Student Borrowers Tap a New Path to Loan Forgiveness: Bankruptcy​​​

More Americans are filing for bankruptcy to get rid of their student debt, the Wall Street Journal reported. The increase came after the Biden administration made it easier for student borrowers to apply for bankruptcy by overhauling its guidelines last November. The government now supports borrowers’ use of bankruptcy to eliminate student debt when they meet certain economic hardship conditions. That is a sharp change from the old, far more adversarial procedure that borrowers found confusing and intimidating. The application numbers remain extremely small, with just 632 borrowers using the new process from last November through September, according to Justice Department data released today. Still, that is an increase from recent levels. The average annual rate of borrowers using bankruptcy to eliminate student loans was around 480 before the pandemic pause on federal student loan payments. The growth is notable because Americans weren’t required to make student loan payments until last month. The department expects those numbers to continue to rise as more lawyers and borrowers become aware of the option. It didn’t provide a number of successful student loan discharges that have resulted from the new guidance. “Borrowers are finding it easier to apply for discharge, and courts are overwhelmingly agreeing with the Justice Department’s recommendations to discharge student loans in eligible cases,” said Associate Attorney General Vanita Gupta. (Subscription required.)  Read more.

Analysis: Families Facing Financial Ruin as Costs Soar for Elder Care​​​

Millions of families are facing daunting life choices — and potential financial ruin — as the escalating costs of in-home care, assisted-living facilities and nursing homes devour the savings and incomes of older Americans and their relatives, the New York Times reported. “People are exposed to the possibility of depleting almost all their wealth,” said Richard Johnson, director of the program on retirement policy at the Urban Institute. The prospect of dying broke looms as an imminent threat for the boomer generation, which vastly expanded the middle class and looked hopefully toward a comfortable retirement on the backbone of 401(k)s and pensions. Roughly 10,000 of them will turn 65 every day until 2030, expecting to live into their 80s and 90s as the price tag for long-term care explodes, outpacing inflation and reaching a half-trillion dollars a year, according to federal researchers. The challenges will only grow. By 2050, the population of Americans 65 and older is projected to increase by more than 50%, to 86 million, according to census estimates. The number of people 85 or older will nearly triple to 19 million.  Read more.

CFPB Report Highlights Consumer Protection Issues in Medical Debt Collection​​​

The Consumer Financial Protection Bureau (CFPB) today released a report highlighting the challenges American families face when debt collectors pursue allegedly unpaid medical bills, according to a CFPB press release. Discussing the 8,500 complaints submitted in 2022 by servicemembers, older adults and other consumers relating to medical debt collections, the CFPB’s annual report to Congress on the Fair Debt Collection Practices Act describes how the CFPB and states have worked to stop the collections of medical bills that are inaccurate or not even owed at all. The report also provides updates on the debt-collection market more broadly and summarizes activities by the CFPB and other federal agencies relating to debt collection, including the Federal Trade Commission (FTC) and its actions under the FTC Act to protect small businesses from unfair and deceptive debt-collection practices. Click here to read the report.
 

Study: Women Bear the Brunt of Financial Stress in the U.S. Economy​​​

Nearly 6 in 10 women are living paycheck to paycheck, compared to 41 percent of men, according to a recent study by Varo Bank, Morning Consult and THRIVE Financial Empowerment Services of 1,004 Americans who regularly spend most or all of their income, The Hill reported. This economic strain is felt across the political spectrum, and Americans living paycheck to paycheck — regardless of party — cited the cost of living as their greatest financial concern. Eroding savings and increasing debt round out the top three concerns for people living paycheck to paycheck, the study found. The Census Bureau’s Household Pulse Survey started during the pandemic to measure how it impacted people’s lives. As of mid-October, the survey found that 39 percent of women had trouble paying for household expenses versus 35 percent of men, said Marisa DiNatale, head labor economist at Moody’s Analytics. Read more.
 

Commentary: Private Debt Was Supposed to Collapse When Rates Rose. Instead, It Is Everywhere*​​​

Wall Street’s doom-mongers spent years warning that private lenders would be the next bubble to burst when central banks tightened their policies. Instead, the funds are becoming even more ubiquitous as companies scramble to refinance debt in a higher-interest-rate environment, according to a Wall Street Journal commentary. For example, Westport, Conn.-based PetVet Care Centers operates 450 veterinary clinics and hospitals across the U.S. and has been owned by private-equity giant KKR since 2018. It has been a successful acquisition, but the company is facing a wall of debt maturities that can only be refinanced at a higher cost. KKR is providing $600 million of additional equity to ease the burden, while private-debt lender Blue Owl Capital will extend PetVet a $2.3 billion senior loan. In the middle ground between debt and equity sit other private-credit firms. Among them is London-based Park Square Capital, which said earlier this month it would commit over $100 million in preferred equity to the deal. This is an example of the “mezzanine” strategies keeping the private-credit boom alive, according to the commentary. Even as mergers and acquisitions have ground to a halt, higher rates and a challenging market for private-equity exits have opened up new opportunities to lend. Private debt — where funds extend credit directly to companies — has ballooned from about $280 billion of assets under management in 2007 to $1.5 trillion in 2022, figures by analytics company PitchBook suggest. Private-equity firms such as KKR, Apollo and Blackstone are channeling an increasing share of their assets into these markets. This year, asset-management behemoths such as BlackRock, Fidelity and PGIM, owned by Prudential, have also invested heavily in the sector. (Subscription required.) Read more.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.
 

U.S. Labor Market Loosening as Weekly Jobless Claims Hit Three-Month High​​​

The number of Americans filing new claims for unemployment benefits increased to a three-month high last week, Reuters reported. The weekly jobless claims report from the Labor Department today also showed unemployment rolls expanding to levels last seen two years ago. The labor market is slowing as higher interest rates curb demand, consistent with slowing economic activity. Initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 231,000 for the week ended Nov. 11, the highest since August. Unadjusted claims increased 1,713 to 215,874 last week. There was a jump in filings in Massachusetts and New York, which more than offset notable decreases in Oregon and Georgia. Read more.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.
 

Don't Miss the Special NCBJ "Behind the Bench" Webinar on Nov. 28 Featuring Members of ABI’s Task Force on Veterans and Servicemembers Affairs Providing Insights on Veterans Issues in Bankruptcy​​​

Join ABI and the National Conference of Bankruptcy Judges on November 28 at 1 PM ET for a special webinar on insights from ABI's Task Force on Veterans and Servicemembers Affairs. Featured speakers include Task Force members Hon. Mary Jo Heston (W.D. Wash.), Steven Berman of Shumaker, Loop & Kendrick LLP (Tampa, Fla.), Ted Gavin of Gavin/Solmonese LLC (Wilmington, Del.) and Kristina Stanger of Nyemaster Goode, PC (Des Moines, Iowa). Register for free!
 

Miss Any of the 25+ Hours of CLE Programming at CPEX23? Access All Replays for Only $100!

Leading practitioners over the past two weeks examined key issues across the consumer bankruptcy landscape during ABI’s 2023 Consumer Practice Extravaganza (CPEX). Did you miss any of the sessions, including an exclusive “Fireside Chat” with EOUST Director Tara Twomey and deep dives into student loans, technology and the future, subchapter V of chapter 11, tax issues and more? Get access to all replays via a state-of-the-art virtual platform for only $100! All sessions will conveniently remain available until Jan. 31!

Vacancy Announcement for Bankruptcy Judgeship for the District of New Hampshire​​​

The U.S. Court of Appeals for the First Circuit is seeking applicants for a bankruptcy judge position in the U.S. Bankruptcy Court for the District of New Hampshire in Concord. The jurisdiction of a bankruptcy judge is specified in Title 28, United States Code, §§ 151-158, and explained in Title 11, United States Code, § 101, et seq. Attorneys are encouraged to apply, even if their experience is not specifically in bankruptcy law. Interested applicants may obtain an application on the Court of Appeals' website at https://www.ca1.uscourts.gov/employment. Persons applying for this position and willing to serve if selected should personally submit their applications to Susan Goldberg, Circuit Executive, via email at ca01_chjobs@ca1.uscourts.gov. Any applicant must comply with the financial disclosure requirements pursuant to the Ethics in Government Act of 1978, Title 5, United States Code Appendix, §§ 101-111, as implemented by the Judicial Conference of the United States, and will be required to satisfy FBI and IRS background investigations prior to appointment. The term of office is 14 years, and the current salary is $213,992. Applications are to be received no later than Monday, November 27, 2023. Persons will be considered without regard to race, color, age (over 40), gender, religion, national origin, disability, or sexual orientation. 

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