As reported by Robin Miller with CBAR: Distinguishing a bankruptcy case that is closed from one that is dismissed, and reaching a conclusion that is independent of the chapter under which the debtor’s bankruptcy case was filed, the Second Circuit Court of Appeals held that, under Code § 349(b)(3), even undisclosed assets revest in the debtor upon the dismissal of the case. Section 349 provides, the court said, that unless the bankruptcy court for cause orders otherwise, “a dismissal of a case … revests the property of the estate in the entity in which such property was vested immediately before the commencement of the case.” Thus, if the debtor owned the property prior to the commencement of the bankruptcy case, a dismissal returns that property…

If you negotiate the foregiveness of indebtedness from a bank on a home loan or credit card company, you will recieved a 1009C. Many bankruptcy practictioners, treat the “discharge in a case under Title 11” and “insolvency” as equally effective ways to avoid including cancelled debt in taxable income and filed a Form 982. Most of us think that by filing a Form 982, we can deal with any tax consequences relating to a 1099C. But – there lurks a special exception that only bankruptcy can take care of. However, Line 10a tells you that you to reduce the basis of non depreciable property including your home by the amount of debt forgiven. As a result, if you are deemed insolvent, you can avoid paying…

Reuter’s reported that a federal court was asked to suspend seven pending appeals over Detroit’s eligibility for bankruptcy until the bankruptcy confirmation plan is confirmed to adjust $18 billion of debt. Attorneys for the city, Michigan, Detroit pension funds, unions and others that filed five of the appeals said that moving forward with the cases now would “significantly undermine” settlements and mediation and could delay the city’s exit from the biggest municipal bankruptcy in U.S. history. But – they also declined to dismiss their cases at this point. “Holding the appeals in abeyance also ensures that this court will not unnecessarily decide important state and federal constitutional issues,” the attorneys said in a letter to the U.S. Court of Appeals for the Sixth Circuit. The…

New federal rules that penalize colleges for excessive student loan defaults offer a powerful incentive for schools to educate students on the complexities of the federal student loan program, including the crucial fact that they can delay or make partial payments if they get into financial trouble, according to a New York Times editorial on Friday. Colleges with default rates of 30 percent or higher in any given year are now required to develop a plan for keeping more students on track to repay their loans. Beginning in September, institutions that reach or exceed the 30 percent for three consecutive years will lose their eligibility for both the federal loan program and the Pell Grant program, subject to appeal. This places schools with runaway default rates at risk…

A study released today by the Urban Institute found that 35 percent of Americans have debt in collections, USA Today reported today. The study, which analyzed the credit files of 7 million Americans, found that Southern states especially stand out with the highest concentration of people delinquent. In 13 states — Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Texas, Nevada, New Mexico and West Virginia — and Washington, D.C., more than 40 percent of the population with a credit file has debt in collections. Nevada, one of the states hardest hit by the housing crisis and recession, has the highest share, at 46.9 percent. The 77 million Americans with debt in collections owe an average of $5,200. That includes debt from credit card…

As reported on mlive by Mike Wilkinson of Bridge Magazine, serious questions remain as to whether Detroit will be able to survive its historic Chapter 9 Bankruptcy. Detroit has the distinction of the murder capital of the U.S. and is also the most populous U.S. city to ever seek bankruptcy protection. But, the real questions are: Can Detroit make it after it emerges from Chapter 9 Bankruptcy? Does the city generate enough money to fix what ails Detroit if billions in debt are cut? Are the city’s costs too high? Does it pay its workers too much? Are pensions too generous? Can the city endure a reduction in both spending and revenue and revive what is by most measures the most dysfunctional large city in…

Yes – According to at least one US Circuit Court in a recent opinion. As reported by Robin Miller of CBAR, in an important decision and a rare victory for consumers, the 11th Circuit Court of Appeals has held that a debt collector’s filing a proof of claim for a time-barred debt violates the federal Fair Debt Collection Practice Act. Crawford v. LVNV Funding, LLC, (11th Cir., July 10, 2014) (case no. 13-12389). The Crawford Court reversed the decisionof the lower court in Crawford v. LVNV Funding, LLC, 2013 WL 1947616 (M.D. Ala., May 9, 2013). The Crawford court reasoned that courts have uniformly held that a debt collector’s threatening to sue on a time-barred debt, or actually filing suit to recover that debt, violates…