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Insolvency Service “reframes” view of creditor – IPs can apply their discretion (UK)

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Equitable Tolling & Nondischargeability Filing Deadline (In re Osborn)

By: Donald L Swanson I recently published this linked article on equitable tolling of a deadline for filing a dischargeability complaint or a motion to extend that deadline: Here’s another opinion on that same subject with an unusual set of facts In re Osborn, Case No. 24-40202, Nebraska Bankruptcy Court (decided July 9, 2024; Doc. 90). ... Continue Reading →

Bankr. E.D.N.C.: In re Williams- Yet another Forged Bankruptcy Court Order

Bankr. E.D.N.C.: In re Williams- Yet another Forged Bankruptcy Court Order Ed Boltz Wed, 11/19/2025 - 16:32 Summary: Judge Warren’s latest sanctions order reads like a greatest-hits compilation of the Eastern District’s prior encounters with bankruptcy document forgery— Wilds, Purdy, and now Williams—but with one glaring distinction: unlike Ms. Sugar, whose saga wound its way to the Fourth Circuit and back on the strength of a plausible (and ultimately successful) reliance on counsel argument, Deja Williams had no attorney to blame but herself. And that turns out to matter—a lot. The Facts: Fiverr, a Fake Order, and a Leasing Agent Who Asked Too Many Questions Ms. Williams filed two prior Chapter 13 cases—both dismissed for failure to comply with the most basic statutory requirements—and then filed a Chapter 11 for her salon business, Hairoin, which was promptly tossed because the LLC never obtained counsel. When those bankruptcies appeared on her credit report, they posed an obstacle to securing a commercial lease. The solution she chose? A $15 fake bankruptcy order purchased from a seller on Fiverr, complete with the name and signature block of a bankruptcy judge in Raleigh. Unsurprisingly, when she tendered this “order” to a leasing agent, the agent did what landlords too rarely do: she attempted to verify it. That inquiry led straight back to the Clerk’s Office, straight into a reopened case, and straight onto Judge Warren’s sanctions docket. The Court’s Ruling: Five-Year Bar and $1,500 Fine: Citing Wilds and Purdy, Judge Warren held that Ms. Williams’ conduct—though remorseful—was “hardly distinguishable” from prior EDNC forgery cases. The sanctions: Five-year bar on filing any bankruptcy, personally or for any entity she owns or is affiliated with $1,500 civil fine Referral to the U.S. Attorney for possible prosecution under 18 U.S.C. §§ 157 or 505 This places Ms. Williams squarely in the same penalty tier as prior debtors who forged court documents—though, critically, without the criminal sentences seen in Wilds and Purdy. Why Sugar Got Mercy—and Williams Did Not: Here is where In re Williams departs from the Sugar line of cases. When the Fourth Circuit remanded In re Sugar, Judge Agee instructed the bankruptcy court to consider the “effect of record evidence that she acted on advice of counsel.” On remand, Judge Warren found that Ms. Sugar’s reliance on her prior attorney was “justified and reasonable,” ultimately vacating severe sanctions in light of that mitigating factor. Ms. Williams had no such shield. Representing herself in all her cases, she could not invoke “advice of counsel”—good, bad, or nonexistent. There was no attorney to mislead her, no mistaken advice to lean upon, and no professional to blame. Her fabrication was: intentional, deliberate, and fully self-directed. In other words, this is the Sugar case with the safety net removed. When you fly pro se and forge a court order, there is no soft landing. Commentary: The Perils of Pro Se Practice in the Age of Fiverr The growing availability of AI-generated and gig-marketplace “legal documents” is giving rise to a new species of bankruptcy misconduct—one cheaper, faster, and more recklessly accessible than anything in the Wilds era. A $15 fake “vacate” order generated overseas is the modern equivalent of forging an attorney’s signature on the office Xerox machine. But courts—and the U.S. Attorney’s Office—are treating it the same. This case also serves as a reminder that pro se debtors don’t get a discount on the standard of honesty owed to the court. They may get leniency when mistakes arise from misunderstanding, but not when the misconduct is calculated. And unlike Ms. Sugar, who ultimately benefited from the rehabilitative power of the “advice of counsel” doctrine, Ms. Williams stands alone. If you are your own lawyer, you also become your own scapegoat. Takeaway: In re Williams reinforces the EDNC’s unwavering approach: forging court documents—no matter the motive, circumstances, or sophistication level—gets treated as a severe affront to the integrity of the system. And while the Fourth Circuit has built space for mercy when a debtor’s missteps stem from reliance on counsel, those who represent themselves don’t have that option. When you choose to go it alone, you own the consequences—including, as here, a five-year bar and a criminal referral. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_williams.pdf (295.07 KB) Category Eastern District

“Abuses Of Receiverships”—A Problem From The Late 1800s And Early 1900s

By: Donald L Swanson Here is an article from more than a century ago: Jacob Trieber, Abuses of Receiverships,” 37 Yale L.J. 275-279 (1909). What follows is a summary of that article. Receivership—A Judicial Remedy Receivership is a judicial remedy to preserve a fund or property from spoliation, waste or removal pending litigation, so it may,... Continue Reading →

Will Bankruptcy Affect Your Child’s 529 Plan in Pennsylvania?

After spending so much time, effort, and money creating and contributing to your child’s 529 college savings plan in Pennsylvania, you do not want to risk it being liquidated during […]

FinCEN and Banking Regulators Issue New FAQs on Suspicious Activity Reports

Banks and other regulated financial institutions have been digesting a set of four frequently asked questions (“FAQs”) about suspicious activity reports (“SARs”) issued jointly on October 9, 2025 by FinCEN and federal banking regulators (the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance... Continue Reading

Law Review (Note): Maxwell Newman, The Advice of Counsel Defense: No Longer a Fraudster’s Shield, 29 N.C. BANKING INST. 558 (2025

Law Review (Note): Maxwell Newman, The Advice of Counsel Defense: No Longer a Fraudster’s Shield, 29 N.C. BANKING INST. 558 (2025 Ed Boltz Mon, 11/17/2025 - 14:32 Available at: https://scholarship.law.unc.edu/ncbi/vol29/iss1/19 Abstract/Introduction: In 2023, consumers reported fraud losses in excess of $10 billion, a fourteen percent increase from the prior year, the first time fraud losses have reached that benchmark. According to the International Criminal Police Organization, “[f]inancial fraud is increasing worldwide as the public embraces new sophisticated technologies” such as artificial intelligence, large language models, and cryptocurrencies. The successful fraud prosecutions of Sam Bankman-Fried, former CEO of the failed cryptocurrency exchange FTX, and Elizabeth Holmes, former CEO of the failed medical diagnostic company Theranos, have been widely reported on by major media outlets. Despite this notoriety popularizing these fraudsters into mainstream figures, the media attention has also heightened focus on financial fraud defense strategies, increasing the overall visibility and conversation around white-collar criminal litigation. What particularly fascinated spectators in the Holmes and Bankman-Fried cases were the back-and-forth fights over the existence of fraudulent intent. Bankman-Fried and Holmes each sought to portray themselves as naïve entrepreneurs who were suckered into making the business decisions that placed them in handcuffs.This is a common strategy used by financial fraud defendants. Intent is subjective and circumstantial, rendering it difficult for the government to prove through direct evidence. Financial fraud defendants often take advantage of this ambiguity to argue that their conduct was not criminal because they acted in “good faith.” Evidence of the defendant’s good faith may take various forms. The advice of counsel good faith defense garnered significant attention after it was invoked by Holmes and Bankman-Fried. This defense “is based on the common sense principle that a defendant should not be held liable for actions taken based on reasonable reliance on the advice of counsel.” Problematically for defendants, this defense seems not to work as well as it once did, bringing about the question of why. This Note will argue that the same digital technology that enabled the explosion of financial fraud has also destroyed criminal defendant’s ability to invoke the advice of counsel defense in financial fraud proceedings. This Note proceeds in four parts. Part II provides background on the element of intent in financial fraud cases, the good faith defense in general, and the advice of counsel good faith defense in particular. Part III analyzes how Holmes and Bankman-Fried used the advice of counsel defense. Part IV examines factors that have contributed to the declining effectiveness of the advice of counsel defense. Finally, Part V concludes that the advice of counsel defense no longer offers fraudsters a legal safe haven—and indeed may be heading towards extinction. Summary: Newman’s note opens with the modern paradox of white-collar prosecution: technology has made fraud both easier to commit and easier to prove. Using the recent prosecutions of Elizabeth Holmes (Theranos) and Sam Bankman-Fried (FTX), the author traces how the once-potent “advice of counsel” defense—long invoked to negate intent—has withered in the digital age. The article begins by reviewing the historical development of the good-faith and advice-of-counsel defenses from Derry v. Peek (1889) through the evolution of U.S. fraud statutes. It highlights how the defense originated as an evidentiary rebuttal to the element of intent rather than a true affirmative defense, and how circuit splits emerged regarding jury instructions and prerequisites for invoking the doctrine. Newman’s central argument is that the defense has become practically unworkable in modern white-collar cases. Two forces have driven this change: Technological transparency—Digital footprints, email archives, and ubiquitous data retention have given prosecutors direct access to internal deliberations that expose defendants’ intent despite any legal advice they may have received. Judicial tightening—Courts now require defendants to meet stringent evidentiary showings before mentioning counsel’s role, often demanding full waiver of privilege and limiting jury instructions under Rule 403 to prevent confusion or “halo effects” from attorney involvement. Holmes and Bankman-Fried both attempted to argue that they relied on legal advice in structuring corporate partnerships, drafting terms of service, and handling disclosures. In each case, courts curtailed the defense—requiring formal proof of each element (full disclosure to counsel, genuine reliance, good-faith compliance) and pretrial notice. Ultimately, both were convicted, and Newman concludes that “the advice of counsel defense no longer offers fraudsters a legal safe haven—and indeed may be heading toward extinction.” Commentary: Reconsidering “Reliance on Counsel” After In re Sugar: While Newman’s note reads the defense’s demise from the high-profile collapses of FTX and Theranos, it did not have the benefit of the more recent decision from the Fourth Circuit’s treatment of In re Sugar (2025), which shows that the doctrine remains alive—if properly cabined—in bankruptcy practice. Judge Agee’s opinion remanded the case “so that the bankruptcy court can consider the effect of record evidence that [the debtor] acted on advice of counsel as part of its decision about the appropriate remedy for Sugar’s conduct.” That is not the language of extinction; it is a recognition that reliance on counsel can still mitigate culpability even when it does not negate a statutory violation. The Fourth Circuit drew a careful line: advice of counsel does not erase misconduct but does matter in calibrating sanction or discharge relief. On remand, Judge David Warren applied that directive with remarkable candor. Three years after the original sanctions order, he held that “her reliance upon her prior counsel’s advice was justified and reasonable, and that the sanctions the court imposed, while properly based upon the facts, testimony and arguments of counsel at that time, are not supported by the uncontroverted facts that have now … been presented to the court.” In other words, once the evidentiary record finally showed genuine good-faith reliance, the court vacated its prior penalty and restored the debtor’s discharge. A Different Kind of Reliance What separates Sugar from the failed defenses of Holmes and Bankman-Fried is not merely scale but structure. Corporate officers invoke “advice of counsel” to deny criminal intent while still retaining privilege, often as a strategic gambit. Consumer debtors invoke it to explain compliance failures under the supervision of the court itself. The former tests the patience of juries; the latter goes to equity. Judge Warren’s approach exemplifies how bankruptcy courts have long balanced accountability with rehabilitation. The debtor’s reliance on counsel did not immunize her from the Code’s disclosure duties—but once proven reasonable, it warranted restoration of her fresh start. That is precisely the moral space bankruptcy occupies between strict liability and moral blameworthiness. Why Sugar Undermines Newman’s “Extinction Thesis” Newman is right that digital evidence and judicial skepticism have narrowed the corporate use of the defense. Yet Sugar shows that in bankruptcy—the most transparent and supervised of all federal forums—the defense not only survives but is institutionally essential. Trustees and judges depend on it to distinguish between: Bad advice followed in good faith, which merits education and correction; and Bad faith disguised as reliance, which warrants denial of discharge or sanctions. Far from “no longer a shield,” reliance on counsel remains a legitimate equitable factor in the Fourth Circuit, particularly where the debtor’s conduct occurred under mistaken but honest professional guidance. Newman’s article, steeped in the spectacle of white-collar collapse, reads as an obituary for the defense. Sugar instead reads as a resurrection story—one more consistent with bankruptcy’s rehabilitative DNA than with criminal law’s retributive logic. Where the FTX and Theranos defendants wielded counsel’s advice as a weapon, the Sugar debtor offered it as an explanation. The difference is moral as much as doctrinal. In short, if Holmes and Bankman-Fried buried the advice-of-counsel defense in the boardroom, Judge Agee revived it in the bankruptcy courtroom. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document the_advice_of_counsel_defense_no_longer_a_fraudster_s_shield.pdf (535.8 KB) Category Law Reviews & Studies

Weekly News – November 14

Latham gets ready to rumble, Patrick James slides safe, Insurers wolfing down private credit, how Sponsors are dealing with pesky holdouts, exclusive DIPs under pressure, the “deal away” is back…

Law Review: Skeel, David A., Debt's Dominion: A New Epilogue (October 21, 2025). U of Penn, Inst for Law & Econ Research Paper No. 25-16, BYU Law Review, forthcoming, 2025

Law Review: Skeel, David A., Debt's Dominion: A New Epilogue (October 21, 2025). U of Penn, Inst for Law & Econ Research Paper No. 25-16, BYU Law Review, forthcoming, 2025 Ed Boltz Fri, 11/14/2025 - 19:45 Available at: https://ssrn.com/abstract=5647631 or http://dx.doi.org/10.2139/ssrn.5647631 Abstract: This Essay, written for the “Who Governs Debt’s Dominion” symposium, looks back on Debt’s Dominion: A History of Bankruptcy Law in America as the twenty-fifth anniversary of the book’s publication nears. The Essay begins, in Part I, by briefly describing how Debt’s Dominion came about. Part II identifies and seeks to explain a striking decline in optimism about American bankruptcy law since Debt’s Dominion was first published. Part III explores a few of the major recent developments in consumer bankruptcy, small business bankruptcy, and large-scale corporate reorganization that I would have analyzed in the book if it were written today. Part IV briefly considers the impact of globalization and concludes the new epilogue. Summary of David Skeel’s 2025 Epilogue to Debt’s Dominion David Skeel’s new epilogue to Debt’s Dominion, written for the BYU symposium “Who Governs Debt’s Dominion,” revisits the arguments that made his 2001 classic the foundational account of American bankruptcy’s political economy — and measures what has changed in the quarter century since. Skeel finds, to his relief, that the book’s core narrative still holds: American bankruptcy law continues to oscillate between the creditor discipline of Hamilton and the populist mercy of Jefferson, brokered and sustained by the self-interested professionalism of bankruptcy lawyers. Yet, while the scaffolding endures, the mood, he writes, has darkened. The optimism of the 1978 Code’s “golden age” has given way to disillusionment — a system now dominated by insiders collecting tribute rather than reformers expanding relief. I. From Hamilton and Jefferson to Visa and Warren Skeel begins by returning to his book’s original dramatis personae: Hamilton’s pro-creditor nationalism and Jefferson’s agrarian debtor populism. In the 2005 BAPCPA reforms, Skeel sees their modern avatars — credit-card lenders like Visa and Mastercard as the new Hamiltonians, and Elizabeth Warren as the reincarnated Jeffersonian reformer from what was once staunchly creditor-friendly Massachusetts. He recalls that Debt’s Dominion was born of a simple but powerful puzzle: why corporate law and bankruptcy had evolved as estranged disciplines, despite their shared concern with financial failure. The book bridged that divide, blending political history with legal theory, and situating bankruptcy within America’s larger narrative of economic democracy. II. A Shift in Mood: From the 1978 Renaissance to Managed Decline In Debt’s Dominion, Skeel likened bankruptcy’s modern history to a rock-star biography — early promise, decline, and triumphant comeback with the 1978 Code. But in 2025, he admits, the “promised land” has become congested. Where once bankruptcy liberated the distressed, it now serves those already in control. Chapter 11’s once-revolutionary “debtor-in-possession” financing has hardened into a near-monopoly market for incumbent lenders, dictating outcomes through restructuring support agreements and milestone-laden credit terms. The system still works — Skeel cautions that “rumors of Chapter 11’s demise are premature” — but it has lost its moral shine. The insiders have taken over the promised land, and the pilgrims are paying rent to stay there. III. Updating the Story: New Fault Lines in a Familiar Dominion A. Consumer Bankruptcy and Race Skeel highlights the surge of scholarship exposing how “neutral” bankruptcy rules reinforce racial inequality. Since Ferguson, scholars like Abbye Atkinson, Mechele Dickerson, and Pamela Foohey have shown that Black debtors disproportionately carry nondischargeable penal fines and fees, effectively reviving debtor’s prisons under a modern guise. He acknowledges that his own 2004 essay on the racial dimensions of credit was an early but limited foray, and that today’s research — extending back even to Rafael Pardo’s work on Bankrupted Slaves — adds a long-missing chapter to the social history of bankruptcy. B. Small Business: The Subchapter V Revolution The epilogue celebrates Subchapter V as a quiet triumph — the most successful reform since 1978. Where once the “new value” doctrine left owner-operators trapped by absolute priority, Congress’s 2019 Small Business Reorganization Act has, in Skeel’s view, “given small business a second chance without requiring them to buy it.” He praises Subchapter V’s pragmatic flexibility, noting its high plan-confirmation rates and its embodiment of the very populist spirit Hamilton feared and Jefferson championed. C. Large Corporate Reorganization: The New Insider’s Game In the realm of large cases, Skeel chronicles the continued erosion of managerial control — replaced not by democracy, but by domination. DIP lenders and private-equity sponsors now wield “contractual sovereignty,” using pre-packaged RSAs to dictate terms before the petition is filed. He identifies three current flashpoints: Venue Shopping: The old Delaware–New York rivalry now yields to judge-shopping in Houston and Richmond, where debtors can all but select their judge. Even after scandals, Skeel notes wryly, “nothing happened in Washington.” Delaware’s lobby remains as effective as ever — a living case study in Mancur Olson’s logic of concentrated interests. Disproportionate Payouts: “Liability management exercises” (uptiers, dropdowns, and double-dips) and RSA fees allow favored creditors to jump the queue, sometimes with judicial blessing. He describes Serta Simmons as a rare judicial thunderbolt restoring fairness — though, as Skeel dryly observes, such thunder seldom strikes twice. Mass-Tort Bankruptcies: From Johns-Manville to Purdue Pharma, bankruptcy has become the “social solution of last resort,” where mass tort defendants cleanse liabilities through non-debtor releases. The Supreme Court’s 2024 decision in Purdue barred such releases — but Skeel predicts, quoting a 1935 lament, that bankruptcy lawyers will soon find “new rituals” to circumvent it. The bar, he notes, “has too much at stake to abandon the practice”. IV. The Third Era Marches On In closing, Skeel reaffirms his tripartite history: (1) founding until the New Deal; (2) 1938–1978; (3) 1978–present. Despite globalization and reformist murmurs abroad — from the UK’s “restructuring plan” to Singapore’s importation of American judges — U.S. bankruptcy remains “debt’s dominion.” If change comes, Skeel suggests, it will be populist and homegrown, born of a future economic shock — not imported from London or Singapore. Commentary: A Quarter Century of Dominion Skeel’s retrospective, fittingly elegiac, reaffirms Debt’s Dominion as both history and prophecy. Like Bruce Mann’s Republic of Debtors, it locates bankruptcy at the moral center of the American experiment — a nation perpetually balancing punishment and mercy, contract and conscience. To appreciate the scope of Skeel’s project, it should be read it alongside these complementary histories: Bruce Mann’s Republic of Debtors (2002) – a rich account of how early American bankruptcy intertwined with notions of honor, mercy, and civic trust. Mann shows that insolvency was once a moral—not merely financial—status. Scott Sandage’s Born Losers: A History of Failure in America (2005) and David Graeber’s Debt: The First 5,000 Years (2011) which situate debt within cultural and anthropological frameworks—why societies forgive, or refuse to forgive. Scott Berman’s When All Else Fails (2019) tracks how modern capitalism uses legal failure as a design feature. Foohey, Lawless, and Thorne’s recent Debt’s Grip (2025), which provides the empirical counterpart to Skeel’s political economy—a granular look at how ordinary Americans still live within that dominion, racialized and gendered as it may be. Together these reveal that bankruptcy’s history is not linear progress but cyclical contest—a series of moral negotiations between failure and forgiveness. For today’s practitioners, the lesson is both humbling and galvanizing. Bankruptcy remains the law’s most democratic institution — but democracy, Skeel reminds us, can be quietly bought out. Whether in the DIP market, Subchapter V courtrooms, or the trenches of consumer practice, the Hamiltonians still have their lobbyists. The Jeffersonians, as ever, must make do with their lawyers. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document debts_dominion_a_new_epilogue.pdf (710.64 KB) Category Law Reviews & Studies

[ACBC] Law Review: Pardo, Rafael I., Specialization and the Permanence of Federal Bankruptcy Law (August 08, 2025). Brigham Young University Law Review, Volume 51 (forthcoming 2026)

[ACBC] Law Review: Pardo, Rafael I., Specialization and the Permanence of Federal Bankruptcy Law (August 08, 2025). Brigham Young University Law Review, Volume 51 (forthcoming 2026) Ed Boltz Fri, 11/14/2025 - 16:51 Available at SSRN: https://ssrn.com/abstract=5641971 or http://dx.doi.org/10.2139/ssrn.5641971 Abstract: Traditional historical accounts posit that federal bankruptcy specialization in the United States first developed under the system established by the Bankruptcy Act of 1898. That view assumes that the structural and temporal conditions necessary to foster specialization did not exist under the nation’s earlier federal bankruptcy systems—those created by the Bankruptcy Acts of 1800, 1841, and 1867. This Article theorizes that federal bankruptcy specialization very likely occurred under the pre-1898 systems and marshals evidence to that effect, primarily focusing on the Bankruptcy Act of 1841 (the 1841 Act). That statute marked a critical turning point in federal bankruptcy law, shifting its primary focus to debtor relief and granting federal district courts substantial policymaking authority and administrative responsibilities to effectuate the law’s reorientation. Drawing on a detailed framework for assessing specialization, this Article shows how the surge of cases under the 1841 Act reshaped the operation of federal district courts, producing a specialized judiciary that facilitated specialization among attorneys and other legal professionals through the creation of patronage networks. Recovering this history invites a broader investigation into federal bankruptcy specialization before 1898, not merely to determine whether it existed, but to reconsider the extent to which it was a causal factor in the emergence of a durable bankruptcy regime in the twentieth century. Summary: In Specialization and the Permanence of Federal Bankruptcy Law (forthcoming BYU Law Review 2026), Rafael Pardo challenges the traditional narrative that a specialized bankruptcy bar—and thus the political durability of federal bankruptcy law—only emerged with the 1898 Act. Building on David Skeel’s Debt’s Dominion, Pardo argues that specialization in bankruptcy practice arose far earlier, particularly under the 1841 Act, and that this specialization among judges, attorneys, and administrators shaped the institutional evolution of federal bankruptcy law. Drawing on political scientist Lawrence Baum’s framework, Pardo distinguishes between “judge concentration” (how narrowly judges focus on certain cases) and “case concentration” (how concentrated cases are among judges), extending the analysis to lawyers and other professionals. Using archival and quantitative methods, he suggests that even under short-lived nineteenth-century bankruptcy statutes, clusters of judges and lawyers developed focused expertise. This created proto-institutional networks—patronage-based, regionally concentrated, and self-reinforcing—that foreshadowed the specialized bar later recognized as key to the 1898 Act’s permanence. Pardo also expands the field of view beyond the federal statutes to state-level bankruptcy and insolvency regimes, which continued to function during the long interregna when Congress repealed national laws. These state systems, he contends, provided the continuity and professional pathways that sustained specialization even in the absence of federal jurisdiction. The result was not an absence of bankruptcy practice, but a fragmented and uneven “ecosystem” of specialized work that persisted beneath the surface of formal repeal. Ultimately, Pardo argues that nineteenth-century specialization—judicial, administrative, and professional—was both more extensive and more important to the endurance of modern bankruptcy law than historians have recognized. The 1898 Act did not invent the specialized bankruptcy bar; it merely nationalized one that had already emerged through decades of intermittent practice. Commentary: Pardo’s rediscovery of the antebellum bankruptcy bar’s quiet persistence gives new depth to Skeel’s famous “interest-group” thesis—that bankruptcy endured because lawyers made it their livelihood. Where Skeel saw the 1898 Act as the birth of specialization, Pardo uncovers a much older lineage: district judges in the 1840s who built local patronage networks, lawyers who mastered the mechanics of debtor relief under state insolvency statutes, and a growing cadre of practitioners whose professional survival depended on the continued availability of bankruptcy relief. It was not a sudden professional creation but an evolution—interrupted by repeal, but never extinguished. The article’s most practical contribution for modern courts lies in its careful definition of *specialization*. In footnote 8, Pardo identifies two complementary measures: The number of attorneys whose practice primarily focuses on a single legal field, and The extent to which a relatively small number of professionals handle a disproportionate share of that field’s work. This framework fits neatly within how bankruptcy courts should interpret 11 U.S.C. § 330(a)(3)(E), which directs them to consider “whether the professional person is board certified or otherwise has demonstrated skill and experience in the bankruptcy field.” Under Pardo’s analysis, specialization is not self-promotion—it is a measurable concentration of expertise and caseload. The same historical logic that made specialized lawyers essential to the survival of bankruptcy law should make specialized lawyers today eligible for higher presumptive compensation. Moreover, Pardo’s insight that specialization historically developed in “layered” fashion has striking relevance under today’s Bankruptcy Code. Even now, the ecosystem of debtor relief extends beyond Title 11. Non-bankruptcy regimes—consumer-protection statutes such as the FDCPA, RESPA, and UDTPA, as well as state receivership and debt-adjustment laws—continue to illustrate how bankruptcy specialization evolves across overlapping state and federal frameworks. Just as nineteenth-century lawyers moved fluidly between state insolvency systems and federal bankruptcy courts, modern consumer advocates also need to be able to navigate among these administrative, regulatory, and bankruptcy remedies, building precisely the kind of integrated professional expertise that Pardo describes. That continuity extends even to the culture of practice. The much-maligned advertising of modern consumer bankruptcy firms, so often derided as a tawdry innovation, has a venerable pedigree. North Carolina itself provides the lineage: A. W. Shaffer of Raleigh advertised his bankruptcy services in 1868 much as John T. Orcutt has continued on in current time — reaching out directly to struggling debtors and democratizing access to legal relief. Far from degrading the profession, such public visibility has always been part of how bankruptcy practice sustains itself. Pardo’s broader lesson is that specialization is not necessarily elitist; it is the mechanism through which bankruptcy has endured and evolved. Just as nineteenth-century courts relied on experienced practitioners to translate congressional policy into meaningful relief, modern bankruptcy courts depend on a certified, specialized bar—tested through the American Board of Certification (ABC) and devoted to the field—to keep the system both expert and humane. Recognizing that expertise under § 330(a)(3)(E) would not merely reward professionals; it would affirm the very historical tradition that has made bankruptcy, in America, permanent. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document specialization_and_the_permanence_of_federal_bankruptcy_law.pdf (1.31 MB) Category Law Reviews & Studies

Failing To Prove “Intent” For “Embezzlement” Discharge Exception (In re Parker)

By:  Donald L. Swanson Here’s a refresher on the law of nondischargeability for “embezzlement” under § 523(a)(4): Facts Morton and Peggy cohabit for years without marrying.  But they do sign a “Post Marital Agreement,” under which they also sign reciprocal wills providing: Peggy dies first, so her entire estate passes to Morton. Then, Morton designates... Continue Reading →

Bankr. M.D.N.C.: In re Peters- No Interest on DMI in Chapter 13

Bankr. M.D.N.C.: In re Peters- No Interest on DMI in Chapter 13 Ed Boltz Wed, 11/12/2025 - 16:18 Summary: In In re Peters, Judge Kahn addressed a recurring question: when Chapter 13 debtors propose to pay unsecured claims in full under §1325(b)(1)(A), must those creditors also receive post-petition interest? The Peters, above-median income debtors, proposed to pay 100% of unsecured claims over a five-year plan, without interest. The Trustee objected, arguing that because the Debtors were not devoting all of their monthly disposable income, §1325(b)(1)(A) required interest to ensure unsecured creditors received the “present value” of their claims. At 8% interest, this could have required the Peters to pay as much as $30,000 more over the length of their Chapter 13 plan. Judge Kahn rejected that argument, aligning the Middle District of North Carolina with the majority approach. Reading §1325(b)(1) “as written and as punctuated,” the Court held that its two subsections are disjunctive — a debtor may satisfy either (A) or (B), but not both — and that the phrase “as of the effective date of the plan” modifies the timing of the court’s confirmation analysis, not the value of distributions. The Court contrasted §1325(b)(1)(A) with §§1325(a)(4) and (a)(5)(B)(ii), which explicitly require “value, as of the effective date of the plan.” That consistent statutory variation, Judge Kahn explained, reflects congressional intent. Applying an interest requirement to §1325(b)(1)(A) would not only violate that structure but create an unjustified windfall for creditors, since even a full-income plan does not provide immediate payment. Judge Kahn’s ruling relied on In re Gillen, 568 B.R. 74 (Bankr. C.D. Ill. 2017); In re Moore, 635 B.R. 451 (Bankr. D.S.C. 2021); In re Edward, 560 B.R. 797 (Bankr. W.D. Wash. 2016); and the analysis in Collier on Bankruptcy §1325.11[3], concluding that no “present value” requirement applies under §1325(b)(1)(A). The Trustee’s objection was overruled. Commentary: A careful, textual opinion that exemplifies Judge Kahn’s methodical approach to statutory construction — and a welcome confirmation (literally) that Chapter 13 debtors who pay unsecured creditors in full do not owe them interest simply for choosing repayment over liquidation. This ruling is significant in both doctrine and tone. It underscores that §1325(b)(1) offers two independent paths to confirmation: debtors may either pay all projected disposable income under (B) or pay unsecured claims in full under (A). Trustees who try to graft a “present value” gloss from §§1325(a)(4) and (a)(5) are, as Judge Kahn notes, ignoring Congress’s deliberate shift in phrasing. Grammar matters — and here, syntax protects substance. From a policy standpoint, the Court rightly recognized that unsecured creditors in Chapter 13 are already better off than they would be in Chapter 7, where post-petition earnings are excluded from the estate entirely. Imposing interest atop a 100% plan would distort that balance and penalize good-faith debtors who attempt full repayment. This decision thus harmonizes the Middle District’s approach with the majority view nationwide, providing clarity to both trustees and practitioners drafting above-median 100% plans. Kudos: Congratulations to Koury Hicks for his crisp advocacy and clear briefing — once again showing why he’s among the most thoughtful consumer lawyers practicing before the Middle District bench. And credit to Hector Quesada, whose earlier research and argumentation helped pave the way for this interpretation of §1325(b)(1)(A). With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_peters.pdf (471.52 KB) Category Middle District

What Happens To A Tort Claim Upon Abandonment By The Chapter 7 Trustee? (Martineu v. Wier)

By: Donald L. Swanson When a Chapter 7 bankruptcy trustee abandons the debtor’s tort claims, what happens to those tort claims? Such question is addressed in a recent opinion of the U.S. Fourth Circuit Court of Appeals,[fn. 1] by describing a prior bankruptcy ruling (Martineau v. Wier, 934 F.3d 385 (4th Cir. 2019)) like this: What... Continue Reading →

Weekly News – November 7

Michael Gatto on First Brands, ConvergeOne settles non pro rata rights offering, Judge sends Office Properties LME to mediation, Ian Feng on Lender/Sponsor Whack-a-Mole, Monarch’s Adam Sklar on market dislocations,and…

Get The Most From Meeting With A Bankruptcy Lawyer

To get the most out of a consultation with a bankruptcy lawyer, you need to come with some basic information and an idea about your goals for a possible bankruptcy filing. After all, you want to know how your situation lines up with the available bankruptcy relief. Every bankruptcy lawyer is different and each one […] The post Get The Most From Meeting With A Bankruptcy Lawyer appeared first on Northern California Bankruptcy Lawyer.

M.D.N.C.: Brown v. First Advantage Background Services Corp. & Ashcott, LLC II- Minimal Emotional Distress Damages

M.D.N.C.: Brown v. First Advantage Background Services Corp. & Ashcott, LLC II- Minimal Emotional Distress Damages Ed Boltz Tue, 11/04/2025 - 16:47 Summary: Following up on his earlier order in Brown v. First Advantage granting default judgment as to liability against Ashcott, LLC under the Fair Credit Reporting Act (FCRA), the Middle District of North Carolina revisited Plaintiff Charles Edward Brown’s claim for damages. The Court ultimately awarded Brown $11,343.79 — consisting of $8,843.79 in lost income and $2,500 for emotional distress, while allowing him to separately seek attorney’s fees. Background: Brown, a North Carolina truck driver, applied for a FedEx Ground subcontractor position through FXG in December 2022. FedEx’s offer was contingent upon a background check conducted by First Advantage, which in turn subcontracted to Ashcott. Ashcott erroneously matched felony convictions from Pennsylvania to Brown — despite mismatched Social Security numbers and the fact that he had never lived in that state. The false report led FXG to withdraw its offer. Though Brown immediately disputed the report, it took six weeks to correct. Despite being invited to reapply, he never did so — a fact that sharply curtailed his damages recovery. Lost Income: Judge Schroeder limited Brown’s economic loss to a six-week period, rejecting his claim for a full year’s lost income on mitigation grounds. Brown’s prior employment at R&L Carriers earned him roughly $326 per week, while the FedEx position would have paid about $1,800 per week. The resulting “shortfall” was pegged at $8,843.79. Emotional Distress: Brown claimed $100,000 in emotional damages for depression, sleeplessness, and increased alcohol use, supported only by his own affidavit referencing rising A1C levels and later treatment. Citing Sloane v. Equifax and Robinson v. Equifax, the Court found such claims “fraught with vagueness and speculation” absent medical corroboration or timely treatment. Despite acknowledging Brown’s frustration and “some demonstrable emotional distress,” the Court found the ten-month delay in seeking therapy undercut causation and limited recovery to $2,500. Commentary: This decision serves as a sobering coda to Judge Schroeder’s earlier opinion in Brown v. First Advantage (Sept. 8, 2025), where liability was easily found but damages were deferred. Then, the Court made clear that default judgments under the FCRA are not blank checks; plaintiffs still bear the burden of proving harm — both economic and emotional. Now, the Court’s modest award underscores the difficulty of quantifying emotional distress without objective, contemporaneous medical support. Brown’s experience — losing a job offer over false criminal charges — is undoubtedly humiliating. Yet the Court’s tone reveals skepticism toward the expanding “soft tissue” of FCRA emotional distress claims, particularly where plaintiffs recover swiftly or fail to mitigate. To paraphrase Sloane, “the distress must be demonstrable, not speculative.” Broader Implications: “The Sweatbox” of Psychological Harm While this was a Fair Credit Reporting Act case, the Court’s demand for “external corroboration” of mental suffering parallels a recurring challenge in consumer bankruptcy and debt-collection litigation — the undervaluation of psychological injuries. As I’ve said (perhaps too colorfully) before, consumer lawyers could take a page from personal injury practitioners. Just as PI attorneys are accused (often unfairly) of having “a chiropractor in every glovebox,” consumer advocates need to develop relationships with psychologists and mental-health professionals who can testify to the genuine, measurable trauma inflicted by financial abuse. The scholarship bears this out. The seminal “Life in the Sweatbox” study by Katherine Porter, Deborah Thorne, Robert Lawless, and Pamela Foohey demonstrates that consumers often spend years trapped in a pre-bankruptcy purgatory — juggling debts, fielding collection calls, and enduring what the authors memorably describe as “slow financial asphyxiation” before finally seeking bankruptcy relief. During this “sweatbox” period, families exhaust retirement funds, borrow from relatives, and suffer cascading emotional and physical distress — all to avoid the perceived stigma of bankruptcy until they are, quite literally, out of options. The UK’s “Debts and Despair” report documents that nearly half of people in arrears felt harassed, and 50% reported suicidal thoughts linked to debt collection contact. Similarly, Debt Collection Pressure and Mental Health (2024) found a statistically significant correlation between repeated creditor contact and depressive symptoms among young adults. Even another credit reporting organization, Equifax, reports that "[t]here's a strong link between debt and poor mental health. People with debt are more likely to face common mental health issues, such as prolonged stress, depression, and anxiety." Together, these data reveal that financial harm is inseparable from psychological harm. The FCRA’s remedial structure — permitting “actual damages” for emotional distress — recognizes this, but as Brown demonstrates, federal courts continue to require a clinical translation of distress into medical or diagnostic evidence. Absent such testimony, even a man falsely branded a felon may be told his sleepless nights are worth no more than $2,500. Takeaway: Judge Schroeder’s ruling may be defensible as a matter of evidentiary rigor, but it exposes a deeper disconnect between how courts conceptualize “harm” and how ordinary people actually experience it. Emotional and psychological injuries—especially those tied to financial humiliation, job loss, or harassment—are real, measurable, and often debilitating, yet they remain undervalued when judges require “medical” corroboration for what is, as David Graeber reminded us in Debt: The First 5,000 Years, a human experience intertwined with obligation, shame, and power since the dawn of civilization. To bridge that gap, consumer attorneys should not only improve how they prove emotional distress—but also reconsider who should decide it. A jury of one's peers, drawn from the same economic and social fabric as the plaintiffs who face abusive credit reporting, debt collection, or financial exclusion, is far more likely to understand the toll of sleepless nights, collection calls, and the loss of dignity that accompany financial hardship. Federal judges, by contrast, tend to approach such claims with institutional skepticism and often little shared experience. As a result, the difference between $2,500 and $100,000 in emotional-distress damages may depend less on the facts than on the decision maker. To shift that balance, consumer advocates should: Document distress contemporaneously — Encourage clients to seek counseling early and to preserve records of anxiety, sleeplessness, and family impact. Retain qualified mental-health professionals — Expert testimony can connect “financial harassment” to observable physical and psychological outcomes such as hypertension, depression, and alcohol misuse. Link causation clearly — Tie those symptoms directly to the statutory violation, whether under the FCRA, FDCPA, or related consumer-protection laws. Push for jury determinations — Where feasible, frame emotional-distress damages as questions for jurors, whose empathy and lived experience make them better arbiters of intangible human harm. Educate courts — Through briefing and expert testimony, remind judges that financial distress and emotional harm are not speculative—they are predictable, documented, and tragically common. Until courts internalize this reality, plaintiffs may continue to win the liability battles yet lose the damages war—a familiar fate for those still living, as Porter, Thorne, Lawless, and Foohey put it, in the Sweatbox. Conversely, creditors and debt collectors facing credible allegations of consumer-rights violations might take note: accepting a default judgment with minimal judicial damages may sometimes be the wiser course than risking a jury’s verdict from twelve citizens who know too well what it feels like to answer the phone with dread. With proper attribution, please share. To read a copy of the transcript, please see: Blog comments Attachment Document brown_v._first_advantage_ii.pdf (135.37 KB) Category Middle District

Welcome to FinTalk!

On behalf of the entire Financial Services Group, welcome to FinTalk! FinTalk is the new flagship blog from Crowell & Moring’s Financial Services Group. Drawing on the deep transactional and regulatory industry experience of our firm’s financial services attorneys, FinTalk delivers timely updates on the ever-evolving financial services landscape. Across finance, regulatory, debt and claims... Continue Reading

Weekly News – October 31

Trust Busters in Selecta, OIP battle lines drawn, Apex Tool LME part Deux, Challenges mount to Non Pro Rata DIPs, Medical Solutions multi-layer coop cake, and so much more…  Creditor…

October 2025 Ponzi Scheme Roundup

By Kathy Bazoian Phelps Below is a summary of Ponzi scheme activity reported for October 2025. There were at least 13 new Ponzi schemes revealed this month, 5 guilty pleas, and 34 years of prison sentences. The average age of the fraudsters was about

4th Cir.: In re Bestwall LLC (4th Cir. Oct. 30, 2025) — Solvent Debtor Allowed in Texas Two-Step Bankruptcy, En Banc Rehearing Denied over Fiery Dissent

4th Cir.: In re Bestwall LLC (4th Cir. Oct. 30, 2025) — Solvent Debtor Allowed in Texas Two-Step Bankruptcy, En Banc Rehearing Denied over Fiery Dissent Ed Boltz Fri, 10/31/2025 - 18:31 Summary: The Fourth Circuit, by an 8–6 vote, declined to rehear Bestwall LLC v. Official Committee of Asbestos Claimants en banc, leaving intact the panel’s decision upholding bankruptcy jurisdiction for a solvent debtor created through the notorious “Texas Two-Step.” Judge King issued a fiery dissent (taking the surprising step of naming by name the position of each of his fellow judges), calling the case a “manufactured sham Chapter 11” that allows a multibillion-dollar corporation to use bankruptcy as a shield against accountability to dying asbestos victims. Background: Georgia-Pacific’s Texas Two-Step Georgia-Pacific, long a defendant in asbestos litigation, used a Texas divisional merger to split itself into two entities: Bestwall LLC, which inherited nearly all asbestos liabilities but few assets or operations, and New Georgia-Pacific, which retained the profitable businesses and the billions in assets. After a brief five-hour Texas reincarnation, both companies relocated—Bestwall to North Carolina—and three months later Bestwall filed for Chapter 11. Although completely solvent thanks to a “funding agreement” from its parent, Bestwall obtained the automatic stay under §362 and a companion injunction halting all asbestos suits nationwide. As Judge King described, this maneuver was “a concerted boardroom effort designed to pause active civil tort litigation, consolidate thousands of asbestos-related claims, and extract more favorable settlement terms from their suffering and dying victims through litigation delay.” Constitutional Argument: What Does It Mean to Be “Bankrupt”? Judge King’s dissent framed the issue as a constitutional one under Article I, Section 8—the Bankruptcy Clause—which grants Congress power to enact “uniform Laws on the subject of Bankruptcies.” Drawing from Founding-era history and early English and American law, he argued that “bankruptcy” was meant only for those who are truly insolvent or honest but unfortunate, not for corporations with “billions in assets seeking a tactical litigation advantage.” “The Constitution,” he warned, “does not permit Congress or the courts to authorize bankruptcy as a strategic weapon of the powerful.” By treating financial distress as “irrelevant,” the Fourth Circuit majority, he wrote, “rewrites the Constitution to suit the needs of a profitable tortfeasor” and “strips tens of thousands of asbestos victims of their Seventh Amendment right to a jury trial.” An Oversight: Solvency Does Not Equal Security Yet Judge King’s otherwise eloquent dissent misses an important nuance familiar to every consumer bankruptcy practitioner: solvency on paper does not always mean financial stability in practice. Thousands of Chapter 13 debtors across the Fourth Circuit are technically solvent—they own homes with equity, maintain retirement accounts, and even have positive disposable income. They seek bankruptcy not because they are “insolvent” in a balance-sheet sense, but because they face unmanageable liquidity crises, judgment collections, medical bills, or foreclosure threats. Congress, in crafting modern bankruptcy law, deliberately moved away from the rigid insolvency test that once defined bankruptcy under the 1800 Act. Financial distress—not insolvency—became the touchstone, recognizing that even solvent individuals and businesses may need court protection to reorganize debts, preserve assets, or ensure fair distribution among creditors. Thus, while Judge King’s historical appeal to the “honest but unfortunate” debtor is emotionally and morally powerful, it risks overstating the constitutional bar against solvent debtors, sweeping in those ordinary families who use Chapter 13 precisely to avoid collapse rather than to exploit it. Still, the contrast between an honest wage-earner struggling to save a home and a conglomerate like Georgia-Pacific—profitable, tax-advantaged, and litigation-savvy—underscores the dissent’s essential moral point: there is a difference between using bankruptcy to survive and using it to manipulate. The Human Toll Since Bestwall’s 2017 filing, nearly 25,000 asbestos claimants have died, including more than 10,000 from mesothelioma, without ever reaching trial. All litigation remains frozen while Bestwall, which has no employees or business operations, and its parent continue to profit. “The sacred right of the asbestos claimants to pursue justice through the tort system…has been placed on hold by a solvent profitable enterprise called Bestwall,” King lamented. Echoes from 1983: Bankruptcy as an “Escape Chute” King cited Judge Young’s warning in Furness v. Lilienfield (D. Md. 1983) that solvent corporations were abusing Chapter 11 “to evade pending litigation.” Forty years later, King wrote, that “gross abuse” has metastasized: corporations now create shell entities like Bestwall to halt tort suits while continuing to operate and profit. “Chapter 11 was designed to give those teetering on the verge of a fatal financial plummet an opportunity to reorganize—not to give profitable enterprises an opportunity to evade liability.” Commentary: Judge King’s dissent may stand as the most forceful moral indictment yet of the Texas Two-Step—but it paints with a brush too broad for the realities of modern consumer and small-business bankruptcy. Financial distress, not insolvency, is the real dividing line between legitimate reorganization and abuse. That said, the dissent’s central warning is unassailable: when billion-dollar corporations use bankruptcy courts to shield assets and suffocate victims’ claims, they transform a system built for mercy into one for manipulation. If the “honest but unfortunate” debtor has long symbolized bankruptcy’s redemptive purpose, then Bestwall represents its inversion—the use of bankruptcy not to start fresh, but to stay rich. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document bestwall_llc_v._official_committee_of_asbestos_claimants.pdf (176.32 KB) Category 4th Circuit Court of Appeals

Law Review (Economics): Hollenbeck, Brett and Larsen, Poet and Proserpio, Davide, The Financial Consequences of Legalized Sports Gambling

Law Review (Economics): Hollenbeck, Brett and Larsen, Poet and Proserpio, Davide, The Financial Consequences of Legalized Sports Gambling Ed Boltz Thu, 10/30/2025 - 16:55 Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4903302 Abstract: Following a 2018 ruling of the U.S. Supreme Court, 38 states have legalized sports gambling. We study how this policy has impacted consumer financial health using a large and comprehensive dataset on consumer financial outcomes. We use data from the University of California Consumer Credit Panel, containing credit rating agency data for a representative sample of roughly 7 million U.S. consumers. We exploit the staggered rollout of legal sports betting across U.S. states and evaluate two treatment effects: the presence of any legal sports betting in a state and the specific presence of online or mobile access to betting. Our main finding is that overall consumers' financial health is modestly deteriorating as the average credit score in states that legalize sports gambling decreases by roughly 0.3%. The decline in credit score is associated with changes in indicators of excessive debt. We find a substantial increase in average bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies. We also find that financial institutions respond to the reduced creditworthiness of consumers by restricting access to credit. These results are substantially stronger for states that allow online sports gambling compared to states that restrict access to in-person betting. Together, these results indicate that the ease of access to sports gambling is harming consumer financial health by increasing their level of debt. Commentary: From Casino Floors to Courtrooms Bankruptcy attorneys have long seen gambling debts as a guaranteed bet for financial ruin—often a moral failing and then a line item in the Statement of Financial Affairs to be sheepishly acknowledged and hopefully quickly forgiven. But the world of gambling has changed faster than the Bankruptcy Code’s assumptions. Gone are the days when compulsive gamblers had to drive hours to Atlantic City or Las Vegas. Today, the casino lives on the phone—always open, algorithmically tuned, and cross-promoted during every football game. And as this study shows, once gambling becomes as accessible as checking Instagram, it starts showing up in credit reports—and in bankruptcy filings. Bankruptcy courts have historically taken a dim view of gambling losses, often equating them with “bad faith” or dismissing them as “self-inflicted wounds.” That moral lens made sense when gambling required planning and travel. But today’s “disordered gambling” is less vice than vulnerability—an addiction intensified by tech platforms designed to maximize engagement, just as social-media apps do. Judges and trustees may soon need to rethink the reflexive skepticism toward debtors whose credit cards, payday loans, or even mortgages collapsed under the weight of DraftKings, FanDuel, or BetMGM. Policy Recommendations: From Punishment to Protection Congress and state legislatures could help mitigate the harm in several ways: Bankruptcy Reform for Disordered Gambling – Amend §523(a)(2)(C) to clarify that gambling-related credit card advances are not per se presumptively nondischargeable, especially when incurred in the context of documented gambling disorder. This is especially true as the credit card lenders that make on-line gambling possible are hardly innocent naifs, but actually actively promoting this behavior. Mandatory Gambling Self-Exclusion in Credit Underwriting – Require financial institutions and credit bureaus to allow consumers to flag gambling transactions or block gaming-related merchant codes, similar to existing “voluntary credit freeze” mechanisms. Tax Revenue Earmarks – Dedicate a fixed percentage of sports-betting tax revenue to fund state treatment programs for gambling addiction and financial counseling. (Currently, many states allocate less than 1% of gaming taxes to addiction services.) CFPB Oversight – Direct the Consumer Financial Protection Bureau to study predatory lending practices tied to gambling losses, including the use of debt consolidation or cash-advance products marketed to problem gamblers. Maybe in 2029? Identifying and Helping Clients: For Attorneys: Consumer bankruptcy lawyers can expect to see more clients whose budgets crumble from gambling losses—but few will volunteer that information. Warning signs include: Unexplained cash withdrawals or “Venmo”-style transfers with sports-related notations.\ Frequent small transactions on debit/credit statements at odd hours. Missing paychecks or “mystery loans” from family or friends. Obsessive secrecy or shame around finances, often cloaked as “bad investing.” Gentle inquiry helps. Ask, “Do you use any betting apps or online gaming platforms?” rather than “Do you gamble?” The former sounds like routine intake; the latter sounds like judgment. For Existing Clients: Offer confidential referrals and normalize treatment as part of financial recovery—just as you would refer for credit counseling or mental-health care. Bankruptcy can be positioned not as failure but as the financial detox necessary to reclaim stability before relationships, housing, or hope are lost. Resources for Clients: Attorneys can provide these evidence-based and anonymous resources: National Council on Problem Gambling (NCPG): www.ncpgambling.org 24-hour helpline (1-800-522-4700) with chat and text support. Gamblers Anonymous: www.gamblersanonymous.org peer-support meetings nationwide and online. NC Problem Gambling Program: morethanagame.nc.gov free treatment and counseling for North Carolina residents. National Suicide Prevention Lifeline: 988 — critical if gambling losses have triggered despair or suicidal thoughts. Final Thoughts As gambling becomes as easy as scrolling a phone, the line between “sports fan” and “debtor” is blurring. This isn’t the old Vegas high-roller—it’s the Uber driver in Greensboro betting $10 parlays during lunch. Bankruptcy courts will increasingly see these debtors not as moral failures but as casualties of a legalized, algorithmic addiction. If the law’s purpose is a “fresh start,” it must evolve to recognize that some losses come not from vice, but from design. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document the_financial_consequences_of_legalized_sports_gambling.pdf (330.54 KB) Category Law Reviews & Studies