Skip to main content
Help Center
banner

ABI Blog Exchange

article-exchange

Insolvency Service “reframes” view of creditor – IPs can apply their discretion (UK)

Read Article

Bankr. W.D.N.C.: In re Ford (Ford III) — When “Tribal Sovereignty” Arguments Collapse into Contempt, Sanctions, and a Permanent Loss of Discharge

Bankr. W.D.N.C.: In re Ford (Ford III) — When “Tribal Sovereignty” Arguments Collapse into Contempt, Sanctions, and a Permanent Loss of Discharge Ed Boltz Mon, 01/19/2026 - 15:04 Summary: If Ford II was the Court firmly closing the door on pseudo-tribal sovereignty arguments, Ford III is what happens when a debtor keeps pounding on that door long after it has been shut—and padlocked. In an extraordinary 82-page opinion, Judge Ashley Austin Edwards brings this long-running pro se Chapter 7 saga to its inevitable conclusion: terminating civil contempt only because the case has reached its endpoint, reducing accrued sanctions to judgment, permanently denying the debtor’s discharge, barring further filings without court permission, and referring the matter to both the U.S. Attorney and Mecklenburg County District Attorney for potential criminal investigation. What Changed from Ford II? Nothing doctrinal—and that is the point. As discussed in the prior blog post ( Bankr. WDNC: Re Ford II—Court Rejects Tribal Sovereignty Claims, Denies Recusal), the Court had already: Rejected claims that property transferred to a purported “tribal” LLC was outside the bankruptcy estate, Rejected arguments that bankruptcy courts lack authority over such property, Rejected recusal motions premised on alleged bias against “tribal” litigants, and Ordered the debtor to comply with routine, baseline Chapter 7 obligations: disclose assets, disclose income, turn over bank records, tax returns, and leases. Ford III is not about novel law. It is about persistent noncompliance. The Core Findings Judge Edwards methodically documents what practitioners will instantly recognize as a pattern—not confusion, not misunderstanding, but strategic obstruction: False schedules and testimony, including repeated denials of rental income, bank accounts, and transfers; Asset transfers to an LLC labeled as “tribal property”, while simultaneously asserting personal ownership and control whenever convenient; Refusal to comply with Rule 2004-style disclosures, including bank records, leases, tax returns, and documentation of the “tribal courses” supposedly generating future income; Improper filings on behalf of an LLC, despite repeated warnings that an entity must appear through counsel; Serial motions attacking the Court’s Article I authority, jurisdiction, and legitimacy—arguments already rejected multiple times. At bottom, the Court found that the debtor’s conduct made it impossible to administer the estate and impossible to trust anything filed or said. Civil Contempt, Then What? The Court formally terminated civil contempt, but only because it had run its course—not because the debtor ever meaningfully purged it. Accrued fines were reduced to judgment, making them enforceable like any other debt. More importantly, the Court imposed the ultimate bankruptcy sanction: Permanent denial of discharge. Not dismissal. Not conversion. Not a temporary bar. A permanent loss of the fresh start—a remedy reserved for the most egregious cases of bad faith and abuse of process. Reporting to Prosecutors In a move that should still make practitioners sit up straight—but for a different reason—the Court’s criminal referral was not directed at the Debtor personally, but instead at the Tribal entities and individuals purporting to provide “jurist” or legal instruction and guidance. The Court referred the matter to both federal and state prosecutors based on evidence suggesting the unauthorized practice of law, including the marketing and provision of quasi-legal advice that appeared to shape the Debtor’s filings, testimony, and litigation strategy throughout the case. That step remains rare. And it serves as an important reminder that while bankruptcy courts routinely deal with bad facts and bad arguments, they draw a sharp line when third parties appear to be selling legal advice outside the bounds of licensure, especially when that advice is then deployed in active federal litigation.. Whether this court (or others in North Carolina) will in the future similarly refer other entities that act as lawyers without either being licensed in North Carolina or complying with its laws ( Looking at you out of state mortgage servicer attorneys) remains an open question. Practice Commentary: The Real Lesson of Ford III This case is not really about tribal sovereignty. It is about a phenomenon bankruptcy judges are seeing with increasing frequency: Pro se debtors armed with internet-derived “jurisdictional” theories, Claims that ordinary disclosure rules do not apply, Arguments that bankruptcy trustees are “trespassing” on private or sovereign property, And a belief that repeating a rejected argument often enough will eventually make it true. Ford III makes clear that there is no safe harbor in Chapter 7 for litigating ideology instead of complying with the Code. For consumer practitioners, the takeaway is straightforward: Bankruptcy relief is powerful, but it is conditional. Disclosure is not optional. Courts will give leeway to unrepresented debtors—but not infinite patience. And when a case crosses from confusion into obstruction, the consequences escalate quickly. As the Court’s tone makes unmistakably clear, this was not a debtor who “made mistakes.” This was a debtor who refused the rules of the system while demanding its benefits. Ford III is what happens when that experiment fails. As always, this case is worth reading not for new doctrine, but for its clarity about the limits of patience—and the very real risks of treating bankruptcy court as a forum for testing sovereign-citizen-adjacent theories. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_ford_iii.pdf (1.81 MB) Category Western District

Weekly News – January 16

Diameter’s class act, Amazon takes it on the chin in Saks, coop agreements in spotlight, STG goes from LME to Bankruptcy, DLA sidelined, and much, much, more…. Creditor Corner Your…

Where are the bankruptcy attorneys?

There is an alarming decrease in the number of attorneys representing debtors these days.  No new attorneys are entering the field. Attorneys in the prime of their career are exiting the field.  The attorneys remaining are quite older and they are scaling back their practice.  In the next 5 years several senior attorneys will fully... Continue Reading…

Bankr. W.D.N.C.: In re Black Pearl Vision, LLC — Claims against MCA Survive (Mostly), RICO Lives to Fight Another Day

Bankr. W.D.N.C.: In re Black Pearl Vision, LLC — Claims against MCA Survive (Mostly), RICO Lives to Fight Another Day Ed Boltz Fri, 01/16/2026 - 14:33 Summary: In Black Pearl Vision, LLC v. Pearl Delta Funding, LLC, the Bankruptcy Court for the Western District of North Carolina (Judge Ashley Austin Edwards) issued a careful and consequential order granting in part and denying in part a motion to dismiss brought by two New Jersey–based merchant cash advance companies. The debtor alleged that what was labeled a “Revenue Purchase Agreement” was, in substance, a loan bearing an effective annualized interest rate of nearly 52%, secured by sweeping UCC liens, a personal guaranty, and aggressive default remedies—including ACH sweeps of 100% of revenue. Over roughly nine months, the debtor paid almost $200,000 on an advance of about $143,000. At the pleading stage, the court refused to accept the MCA label at face value. Applying well-established principles that substance controls over form, the court held that the debtor plausibly alleged the agreement was a loan rather than a true sale of receivables, particularly where the funder bore little to no risk of nonpayment and reconciliation provisions were allegedly illusory. That determination alone allowed the debtor’s constructive fraudulent transfer claims under § 548 to survive dismissal. The court did, however, draw an important line on usury. Consistent with prior North Carolina bankruptcy decisions applying New York law, the court reiterated that corporations may not use usury affirmatively as a sword. Criminal usury can be raised defensively, but not as an independent basis for affirmative avoidance. Still, that did not doom the case: the debtor adequately pled lack of reasonably equivalent value based on the stark disparity between what it received and what it paid. On RICO, the result was mixed. The court held that the debtor plausibly alleged a violation of 18 U.S.C. § 1962(a) (investment of income derived from the collection of unlawful debt), but dismissed the § 1962(c) claim for failure to plead the required distinction between the “person” and the “enterprise”—a fixable pleading defect, with leave to amend. Commentary: Why This Case Matters Beyond Merchant Cash Advances This opinion should be read as part of a much larger enforcement roadmap, not just an MCA skirmish. First, the court’s willingness to let RICO theories based on unlawful debt survive—even while trimming defective pleadings—should catch the attention of out-of-state lenders and service providers doing business in North Carolina. The logic here is not limited to MCAs. It applies with equal force to: Out-of-state title lenders making loans to North Carolina residents at interest rates flatly prohibited by North Carolina law, while taking liens against vehicles through contractual sleight of hand or choice-of-law clauses; and Debt settlement or “credit relief” companies that market into North Carolina, collect fees, and provide services without complying with North Carolina licensing, fee, and conduct restrictions. Second, the decision reinforces a crucial point for bankruptcy practitioners: you do not need to win the usury fight outright to create leverage. Even where state law limits affirmative usury claims, § 548 fraudulent transfer analysis looks to economic reality, not labels. If a debtor paid far more than it received, under coercive terms, while insolvent or undercapitalized, that alone may support avoidance and recovery. Third—and this is where things get uncomfortable for repeat players—the court’s discussion of RICO “unlawful debt” opens the door to pattern-based litigation. Many of these businesses operate on a national scale using near-identical contracts, ACH authorizations, guarantees, and enforcement playbooks. If those arrangements are unlawful as to principal or interest under applicable state law, RICO is no longer theoretical. It becomes a real risk multiplier, especially once discovery begins. Finally, for North Carolina practitioners, this case fits squarely into a growing body of law pushing back on attempts to export high-cost lending and fee-based financial products into the state under foreign law labels. Bankruptcy courts are increasingly willing to look past contractual formality and ask the only question that matters: who bore the risk, and who really paid the price? Expect this opinion to be cited not just in MCA disputes, but in title-loan, litigation-funding, and debt-relief cases where out-of-state actors assumed North Carolina law would never catch up with them. To read a copy of the transcript, please see: Blog comments Attachment Document black_pearl_vision_v._pearl_delta_funding.pdf (520.12 KB) Category Western District

Currently Not Collectible (CNC) Status and Defaulted SBA Loans

Currently Not Collectible (CNC) Status and Defaulted SBA Loans “Currently Not Collectible” (CNC) status can, in limited cases, be used to temporarily pause collection activity on a defaulted SBA loan. CNC is not an SBA program and is not available

W.D.N.C.: Bethea v. Equifax — Defaults Aren’t Windfalls, and “Shotgun Pleadings” Miss the Target

W.D.N.C.: Bethea v. Equifax — Defaults Aren’t Windfalls, and “Shotgun Pleadings” Miss the Target Ed Boltz Tue, 01/13/2026 - 15:40 Summary: In Bethea v. Equifax (W.D.N.C. Dec. 19, 2025), Judge Kenneth Bell offers both a procedural refresher and a cautionary tale for consumer litigants hoping to convert technical missteps into instant victory. The plaintiff sued Equifax, Navy Federal Credit Union, and Goldman Sachs, alleging inaccurate and unauthorized accounts on his credit reports, along with failures to reasonably investigate disputes under the Fair Credit Reporting Act (FCRA) — and, for good measure, invoking the Gramm-Leach-Bliley Act (GLBA). Navy Federal , the the largest credit union in the United States with about $191.8 billion in total assets, miscalculated its response deadline by four days. The Clerk entered default and the plaintiff moved for default judgment. But the Court set aside the default, emphasizing that federal courts prefer deciding cases on the merits, particularly where the defendant acted promptly and the plaintiff suffered no real prejudice. The Court then dismissed the complaint — not on default grounds — but because it lacked factual specificity, lumped defendants together, and didn’t clearly explain what was inaccurate in the report. The GLBA claim failed outright because there is no private right of action. The dismissal was without prejudice, allowing refiling — but only with specific allegations tied to each defendant. Commentary: Courts Forgive Institutional Mistakes — But Are They Equally Forgiving to Consumers? The Court’s reasoning here is doctrinally sound. Defaults are disfavored. Cases should be decided on the merits. A vague FCRA complaint shouldn’t proceed just because the defendant was four days late. But the opinion also invites a harder question — one bankruptcy and consumer lawyers see every day: Do courts extend the same patience to consumers who default? Consider the contrast. When creditors miss deadlines “Good cause” No prejudice Resolve on the merits Defaults set aside When consumers miss deadlines In debt collection suits, foreclosure proceedings, and even bankruptcy adversaries — consumers who: don’t file an answer within 30 days don’t respond to a motion misunderstand service are pro se and confused often find themselves hit with: default judgments foreclosure orders wage garnishments liens sometimes years later discovering what happened And courts frequently emphasize finality and procedural compliance, not “deciding claims on the merits.” Yes, there are good judges who bend toward justice and give leeway — but those decisions are far less routine than the institutional forgiveness shown to banks, mortgage servicers, and national credit bureaus. Why the asymmetry matters Institutional defendants benefit from: T all Building Lawyers calendaring systems in-house litigation teams repeat-player credibility Consumers operate with: anxiety limited legal understanding chaotic financial and life circumstances no counsel in most collection cases Yet the procedural expectations applied to each group often look identical on paper — and very different in practice. ⚖️ Could Navy Federal Have Sued Its Own Lawyers for Malpractice? While it’s easy to say Navy Federal “dodged a bullet,” the reality is that the real exposure from the blown deadline lay not with the credit union, but with its lawyers. Missing a response date is classic malpractice territory — the duty is clear, the breach obvious, and the potential consequences severe. A further question is not whether Navy Federal could have sued its lawyers, but whether those lawyers had an ethical duty to recognize that their own potential liability created a conflict of interest requiring disclosure — and perhaps withdrawal. By missing the deadline, counsel became personally invested in persuading the court that the mistake was harmless and should be forgiven. That means their interests arguably diverged from Navy Federal’s, whose best option might have been independent advice about potential claims, strategy, and risk. At a minimum, that conflict should have been disclosed to Navy Federal; some would argue it should also have been candidly addressed with the court, and even with Bethea, to avoid any appearance that counsel was litigating primarily to protect themselves. Whether courts would actually require that level of transparency is another matter — but the issue reminds us that when procedural errors occur, lawyers are not just advocates, they may be witnesses and parties with skin in the game, and the rules of professional responsibility are supposed to account for that. The lesson in Bethea : This opinion is a reminder to: 1️⃣ Draft well-pleaded, fact-specific FCRA complaints. 2️⃣ Avoid relying on technical defaults as strategy. 3️⃣ Continue pushing courts to apply their “preference for merits decisions” consistently — including when consumers stumble. If default is a disfavored “windfall,” that should be true whether the party asking for relief is Navy Federal — or a working family trying to save a home from foreclosure. ⚖️ Takeaway Bethea is doctrinally correct — but it highlights an uneven playing field. Creditors get grace. Consumers get judgments. The challenge for consumer advocates is not simply litigating well-pleaded cases — but continuing to press courts to extend the same mercy to the people the system was supposedly built to protect. To read a copy of the transcript, please see: Blog comments Attachment Document bethea_v._equifax.pdf (315.08 KB) Category Western District

N.C. Bus. Ct.: Meridian Renewable Energy LLC v. Birch Creek Development, LLC- Effect of Bankruptcy Filing on Third Parties in Lawsuit

N.C. Bus. Ct.: Meridian Renewable Energy LLC v. Birch Creek Development, LLC- Effect of Bankruptcy Filing on Third Parties in Lawsuit Ed Boltz Mon, 01/12/2026 - 15:18 Summary: The Business Court addressed what happens when one party in multi-party commercial litigation files bankruptcy — here, Pine Gate Renewables’ Chapter 11 filing — while litigation continues between the remaining parties. Judge Houston held: Claims against Pine Gate are stayed under §362. The stay does not extend to Meridian’s contract and tort claims against Birch Creek. The competing declaratory judgment claims are dismissed without prejudice, because deciding them would necessarily involve determining Pine Gate’s contractual rights while Pine Gate is frozen in bankruptcy. Everything else proceeds. Commentary: This opinion is yet another reminder that the automatic stay is powerful — but it isn’t contagious. §362 protects the debtor — not everyone standing near the debtor North Carolina courts continue to follow the rule that unless there are extraordinary circumstances, the stay applies only to the debtor, not co-defendants trying to enjoy a free litigation vacation. Birch Creek’s argument that everything should grind to a halt failed for the same familiar reason: joint obligors remain jointly liable, and North Carolina law expressly allows the plaintiff to proceed against one. Why dismiss the declaratory judgment claims? Because those claims weren’t really narrow clarifications — they were invitations to declare everyone’s rights under multi-party agreements, including Pine Gate’s. Issuing sweeping declarations while Pine Gate is barred from defending itself would risk prejudicing the debtor and potentially interfering with the administration of the bankruptcy estate. So the Court wisely declined to play advisory bankruptcy court. Where Chapter 11 complicates things more than people expect: It’s especially important to read this opinion in light of the Supreme Court’s recent decision in the Purdue Pharma case. There, SCOTUS made clear that bankruptcy courts cannot impose broad, non-consensual third-party releases that permanently protect non-debtors simply because a debtor filed a plan. But — and this is where practitioners must be careful — Chapter 11 plans can STILL contain negotiated provisions that, in practice, insulate or benefit third parties — especially if creditors consent or receive consideration. Indemnification provisions, channeling injunctions tied to specific settlements, and claims procedures can all functionally limit litigation rights even if they don’t look like Purdue-style releases. Translation: If Pine Gate’s Chapter 11 plan ultimately includes provisions affecting litigation involving Birch Creek, Meridian, or the joint venture structure, those plan terms may later change the playing field. That means: 💡 Reviewing the actual Chapter 11 plan — not merely relying on §362 — becomes critical. Contrast: Chapter 13 is very different — and much stronger for co-debtors This opinion also highlights something consumer bankruptcy lawyers already know: The Bankruptcy Code can give far more protection to co-debtors in Chapter 13 than in Chapter 11. Under 11 U.S.C. §1301, the automatic codebtor stay prevents creditors from pursuing a co-signer on a consumer debt while the Chapter 13 is pending — unless the bankruptcy court grants relief. So whereas Birch Creek got no shelter from Pine Gate’s Chapter 11 filing: A mom who co-signed her son’s car note, A spouse on a joint credit card, A parent who co-signed student-style consumer financing, would generally enjoy protection in a Chapter 13 filed by the primary debtor until the court says otherwise. In other words: ✔ Chapter 11 → debtor-focused stay, limited extension to others ✔ Chapter 13 → explicit statutory shield for consumer co-debtors The takeaway: The Business Court struck the right balance: Protect the debtor where federal law requires, Keep commercial litigation moving otherwise, Avoid issuing declarations that might accidentally step on the bankruptcy court’s turf, And quietly remind practitioners that bankruptcy strategy doesn’t stop at the automatic stay — it runs through the plan. And for consumer practitioners, the comparison underscores that Chapter 13 contains protections that simply don’t exist in commercial Chapter 11 practice. To read a copy of the transcript, please see: Blog comments Attachment Document meridian_renewable_energy_llc_v._birch_creek_dev._llc.pdf (149.57 KB) Category NC Business Court

Weekly News – January 9

First Brands tees up sales process, Venny distressed opportunities abound, non-debtor releases in the spotlight, 2026 outlooks and so much more… Creditor Corner Your weekly curated content from the Creditor…

Increased SBA and Treasury Collection Actions on Defaulted SBA Loans

At Shenwick and Associates, we regularly represent individuals and businesses facing financial distress, including borrowers who have defaulted on Small Business Administration (SBA) loans. Over the past several months, we have observed a marked

Bankr. W.D.N.C.: In re Holland — Means Test Reality Beats Wishful Thinking Across All Three NC Districts

Bankr. W.D.N.C.: In re Holland — Means Test Reality Beats Wishful Thinking Across All Three NC Districts Ed Boltz Fri, 01/09/2026 - 16:53 Summary: Judge Laura Beyer’s decision in In re Holland drives home a now-settled point in North Carolina bankruptcy practice: if a debtor does not intend to keep collateral and make payments, then the debtor does not get to deduct those payments on the Chapter 7 means test. The Hollands were above-median debtors with multiple secured debts and stated their intention to surrender a 2023 Kia K5. They hadn’t made payments on the Kia in months, it had already been repossessed, and stay relief had been granted. Yet they still deducted the $590 Kia payment on the means test. The Bankruptcy Administrator objected. Once that deduction disappeared, the Hollands had sufficient disposable income to trigger the presumption of abuse under § 707(b). Judge Beyer agreed and ordered dismissal unless the debtors converted to Chapter 13. A Unified North Carolina Rule: Sterrenberg (EDNC), Hamilton (MDNC), and Holland (WDNC): This isn’t just a Western District trend — it now reflects all three North Carolina bankruptcy districts. In re Sterrenberg (Eastern District of North Carolina) Judge Randy D. Doub Judge Doub held that a debtor who intends to surrender collateral cannot deduct secured payments tied to that collateral on the means test. A deduction cannot be based on payments the debtor already knows will not be made. https://case-law.vlex.com/vid/in-re-sterrenberg-no-895409367 In re Hamilton (Middle District of North Carolina) Judge Catherine Aron Judge Aron reached the same result: allowing secured-payment deductions on property the debtor plans to surrender distorts the means test and conflicts with the forward-looking approach of Lanning and Ransom. https://case-law.vlex.com/vid/in-re-hamilton-no-891123578 In re Holland (Western District of North Carolina) Judge Laura T. Beyer Judge Beyer follows the same reasoning, expressly adopting the forward-looking interpretation and disallowing deductions tied to surrendered collateral. Across EDNC, MDNC, and WDNC, the message is consistent: If you aren’t going to keep it and pay for it, you don’t get to deduct it. Commentary: Why Debtors Should Not Rush to Surrender or Reaffirm This case also highlights an important strategic lesson for consumer debtors: ⭐ It is often in the debtor’s best interest not to surrender vehicles or other secured property until after discharge, and not to sign reaffirmation agreements. Why: declaring surrender during the case can remove a means-test deduction losing that deduction can turn a Chapter 7 into a 707(b) “abuse” case debtors get pushed into Chapter 13 unnecessarily reaffirmations recreate personal liability on depreciating assets most lenders will accept payments without reaffirmation surrendering after discharge does not change the means test at all Put differently: ✔️ Keep the car if possible during the case ✔️ Do not reaffirm unless there is a compelling reason ✔️ Decide about surrender after discharge once your financial circumstances have stabilized Holland shows how quickly a routine Chapter 7 can unravel once a debtor checks the “surrender” box too early. Sterrenberg and Hamilton show that this outcome isn’t a fluke — it’s doctrine. In bankruptcy, sometimes the smartest move is not bold action. It’s patient inaction. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_holland.pdf (372.68 KB) Category Western District

W.D.N.C: Moseley v. Latino Community Credit Union-If you click “I agree,” don’t be surprised when they actually check your credit

W.D.N.C: Moseley v. Latino Community Credit Union-If you click “I agree,” don’t be surprised when they actually check your credit Ed Boltz Thu, 01/08/2026 - 15:40 Summary: In this Western District case, the pro se plaintiff, Brittney Moseley, brought what has become a fairly common species of Fair Credit Reporting Act litigation — alleging that a lender “pulled” her credit report without authorization and, in the process, violated both the FCRA and North Carolina’s Unfair and Deceptive Trade Practices Act. The Court did not buy it. Moseley applied online to open a membership account with Latino Community Credit Union. As part of that process, she electronically signed an application that — in clear, unambiguous language — authorized the credit union to verify her identity and obtain a credit report if necessary. The account rules repeated the same thing: eligibility for membership includes consent to check your credit and banking history. That’s the ballgame. Because the record showed: A real credit report existed, The credit union accessed it, and It had a permissible purpose — i.e., the consumer’s written authorization and a legitimate transaction initiated by the consumer — the Court concluded that there was no FCRA violation, and therefore no UDTPA violation either. The Court converted the motion to dismiss into one for summary judgment (with the parties’ consent) and entered judgment for the credit union. It also denied the plaintiff’s attempt to file yet another amended complaint, finding that amendment would be futile because the documents already in the record doomed the theory of liability. As the Court put it, obtaining a credit report “in connection with an application to open a financial account with the consent of the consumer” simply isn’t unfair, deceptive, or unlawful. Commentary: Cases like this are an important reminder — for both lawyers and consumers — about the real-world consequences of online agreements. The credit unions and banks have learned (sometimes the hard way) to put conspicuous authorization language directly above the signature line, and courts are increasingly unwilling to ignore that language when consumers later claim surprise. This is also another example where adding more allegations to a complaint cannot salvage a claim once the documentary record contradicts the narrative. Rule 15 is liberal, but not magical: if the authorization is right there in black and white, no amount of “re-pleading” can make it disappear. For consumer advocates, the takeaway isn’t that FCRA claims are frivolous — many are not — but that these cases live or die on the paper trail. Where creditors fabricate applications, misuse credit pulls, or go fishing without a legitimate purpose, liability remains very real. But when the consumer clicks “I agree,” courts will hold them to it. To read a copy of the transcript, please see: Blog comments Attachment Document moseley_v._latino_community_credit_union_1.pdf (329.39 KB) Category Western District

Justice Delayed For Mass Tort Survivors (Boy Scouts)

By: Donald L Swanson Mass torts and resulting litigation are a reality of life in these United States. But one of the truly shocking things about mass tort litigation, in recent times, is this: A current example of such delays is the Boy Scouts confirmed bankruptcy plan.  Chronology Here is a short Chronology of the Boy... Continue Reading →

M.D.N.C.- Custer v. Dovenmuehle Mortgage II: Class Certification Granted in “Pay-to-Pay” Mortgage Fee Case

M.D.N.C.- Custer v. Dovenmuehle Mortgage II: Class Certification Granted in “Pay-to-Pay” Mortgage Fee Case Ed Boltz Wed, 01/07/2026 - 16:32 Summary: In yet another chapter of what is becoming a running series on pay-to-pay mortgage fees, Chief Judge Catherine Eagles has issued a significant opinion certifying a statewide class of North Carolina homeowners against Dovenmuehle Mortgage, Inc. (DMI). The ruling allows claims under both the North Carolina Debt Collection Act (NCDCA) and the Unfair and Deceptive Trade Practices Act (UDTPA) to proceed on a class-wide basis. This case ties directly back to earlier discussions here: Custer v. Dovenmuehle Mortgage (2024) — holding that the NCDCA does not require default before protections apply https://ncbankruptcyexpert.com/2024/11/06/mdnc-custer-v-dovenmuehle-mor… Custer v. Simmons Bank (2025) — where claims survived despite “bad threats” arguments and highlighted that loss-mitigation fees can still be actionable https://ncbankruptcyexpert.com/2025/11/21/mdnc-custer-v-simmons-bank-dm… Williams v. PennyMac (2025) — another strike against “pay-to-pay” fees as lenders tried to argue creative contractual interpretations https://ncbankruptcyexpert.com/2025/12/23/mdnc-williams-v-penny-mac-dim… Collectively, these cases are forming a fairly coherent message: Mortgage servicers should not treat borrowers as captive revenue streams for junk fees. What DMI Was Doing DMI charged borrowers: $9.50 to pay by automated phone system $11.50 to pay a live representative Meanwhile, the actual cost of processing these payments was measured in pennies — often less than 50 cents per transaction. And — critically — the mortgage documents did not authorize these charges. Worse, DMI appeared to treat the fees not as cost-recovery, but as a profit center. Judge Eagles noted that the Uniform Mortgage documents routinely used in North Carolina expressly prohibit charging fees that are not permitted by law or contract — which is going to be a recurring issue for servicers who have reflexively adopted the “everybody charges these” mindset. The Class That Was Certified: The Court certified a statewide class consisting of: All North Carolina borrowers whose mortgages were serviced by DMI and who paid a pay-to-pay phone fee between April 10, 2020 and the date notice is issued. The Court found that: The legal theories are the same for everyone. DMI used standardized practices. Damages are manageable. Individual borrowers are unlikely to litigate $10–$15 fees on their own. In other words — exactly the type of case Rule 23 exists for. Key Legal Takeaways 1. NCDCA + UDTPA remain powerful consumer tools The Court recognized that charging unlawful fees may constitute: unconscionable debt collection (NCDCA), and an unfair or deceptive trade practice (UDTPA). And importantly — statutory damages may apply, which shifts leverage away from servicers and toward consumers. 2. “Consent” arguments didn’t carry the day DMI floated arguments that borrowers “agreed” to the fees simply because the automated phone system disclosed them. But Judge Eagles noted: It isn’t clear DMI is even covered by the “any fee the borrower agrees to pay” statute. The core question — whether DMI could legally charge the fee at all — is still common across all class members. The Court also gently reminded DMI that it previously resisted producing loan documents — making it difficult to now claim that individual contracts somehow change everything. 3. Courts increasingly reject “junk fee” rationalizations Echoing the trajectory in Williams and the earlier Custer decisions, the Court showed skepticism toward the idea that “everyone does this” equals legality. Mortgage servicers cannot tack on charges simply because: payment convenience is nice, servicing platforms allow it, or they think borrowers won’t fight back. Commentary: Where This Is Headed We are seeing a pattern emerge — across federal courts and in North Carolina specifically. Judges are increasingly unwilling to let mortgage servicers: hide behind technicalities, charge fees untethered from cost, or impose “convenience” tolls that borrowers never bargained for. This opinion matters especially in bankruptcy and consumer practice because: Many Chapter 13 clients were hit with these fees repeatedly. Those charges often compounded delinquency problems. Trustees, courts, and debtors’ counsel can now more confidently challenge them. And yes — servicers will almost certainly continue to argue: “But borrowers could have mailed a check instead!” That’s not likely to carry much weight when the real story is: “We charged people extra to pay us — and then profited on the difference.” Final Thought: Between the earlier Custer rulings, Simmons Bank, Williams, and now this class certification order, mortgage servicers should be getting the message. North Carolina law does not permit turning payment mechanics into a side-business. And for once, the small $10 fees that nobody used to fight about may wind up costing a servicer far more than it ever collected. To read a copy of the transcript, please see: Blog comments Attachment Document custer_v._doevenmuhle.pdf (305.57 KB) Category Middle District

Crowell’s Paul Pollock Quoted in Pensions & Investments Article on Private Equity

Paul Pollock was recently quoted in a Pensions & Investments article that covers the outlook for private equity firms in 2026 across deals, exits, and fundraising. The article reads: Even as deal activity improved in 2025, with nearly $900 billion in deal activity through the third quarter, the private equity ecosystem is largely still unsatisfied,... Continue Reading

Law Review: Iuliano, Jason Bridging the Student Loan Bankruptcy Gap

Law Review: Iuliano, Jason Bridging the Student Loan Bankruptcy Gap Ed Boltz Tue, 01/06/2026 - 15:24 Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5944454 Abstract: In November 2022, the Department of Justice and Department of Education announced sweeping reforms designed to make student loan bankruptcy discharge more accessible to struggling borrowers. Drawing upon an original (hand collected) dataset of more than six hundred adversary proceedings filed during the first year of implementation, this article presents the first empirical analysis of whether these reforms have achieved their goal and bridged the “Student Loan Bankruptcy Gap”—the chasm between those who could benefit from bankruptcy discharge and those who actually pursue it. The results are mixed but suggest the gap, although narrowed, remains wide. On the positive side, success rates have reached 87% in the post-reform period. But on the negative side, filings remain remarkably low. This article evaluates the reforms along four key metrics of success and proposes solutions to make bankruptcy relief more accessible to struggling borrowers. Bridging the Student Loan Bankruptcy Gap: Progress — But Still Miles To Go: Professor Jason Iuliano’s newest article, Bridging the Student Loan Bankruptcy Gap, offers something that has been sorely missing in the conversation about student-loan discharges: data rather than rumor, analysis instead of folklore, and a grounded assessment of whether the Department of Justice’s November 2022 attestation process actually changed anything. And yes — it has. Borrowers who file adversary proceedings are winning. But the real problem remains: almost no one files. It Isn’t Really the Law That’s the Problem — It’s Behavior Across multiple articles — including: Student Loans, Bankruptcy, and the Meaning of “Educational Benefit” (which helped catalyze the Crocker, McDaniel, and Homaidan line of cases clarifying that not every supposed “student loan” is actually protected by §523(a)(8)), and The Student Loan Bankruptcy Gap: Where Prof. Iuliano documented how prior to the SLAP Guidance, out of the ~250,000 student loan debtors who filed for bankruptcy, fewer than three hundred discharged their educational debt. Iuliano has shown that the dominant myth — student loans cannot be discharged — has done more damage than §523(a)(8) itself ever could. Lawyers stopped filing. Clients never heard about the possibility. Courts stopped seeing the cases — and the myth hardened. The DOJ’s 2022 guidance tries to correct course by: Defining clearer presumptions under Brunner Simplifying evidence through attestation Encouraging stipulations instead of trial by attrition The result? Roughly 87% success among those who actually file. And yet filings remain anemic — proof that culture changes slower than doctrine. Judges: Some Obstacles — But Many Quiet Allies It must be acknowledged — there are still a few rogue judges who seem determined to block agreed student-loan discharges, even where the DOJ stipulates that undue hardship exists. These judges, driven by an ill-conceived sense that they personally safeguard federal fiscal responsibility (which, if our system was working, would be the job of Congress), insist on second-guessing both the borrower and the government. The result is needless litigation, higher costs, and exactly the kind of access-to-justice barrier both the Biden and Trump administrations have sought to avoid. But those judges are the exception — not the rule. Across the country, many bankruptcy judges are doing the opposite: encouraging Student Loan Adversary Proceedings (SLAPs) adopting student-loan management programs creating standardized discovery schedules pushing user-friendly procedures rather than obstacle courses Instead of weaponizing Brunner, they are demystifying it — and signaling clearly that debtors should bring these cases. That matters. Culture follows procedure. More Can Be Done— Especially on Fees If we truly want SLAPs to become routine tools rather than heroic undertakings, we need to make them economically feasible. Right now, many debtors simply cannot afford counsel — and many attorneys understandably hesitate to shoulder unpaid litigation risk. One simple fix: Allow “no-look” fees in Chapter 13 for student-loan adversaries, payable through the plan. Treat SLAPs as a recognized service — not a boutique add-on. If attorneys could rely on standardized compensation, more cases would be filed. More courts would see the right facts. More borrowers would receive discharges. And the Student Loan Bankruptcy Gap would actually begin to close. This is the kind of structural tweak that aligns incentives instead of relying on heroics. Connecting Back to “Full Discharge Ahead” This all echoes themes discussed earlier in the review of: Pang & Belisa / Jimenez-Dalie & Bruckner — Full Discharge Ahead The winds are shifting: DOJ is more reasonable courts are less hostile scholarship supports workable frameworks judges increasingly support bringing the cases The barrier now is no longer doctrinal despair — it is professional inertia. Final Thought: Ask — Because Now You Might Receive Iuliano’s newest article reinforces something bankruptcy practitioners cannot afford to ignore: The discharge is no longer fantasy. The gap persists only because most people never try. Our task — as lawyers, judges, trustees, and educators — is to make sure that borrowers learn that relief exists, that the courthouse door is not welded shut, and that the promise of a fresh start applies to student loans as much as to everything else. And while some still cling to the myth that protecting the Treasury means punishing borrowers forever, the better view — the bankruptcy view — remains: Fresh starts make better citizens, better economies, and better futures. With proper attribution, please share. To read a copy of the transcript, please see: Blog comments Attachment Document bridging_the_student_loan_bankruptcy_gap.pdf (483.74 KB) Category Law Reviews & Studies

The Problem Of Ancillary ABC Proceedings For Multi-State Assets: A Uniform ABC Act Solution

By:  Donald L. Swanson The Uniform Law Commission (“ULC”) is the same organization that brought us the Uniform Commercial Code, the Uniform Trust Code, and other “Uniform” state laws. The ULC is now offering a Uniform Assignment for Benefit of Creditors Act (the “Uniform ABC Act”). The new Uniform ABC Act codifies the common law... Continue Reading →

N.C. Ct. of App.: The Law Office of Robert Forquer v. Arcuri- Co-Signer on Deed Not Liable for Mortgage Payoff

N.C. Ct. of App.: The Law Office of Robert Forquer v. Arcuri- Co-Signer on Deed Not Liable for Mortgage Payoff Ed Boltz Mon, 01/05/2026 - 16:19 Summary: This case began as an interpleader filed by a closing attorney caught in the middle of a family property dispute — wisely deciding not to referee a fight over sale proceeds while trying to deliver clear title. Susan Arcuri and her late partner, John Renegar, owned a house in Charlotte as tenants-in-common. In 2021, Arcuri alone signed a $245,000 promissory note, but both she and Renegar signed the Deed of Trust, which described both as “Borrowers” — while also expressly stating that any co-signer not on the Note was not personally liable for the debt. When Renegar passed away, his interest passed to his two adult children. The property was eventually sold, and everyone agreed the lien had to be paid. The disagreement? Who’s share took the mortgage hit. Arcuri argued: Everyone had to give up proceeds proportionally because everyone pledged their interest. The Renegar children argued: Only Arcuri signed the Note — so payment comes from her half. The trial court agreed with the children, and the Court of Appeals affirmed. The majority emphasized a core principle: A deed of trust secures a debt — it does not create a new obligation to pay one. And Section 13 of the Fannie Mae form deed could not be clearer that co-signers like Renegar encumber the property only, without assuming payment responsibility. Therefore, the mortgage payoff was deducted solely from Arcuri’s share of the proceeds . The opinion does correct one misstep below: the deed did encumber the Renegar heirs’ interest — but encumbrance is different from personal liability. That distinction mattered, but not enough to change the outcome. Chief Judge Dillon concurred, offering a richer surety analysis. He explained that someone who mortgages property for another’s debt is often treated like a surety — responsible only to the extent of the pledged property. In his view, there is a rebuttable presumption that Renegar was acting as surety, and Arcuri failed to offer competent evidence that the loan was actually for joint benefit. Since she didn’t rebut the presumption, the payoff properly came from her side. Commentary: What makes this opinion interesting — and highly relevant to bankruptcy lawyers — is how clearly it separates: Who owes the debt What property is pledged Who ultimately bears the economic burden when property is sold Creditors — and sometimes debtors — tend to conflate these. The Court’s reasoning reinforces what we too often see in practice: Signing the deed of trust is not the same as signing the note. This is particularly common with non-borrowing spouses, partners, elderly parents helping their children qualify, and anyone else who winds up “on title” but not “on the loan.” The Court wisely refused to treat the sale payoff as some kind of equitable contribution obligation. There was no separate agreement shifting responsibility. No implied assumption. No magic language in the deed that turned a non-obligor into a debtor. And had this landed in bankruptcy? A Chapter 7 or Chapter 13 trustee might have argued “benefit to the estate,” “marshalling,” or equitable contribution — but those are uphill climbs without evidence. The opinion makes clear: The encumbrance survives. The obligation does not expand. Proceeds follow liability unless facts show otherwise. Chief Judge Dillon’s concurrence is also worth flagging for practitioners. His surety analysis opens the door — in other cases — for evidence showing: both parties benefited from the loan, the loan refinanced joint debt, improvements increased shared value, or the parties intended shared obligation. Had Arcuri produced competent evidence (not an unverified pleading), the outcome may have been different. That’s a practice pointer worth remembering. Takeaways for consumer bankruptcy and real-property lawyers ✔ Always review both the Note and Deed of Trust — they are related, but not identical. ✔ Co-signing a deed does not create personal liability without signing the note. ✔ Encumbrance ≠ obligation. ✔ Evidence matters — especially when seeking contribution. ✔ In bankruptcy cases, don’t assume joint ownership means joint liability. And finally — the closing attorney did exactly what closing attorneys should do in these situations: interplead and walk away slowly. With proper attribution, please share. To read a copy of the transcript, please see: Blog comments Attachment Document the_law_off._of_robert_forquer_v._arcuri.pdf (174.32 KB) Category NC Court of Appeals

Contributors Speak Up: 2025 Potpourri

2025 (including the last day of 2024!) featured a flurry of seemingly seminal court decisions—from Serta and Mitel to ConvergeOne, Incora I, and its sequel, Incora II.  We also saw the continued evolution of Liability Management Exercises during…

Weekly News – January 2

2025 Year-End Potpourri…. Saks hits the skids, coop antitrust litigation, Porta-Potty takes a dump, PosiGen one to watch, and so much more… Creditor Corner Your weekly curated content from the…

Bankr. W.D.N.C.: In re Granite City Mechanical- ERTC Refunds Don’t Survive Contact with SBA EIDL Debt

Bankr. W.D.N.C.: In re Granite City Mechanical- ERTC Refunds Don’t Survive Contact with SBA EIDL Debt Ed Boltz Fri, 01/02/2026 - 17:39 Summary: In In re Granite City Mechanical, Inc., the Bankruptcy Court for the Western District of North Carolina (Judge Laura T. Beyer) held that the United States may offset unpaid Employee Retention Tax Credits (ERTCs) against a debtor’s outstanding COVID-19 EIDL loan owed to the SBA. The debtor sought turnover of approximately $91,926.51 in pending ERTC refunds, arguing that the CARES Act insulated those credits from offset and that SBA lacked mutuality or had waived its rights. The Court rejected those arguments, denied the turnover motion, and granted relief from the automatic stay to allow the offset. Key holdings: ERTCs are “overpayments” under 26 U.S.C. § 3134(b)(3) and are therefore subject to offset under 26 U.S.C. § 6402(d). Mutuality exists because the United States is treated as a single creditor for setoff purposes, even when different federal agencies are involved. The SBA’s claim was prepetition, and default existed under the modified EIDL note. There was no waiver of offset rights. Any ERTC checks already issued but not cashed must be returned to the IRS. The Court aligned itself with other bankruptcy courts nationally that have allowed ERTC offsets against SBA EIDL debt. Commentary: This is one of those decisions where the result may be disappointing to debtors, but the legal analysis is hard to argue with—and harder to ignore going forward. For the last few years, ERTCs have felt like "found money": a retroactive lifeline for businesses battered by COVID, often arriving years after the worst had passed. But this opinion is a reminder that the federal government never forgets which pocket the money comes from. Judge Beyer’s opinion is methodical and unsentimental. Once ERTCs are defined—by Congress itself—as tax “overpayments,” the rest of the analysis almost writes itself. Section 6402(d) doesn’t say some overpayments may be offset. It says any overpayment shall be reduced by debts owed to other federal agencies. That statutory language is not subtle, and the Court rightly refused to engage in linguistic gymnastics to pretend otherwise. Two practical takeaways stand out. First, for debtors with SBA EIDL loans, ERTCs are not safe harbor funds. If your client owes SBA money—and most do—those credits are functionally earmarked for repayment whether you like it or not. From a planning standpoint, that means ERTCs should be treated less like incoming cash and more like a contingent government recapture. Second, the mutuality argument was always a long shot. Courts have consistently treated the United States as one creditor for setoff purposes, and this case follows that well-worn path. If anything, Granite City confirms that trying to slice the federal government into agency-specific silos is an argument better suited for a law review article than a bankruptcy courtroom. What’s perhaps most important is what this case signals for Chapter 11 and Subchapter V debtors going forward. If ERTCs are part of the reorganization calculus, practitioners must assume that SBA will assert offset rights early and aggressively—and that courts will likely permit it. In short: ERTCs may help businesses survive COVID—but they won’t help them outrun the SBA. And as this decision makes clear, when Congress writes “shall,” bankruptcy courts in North Carolina are inclined to read it exactly that way. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_granite_city_mechanical.pdf (381.67 KB) Category Western District