Analysis: Personal Bankruptcies Are on the Rise​​​

Bankruptcies are still significantly below pre-pandemic levels, but have gone up relative to last year. Personal bankruptcies were up 16% in October from a year ago, as more Americans are seeking debt relief, CBSNews.com reported. But those struggling to stay financially afloat should consider the option sooner rather than later, advise experts who study when and why people file. "When a consumer feels financial pressure, the last thing on their mind is seeking bankruptcy protection," said Michael Hunter, vice president of Business Development at Epiq AACER, a provider of bankruptcy information and partner to the American Bankruptcy Institute. Most people don't file until 18 to 24 months after they've incurred financial hardship, Hunter said. Over decades of interviewing thousands of people who've declared personal bankruptcy, researchers have found that about two-thirds of individual filers struggle with paying their debts for up to five years before seeking help. "The common response is people are struggling with their debt for more than two years" before seeking a legal remedy, said Robert Lawless, a professor at the University of Illinois College of Law. "People misunderstand bankruptcy and wait too long to see a bankruptcy lawyer. Most people would benefit by going earlier," said Lawless, a co-principal investigator in the Consumer Bankruptcy Project, launched in 1981 by a group of academics including Senator Elizabeth Warren, D-Mass., a law school professor at the time. "It makes sense to file if a creditor is going to be able to take away something you need," said Pamela Foohey, a professor of law at the University of Georgia School of Law in Athens. "If a person is dealing with a wage garnishment that is harming their lives, or if a lender is threatening to repossess your car. If there's no other way to get a car that will fit your budget, filing could be a way to keep your car, or keep your house." Read more.

CFPB Issues Final Rule to Supervise Big Tech Payments, Digital Wallets​​​

Silicon Valley tech giants and others who together process more than 13 billion financial transactions annually through digital wallets and payment apps will be subject to government supervision, the Consumer Financial Protection Bureau (CFPB) said, Reuters reported. The new rule finalized today will bring a burgeoning consumer service under the same scrutiny faced by banks while helping protect the privacy of vast amounts of consumer data and preventing fraud and the illegal closure of their accounts, the agency said. The regulations, first proposed a year ago to govern digital services such as Apple Wallet (AAPL), Google Pay (GOOG, GOOP) and Venmo, come as President-elect Donald Trump prepares to make far-reaching changes to federal regulators' conduct when he takes office next year, which could cast doubt on the rule's future. "Digital payments have gone from novelty to necessity, and our oversight must reflect this reality," CFPB Director Rohit Chopra said in a statement. Read more.

Subchapter V Experiences to Share? ABI Wants to Hear from You!

ABI is continuing its study of Subchapter V, and it needs your help! We are particularly interested in learning more about the real-world impact of Subchapter V. So our question is, do you have a story about a distressed business or creditor who has used or benefited from the subchapter? If so, could that case still happen under the lower debt cap for Subchapter V debtors? Any and all responses are welcome. Submit your story at https://abi.org/subvstories.
 

U.S. Applications for Jobless Benefits Fall to 213,000, Remaining Near 7-Month Lows​​​

The number of Americans applying for unemployment benefits fell again last week, remaining near seven-month lows. The Labor Department reported Thursday that jobless claim applications fell by 6,000 to 213,000 for the week of Nov. 16, the Associated Press reported. That’s fewer than the 220,000 analysts had forecast. However, continuing claims, the total number of Americans collecting jobless benefits, rose by 36,000 to 1.91 million for the week of Nov. 9. That was higher than expected and the most in three years. The four-week average of weekly claims, which quiets some of the weekly volatility, fell by 3,750 to 217,750. Read more.

Census Report: Employment Bounced Back Faster for Private Industry than for State and Local Governments​​​

Since the economic downturn caused by the COVID-19 pandemic, total full- and part-time employment in state and local governments has never fully bounced back, according to a recent Census Bureau Report. The number of state and local government employees took less of a hit than those in private industry, but the belt-tightening by state and local governments has not loosened up enough to return to pre-pandemic employment levels as of 2023. From March 2019 to March 2023, the number of state and local government jobs declined by 101,000 or 0.5% to 19.6 million, according to U.S. Census Bureau statistics from the Annual Survey of Public Employment & Payroll (ASPEP). By contrast, private industry experienced a smaller percentage drop in employment and in March 2022 had rebounded beyond pre-pandemic levels with more employees (seasonally adjusted) than in March 2019. Private industry employment in 2022 reached a total of 129.3 million jobs, according to the Bureau of Labor Statistics, up over 1.2% (nearly 1.6 million jobs) from 127.7 million jobs in 2019 despite the pandemic downturn during that period. In March 2022, while private industry had surpassed its level of employment from March 2019, state and local governments still had not fully regained their March 2019 employment levels. Read more.

U.S. Home Sales Rose in October, Notching Their First Annual Gain in More than 3 Years​​​

Sales of previously occupied U.S. homes rose in October, the first annual gain in more than three years, with home shoppers encouraged by easing rates and a pickup in properties on the market, the Associated Press reported. Existing home sales rose 3.4% last month from September to a seasonally adjusted annual rate of 3.96 million, the National Association of Realtors said Thursday. That matches the annual pace set in July. Sales rose 2.9% compared with October last year, representing the first year-over-year gain since July 2021. The latest home sales topped the 3.93 million pace economists were expecting, according to FactSet. Home prices increased on an annual basis for the 16th consecutive month. The national median sales price rose 4% from a year earlier, to $407,200. “The worst of the downturn in home sales could be over, with increasing inventory leading to more transactions,” said Lawrence Yun, the NAR’s chief economist. Still, with just two more months left to go this year, existing home sales are on track to be the lowest amount of annual home sales since 1995, Yun said. Read more.

The Lender Bailing Out Desperate Luxury Property Owners — for a Price​​​

It is hard to say precisely when art magazine publisher Louise Blouin’s financial problems began, but by November 2022 she was desperate. Saddled with debt and facing foreclosure on La Dune, an oceanfront estate in the Hamptons, Blouin borrowed $62 million from Georgia-based lender Bay Point Advisors, hoping to buy herself time to refinance or sell. Roughly 14 months later, however, the bridge loan ballooned to more than $80 million, thanks to a 24% default interest rate and late fees. La Dune, once asking $150 million, sold for $89 million after an auction in January, the Wall Street Journal reported. “I was just going in for a bridge for a few weeks and ended up in this tsunami,” said Blouin, who has since described her dealings with Bay Point as a “nightmare” in New York bankruptcy court filings. She is now fighting Bay Point for a portion of the sale proceeds. Bay Point has become a lender of last resort for the rich, lending nearly unheard-of sums to luxury real-estate owners at high rates — rates that get much higher if a customer defaults — and using sophisticated, some say overly aggressive, tactics for getting repaid. “We fill in where banks stop lending,” said Charles Andros, Bay Point’s co-founder and CEO, who said there is a growing demand for Bay Point’s services in the luxury real-estate sector, thanks to tighter banking regulations and skyrocketing property values. Launched in 2012 by former finance executives, Bay Point has a war chest of $800 million, backed by family offices and other private investors. One of Bay Point’s specialties is distress — which can be opportunistic situations where there is an upside for investors. Operating within the shadow-banking sector — as the market involving nonbank lenders is known — Bay Point stands out as a deep-pocketed lender that is not deterred by thorny situations. “They’re going to have a handful of competitors — if that,” said Anthony Geraci, co-founder of the American Association of Private Lenders, citing the high risk of lending so much money against a luxury property, the value of which could drop precipitously. (Subscription required.) Read more.

Miss Part 1 of CPEX24 Last Week? Access Replays Through Dec. 13!​​​
Part 1 of ABI's Consumer Practice Extravaganza, the largest online consumer bankruptcy practice event of the year, was held on Nov. 11 and 12 featuring the following great panels:

- "Combating the Creative Consecutive Filer"
- "Explaining Racial Disparities in Personal Outcomes"
- "Issues Spotting and Preparing Schedules Properly for Consumer Bankruptcy and Family Law Issues"
- "Injunction of Law in Light of Purdue Pharma"

Not able to make the live airing and want to tap into the replays? All November Part 1 programs, plus Part 2 sessions taking place in January 2025, are included in the registration price of just $100!

Access All Current ABI Titles Through ABI’s New Digital Book Subscription!​​​

One of the best collections of bankruptcy books is now available as an annual digital subscription! ABI’s bankruptcy library opens the door to a constantly evolving area of the law, and our books are continually being updated by top industry professionals. Auto-renewing annual subscriptions guarantee immediate access to this invaluable resource, which is comprised of fully searchable content that’s always available on any digital device. Convenient pricing plans for individual and institutional subscribers offer immediate and unlimited access to our entire digital library of books — nearly 100 treatises! Plus, you get advanced access to new and revised books as soon as they are published — all included in your annual subscription. Learn more!

Have an Idea for a Topic for an ABI Conference Session? Submit Your Proposal via ABI’s “Call for Abstracts” Page!​​​

ABI has launched an online portal for professionals to submit proposals for educational sessions at future ABI conferences. Submitters can describe their proposed topic, outline the session’s focus and learning goals, suggest speakers, and provide contact information via the portal’s detailed form. The portal can be accessed here.

All submissions will be reviewed by an internal Education Committee, which will contact the submitter to ask questions as needed and to discuss the status of the proposal. Submissions will be reviewed on a rolling basis.

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