400. "Student loan debt is dragging down economic growth, keeping the American Dream out of reach for many and is a monthly strain for millions," said Delaney. "Right now, there is effectively a huge student loan loophole in bankruptcy law that’s hurting real people. . . It doesn't make sense for students with heavy debt burdens to be worse than someone with credit card, auto loan debt or mortgage debt." Read more.
Click here to read Delaney's press release on the legislation.
BANKRUPTCY RULES ADVISORY COMMITTEE HEARING TOMORROW TO CONSIDER NATIONAL CHAPTER 13 PLAN FORM
The U.S. Judicial Conference's Advisory Committee on Bankruptcy Rules will hold a hearing tomorrow at 10 a.m. ET to hear testimony on a mandatory national plan for chapter 13. Alane A. Becket, Ronda Winnecour and Bankruptcy Judges Marvin Isgur, Brian Lynch, and Rebecca Connelly are among those set to testify at the hearing. To read the comments and testimony submitted to date, please click here.
The Judicial Conference Advisory Committee on Bankruptcy Rules has proposed amendments to the Federal Rules of Bankruptcy Procedure and Official Forms, and has requested that the proposals be circulated to the bench, bar and public for comment. The public comment period opened on Aug. 15 for the proposed amendments to Bankruptcy Rules 1010, 1011, 2002, 3002, 3002.1, 3007, 3012, 3015, 4003, 5009, 7001, 9006, 9009 and New Rule 1012, and Official Forms 11A, 11B, 106J, 201, 202, 204, 205, 206Sum, 206A/B, 206D, 206E/F, 206G, 206H, 207, 309A, 309B, 309C, 309D, 309E, 309F, 309G, 309H, 309I, 312, 313, 314, 315, 401, 410, 410A, 410S1, 410S2, 416A, 416B, 416D, 424 and Instructions, and New Official Forms 106J-2 and 113. The public comment period closes on Feb. 17.
NATIONAL CREDIT DEFAULT RATES CONTINUED THEIR UPWARD TREND IN DECEMBER
December marks the fifth month of rising consumer credit default rates in the U.S., ACAInternational.org reported yesterday. Data through December 2014, released Jan. 20, 2015, by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, continued to show an increase in default rates. The national composite posted a default rate of 1.11 percent in December, up four basis points from November 2014. The first mortgage default rate rose five basis points to 1.02 percent in December, its largest increase since September 2013. The second mortgage default increased by 11 basis points to 0.59 percent. The bank card default rate also increased from its historic low in November, up six basis points to 2.65 percent. Only the auto loan default rate decreased, down three basis points to 1.02 percent. Read more.
COMMENTARY: PAYDAY LOAN RULES CAN HELP LEVEL THE PLAYING FIELD FOR DESPERATE BORROWERS
Payday loans are advertised as a quick and easy solution to temporary cash-flow problems, but most borrowers take out these small loans to meet expenses that don't go away, according to a commentary in yesterday's New York Times. Research from the Consumer Financial Protection Bureau says that 82 percent of loans are renewed within 14 days. A study by Pew found that the average borrower takes out eight loans of $375 each per year, spends $520 on interest and is in payday loan debt five months out of the year — well beyond the two-week obligation that payday lenders promote. According to the Federal Reserve Bank of Kansas City, "the profitability of payday lenders depends on repeat borrowing." This asymmetry between the economic vulnerability of borrowers and profitability of lenders opens the door to predatory practices, according to the commentary. To break the cycle induced by payday loans, the commentary advocates banning predatory interest rates, making borrowers account for their ability to repay, limiting the duration of the debt, and restricting lenders’ access to borrowers' bank accounts. To read the full commentary, please click here.
FEDERAL STUDY REVIEWS CREDIT REPORT ACCURACY
A federal credit report accuracy study found that most consumers who previously reported an unresolved error on one of their three major credit reports believe that at least one piece of disputed information is still inaccurate, CollectionsCreditRisk.com reported today. The congressionally mandated Federal Trade Commission study is the sixth and final review of credit report accuracy. It follows a study issued by the FTC in 2013, which examined how many consumers had errors on one of the three credit reports. The 2013 study found, among other things, that one in five consumers had an error that was corrected by a credit reporting agency after it was disputed on at least one of the three credit reports. The study also found that about 20 percent of consumers who identified errors on one of the three credit reports experienced an increase in their score that resulted in a lower credit risk tier, making them more likely to be offered a lower auto loan interest rate. The new study announced yesterday focuses on 121 consumers who had at least one unresolved dispute from the 2012 study and participated in a follow-up survey. It found that 37 of the consumers (31 percent) stated that they now accepted the original disputed information on their reports as correct. However, 84 of these consumers (nearly 70 percent) continue to believe that at least some of the disputed information is inaccurate. Of those 84 consumers, 38 of them (45 percent) said that they plan to continue their dispute and 42 (50 percent) plan to abandon their dispute, while four consumers are undecided. The study also examined whether consumers from the 2013 study, who had their credit reports modified after disputing information on their credit reports, had any of the negative information that had been removed subsequently reappear on their reports. The study found two instances of this, representing about 1 percent of these consumers. Read more.
Click here to read the full study.
NEXT THURSDAY: BLOOMBERG BNA PROGRAM IN NEW YORK TO FOCUS ON FINAL REPORT OF ABI’S CHAPTER 11 REFORM COMMISSION
Two programs, sponsored by Bloomberg BNA in January and the American College of Bankruptcy (ACB) Fourth Circuit in February, will focus on the Final Report of the ABI Commission to Study the Reform of Chapter 11. Both programs will feature an overview of the Report, and members of the Commission will address their recommendations aimed at modernizing chapter 11 of the Bankruptcy Code.
Bloomberg BNA 2015 Outlook: "What's Ahead for Chapter 11 Reform?"
Bloomberg Headquarters, New York. January 29, 2015.
This free half-day program will take place at Bloomberg's headquarters in New York on Jan. 29 from 8:45 a.m. to 12:30 p.m. ET. Bloomberg's Bill Rochelle and members of ABI's Commission to Study the Reform of Chapter 11, including the official reporter, will present three panel discussions analyzing the key recommendations of the 400-page Report. Attendees have the opportunity to earn 3.25 hours of CLE credit. For more information on the free program, including speakers and registration, please click here.
ACB Fourth Circuit Program: "Considering ABI's Report on Chapter 11 Reform"
Rayburn House Office Building, Washington, D.C. February 13, 2015.
The American College of Bankruptcy Fourth Circuit program, "Considering ABI's Report on Chapter 11 Reform," will be held on Feb. 13 from 9:30 a.m. to 1:00 p.m. ET on Capitol Hill. The free event will take place in Room 226 of the Rayburn House Office Building (House Judiciary Committee) and will feature discussion by ABI commissioners and bankruptcy experts on the Final Report's treatment of small and medium-sized enterprises (SMEs), 363 sales, valuation and more. For more information and to register, please click here.
ORDER YOUR PRINTED COPY OF THE FINAL REPORT OF ABI'S COMMISSION TO STUDY THE REFORM OF CHAPTER 11!
Order your printed copy of the Final Report of ABI's Commission to Study the Reform of Chapter 11! The 402-page Final Report contains more than 200 discrete recommendations of chapter 11 policy reforms. ABI's Commission to Study the Reform of Chapter 11 was established in 2012 with a mission to study and propose reforms to Chapter 11 of the Bankruptcy Code and related statutory provisions. After months of deliberations, the Commission unanimously adopted this report to provide to Congress. For the special price of $40, you will have all the testimony, studies and figures that went into compiling the recommendations at your fingertips! Click here to order.
NEW CASE SUMMARY ON VOLO: POWERS V. CREDIT MANAGEMENT SERVICES INC. (8TH CIR.)
Summarized by Michael Cooley of Akin Gump Strauss Hauer & Feld LLP
The Eighth Circuit found that standard form complaints and discovery requests served on debtors by a consumer debt collector did not, on their face, violate the Fair Debt Collections Practices Act, and therefore were insufficient to support class certification under Fed. R. Civ. P. 23(b).
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: AMEND THE FEDERAL RULES OF BANKRUPTCY PROCEDURE TO COMBAT FRAUDULENT ASBESTOS CLAIMS
A recent post advocates for action to be taken toward federalizing the lessons learned in Garlock in order to eliminate the scandal of fraudulent pursuit of asbestos claims from all federal bankruptcy proceedings, including asbestos trusts established under confirmed "524G plans."
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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BLOOMBERG BNA 2015 OUTLOOK: "WHAT'S AHEAD FOR CHAPTER 11 REFORM?"
Bloomberg Headquarters, New York, January 29, 2015.
ACB 4th Cir. Program on ABI Chapter 11 Reform Report
Feb. 13, 2015 Washington, D.C.