The Supreme Court heard oral argument yesterday in Taggart v. Lorenzen, 18-489 (Sup. Ct.), to decide whether a good faith belief that a debt was not discharged precludes holding the creditor in civil contempt, according to an analysis by ABI's Bill Rochelle. The Court will choose among three tests, one proposed by the debtor, one by the U.S. Solicitor General and another by the creditor. Not surprisingly, the debtor argued for strict liability where the creditor’s good faith is no defense. The Solicitor General proposed a purely objective test but said the government would go along with the creditor’s objective test that also considers good faith.
In Taggart v. Lorenzen, the justices sounded largely noncommittal, except for the Chief Justice, who seemed in the debtor’s camp favoring a stricter standard for contempt of the discharge injunction.
The Supreme Court will hear oral argument today in Taggart v. Lorenzen (18-489) to consider whether, under the Bankruptcy Code, a creditor’s good-faith belief that the discharge injunction does not apply precludes a finding of civil contempt. For more on the case, including petitions, briefs and the transcript of the oral argument (once available later in the day), please click here. ABI Editor-at-Large Bill Rochelle will also be preparing a special analysis of the oral argument to be sent later via the Rochelle Daily Wire newsletter.
Homeowners in Chicago cheated by a mortgage fraud scheme are seeking to form a committee to protect their interests in the bankruptcy of Ditech Holding Corp., the company that owns their loans, Bloomberg News reported. The Investor Protection Center at the Northwestern Pritzker School of Law filed a request for the creation of a committee of consumer creditors to represent borrowers who were victims of the scheme. The fraud targeted elderly African-American homeowners and coerced them into reverse mortgages with no benefits that left some in foreclosure, the filing states. Ditech, the mortgage lender and servicer led by Tom Marano, filed for bankruptcy in February and has proposed a plan to restructure its debt that would release it from liabilities such as lawsuits filed by consumer borrowers. J. Samuel Tenenbaum, a professor of law at Northwestern, said the homeowners he helps represent will be harmed by such a release of liabilities. The center’s clients “are elderly, disabled, and lack the financial means to obtain representation, are the most vulnerable and at risk of harm in Ditech bankruptcy matters," Tenenbaum, who is the director of the Northwestern’s Complex Civil Litigation and Investor Protection Center, wrote in the filing on Friday.
The U.S. District Attorney’s Office for Connecticut said that Joel C. Reilly of Wallingford, Conn., pleaded guilty to one count of bankruptcy fraud on Wednesday after allegedly securing credit using another individual’s name, then declaring bankruptcy on their behalf for those same loans, the New Haven Register reported. Reilly “fraudulently applied for and obtained loans and lines of credit in the name of another individual... without the victim’s knowledge or permission, using her name and personal information,” according to the U.S. District Attorney's office. The outstanding debt on the loans was approximately $211,142 as of December 2016, spokesman Tom Carson said, which Reilly could not repay.
Judge Hunt in Chicago tells debtors’ counsel to oppose inclusion of unjustifiable provisions in chapter 13 plans, even if it means contested confirmation hearings.
Alexandria, Va.— The ABI Commission on Consumer Bankruptcy unveiled its final report of recommendations to identify updates to be made to the U.S. Bankruptcy Code and Rules so that the system is more accessible and efficient for both financially struggling Americans and the professionals who serve them. The Commission was created in December 2016 to research and recommend improvements to the consumer bankruptcy system that can be implemented within its existing structure. After soliciting public feedback, Commission members identified nearly 50 discrete issues for study and divided these issues among three advisory committees composed of 52 bankruptcy professionals. The commissioners and committee members represent all diverse stakeholders in the bankruptcy system.
“The report represents the hard work of all stakeholders over a two-year period,” said co-chair Hon. Elizabeth Perris (ret.). “As one of the co-chairs, I am proud that the report contains thoughtful suggestions for how to make the system work better for all involved.”
“As one of the co-chairs, I believe the report will trigger meaningful discussions that can lead to improvement in the consumer bankruptcy system,” said fellow co-chair Hon. William Houston Brown (ret.).
Some of the select issues addressed in the final report of recommendations include:
Student loans in bankruptcy
Remedies for discharge violation
Protection of interests in collateral repossessed pre-petition
Chapter 7 attorneys’ fees
Attorney competency & remedying lawyer misconduct
Credit counseling and the financial management course
Means test revisions and interpretations
Chapter 13 debt limits
Racial justice in bankruptcy
Reserve fund in chapter 13 cases
Chapter 7 trustee compensation
To download a copy of the full report, please click here.
The Commission is grateful to the financial support received from the ABI Anthony H.N. Schelling Endowment Fund and the NCBJ Endowment.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
