ABI Blog Exchange

M.D.N.C.: Joyce v. First American Mortgage Solutions – Stream of Consciousness Meets the FCRA and Mortgage Reports

M.D.N.C.: Joyce v. First American Mortgage Solutions – Stream of Consciousness Meets the FCRA and Mortgage Reports Ed Boltz Mon, 10/20/2025 - 18:37 Summary: Judge Schroeder’s September 30, 2025 portrait of the property report as a CRA in Joyce v. First American Mortgage Solutions, LLC (No. 1:23-cv-1069) denied the defendant’s motion for judgment on the pleadings, allowing a Fair Credit Reporting Act (“FCRA”) claim to proceed where a “Property Report” combined another consumer’s judgments with the plaintiff’s file and was then used by a lender to deny him a loan. And "yes i said yes I will yes"—perhap because the plaintiff’s name really is James Joyce— while the complaint and claims read a bit like Ulysses: full of detail, meandering through definitions and disclaimers, they were ultimately coherent enough to survive dismissal. Background: Joyce applied for a debt-consolidation loan with Members Credit Union. At the credit union’s request, First American Mortgage Solutions prepared and sold a “Property Report.” The report—supposedly about the borrower’s property—listed judgments against “James Joyce d/b/a AMPM Appliance” and “James F. Joyce,” neither of whom were the plaintiff. The credit union, seeing those supposed debts, denied the application. Joyce sued under 15 U.S.C. §1681e(b), alleging that First American failed to follow “reasonable procedures to assure maximum possible accuracy.” The Court’s Ruling: First American argued that the report wasn’t a “consumer report” because it was about property, not personal creditworthiness, and that its End User License Agreement (EULA) expressly disclaimed any FCRA use. Judge Schroeder wasn’t persuaded. Taking the allegations as true, the court found the complaint plausibly alleged that: The report contained personal information (judgments and liens attributed to “James Joyce”); It was prepared for a lender in direct response to a credit application; and The lender actually used it in deciding to deny credit. The court refused to consider First American’s attached EULA and “title abstract,” holding they were neither integral to nor authenticated within the pleadings. Even if they had been, disclaimers cannot defeat plausible allegations of intent. As Judge Schroeder noted, citing Kidd v. Thomson Reuters Corp., “an entity may not escape regulation as a ‘consumer reporting agency’ by merely disclaiming an intent to furnish ‘consumer reports.’” Commentary: Judge Schroeder stopped short of declaring all property reports “consumer reports,” but left open that possibility depending on how they are used. That uncertainty should prompt both lenders and vendors to revisit their compliance policies. And if the irony of a plaintiff named James Joyce alleging that his credit file was “mixed” isn’t poetic enough—consider this case a reminder that the FCRA, like modernist literature, demands attention to detail. One might even say that this decision brings stream-of-consciousness to the stream of commerce. Practical Implications: Judge Schroeder’s opinion continues the recent Middle District trend (see Keller v. Experian I and II) that focuses on the real-world use of a report, not its label. If a report—whether called a “title search,” “property profile,” or “data supplement”—is used to assess a consumer’s credit eligibility, it may fall under the FCRA. For consumer practitioners, Joyce reminds us that: “Mixed file” errors remain actionable, even when made by secondary data vendors; Mortgage-related data companies can be “consumer reporting agencies” if their reports influence credit decisions; and EULAs and disclaimers can’t contract around statutory duties. For creditors, the takeaway is straightforward: if you use such reports in deciding whether to extend credit, you assume FCRA compliance risk—no matter how the vendor markets it. And while Joyce involved a straightforward consumer loan, its reasoning has implications far beyond. In North Carolina’s Loss Mitigation/Mortgage Modification (LMM) Programs—available in the Eastern, Middle, and Western Bankruptcy Courts—mortgage servicers and their vendors routinely generate “property verification,” “valuation,” or “title update” reports as part of the modification process. If those reports contain personally identifiable credit information (e.g., judgments, liens, prior bankruptcies) and are used to determine a debtor’s eligibility for a modification or short refinance, they could meet the FCRA’s definition of a “consumer report.” The FCRA applies to any “communication of information by a consumer reporting agency bearing on a consumer’s creditworthiness, credit standing, or capacity,” used or expected to be used to determine credit eligibility. 15 U.S.C. §1681a(d)(1). A mortgage modification is an extension of credit. Thus: Servicers that request or rely on such reports in deciding whether to offer modification terms are “using” consumer reports; Vendors that compile and sell those reports to servicers could qualify as “consumer reporting agencies”; and Debtors denied modifications due to inaccurate entries (e.g., misattributed judgments, erroneous liens, or mistaken prior foreclosures) might assert FCRA claims akin to Joyce. Even within bankruptcy, where the LMM process is court-supervised, the fact that servicers use these reports to make credit determinations may implicate the FCRA’s procedural and accuracy requirements—especially when those same reports later form the basis for Rule 3002.1 payment changes, escrow recalculations, or denials of post-petition loss mitigation. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document joyce_v._first_american_mortgage.pdf (168.17 KB) Category Middle District

Weekly News – October 17

Market stress rearing its ugly head, First Brands and auto stress hit BDCs/ Banks, 2024 double-dip USS hits the skids, Credit Sights LME Quarterly Review and so much more…  Creditor…

Can Divorce-Related Debts Be Wiped Out in Pennsylvania Bankruptcy?

Divorce and bankruptcy can be unpleasant, but they may be necessary to help you get a fresh start. They also tend to take a large financial toll, and one may […]

M.D.N.C.: Keller v. Experian II – No Standing to Sue, Even for a “Suspicious Mail Policy” Delay

M.D.N.C.: Keller v. Experian II – No Standing to Sue, Even for a “Suspicious Mail Policy” Delay Ed Boltz Fri, 10/17/2025 - 16:38 Summary: In this sequel to Keller v. Experian I, 2024 WL 1349607 (M.D.N.C. Mar. 30, 2024), Judge Thomas Schroeder once again dismissed Eric Keller’s Fair Credit Reporting Act (FCRA) suit against Experian—this time for lack of Article III standing rather than for failure to state a claim. Background Keller’s saga began when a refinancing snafu between Truist and TD Auto Finance led to erroneous late payment reporting on his car loan. After Experian flagged Keller’s initial dispute letter as “suspicious mail,” it delayed forwarding the dispute to Truist. Once Experian eventually did so, Truist confirmed—incorrectly—that the loan was delinquent. In Keller I, Judge Loretta Biggs held that this was a legal dispute, not a factual one, and thus outside Experian’s reinvestigation duties under 15 U.S.C. §1681i. She dismissed Keller’s individual FCRA claims, leaving only a putative class action claim challenging Experian’s “suspicious mail policy.” Keller II: The Standing Showdown Experian next argued that Keller lacked Article III standing because his alleged injury—a delay in processing his dispute—was not “fairly traceable” to any inaccuracy in his credit file. Judge Schroeder agreed. While Keller alleged he was denied a mortgage loan due to Experian’s inaction, the court found that the delay itself did not cause that injury. Even if Experian had promptly acted, Truist would have repeated its same erroneous report, and Keller’s credit file would have remained unchanged. The harm flowed from Truist’s records, not from Experian’s temporary hesitation. The court also noted Keller could have directly disputed the information with Truist under 12 C.F.R. §1022.43, further breaking the causal chain. The court thus found no injury “fairly traceable” to Experian—and therefore no standing. Amendment Futility Keller’s proposed Second Amended Complaint alleged multiple duplicative tradelines and data conflicts within Experian’s report. Judge Schroeder was unmoved, finding these allegations simply restated the same underlying dispute with Truist—still a legal disagreement, not a factual inaccuracy a CRA could resolve. The amendment would be futile. Class Action Dismissal Because a named plaintiff without standing cannot represent a class, the entire case was dismissed without prejudice. The court declined to allow substitution of another representative since no class had been certified and no other injured party had been identified. Commentary Keller II closes the loop on a dispute that began with Experian’s overzealous fraud-screening policy. Where Keller I held that Experian wasn’t responsible for resolving legal disputes between borrower and lender, Keller II finds that even if Experian’s internal procedures delayed a reinvestigation, no actionable injury resulted. This decision exemplifies how, post- TransUnion v. Ramirez and Spokeo, courts in the Fourth Circuit continue to demand a concrete and traceable injury—not just a statutory violation or procedural misstep—before FCRA plaintiffs can proceed. For consumer attorneys, Keller II reinforces two key lessons: Causation matters—even procedural delays or CRA negligence require a clear factual link to a real-world credit denial. Parallel disputes with furnishers should be pursued directly and promptly under §1022.43, especially when the CRA’s role is limited. And for CRAs, Keller II provides further validation that their “suspicious mail” safeguards, though frustrating to consumers, are unlikely to result in standing-worthy claims absent concrete harm. See prior coverage: M.D.N.C.: Keller v. Experian I – Reinvestigation Duties Limited to Factual, Not Legal Disputes (July 15, 2024). With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document keller_v._experian_ii.pdf (153.67 KB) Category Middle District

M.D.N.C.: Atkinson v. Coats II – “Breach of the Peace” in Repossession Requires More Than a Deputy’s Quiet Presence

M.D.N.C.: Atkinson v. Coats II – “Breach of the Peace” in Repossession Requires More Than a Deputy’s Quiet Presence Ed Boltz Thu, 10/16/2025 - 17:43 Summary: When a repossession turns into a shouting match—or worse, when the debtor is still inside the car—any lawyer who’s ever seen the phrase “without breach of the peace” in N.C. Gen. Stat. § 25-9-609 should immediately start thinking “state-court claim and delivery,” not “self-help.” In Atkinson v. Coats II, No. 1:22-cv-369 (M.D.N.C. Sept. 23 2025), Judge Osteen followed the Fourth Circuit’s earlier decision in Atkinson v. Godfrey, 100 F.4th 498 (4th Cir. 2024), and dismissed the remaining claims against the Harnett County Sheriff, finding no Monell liability for the deputy’s role in a contentious repossession. The tow operator had called the sheriff’s office for “assistance” after lifting the debtor’s vehicle—with her still inside—off the ground. A deputy arrived, ordered her out, and the repo was completed. The debtor alleged that the sheriff’s office had a policy of aiding creditors in self-help repossessions. No Clear Constitutional Violation, No Policy Liability The Fourth Circuit had already held that the deputy was entitled to qualified immunity because neither North Carolina nor federal precedent clearly established that his conduct—ordering the debtor from the car—was unconstitutional. Judge Osteen reasoned that if the constitutional “terrain was murky,” there could be no notice to the Sheriff sufficient to support municipal liability. The plaintiff’s claims that Harnett County had a “policy” of helping repossessors were conclusory, based only on this single incident and “information and belief.” Without multiple examples or evidence of an official directive, there was no “express policy,” “custom,” or “deliberate indifference” sufficient to meet Monell’s standards. Why This Matters for Consumer Counsel While Atkinson II ultimately shields the sheriff’s office from federal § 1983 liability, it leaves open a key state-law issue: repossession “without breach of the peace.” Under U.C.C. § 9-609 and North Carolina’s enactment, self-help repossession is permissible only so long as it does not breach the peace. That standard is a factual, state-law inquiry—and when an officer’s presence or command compels a debtor’s compliance, the line from “peacekeeping” to “state-sanctioned seizure” may be crossed. Consumer debtor attorneys should therefore remind creditor counsel—particularly those representing buy-here-pay-here dealers and third-party repossessors—that bankruptcy “surrender” does not itself authorize self-help repossession. If the debtor refuses access or remains in possession, the creditor’s lawful course is a claim-and-delivery action under N.C. Gen. Stat. § 1-472 et seq., not a midnight tow backed by a deputy’s badge. Attempting repossession in those circumstances risks both tort and UDTPA exposure, as well as possible contempt in bankruptcy court if the vehicle remains property of the estate. Practice Pointer Advise creditors: even post-bankruptcy, obtain judicial process before repossessing over objection. Advise debtors: document any law-enforcement involvement, as the presence of an officer often transforms a private dispute into state action. Advise law enforcement: “civil standby” should never become “civil participation.” In short, Atkinson v. Coats II narrows federal liability but reminds everyone else—especially those holding tow straps and titles—that repossession power ends where the peace begins. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document atkinson_v._coats_ii.pdf (191.87 KB) Category Middle District

Who Owns “Product Line” Successor Liability Claims: The Debtor Or The Claimants? (In re Whittaker–Part 3)

By: Donald L Swanson The question of who owns “product line” successor liability claims is addressed and resolved in In re Whittaker Clark & Daniels, Inc., Case Nos. 24-2210 & 24-2211 (3rd Cir., decided September 10, 2025).## Facts The Whittaker Debtor processes, manufactures, and distributes industrial chemicals and minerals, including talc. Through a series of corporate... Continue Reading →

N.C. Ct. App.: Pelc v. Pham – Contempt Vacated; Execution, Not Incarceration, Required for Enforcement of Money Judgment

N.C. Ct. App.: Pelc v. Pham – Contempt Vacated; Execution, Not Incarceration, Required for Enforcement of Money Judgment Ed Boltz Wed, 10/15/2025 - 20:17 Summary: In Pelc v. Pham (No. COA25-27, filed Oct. 15, 2025), the North Carolina Court of Appeals (Tyson, J.) vacated a Mecklenburg County contempt order imprisoning a former spouse for failure to pay a contractual debt arising from a Form I-864 “Affidavit of Support” and related loan. The appellate court held that the trial court lacked jurisdiction to use contempt powers to enforce a money judgment grounded in breach of contract. The Court reaffirmed the longstanding principle that monetary judgments must be enforced through execution proceedings under N.C. Gen. Stat. § 1-302, not contempt. The Court also noted that the debtor had properly filed a Motion to Claim Exempt Property under N.C. Gen. Stat. §§ 1C-1601 and -1603, which the trial court erroneously disregarded when assessing his “ability to pay.” After years of litigation between the parties—whose disputes began over financial obligations from a failed international marriage and immigration sponsorship—the district court had ordered payment of damages for breach of the Affidavit of Support and unjust enrichment. When the defendant failed to pay, the court imprisoned him for civil contempt. The Court of Appeals found this improper, vacating the order and remanding with instruction that the creditor may instead proceed by execution, “subject to Defendant’s statutory and lawful exemptions.” Commentary: This decision stands out as a rare example of the North Carolina appellate courts interpreting and applying the state’s exemption procedures under N.C. Gen. Stat. § 1C-1601, particularly in the context of enforcing a civil judgment outside of bankruptcy or domestic-support enforcement. The Court’s holding underscores the sharp statutory distinction between (1) support obligations enforceable by contempt (e.g., child support under § 50-13.4(f)) and (2) contractual or quasi-contractual debts, which must proceed through execution and respect debtor exemptions. Judge Tyson’s opinion reinforces both the jurisdictional limits of the contempt power and the policy underlying the North Carolina Exemptions Act—to preserve a debtor’s basic means of living and prevent imprisonment for debt. The trial court’s refusal to honor Pelc’s claimed exemptions (including his residence and Australian retirement account) improperly blurred the line between contempt and execution, essentially transforming a civil money judgment into an imprisonable offense. In practical terms, this opinion reminds creditors (and domestic attorneys dealing with Affidavit-of-Support claims or other contractual obligations) that execution—not contempt—is the lawful enforcement mechanism, and that exemption procedures under §§ 1C-1601 et seq. must be afforded full effect. For consumer and bankruptcy practitioners, Pelc v. Pham also offers an instructive illustration of how North Carolina exemption law continues to operate outside of bankruptcy proceedings—rare appellate guidance in a state where exemption jurisprudence is more often developed in the bankruptcy courts than in the North Carolina appellate courts. Additionally worth noting is that based on the Form I-864 “Affidavit of Support” and unjust enrichment / loan repayment, this debt would likely be dischargeable in bankruptcy, though with nuances depending on how it’s characterized and which chapter is used. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document plec_v._pham.pdf (149.57 KB) Category NC Court of Appeals

M.D.N.C.: Scott v. Full House Marketing — No “Bad Faith” in FCRA Claim, Even After Jury Loss

M.D.N.C.: Scott v. Full House Marketing — No “Bad Faith” in FCRA Claim, Even After Jury Loss Ed Boltz Wed, 10/15/2025 - 18:40 Summary: In Scott v. Full House Marketing, Inc., No. 1:21-cv-242 (M.D.N.C. Sept. 30, 2025), Judge William Osteen, Jr. denied the defendant’s motion for attorneys’ fees and costs after a jury verdict in its favor on claims under the Fair Credit Reporting Act (FCRA). Full House Marketing argued that both the plaintiff, Derrick Scott, and his counsel acted in “bad faith” by pursuing a baseless claim and prolonging litigation unnecessarily. The court disagreed, holding that neither 15 U.S.C. § 1681n(c) nor 28 U.S.C. § 1927 justified a fee award. Scott had sued Full House Marketing and its background-check vendor, Resolve Partners, alleging that he was denied employment based on an inaccurate consumer report that confused him with another person. Although the jury found for Full House on the negligence claim, it found against Resolve. After the verdict, Full House sought sanctions and fees, asserting that Scott had fabricated portions of his résumé and continued litigating after evidence undermined his case. Judge Osteen found that the FCRA’s bad-faith fee provision requires proof of subjective bad faith at the time of filing — not merely that the claims later failed. He emphasized that earlier rulings denying Rule 11 sanctions and summary judgment already established that Scott’s claims had “some factual basis.” Likewise, § 1927 sanctions against counsel were inappropriate, since overestimating a case’s strength or rejecting settlement offers is not “unreasonable and vexatious” conduct. As the court concluded, “[a] mistake in judgment does not amount to bad faith.” Commentary: This decision offers a measured reaffirmation of the high bar for fee-shifting under both the FCRA and § 1927 — a bar that remains especially relevant in consumer litigation where plaintiffs’ counsel often press close factual questions against corporate defendants. The court’s refusal to equate loss at trial with bad faith in filing stands as an important guardrail against chilling legitimate, if ultimately unsuccessful, FCRA claims. For consumer practitioners, Scott reinforces two parallel themes familiar from dischargeability and fee-reasonableness disputes: Objective weakness ≠ subjective bad faith. Just as an unsuccessful § 523(a)(2) complaint does not automatically trigger § 523(d) fees, a losing FCRA claim is not “bad faith” merely because a jury disagreed. The focus remains on the filer’s mental state at filing — a distinction crucial when creditors attempt to penalize debtors or their counsel for asserting rights under the FCRA, FDCPA, or RESPA. Counsel’s persistence is not misconduct. Judge Osteen’s observation that “a mistake in judgment does not amount to bad faith” could easily apply to debtors’ attorneys who litigate plan confirmation or stay-violation claims that later fail. Zealous advocacy and aggressive strategy — even when frustrating to the other side — are not sanctionable absent genuine vexatiousness or dishonesty. In sum, Scott v. Full House Marketing tempers the reflexive urge to punish consumer plaintiffs after a defense verdict, reminding courts that losing a close case is not the same as filing a frivolous one. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document scott_v._full_house_marketing.pdf (170.83 KB) Category Middle District

Chapter 11 Bankruptcy In New York: A Strategic Path To Business Recovery

When Debt Threatens Your Business, Chapter 11 Offers A Lifeline Running a business is hard enough without the crushing weight of debt making every decision feel impossible. Maybe you’re lying The post Chapter 11 Bankruptcy In New York: A Strategic Path To Business Recovery appeared first on Wayne Greenwald, P.C..

Post-Purdue Clarity: Narrow Readings of Settlement Bar Orders Under Section 105(a)

N.C. Ct. App.: TOM, LLC v. South River Land Co. — “Time Is of the Essence” Clause Ends $2.7M Flip Deal, All Claims Dismissed

N.C. Ct. App.: TOM, LLC v. South River Land Co. — “Time Is of the Essence” Clause Ends $2.7M Flip Deal, All Claims Dismissed Ed Boltz Tue, 10/14/2025 - 18:17 Summary: In this unpublished but instructive decision, Judge Wood (joined by Judges Stroud and Carpenter) affirmed the dismissal of an attempted “flip” real-estate buyer’s sprawling complaint after the collapse of a $2.7 million contract to buy the Seawatch at Sunset Harbor subdivision in Brunswick County. Jack Carlisle, acting through his closely held entities TOM, LLC and Hoosier Daddy, LLC, contracted in late 2020 to buy Seawatch from South River Land Company, LLC (“South River”) for $2.8 million—later reduced to $2.7 million—with a non-refundable $100,000 deposit and a “time is of the essence” closing clause. The contract expressly acknowledged that South River didn’t yet own the property—it was still to acquire it from the North Myrtle Liquidating Trust (“NMLT”), which held Seawatch under a complex “Bond Replacement Agreement” securing subdivision improvements dating back to 2013. When Seawatch at Sunset Harbor, LLC (the prior developer) sued NMLT and obtained an injunction prohibiting any transfer unless new improvement bonds were posted, the sale collapsed. Eleven months passed without communication between buyer and seller. By the time the litigation ended in late 2021, South River (through a related entity, South River Communities, LLC) purchased Seawatch itself for about half the original price. Carlisle then sued nearly everyone in sight—South River, its principal Steven Tatum, NMLT and trustee Andrew Bolnick, Brunswick County, and the bonding company—alleging breach of contract, fraud, voidable transfers, UDTPA, and civil conspiracy. The Court of Appeals methodically affirmed dismissal of every claim: Breach of Contract: The “time is of the essence” clause controlled. The final amendment extended closing to January 29, 2021, and plaintiffs neither tendered performance nor alleged any waiver. The contract therefore “naturally terminated” by operation of its own terms—much like the analysis in S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 189 N.C. App. 601 (2008). Fraud: The “as-is” contract expressly incorporated the Bond Replacement Agreement, defeating any reasonable reliance on alleged nondisclosures. Plaintiffs also failed to allege what defendants gained by any supposed deceit beyond earnest money they in fact refunded. Voidable Transfer & UDTPA: Without an enforceable contract, plaintiffs were not “creditors” and could not show any unfair or deceptive conduct “in or affecting commerce.” Civil Conspiracy: Could not stand absent an underlying tort, and mere overlap of corporate officers didn’t establish any conspiratorial agreement. Moot Parties: Because all substantive claims failed, Brunswick County and the bonding company—named only as nominal defendants—were properly dismissed as moot. Commentary: This case is a reminder that “flip” buyers operating on speculation and optimism—especially when their seller doesn’t yet own the property—stand on perilously thin legal ground once a “time is of the essence” date expires. Carlisle’s attempt to recharacterize a dead deal into a multi-defendant fraud and conspiracy suit foundered on the same shoals as countless expired purchase agreements: no timely tender, no enforceable contract, no claim. The opinion also underscores a pragmatic lesson: North Carolina courts will enforce “time is of the essence” provisions strictly, even where parties later amend or extend closing dates, so long as the clause is incorporated by reference. Attempts to imply waiver from post-deadline negotiations will not save a lapsed contract. While TOM, LLC v. South River Land Co. held that parties without an enforceable contract were not “creditors” and thus could not claim unfair or deceptive conduct “in or affecting commerce,” the Fourth Circuit’s decision in Koontz v. SN Servicing reaches the opposite conclusion for consumers. In Koontz, the court held that the FDCPA, and by extension similar consumer-protection statutes like RESPA and N.C. Gen. Stat. §§ 75-50 et seq., can apply even when the underlying personal debt is no longer enforceable, such as after a bankruptcy discharge. What matters is that a creditor or servicer acts as if the debt remains collectible or communicates in a way that could mislead or pressure the consumer. Thus, TOM in contrast reflects a commercial contract principle—no enforceable obligation, no standing to sue for unfair trade practices—whereas Koontz affirms a consumer-protection principle—even a legally unenforceable debt can trigger liability if a collector’s conduct is deceptive or coercive. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document tom_v._south_river_land_co.pdf (195.46 KB)

Bankr. W.D.N.C.: In re Ford (II) — Court Rejects “Tribal Sovereignty” Claims, Denies Recusal, and Increases Sanctions Against Debtor for Pseudo-Legal Defenses

Bankr. W.D.N.C.: In re Ford (II) — Court Rejects “Tribal Sovereignty” Claims, Denies Recusal, and Increases Sanctions Against Debtor for Pseudo-Legal Defenses Ed Boltz Tue, 10/14/2025 - 17:43 Summary: In In re Ryan Lashon Ford, Judge Edwards issued two companion opinions chronicling the court’s escalating efforts to bring order to what she aptly described as an “atypical” pro se Chapter 7 case that had metastasized into a performative exercise in pseudo-law. Background and Procedural History Beginning in December 2024, the debtor filed a barrage of more than two hundred pleadings—motions to dismiss, convert, compel, and “declare tribal property”—along with serial assertions that her assets belonged not to the bankruptcy estate but to the self-styled “Xi Amaru Tribal Government,” a group offering “jurisprudence” courses and “law consultation” to its adherents. When questioned, the debtor could recall neither what she had paid for these courses nor basic details about her bank accounts, transfers, or tenants. The Chapter 7 Trustee and Bankruptcy Administrator sought routine discovery into these transfers and the “course materials” that appeared to be generating her pleadings. Despite multiple continuances, explicit directives, and an Omnibus Order requiring production of bank and course records, the debtor refused—citing non-existent federal statutes, fabricated tribal immunity, and even copyright restrictions. The court entered a civil-contempt order with daily sanctions and, after continued defiance, increased the fine to $150 per day. The July 2025 Opinion ( In re Ford I) The earlier opinion had already sanctioned the debtor for contempt after repeated failures to comply with discovery orders. The court recounted her pattern of evasive testimony, including claims that production of the “tribal coursework” would violate “15 U.S.C. § 114”—a statute that, as the court dryly noted, “does not exist.” The decision catalogued her shifting explanations and concluded that her refusal to comply was deliberate bad faith warranting escalating sanctions. The September 2025 Opinion ( In re Ford II) The latest decision addressed the debtor’s “Amended Motion for Recusal” seeking removal of both the Trustee and the Bankruptcy Administrator. Judge Edwards patiently—but firmly—reiterated that (1) the Trustee’s duties under § 704 run to the estate and creditors, not to the debtor; and (2) both the Trustee and Bankruptcy Administrator are statutorily required to investigate omissions, object to improper claims, and ensure orderly administration. Finding no factual basis for bias or misconduct, the court emphasized that adverseness to the debtor is not only permissible but inherent in those fiduciary roles. The debtor’s filing of a state-bar grievance against the Trustee, moreover, was itself prohibited under the Barton Doctrine and the automatic stay—echoing In re Seertech Corp. (W.D.N.C. 2007)—and could not be wielded to create the very “conflict” she alleged. Judge Edwards then dismantled the debtor’s claims of “tribal” privilege and bias. Analogies drawn by the Trustee and Administrator between the debtor’s filings and the sovereign-citizen movement, she wrote, did not equate recognized tribal sovereignty with pseudo-legal theories; they merely illustrated that unrecognized assertions of sovereignty cannot nullify federal law. “[A]nalogies,” she observed, “are a bridge, not a mirror.” Commentary: This pair of orders, in what (given the persistence of sovereign citizens) might eventually be termed the Ford Trilogy, underscores Judge Edwards’ measured but increasingly direct confrontation with the growing sovereign-citizen phenomenon in bankruptcy. As noted in commentary previously circulated to the bankruptcy bar on August 5, 2025 (but withheld from public posting to avoid inflaming a sovereign citizen), I wrote that: While Judge Edwards rightly imposed sanctions and attempted to bring order to the case, it is fair to question whether the court's extended engagement with the debtor’s pseudo-legal defenses gave undeserved credence to what is, ultimately, sovereign-citizen nonsense. By parsing phantom statutes and issuing repeated compliance orders, the court risked signaling that these filings were defective pleadings rather than fantasies. Yet, with these later opinions, Judge Edwards appears to have reached the same conclusion—drawing a bright doctrinal line between legitimate procedural patience and indulgence of performative obstruction. The opinions now serve as a practical template for future cases: a record of escalating judicial responses—from explanation, to order, to contempt, to sanctions—culminating in a clear reaffirmation that bankruptcy courts are courts of law, not forums for tribal mythos or AI-generated “jurisprudence.” More decisive early action—whether through dismissal under § 707(a) for bad faith, denial of discharge under § 727(a)(4) for false oaths, or referral for unauthorized practice—could conserve judicial resources and deter the cottage industry of “sovereignty educators” peddling this nonsense to vulnerable debtors. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_ford_ii.pdf (616.9 KB) Document in_re_ford_i.pdf (481.9 KB) Category Western District

Law Review (Economics): Choi, James J. and Huang, Dong and Yang, Zhishu and Zhang, Qi, How Good is Ai at Twisting Arms? Experiments in Debt Collection (April 2025). NBER Working Paper No. w33669

Law Review (Economics): Choi, James J. and Huang, Dong and Yang, Zhishu and Zhang, Qi, How Good is Ai at Twisting Arms? Experiments in Debt Collection (April 2025). NBER Working Paper No. w33669 Ed Boltz Tue, 10/14/2025 - 17:41 Available at: https://ssrn.com/abstract=5215980 Abstract: How good is AI at persuading humans to perform costly actions? We study calls made to get delinquent consumer borrowers to repay. Regression discontinuity and a randomized experiment reveal that AI is substantially less effective than human callers. Replacing AI with humans six days into delinquency closes much of the gap. But borrowers initially contacted by AI have repaid 1% less of the initial late payment one year later and are more likely to miss subsequent payments than borrowers who were always called by humans. AI’s lesser ability to extract promises that feel binding may contribute to the performance gap. Commentary: A recent study published by the National Bureau of Economic Research examining Chinese consumers’ reactions to debt collection, including the use of AI-driven “collectors,” offers interesting insights—but while its conclusions rest heavily on psychological and behavioral research conducted by U.S. scholars on fairness, compliance, and emotional response in debt collection and originated in the American context leaves substantial questions about how transitive those findings really are between the sharply different regulatory and social environment in China and the United States (let alone elsewhere.) In China (with a full admission that I'm only a North Carolina Bankruptcy Expert!), consumer bankruptcy remains rare, with only limited pilot programs in a handful of provinces and far fewer formal protections for over-indebted individuals. Without leaning too hard on cultural generalizations, collection practices therefore tend to rely on social pressure and moral appeals, often leveraging family networks and reputational risk, rather than the structured statutory regimes familiar to U.S. practitioners. Against this backdrop, the finding that Chinese consumers respond more favorably to “empathetic” or “respectful” AI collectors may reflect local cultural expectations about deference and face-saving, rather than a universal truth about human-machine interaction. By contrast, in the United States, debt collection operates within a robust legal framework of consumer protection—anchored by the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), and state Unfair and Deceptive Trade Practices Acts (UDTPA) such as North Carolina’s § 75-1.1. While social stigma and moral hazard still play a substantial role, these laws don’t merely regulate behavior; they define the very boundaries of communication. A U.S. consumer must be told who is collecting the debt, how much is owed, and how to dispute it—and harassment or misrepresentation is strictly prohibited. Moreover, Chapter 7 and Chapter 13 bankruptcy provide predictable, court-supervised debt-relief channels unavailable to most Chinese consumers, fundamentally altering both the power dynamics and the perceived legitimacy of collection efforts. Given that backdrop, an AI debt collector operating in the United States would almost certainly be required not only to disclose that it is a debt collector, but also that it is an artificial intelligence system. Failure to do so could violate the FDCPA’s prohibitions on “false, deceptive, or misleading representations,” particularly if the AI’s design made a consumer believe they were conversing with a human being. The CFPB’s 2024 digital-communication guidance and the FTC’s emerging policies on AI transparency both suggest that accuracy of identity and medium are integral to consumer protection. (The viability of these policies, however, may be in doubt under the current U.S. administration.) The deeper lesson, then, is that technology doesn’t operate in a vacuum. It reflects the social and legal system that deploys it. Where Chinese law emphasizes harmony and moral rehabilitation over statutory procedure, AI may simply mechanize social pressure. In the United States, by contrast, our debt-collection system—grounded in disclosure, due process, and the constitutional promise of a “fresh start” through bankruptcy—would demand that even machines play by the same rules of fairness and honesty that govern human collectors. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document ai-debt-collection-20250331.pdf (3.47 MB) Category Law Reviews & Studies

Second Circuit Applies Safe Harbor to Shield Madoff-Related Transfers in Chapter 15 Proceeding

Is It Smart to Borrow from my TSP to Pay my Credit Cards?

Some People file Bankruptcy After They Drained their TSP Some people file bankruptcy after they drained their TSP. Those people, people I meet as a bankruptcy lawyer, should have talked to me sooner and left their money safely in their TSP. One of the many wonderful advantages of the TSP is this: your creditors can’t […] The post Is It Smart to Borrow from my TSP to Pay my Credit Cards? appeared first on Robert Weed Virginia Bankruptcy Attorney.

The latest Game of Whack-a-Mole between Sponsors & Lenders

Between anti-coop provisions, expanding DQ lists, and now anti-counsel language, the game of whack-a-mole for negotiating leverage is changing faster than a Mason Miller fastball! We asked our expert contributors…

Weekly News – October 10

Jefferies high on its own supply, First Brand DIP be put to the test, Examiner motion takes center stage, private credit contagion, porta potty on the hot seat, Lehman UK…

Chapter 7 vs. Chapter 13 Bankruptcy

If you are considering filing bankruptcy, it can be difficult to know which chapter to choose: Chapter 7 vs. Chapter 13. Bankruptcy can be daunting, and the process often seems complex. There are eligibility requirements to consider, as well as a different timeline for each chapter. It’s best to seek the assistance of an experienced Dallas bankruptcy lawyer. Call Allmand Law Firm, PLLC today at 214-974-3278 […] The post Chapter 7 vs. Chapter 13 Bankruptcy appeared first on Allmand Law Firm, PLLC.

What Are the Benefits of Chapter 13?

If you are facing overwhelming debts, Chapter 13 bankruptcy can help you get your financial situation under control. But what are the benefits of Chapter 13? In a Chapter 13, you may be able to repay your debts while retaining your property. You also don’t have to endure the never-ending cycle of debt payments, fees, and interest charges. […] The post What Are the Benefits of Chapter 13? appeared first on Allmand Law Firm, PLLC.

How to Answer a Foreclosure Notice in Philadelphia

If you don’t respond properly to a foreclosure notice, your lenders may get a default judgement and take your home. We know what lenders need to hear after sending foreclosure […]