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AUGUST BANKRUPTCY FILINGS INCREASE SLIGHTLY OVER LAST MONTH



Total bankruptcy filings in the United States for the month of August increased 7 percent compared to July, according to data provided by Epiq Systems, Inc. August bankruptcy filings totaled 104,336, up from the 97,104 filings registered in July 2012. The 99,417 total noncommercial filings for August represented a 7 percent increase from the July noncommercial filing total of 92,562. Total commercial filings for August 2012 were 4,919, representing an 8 percent increase from the 4,542 filings in July. Commercial chapter 11 filings also increased in August as the 648 filings represented an 8 percent increase over the 600 filings in July.

The 104,336 total bankruptcy filings in August represented a 14 percent decrease from the 120,905 filings registered in August 2011. The 4,919 commercial filings for August 2012 represented a 24 percent decrease from the 6,434 filings during the same period in 2011. The August commercial chapter 11 filing total of 648 represented a 9 percent decrease from August 2011’s total of 710. The 99,417 total noncommercial filings for August represented a 13 percent drop from the August 2011 noncommercial filing total of 114,471. Click here for the full ABI press release.

REPORT: DEBT-PROTECTION PLANS UNDER SCRUTINY



Several consumer advocates lump credit-protection plans in the category of an expensive type of insurance that most consumers do not really need, according to a report in today's Detroit Free Press. Credit card protection plans are under fire for deceptive marketing practices, and the Consumer Financial Protection Bureau has put all institutions on notice. One concern is that the third-parties that often pitch these products mislead consumers. Under a settlement with regulators, Capital One Bank will refund about $150 million to 2.5 million customers and pay $60 million in penalties. Capital One said it believes that the average refund will be less than $100. Federal regulators charged that Capital One engaged in deceptive marketing tactics to pressure or mislead some consumers into buying payment-protection plans and credit-monitoring services when they activated their credit cards. Here is a look at what other card issuers are doing:

• Bank of America quit pitching its Credit Protection Plus and Credit Protection Deluxe products in August and no longer offers the credit-protection plans to new customers.

• American Express stopped offering its Account Protector program -- a debt-cancellation product -- earlier this year and will discontinue the plan on Dec. 31.

• Chase said that it stopped offering its Chase Payment Protector plans to new enrollments in October 2011, but it is continuing to serve customers who already purchased the service.

• Discover declined to comment this week but was still offering its payment-protection plan at that time.

• Citi Cards recently paused telephone sales for its debt-protection products and said it would fully complete reviews already under way, in line with new guidance recently issued by the Consumer Financial Protection Bureau.

Ben Woolsey, director of marketing and consumer research for CreditCards.com, said that one troubling issue with the credit-protection product involved hard-sell, fear-driven phone pitches. Click here to read the full report.

ANALYSIS: PREPAID PLASTIC IS CREEPING INTO CREDIT



Prepaid cards are among the fastest-growing types of plastic, according to payment-industry researcher Mercator Advisory Group, as U.S. consumers loaded $83.3 billion onto prepaid cards in 2011, a 34 percent increase over the prior year, the Wall Street Journal reported today. While the cards were designed to help the less-affluent have better control their finances, overdraft and other credit-like features have been added to these cards in recent years. Some consumers are outspending their means and racking up big debts from the cards, say consumer advocates, who are lobbying regulators to ban the practice. Several nonbank prepaid card providers and large banks that recently started offering prepaid cards, including Green Dot Corp., JPMorgan Chase & Co. and Wells Fargo & Co., have steered clear of overdraft or other credit-like features. But a number of players, including Netspend Holdings Inc., the second-largest prepaid card provider behind Green Dot, allow users to take on debt, which can add to the fees they must pay. The National Consumer Law Center, the Center for Responsible Lending and the Consumer Federation of America have joined forces to lobby the Consumer Financial Protection Bureau (CFPB) to prohibit prepaid cards from offering any type of credit. The CFPB is evaluating the consumer advocates' proposal as part of a broader effort to more closely regulate prepaid cards. Read more. (Subscription required.)

COMMENTARY: PRUNING HEDGE FUND REGULATION WITHOUT CULTIVATING BETTER RULES



Fresh from having declined to constrain money market funds, the Securities and Exchange Commission has moved to loosen marketing constraints on hedge funds, according to a commentary yesterday in the New York Times DealBook blog. Two weeks ago, the agency said that it would not be able to defend millions of investors from money market funds that do things like invest in European bank bonds, but portend to be perfectly safe. While hedge funds should be able to promote themselves to investors with data about their returns and methods, the SEC does not have any new resources and has not put in place any policies to police these promotions. Even professionals have a problem in evaluating hedge fund performance, according to the commentary, because distinguishing skill from luck and excessive risk-taking is extremely difficult. Read the full commentary.

ABI MEMBERS WELCOME TO ATTEND ACB'S FREE HALF-DAY "BANKRUPTCY: BACK TO THE FUTURE" PROGRAM IN SEPTEMBER



The American College of Bankruptcy invites you to attend a free half-day program on Sept. 28 in Chicago for a discussion of many of the challenging topics facing current bankruptcy and reorganization professionals. Topics to be addressed include recent decisions of the U.S. Supreme Court and Court of Appeals, important work of the Advisory Committee on Bankruptcy Rules, and developments in the field of bankruptcy ethics. The nation’s leading judges, academics and bankruptcy professionals are among the speakers for the program. While there is no cost to attend, seating is limited, so early reservation is suggested. For more information and to register, please click here.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: CARDWELL V. GURLEY (IN RE CARDWELL; 5TH CIR.)



Summarized by Eric Lockridge of Kean Miller LLP

The Fifth Circuit affirmed the district court's summary judgment affirming the bankruptcy court's determination that the creditor's state-court judgment against the debtor was not dischargeable in bankruptcy. The state court's findings of fact and conclusions of law established the elements of actual fraud that support a determination that the judgment debt is non-dischargeable under 11 U.S.C. 523(a)(2)(A).

There are more than 600 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: JUDICIAL CONFERENCE PROPOSES AMENDED BANKRUPTCY RULES IN RESPONSE TO SUPREME COURT'S RULING IN STERN V. MARSHALL



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post details how the Advisory Committee on Bankruptcy Rules for the Judicial Conference of the United States has proposed amendments to Bankruptcy Rules 7008, 7012, 7016, 9027 and 9033 in an attempt to address some of the inefficiencies that the Supreme Court’s Stern v. Marshall decision has introduced into bankruptcy proceedings. The proposed amendments were published in the Federal Register on Aug. 17, 2012, for public comment. Public hearings on the proposed amendments will be held in Chicago on Jan. 18, 2013, and Washington, D.C., on Feb. 1, 2013. The public comment period ends Feb. 15, 2013.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

September

- 7th Annual Golf and Tennis Outing

     September 11, 2012 | Maplewood, N.J.

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.

- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

     September 19-20, 2012 | New York, N.Y.

- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar

     September 27, 2012

- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

     October 15, 2012

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

HOMEOWNERS SEE BENEFITS OF FORECLOSURE SETTLEMENT PLAN



More than 130,000 homeowners have received $10.5 billion in relief under the national settlement over foreclosure abuses, according to a preliminary report issued yesterday by the settlement monitor, the New York Times reported today. Under the settlement in February, reached in response to evidence that the foreclosure process had been riddled with fraud, the country’s five largest mortgage servicers promised $25 billion to help stem the tide of homeowner losses. About $20 billion of that was designated to provide relief to homeowners, primarily through various forms of debt forgiveness. Although it may seem that banks have already satisfied more than half of their commitment, only a portion of the $10.5 billion will count, because of the way the relief is tallied. The banks — Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — reported that the bulk of the help so far had come in the form of short sales, in which lenders allow homeowners to sell for less than what they owe. Many homeowners have been stuck in their homes because they have lost so much value. The banks reported $8.7 billion in debt written off through short sales. But far less progress has been seen under the central provision of the settlement, reducing the principal owed on homes. Banks reported a total of only $750 million in principal reduction, and Bank of America, which has the highest obligations under the settlement, reported none. Read more.

ANALYSIS: U.S. HOUSEHOLDS CONTINUE TO CHIP AWAY AT THE DEBT ON THEIR HOMES



Total U.S. household debt fell by 0.5 percent in the April-to-June period from the previous quarter to $11.38 trillion, the Federal Reserve Bank of New York said yesterday, according to a report in the Wall Street Journal. The drop was due almost entirely to falling mortgage balances, as some households paid down home loans while others erased their debts and lost their homes by completing the foreclosure process. Additionally, the number of homeowners entering foreclosure fell by 12 percent to an estimated 256,000 during the quarter, the lowest level since mid-2007, another sign the housing market may be stabilizing. Read more. (Subscription required.)

STUDENT-LOAN DEBT RISES TO $914 BILLION IN SECOND QUARTER



The Federal Reserve Bank of New York said that debt from educational loans in the U.S. rose 1.1 percent to $914 billion in the second quarter, Bloomberg News reported yesterday. Outstanding student debt increased from $904 billion three months earlier, the New York Fed said yesterday in a report. The loans were taken out by students and their parents, and the majority are backed by the U.S. government. Ninety-day delinquency rates for student loans increased to 8.9 percent from 8.69 percent in the first quarter, the New York Fed said. Since the peak in household debt in the third quarter of 2008, student-loan debt has increased by $303 billion, while other forms of debt fell a combined $1.6 trillion. Read more.

SEC PROPOSAL WOULD REMOVE PROHIBITION AGAINST GENERAL SOLICITATION BY HEDGE FUNDS



The Securities and Exchange Commission on Wednesday proposed rules that would remove a longtime prohibition against general solicitation by hedge funds, a huge change for an industry that has ballooned in size and influence in recent decades, the New York Times DealBook blog reported yesterday. Unlike their mutual fund brethren, hedge funds have long been barred from advertising in public forums like newspapers or television. Releasing information as basic as performance and assets has been prohibited, the idea being that such complicated and risky investment opportunities should be promoted only to those deemed financially fit. That threshold has been at least $1 million in liquid assets, or a $200,000 annual income for an individual or $300,000 for a couple. But under the new rules, hedge funds might be able to rent billboards, buy full-page advertisements in newspapers or have Web sites that offer the public a real look inside their operations and performance, as opposed to the password-protected sites most operate today. The proposal –mandated by a new law, the Jump-Start Our Business Start-Ups Act – could go a long way toward demystifying and increasing understanding of hedge funds, which are often accused of being highly secretive. Read more.

CONSUMER SPENDING TICKS UP



The Commerce Department released a report today that U.S. personal spending rose the most in five months in July, the Wall Street Journal reported today. Personal consumption expenditures increased 0.4 percent from the prior month, according to the Commerce Department. Personal consumption fell 0.2 percent in May and was flat in June as Americans saved, rather than spent, their slowly rising incomes. Today's report showed that personal incomes rose 0.3 percent in July, the eighth consecutive month that incomes increased. July's savings rate ticked down to 4.2 percent from 4.3 percent in June, which had been the highest level in a year. Read more. (Subscription required.)

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: CAGE V. HARDY RAWLS ENTERPRISES, LLC (IN RE MOYE; 5TH CIR.)



Summarized by Omid Moezzi of the Office of Chapter 13 Trustee Nancy Curry

Affirming the decision of the U.S. District Court for the Southern District of Texas (Houston) that the trustee had proved that all but one of the payments in question made by the debtors were avoidable preferences and that the creditor failed to successfully establish its affirmative defenses.

There are more than 600 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: EMINENT DOMAIN WILL DRIVE HOMEOWNERSHIP INTO THE SUNSET



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post finds that the proposed plan by San Bernardino County, Calif., to seize underwater mortgages through eminent domain would serve only to damage homeownership, not protect it.

For more on the issue of localities examining the use of eminent domain to seize underwater properties, listen to an ABI podcast featuring Prof. Mark Scarberry discussing the proposal and the potential legal ramifications of using eminent domain to provide relief from the foreclosure crisis. Click here to listen.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Client matters left unfinished at a firm when it files for bankruptcy are the property of the defunct firm.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

September

- 7th Annual Golf and Tennis Outing

     September 11, 2012 | Maplewood, N.J.

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.

- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

     September 19-20, 2012 | New York, N.Y.

- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar

     September 27, 2012

- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

     October 15, 2012

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.