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'Chapter 20' Debtors Can Strip Junior Liens, 9th Circ. Says

‘Chapter 20’ Debtors Can Strip Junior Liens, 9th Circ. Says A Ninth Circuit bankruptcy panel ruled Thursday that distressed homeowners who convert from Chapter 7 to Chapter 13 bankruptcy can strip wholly unsecured junior liens, joining a growing number of circuits that ruled the Bankruptcy Code permits “Chapter 20” debtors this lien avoidance. Boukatch et al. v. Midfirst Bank et al., case number 14-1483, before the U.S. Bankruptcy Appellate Panel of the Ninth Circuit. Read More
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FactorLaw Attorney Featured Speaker at ABI Southwest Conference

Featured Speaker Ariane Holtschlag The Law Office of William J. Factor, Ltd.; Chicago Friday, September 11 9:45–11:00 a.m. Hot Consumer Bankruptcy Topics This year’s hot topics will include two cases currently pending before the U.S. Supreme Court, a new Ninth Circuit BAP decision and will address lenders refusing to retake abandoned collateral, as well as other issues that will be of interest to those representing parties in consumer cases. 23rd Annual Southwest Bankruptcy Conference Four Seasons, Las Vegas September 10–12, 2015 ~ Las Vegas, NV Celebrate the end of summer with a luau-themed Opening Reception, a keynote by famed former mayor of Las Vegas Oscar Goodman, and a craft beer tasting on Friday evening. You can find fun anywhere in Las Vegas—but the place to be is at the Southwest Bankruptcy Conference! Experienced practitioners and regional judges will present sessions on a variety of topics, both business and consumer—ensuring that there is something for everyone. Southwest Conference by the numbers: • 8 unique networking opportunities—in small and large group settings—to ensure business gets done and connections are made. • 14 U.S. Bankruptcy Judges. • Up to 11.5 hours of CLE/CPE and 3 hours of ethics credit. • Over 400 insolvency professionals expected to attend. Read More
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FactorLaw wins two appeals in one week

District Court Upholds Chapter 7 Trustee’s Motion for Turnover In In re Fregeau, 15 C 01687 (N.D. Ill. June 26, 2015), FactorLaw represented a chapter 7 trustee in his efforts to obtain the turnover of $141,000 from a chapter 7 debtor. The parties agreed the debtor had the $141,000 in his possession on the petition date, but the debtor claimed he lost the money gambling in Las Vegas after the meeting of the creditors but before the entry of an order directing him to surrender such funds. After winning at the bankruptcy court level, FactorLaw represented the Trustee when the debtor appealed the turnover order on the grounds that he could not be ordered to turnover property he no longer possessed. In affirming the bankruptcy court, Judge Edmond E. Chang held the bankruptcy court did not clearly error in finding the debtor still possessed the property at the time the bankruptcy court entered the turnover order. The bankruptcy court found that the debtor’s “bald statement” that he no longer had the money was not credible, because his bankruptcy schedules suggested he still had the funds. Judge Chang also noted the debtor vaguely spoke of gambling losses, but did not offer a sworn declaration or testimony under oath in support of his claim that he gambled away the money. District Court Affirms Bankruptcy Court’s Orders Granting Sanctions and Denying Reconsideration In SC Real Estate LLC v. Acevedo, 15 C 1104 (N.D. Ill. July 1, 2015), Judge John J. Tharp, Jr. affirmed an order in favor of FactorLaw’s client that sanctioned a creditor for violating the automatic stay. The sanctions order directed the creditor to pay approximately $21,000 in legal fees incurred to enforce the automatic stay after the creditor proceeded with state court litigation post-petition. Judge Tharp concluded the creditor forfeited its objection to the sanctions order by failing to timely respond to the underlying motion. He also rejected the creditor’s due process argument premised on the alleged lack of an ability to respond meaningfully, noting the creditor had notice of the possible sanction and chose not to attend a critical hearing, at which the bankruptcy court granted the debtor’s motion for sanctions. Read More
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Nationwide bankruptcy filings drop, although per capita filings in Illinois are still high

According to the American Bankruptcy Institute, total bankruptcy filings totaled 422,782 nationwide during the first six months of 2015 (Jan. 1-June 30), a 12 percent decrease from the 479,573 total filings reported during the same period a year ago, according to data provided by Epiq Systems, Inc. The 407,764 total noncommercial filings for the first half of 2015 represented a 12 percent drop from the noncommercial filing total of 460,931 for the first half of 2014. Total commercial filings during the first six months of the year were 15,018, representing a 19 percent decrease from the 18,642 filings during the same period in 2014. Commercial chapter 11 filings also fell during the first half of 2015 as the 2,576 filings represented a 15 percent decrease from the 3,046 commercial chapter 11 filings during the first six months of 2014. “Bankruptcy filings through the first half of the year continue to recede amid sustained low interest rates and flat consumer debt levels,” said ABI Executive Director Samuel J. Gerdano. “Total bankruptcies remain on a pace to total just over 800,000 for 2015.” The 69,723 total bankruptcy filings for the month of June represented a 6 percent decrease compared to the 73,855 filings in June 2014. The 67,293 total noncommercial filings for June represented a 5 percent drop from the June 2014 noncommercial filing total of 70,996. Total commercial filings for June 2015 were 2,430, representing a 15 percent decrease from the 2,859 filings during the same period in 2014. Commercial chapter 11 filings registered a 24 percent drop as the 483 commercial chapter 11 filings in June 2014 fell to 366 in June 2015. The average nationwide per capita bankruptcy filing rate for the first six calendar months of 2015 (Jan. 1-June 30) decreased slightly to 2.72 (total filings per 1,000 per population) from the 2.73 rate for the first five months of the year, and the average total filings per day in June 2015 were 2,324, a 6 percent decrease from the 2,462 total daily filings in June 2014. States with the highest per capita filing rate (total filings per 1,000 population) through the first six months of 2015 were: 1. Tennessee (5.68) 2. Alabama (5.20) 3. Georgia (4.89) 4. Illinois (4.51) 5. Utah (4.40) total bankruptcy filings totaled 422,782 nationwide during the first six months of 2015 (Jan. 1-June 30), a 12 percent decrease from the 479,573 total filings during the same period a year ago, according to data provided by Epiq Systems, Inc. The 407,764 total noncommercial filings for the first half of 2015 represented a 12 percent drop from the noncommercial filing total of 460,931 for the first half of 2014. Total commercial filings during the first six months of the year were 15,018, representing a 19 percent decrease from the 18,642 filings during the same period in 2014. Commercial chapter 11 filings also fell during the first half of 2015 as the 2,576 filings represented a 15 percent decrease from the 3,046 commercial chapter 11 filings during the first six months of 2014. “Bankruptcy filings through the first half of the year continue to recede amid sustained low interest rates and flat consumer debt levels,” said ABI Executive Director Samuel J. Gerdano. “Total bankruptcies remain on a pace to total just over 800,000 for 2015.” Read the press release. Read More
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Be Careful of Credit Repair Scams

The following information was provided by the Federal Trade Commission (http://www.consumer.ftc.gov/articles/0058-credit-repair-how-help-yourself): You see the ads in newspapers, on TV, and online. You hear them on the radio. You get fliers in the mail, email messages, and maybe even calls offering credit repair services. They all make the same claims: “Credit problems? No problem!” “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!” “We can erase your bad credit — 100% guaranteed.” “Create a new credit identity — legally.” Do yourself a favor and save some money, too. Don’t believe these claims: they’re very likely signs of a scam. Indeed, attorneys at the Federal Trade Commission, the nation’s consumer protection agency, say they’ve never seen a legitimate credit repair operation making those claims. The fact is there’s no quick fix for creditworthiness. You can improve your credit report legitimately, but it takes time, a conscious effort, and sticking to a personal debt repayment plan. Read More
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Court Holds Creditor Can Be Liable For Pursuing Stale Credit Card Claims In Bankruptcy

In In re Rose I. Avalos, 15 A 00091 (Bankr. N.D. Ill. June 12, 2015), Judge Schmetterer reasoned that a creditor could be found to have violated the Federal Debt Collection Practices Act by filing a proof of claim in a chapter 13 to recover credit card debt that was unenforceable due to the expiration of the five-year statute of limitations. Judge Schmetterer noted there was a difference of opinion within the Chicago Bankruptcy Court, but reasoned that filing a claim for an unenforceable debt could be deemed a false or misleading practice actionable under the Fair Debt Collection Practices Act. Read More
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Obama Administration Opens Door for More Student-Debt Forgiveness

The Obama administration said yesterday that it would forgive federal student loans owed by Americans who can show they were lured to colleges by fraudulent recruiting, a move that potentially could involve billions of dollars and is one of the most aggressive measures yet to ease student debt, the Wall Street Journal reported today Read More
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Jeff Crane to speak at CLE Webinar on Offers of Judgment under Rule 68

The CLE webinar will examine the strategic use of Rule 68 offers of judgment in putative class actions, including the growing circuit court split on whether offers of judgment moot a putative class action; how defense counsel are leveraging Rule 68 as an early case defense strategy; and considerations for counsel regarding choice of jurisdiction and the use of placeholder certification motions as a method to proactively avoid an offer of judgment. Read More
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BREAKING: Supreme Court Rejects Chapter 7 Lien Stripping

The U.S. Supreme Court ruled Monday that the bankruptcy code does not allow Chapter 7 debtors to rid themselves of junior liens on home loans that are underwater, a decision that should benefit commercial lenders. Read More
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Supreme Court holds on 5/26/2015 that Article III permits bankruptcy judges to adjudicate Stern claims with the parties’ knowing and voluntary consent.

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