S. 1162, the "Bank on Students Emergency Loan Refinancing Act"
To amend the Higher Education Act of 1965 to provide for the refinancing of certain Federal student loans, and for other purposes.
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Supreme Court Backs Bids to Collect Outdated Debt in Bankruptcy
A divided U.S. Supreme Court ruled that debt collectors can use bankruptcy proceedings to try to collect liabilities that are so old the statute of limitations has expired, Bloomberg reported yesterday. Voting 5-3 in Midland Funding, LLC v. Johnson, 16-348, the court said that companies don’t violate the Fair Debt Collection Practices Act when they file bankruptcy claims on that type of years-old debt. Justice Stephen Breyer joined the court’s conservative wing in the majority. Critics have accused debt collectors of violating the law by filing tens of thousands of outdated claims with bankruptcy courts in the hope that some debtors won’t object. “The result of the decision appears to give creditors a free pass to file stale claims without fearing FDCPA liability,” said Andrew Muller, a partner with Stinson Leonard Street LLP. “The flip side is that trustees and debtors’ lawyers may be under increased pressure to more closely review claims to determine whether the claims are subject to a statute of limitations defense.” The ruling is a victory for Encore Capital Group Inc.’s Midland Funding in an Alabama case that started with an effort to collect a $1,900 credit card debt. The debtor, Aleida Johnson, sued Midland after a bankruptcy judge threw out Midland’s claim. Midland argued that federal bankruptcy law lets creditors file claims in those proceedings even if the statute of limitations wouldn’t allow a lawsuit.
Click here to read Bill Rochelle’s analysis on yesterday’s Midland Funding decision.
Experts to Discuss Supreme Court’s Ruling in Midland Funding, LLC v. Johnson and Its Implications on Debt-Collection Practices
ABI will be holding a media webinar on Wednesday, May 17, at 3 p.m. ET discussing the Supreme Court’s ruling in Midland Funding, LLC v. Johnson. ABI Editor-at-Large Bill Rochelle will be moderating the discussion. There are limited slots available for ABI members to listen and participate in the webinar. Click here to register.
Supreme Court Allows Debt Collectors to File Time-Barred Proofs of Claim
High court allows a business model that is based on the inadvertence of trustees and creditors.
Judge Name - Do not use it.
Supreme Court
Experts to Discuss Supreme Court’s Ruling in Midland Funding, LLC v. Johnson and Its Implications on Debt Collection Practices
Date:
Wednesday, May 17, 2017
Issue:
The U.S. Supreme Court on May 15, 2017, ruled (5-3) in the case of Midland Funding, LLC v. Johnson (No. 16-348) that filing a claim barred by the statute of limitations does not violate the federal Fair Debt Collection Practices Act because it is not false, deceptive, or misleading.
What:
ABI Media Webinar to examine the Supreme Court’s ruling in Midland Funding, LLC v. Johnson.
When:
Wednesday, May 17, at 3:00 p.m. ET. If you are a member of the media and would like to participate in the webinar, please register via the following link: https://register.gotowebinar.com/register/2637945381512267777
Who:
Speakers on the teleconference include:
- Craig Goldblatt of WilmerHale (Washington, D.C.) is an experienced bankruptcy litigator, with a focus on complex bankruptcy disputes and bankruptcy appeals. The core of his practice has been protecting the interests of secured creditors, financial institutions and insurance companies in bankruptcy-related disputes.
- Thad O. Bartholow is a partner with the Dallas law firm of Kellett & Bartholow PLLC. In addition to consumer bankruptcy, Bartholow’s practice focuses on individual and class-action litigation on behalf of consumer debtors in state, federal and bankruptcy courts.
Moderator:
ABI Editor-at-Large Bill Rochelle provides his authoritative take on legal developments affecting bankruptcy practice in ABI’s Rochelle’s Daily Wire. Rochelle published for Bloomberg every day from 2007-15, and prior to his second career in journalism, he practiced bankruptcy law for 35 years.
Background:
The U.S. Supreme Court on May 15, 2017, ruled (5-3) in the case of Midland Funding, LLC v. Johnson, No. 16-348, that filing a claim barred by the statute of limitations does not violate the federal Fair Debt Collection Practices Act because it is not false, deceptive, or misleading. The Supreme Court had granted certiorari to review a decision from the Eleventh Circuit holding that the filing of a stale claim violates the FDCPA. The case involved a proof of claim filed by a debt collector where the statute of limitations “had long since run,” Justice Breyer said. Writing for the majority, he said that filing stale claims was neither false, deceptive, nor misleading, in part because the state in which the case had initially been filed, as with most states, provides that “a creditor has a right to payment of a debt even after the limitations period has expired.” Writing for the dissent, Justice Sotomayor said that filing a stale claim is unfair and unconscionable, and stated that “[d]ebt collectors do not file these claims in good faith; they file them hoping and expecting the bankruptcy system will fail.”
How will the Court’s decision affect the application of the Fair Debt Collection Practices Act (FDCPA) to the filing of an accurate proof of claim for an unextinguished time-barred debt? ABI’s media webinar will discuss the effects of the Court’s ruling and take questions from the media. If you would like to participate or have any questions about the webinar, please contact ABI Director of Communications Jim Carman at jcarman@abiworld.org or 703-894-5936.
# # #
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 more than 12,000 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 ABI World at http://www.abi.org. For additional conference information, visit http://www.abi.org/calendar-of-events.
Courts Split on Arbitration over Dischargeability of Student Loans
Seattle judge disagrees with Florida judge on arbitration over bar study loans, while Second Circuit ponders the issue.
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Christopher M. Altson
More than 40 Percent of Americans Won’t Date a Person with Bad Credit
Some people inquire about a potential mate’s age or how many previous partners they’ve had, but others are more interested in another number, MarketWatch.com reported today. Some 42 percent of adults say knowing someone’s credit score would affect their willingness to date that person, according to a survey of 1,000 adults by Bankrate.com. That’s up from nearly 40 percent last year. Women were nearly three times as likely to consider credit score a major influence on a potential partner compared to men (20 percent vs. 7 percent). Younger daters are not as concerned about these three digits: 45 percent of older millennials (those aged 27-36) said that knowing someone’s credit score would only have a minor impact on their desire to date. By showing an interest in these three digits, people are probably being smart rather than shallow. People are combining their finances when they marry, and that can impact their future happiness. In fact, the higher one’s credit score, the less likely you’ll separate from your partner. More than half of Americans (58 percent) said they wouldn’t marry someone with significant debt, according to a study of more than 2,300 adults from Avvo. While knowing someone’s credit score doesn’t necessarily reveal whether that person has a medical or student debt or even their annual income, it does indicate whether they are eligible for a loan.
Third Circuit Joins the Majority in the Split Over Late-Filed Tax Returns
Circuit split widens on an issue the Supreme Court has been ducking.
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Jane R. Roth
Trump Administration Welcomes Back Student Debt Collectors Fired by Obama
A pair of private collection agencies fired by the Obama administration have accepted the Education Department’s offer of new contracts to recoup past-due student loans, but the agreements are in limbo as the government wades through a messy court battle, The Washington Post reported Wednesday. Enterprise Recovery Systems and Pioneer Credit Recovery were among five companies whose contracts the government cancelled in 2015 after an audit showed them giving inaccurate information to people trying to get their student loans out of default. The companies said the evaluation was arbitrary and flawed for drawing conclusions based on excerpts from a handful of calls, and four of them took legal action against the department. To put an end to the litigation, the Trump administration in February said it would reconsider assigning accounts to the four companies and disregard the two-year old audit against them. Reversing the Obama-era decision may prove inconsequential for the time being; a group of companies that lost out on a 2016 debt-collection contract bid are waging a fight in the courts that is preventing the government from assigning accounts. Because of a temporary restraining order issued by a federal judge in the case, education officials are not transferring accounts to Enterprise, Pioneer or any other collection agencies until the courts give the okay.
A ‘Loan’ Is Not an ‘Educational Benefit,’ Ninth Circuit BAP Holds
BAPCPA amendments on student loans modified the definition of ‘educational benefit.’
Judge Name - Do not use it.
Robert J. Faris
Consumer Reports: Obamacare Helped Make a Nearly 50 Percent Dent in Personal Bankruptcies
The Affordable Care Act was among the likely factors that assisted with a big decrease — nearly 50 percent — in personal bankruptcy filings over the last six years, according to a Consumer Reports analysis, MarketWatch reported yesterday. Other factors, including new bankruptcy laws, a rebounding economy and tighter credit requirements, also likely helped with the reduction, with filings dropping from 1.54 million in 2010 to 770,846 last year. There’s no way to know what made the biggest difference in that drop, since those filing for personal bankruptcy do not state a specific reason for it. Still, the health care law in all likelihood played a major role. Richard Gaudreau, a consumer bankruptcy lawyer in New Hampshire, says he sees far fewer clients who do not have health insurance now. “I think before the ACA there were a lot of medically-driven costs” in personal bankruptcies, he said. Medical bills, which are famously costly and unpredictable, in the past have been estimated as the leading cause of bankruptcy filings. Other reasons include a lost job, reduced income and divorce, Gaudreau said. Yet even if the health care law has contributed to a decline in personal bankruptcies, there is still evidence of its financial difficulties. Health care premiums have gone up substantially in certain areas, and the high-deductible plans expose those on them to large out-of-pocket expenses. Moreover, it’s possible premiums could increase even more next year.
Click here to read the Consumer Reports study.
