ABI Blog Exchange

FinTalk: Our New Blog is Launching Monday, November 3rd

As of Monday, November 3rd, Crypto Digest and Restructuring Matters will be consolidated into a new Financial Services Group blog called FinTalk. The new blog will feature the full range of Crowell’s financial services thought leadership, events, and other developments. By default, any subscribers to these blogs will be opted-in as a subscriber for the... Continue Reading

Weekly News – October 24

Sign up for upcoming CreditSights/CRC LME Seminar, Advisor rankings out, First Brands exposures growing, Saks sliding into BK? and so much more…  Creditor Corner Your weekly curated content from the…

Bankr. E.D.N.C.: Travis v. Adair Realty – Standing Restored After Dismissal; Foreclosure “Rescue” Claims Proceed Despite Omissions in Chapter 13 Petition

Bankr. E.D.N.C.: Travis v. Adair Realty – Standing Restored After Dismissal; Foreclosure “Rescue” Claims Proceed Despite Omissions in Chapter 13 Petition Ed Boltz Fri, 10/24/2025 - 15:34 Summary: In Travis v. Adair Realty Group, LLC, Adv. Pro. No. 25-00040-5-PWM (Bankr. E.D.N.C. Oct. 8, 2025), Judge Pamela McAfee denied motions to dismiss filed by both the Chapter 7 trustee for Adair Realty Group (“ARG”) and its principal, Robin Shea Adair. The opinion clarifies two key issues for consumer bankruptcy practitioners: (1) when a debtor retains standing to pursue undisclosed claims after a dismissed Chapter 13 case, and (2) how North Carolina’s “foreclosure rescue” statutes can impose personal liability on individuals behind such schemes. Background: Melissa Travis—formerly known as Melissa Leigh Marek—purchased her Holly Springs home in 2015. After defaulting on her mortgage, she contacted Robin Adair, who promoted himself online as a professional who could “help homeowners avoid foreclosure.” In December 2022, Adair met Travis at a UPS Store, where she signed a quitclaim deed conveying a 50% interest in her home to Adair’s company, Adair Realty Group, LLC, in exchange for promises to reinstate her mortgage ($29,344.62), invest $10,000 in repairs, and split sale proceeds once the home was sold. Adair never made the promised reinstatement payment and allowed the foreclosure to proceed in January 2023. On January 12, 2023, Travis filed a Chapter 13 case (No. 23-00091-5-PWM) to halt the foreclosure. That case was dismissed without discharge on March 11, 2024. Critically, her bankruptcy petition failed to disclose both the December 2022 property transfer and any potential claim against Adair or ARG—neither appearing on Schedule A/B nor in her Statement of Financial Affairs. Despite the bankruptcy filing, Adair recorded the deed post-petition. When the property was later sold for $400,050, the surplus proceeds of $155,429.58 were split, with ARG receiving half. Travis then sued Adair and ARG in Wake County Superior Court under N.C. Gen. Stat. §§ 75-1.1 and 75-121 (the “foreclosure rescue” statutes), seeking to void the deed and recover damages. ARG’s subsequent Chapter 7 filing brought the case into bankruptcy court. Chapter 7 Trustee’s Motion – Standing After Dismissed Chapter 13: The Chapter 7 trustee for ARG argued that Travis lacked standing because her claims were property of her prior Chapter 13 estate and had never been disclosed or abandoned. Judge McAfee rejected that argument, adopting the Second Circuit’s reasoning in Crawford v. Franklin Credit Mgmt. Corp., 758 F.3d 473 (2d Cir. 2014). Under 11 U.S.C. § 349(b), dismissal “revests the property of the estate in the entity in which such property was vested immediately before the commencement of the case,” including unscheduled assets. Unlike a closed Chapter 7 case, dismissal of a Chapter 13 terminates the estate entirely, restoring the parties to their pre-petition positions and leaving no property in custodia legis. Thus, even though Travis failed to disclose these claims, her right to pursue them reverted to her upon dismissal. Adair’s Motion – Jurisdiction and Personal Liability: Adair argued that the bankruptcy court lacked jurisdiction over claims against him personally and that any recovery would require piercing ARG’s corporate veil. The Court found “related-to” jurisdiction under In re Celotex Corp., 124 F.3d 619 (4th Cir. 1997), because any judgment against Adair would reduce Travis’s claim against the debtor estate. The Court further held that Travis alleged Adair’s direct participation in a “foreclosure rescue transaction,” which under N.C. Gen. Stat. § 75-121(a) makes “any person or entity” personally liable for engaging in or promoting such conduct. No veil-piercing was required. Claims Surviving Dismissal of Chapter 13: Unfair & Deceptive Trade Practices (N.C. Gen. Stat. §§ 75-1.1 and 75-121): Survives. The statute expressly prohibits foreclosure-rescue conduct, whether or not the transaction was “isolated.” Fraud: Survives. The amended complaint met Rule 9(b)’s particularity standard, detailing the misrepresentations, timing, and resulting injury. Unjust Enrichment: Dismissed with leave to amend, as the benefit was alleged to have gone to ARG, not Adair personally. Commentary: Judge McAfee’s decision is significant for consumer practitioners. It reinforces that dismissal of a Chapter 13 case generally fully restores ownership of undisclosed claims to the debtor, preventing trustees from later asserting control. And it underscores that foreclosure-rescue statutes have real teeth, exposing individuals—not just their LLCs—to personal liability. Professional Responsibility Note – Counsel’s Role in the Omission: While the Court’s opinion did not directly address the performance of Travis’s prior bankruptcy counsel, the undisputed record raises a natural question: Should her former attorney have identified and disclosed these potential claims or the prepetition deed transfer? The December 2022 transfer of a partial ownership interest, coupled with alleged misrepresentations by Adair, occurred weeks before the January 2023 bankruptcy filing. Under Rule 1007(b)(1) and Schedule A/B, such a transfer and any related contingent claims were required to be disclosed. Even if Travis did not fully appreciate the legal significance of the “foreclosure rescue” transaction, counsel arguably had a duty of reasonable inquiry under Fed. R. Bankr. P. 9011(b) to investigate any prepetition transfers or disputes. That said, Judge McAfee’s application of Crawford spared both the debtor and her counsel the harsher consequence of a standing dismissal or judicial-estoppel bar—holding that dismissal of the Chapter 13 case “rewinds the clock.” Still, Travis serves as a quiet reminder that thorough intake and disclosure are the best defenses: even “rescues” gone wrong should be treated as potential litigation assets and properly listed. For debtor’s counsel, however, the case carries a cautionary undertone: the best outcome is still to disclose everything. Had Travis’s prior case resulted in discharge rather than dismissal, the omission could have proven fatal. To read a copy of the transcript, please see: Blog comments Attachment Document travis_v._adair_realty.pdf (186.11 KB) Category Eastern District

How to Answer a Foreclosure Notice in New Jersey

If you are behind on mortgage payments and foreclosure proceedings have started, you may be at risk of losing your house surprisingly fast. How you respond and what you do […]

Bankr. W.D.N.C.: In re Joiner – §1111(b) Election Survives Subchapter V Lien Modification Rights

Bankr. W.D.N.C.: In re Joiner – §1111(b) Election Survives Subchapter V Lien Modification Rights Ed Boltz Thu, 10/23/2025 - 17:56 Summary: In In re Joiner, Case No. 25-30396 (Bankr. W.D.N.C. Oct. 2 2025) (Judge Ashley Austin Edwards), the court addressed the intersection between Subchapter V’s debtor-friendly lien modification authority under § 1190(3) and a creditor’s long-standing right under § 1111(b)(2) to elect to have an undersecured claim treated as fully secured. Facts: Joseph and Krista Joiner filed under Subchapter V, personally guaranteeing a $1 million SBA-backed business loan from Pinnacle Bank that was also secured by their Charlotte residence. Pinnacle filed a proof of claim for roughly $1.2 million, asserting a secured portion of $463,768 based on an $805,000 appraisal, after accounting for a senior Truist lien of $341,000. When Pinnacle elected under § 1111(b)(2) to treat its entire claim as secured, the Joiners objected, arguing that § 1190(3) — which allows an individual Subchapter V debtor to modify a lien on a principal residence if the loan proceeds were primarily used for the small business — took precedence and rendered § 1111(b) inapplicable. Pinnacle countered that § 1111(b) applies in all Chapter 11 cases, that § 1181(a) lists the provisions inapplicable to Subchapter V and does not exclude § 1111, and that Congress intended both sections to coexist. Holding: Judge Edwards overruled the debtors’ objection, holding that § 1190(3) does not override a creditor’s right to make a § 1111(b) election. Citing Collier on Bankruptcy and In re VP Williams Trans, LLC, 2020 WL 5806507 (Bankr. S.D.N.Y. Sept. 29 2020), the court emphasized that § 1181(a)’s silence regarding § 1111 indicates Congress meant for the election to remain available in Subchapter V cases. The court also noted that Pinnacle’s loan might not even qualify under § 1190(3), as it appeared secured by more than just the residence. Commentary: This decision marks the first published Western District of North Carolina ruling squarely addressing whether an individual Subchapter V debtor’s new lien-modification power can negate an undersecured creditor’s § 1111(b) rights — and answers “no.” The reasoning mirrors traditional Chapter 11 practice: § 1111(b) protects secured creditors from undervaluation risk by allowing them to receive payments equal to their total claim, while § 1190(3) merely expands which claims a Subchapter V debtor may modify. Judge Edwards viewed the two provisions as co-existing, not conflicting — much as §§ 1123(b)(5) and 1111(b) have co-existed since 1978. Practice Pointer: For Subchapter V debtor’s counsel, this means that even when § 1190(3) allows modification of a lien on a principal residence, an undersecured creditor can still invoke § 1111(b) and require the plan to treat its full claim as secured. That can substantially increase plan payment obligations and alter feasibility calculations. Before proposing a § 1190(3) modification, counsel should: Confirm collateral scope. If the loan is secured by more than the residence, § 1190(3) may not apply at all. Anticipate § 1111(b) elections. Run feasibility models assuming full-claim treatment. Negotiate or value early. Early stipulations or agreed valuations can mitigate post-election surprises. For creditors, Joiner reaffirms that the § 1111(b) election remains a powerful tool—even in the more debtor-friendly confines of Subchapter V. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_joiner.pdf (253.34 KB) Category Western District

W.D.N.C.: Shaf International v. Mohammed – Only the Receiver Can Ride This Motorcycle

W.D.N.C.: Shaf International v. Mohammed – Only the Receiver Can Ride This Motorcycle Ed Boltz Wed, 10/22/2025 - 16:33 Summary: In Shaf International, Inc. v. Mohammed (W.D.N.C. Sept. 22, 2025), Judge Reidinger affirmed the Bankruptcy Court’s grant of summary judgment to the debtor, holding that a single creditor lacks standing to assert fiduciary duty claims against the officer of an insolvent corporation where the injury alleged is common to all creditors. Background: Shaf International sold motorcycle gear to Jafrum International, a company owned and operated by debtor Jaffer Sait Mohammed, who personally guaranteed the corporate debt. When Jafrum collapsed, it sold its inventory to an affiliate of Vance Leathers, a Florida company, for $436,000—satisfying Vance’s $311,000 debt and leaving other creditors, including Shaf, unpaid. Shaf later obtained a $661,239 judgment in New Jersey and then sued Mohammed in an adversary proceeding, alleging “constructive fraud while acting in a fiduciary capacity” and “willful and malicious injury,” asserting that he diverted assets and favored one creditor over others. The Court’s Holding: The District Court agreed with both the Bankruptcy Court and long-settled North Carolina law that fiduciary duties of corporate officers run to the corporation itself, not to individual creditors—unless the injury is “peculiar or personal” to that creditor. Where multiple creditors share the same injury—here, the debtor’s alleged preference for one creditor over the rest—only a receiver, trustee, or derivative action on behalf of all creditors has standing. Shaf’s arguments that its judgment and large claim size made it unique fell flat: the court noted that a judgment creditor is still an unsecured creditor of the same class as others, and “being the largest” does not confer exclusivity. Similarly, Shaf’s claim that the debtor’s post-sale employment with his wife’s company (which later did business with the buyer) was a form of self-dealing failed both factually and legally, as any resulting injury again would have been suffered equally by all creditors. Practice Pointer: This case reaffirms that individual creditors cannot repackage collective injuries into personal claims simply by invoking fiduciary language or alleging bad faith. Where a debtor-officer allegedly strips or favors assets in the wind-down of an insolvent corporation, only a receiver, trustee, or derivative plaintiff acting for all creditors may bring a fiduciary breach or constructive fraud action. For creditor’s counsel, this underscores two key points: Preserve corporate claims early—consider seeking appointment of a receiver or filing an involuntary bankruptcy before assets vanish. Don’t mistake nondischargeability for standing—even if a debt might fit §523(a)(4) or (a)(6), the underlying claim must still be one the creditor can legally bring. And for debtors’ counsel: when closing a business, ensure any payments to insiders or favored creditors are scrupulously documented and defensible—because while individual creditors can’t sue, the trustee (or a vigilant receiver) certainly can. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document shaf_international_v._mohammed.pdf (242.34 KB) Category Western District

E.D.N.C.: Saffold v. First Citizens Bank – Failure to Accurately Report Balance following Settlement can constitute Breach of Settlement, but Compliance with Notice Procedures Required

E.D.N.C.: Saffold v. First Citizens Bank – Failure to Accurately Report Balance following Settlement can constitute Breach of Settlement, but Compliance with Notice Procedures Required Ed Boltz Tue, 10/21/2025 - 17:52 Summary: In Saffold v. First Citizens Bank (No. 5:24-CV-487-M-RJ, E.D.N.C. Sept. 30, 2025), Chief Judge Myers denied—albeit without prejudice—the bank’s motion to dismiss a Fair Credit Reporting Act (FCRA) claim brought by consumer Amanda Saffold. The dispute arose from a 2020 settlement between Saffold and First Citizens resolving prior collection activity that she alleged violated consumer protection laws. The settlement included mutual releases, a representation by the bank that it would discharge the debt and cease collection, and a clause requiring either party to give 14 days’ written notice before alleging breach. Saffold later discovered that TransUnion continued to report her account as delinquent and disputed the entry, asserting that First Citizens failed to correct its reporting in violation of the FCRA. The bank sought dismissal, arguing the settlement’s release barred the claim and that it had no continuing duty to ensure credit reporting accuracy. The court rejected both substantive defenses. Applying North Carolina contract law, Judge Myers found that Saffold’s promise not to sue was dependent on the bank’s promise to “fully release and forever discharge” her debt. If the bank continued to report a balance, that would breach the agreement and relieve Saffold of her obligation not to pursue further claims. The Court also held that the settlement did more than simply end collection—it extinguished the debt itself, and therefore, continuing to report it as due could violate both the contract and the FCRA. However, Saffold failed to allege that she complied with the agreement’s notice provision. Her dispute through TransUnion did not constitute notice under the contract, which required direct written notice to the bank’s counsel. Because she had not alleged that she sent such notice, her complaint was procedurally deficient. Nonetheless, the court denied the motion to dismiss without prejudice and granted her leave to amend by October 14, 2025, to allege proper notice. Commentary: The Saffold decision is a helpful illustration of how consumer credit reporting disputes often live at the intersection of federal statutory rights and private settlement contracts. Even when a creditor agrees to “discharge” a debt, its obligations may continue through the accuracy duties imposed by the FCRA. Yet, as this case shows, procedural precision still matters—particularly when settlements include notice-and-cure provisions. For consumer and debtor counsel, one practical takeaway is to ensure that settlement agreements explicitly address post-settlement credit reporting duties. Rather than relying on general release language or “cessation of collection” clauses, consider including a clause such as: Credit Reporting Accuracy Provision: Creditor agrees to report to all consumer reporting agencies to which it furnishes information an update to their records to reflect that the Account has been satisfied, settled in full, or otherwise carries a $0 balance with no past-due status. Creditor shall not report or cause to be reported any derogatory information regarding the Account after the Effective Date of this Agreement. Such a provision transforms the creditor’s obligations from implicit to enforceable, reducing ambiguity about whether continued derogatory reporting constitutes a breach. In sum, Saffold reminds practitioners that settlements resolve disputes only when they are drafted—and followed—with the same care as any other legally binding agreement. A promise to “forever discharge” the debt should also mean a promise to stop saying otherwise to the credit bureaus. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document saffold_v._first_citizens_bank.pdf (180.19 KB) Category Eastern District

The New Uniform Assignment For Benefit Of Creditors Act Needs To Be Enacted By State Legislatures

By: Donald L. Swanson On July 23, 2025, the Uniform Law Commission approved and adopted the Uniform Assignment for Benefit of Creditors Act (the “Uniform Act”) for submission to state legislatures. What follows are brief thoughts on why the Uniform Act needs to be enacted by legislatures throughout these United States as soon as possible. A... Continue Reading →

M.D.N.C.: Joyce v. First American Mortgage Solutions – Stream of Consciousness Meets the FCRA and Mortgage Reports

M.D.N.C.: Joyce v. First American Mortgage Solutions – Stream of Consciousness Meets the FCRA and Mortgage Reports Ed Boltz Mon, 10/20/2025 - 18:37 Summary: Judge Schroeder’s September 30, 2025 portrait of the property report as a CRA in Joyce v. First American Mortgage Solutions, LLC (No. 1:23-cv-1069) denied the defendant’s motion for judgment on the pleadings, allowing a Fair Credit Reporting Act (“FCRA”) claim to proceed where a “Property Report” combined another consumer’s judgments with the plaintiff’s file and was then used by a lender to deny him a loan. And "yes i said yes I will yes"—perhap because the plaintiff’s name really is James Joyce— while the complaint and claims read a bit like Ulysses: full of detail, meandering through definitions and disclaimers, they were ultimately coherent enough to survive dismissal. Background: Joyce applied for a debt-consolidation loan with Members Credit Union. At the credit union’s request, First American Mortgage Solutions prepared and sold a “Property Report.” The report—supposedly about the borrower’s property—listed judgments against “James Joyce d/b/a AMPM Appliance” and “James F. Joyce,” neither of whom were the plaintiff. The credit union, seeing those supposed debts, denied the application. Joyce sued under 15 U.S.C. §1681e(b), alleging that First American failed to follow “reasonable procedures to assure maximum possible accuracy.” The Court’s Ruling: First American argued that the report wasn’t a “consumer report” because it was about property, not personal creditworthiness, and that its End User License Agreement (EULA) expressly disclaimed any FCRA use. Judge Schroeder wasn’t persuaded. Taking the allegations as true, the court found the complaint plausibly alleged that: The report contained personal information (judgments and liens attributed to “James Joyce”); It was prepared for a lender in direct response to a credit application; and The lender actually used it in deciding to deny credit. The court refused to consider First American’s attached EULA and “title abstract,” holding they were neither integral to nor authenticated within the pleadings. Even if they had been, disclaimers cannot defeat plausible allegations of intent. As Judge Schroeder noted, citing Kidd v. Thomson Reuters Corp., “an entity may not escape regulation as a ‘consumer reporting agency’ by merely disclaiming an intent to furnish ‘consumer reports.’” Commentary: Judge Schroeder stopped short of declaring all property reports “consumer reports,” but left open that possibility depending on how they are used. That uncertainty should prompt both lenders and vendors to revisit their compliance policies. And if the irony of a plaintiff named James Joyce alleging that his credit file was “mixed” isn’t poetic enough—consider this case a reminder that the FCRA, like modernist literature, demands attention to detail. One might even say that this decision brings stream-of-consciousness to the stream of commerce. Practical Implications: Judge Schroeder’s opinion continues the recent Middle District trend (see Keller v. Experian I and II) that focuses on the real-world use of a report, not its label. If a report—whether called a “title search,” “property profile,” or “data supplement”—is used to assess a consumer’s credit eligibility, it may fall under the FCRA. For consumer practitioners, Joyce reminds us that: “Mixed file” errors remain actionable, even when made by secondary data vendors; Mortgage-related data companies can be “consumer reporting agencies” if their reports influence credit decisions; and EULAs and disclaimers can’t contract around statutory duties. For creditors, the takeaway is straightforward: if you use such reports in deciding whether to extend credit, you assume FCRA compliance risk—no matter how the vendor markets it. And while Joyce involved a straightforward consumer loan, its reasoning has implications far beyond. In North Carolina’s Loss Mitigation/Mortgage Modification (LMM) Programs—available in the Eastern, Middle, and Western Bankruptcy Courts—mortgage servicers and their vendors routinely generate “property verification,” “valuation,” or “title update” reports as part of the modification process. If those reports contain personally identifiable credit information (e.g., judgments, liens, prior bankruptcies) and are used to determine a debtor’s eligibility for a modification or short refinance, they could meet the FCRA’s definition of a “consumer report.” The FCRA applies to any “communication of information by a consumer reporting agency bearing on a consumer’s creditworthiness, credit standing, or capacity,” used or expected to be used to determine credit eligibility. 15 U.S.C. §1681a(d)(1). A mortgage modification is an extension of credit. Thus: Servicers that request or rely on such reports in deciding whether to offer modification terms are “using” consumer reports; Vendors that compile and sell those reports to servicers could qualify as “consumer reporting agencies”; and Debtors denied modifications due to inaccurate entries (e.g., misattributed judgments, erroneous liens, or mistaken prior foreclosures) might assert FCRA claims akin to Joyce. Even within bankruptcy, where the LMM process is court-supervised, the fact that servicers use these reports to make credit determinations may implicate the FCRA’s procedural and accuracy requirements—especially when those same reports later form the basis for Rule 3002.1 payment changes, escrow recalculations, or denials of post-petition loss mitigation. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document joyce_v._first_american_mortgage.pdf (168.17 KB) Category Middle District

Weekly News – October 17

Market stress rearing its ugly head, First Brands and auto stress hit BDCs/ Banks, 2024 double-dip USS hits the skids, Credit Sights LME Quarterly Review and so much more…  Creditor…

Can Divorce-Related Debts Be Wiped Out in Pennsylvania Bankruptcy?

Divorce and bankruptcy can be unpleasant, but they may be necessary to help you get a fresh start. They also tend to take a large financial toll, and one may […]

M.D.N.C.: Keller v. Experian II – No Standing to Sue, Even for a “Suspicious Mail Policy” Delay

M.D.N.C.: Keller v. Experian II – No Standing to Sue, Even for a “Suspicious Mail Policy” Delay Ed Boltz Fri, 10/17/2025 - 16:38 Summary: In this sequel to Keller v. Experian I, 2024 WL 1349607 (M.D.N.C. Mar. 30, 2024), Judge Thomas Schroeder once again dismissed Eric Keller’s Fair Credit Reporting Act (FCRA) suit against Experian—this time for lack of Article III standing rather than for failure to state a claim. Background Keller’s saga began when a refinancing snafu between Truist and TD Auto Finance led to erroneous late payment reporting on his car loan. After Experian flagged Keller’s initial dispute letter as “suspicious mail,” it delayed forwarding the dispute to Truist. Once Experian eventually did so, Truist confirmed—incorrectly—that the loan was delinquent. In Keller I, Judge Loretta Biggs held that this was a legal dispute, not a factual one, and thus outside Experian’s reinvestigation duties under 15 U.S.C. §1681i. She dismissed Keller’s individual FCRA claims, leaving only a putative class action claim challenging Experian’s “suspicious mail policy.” Keller II: The Standing Showdown Experian next argued that Keller lacked Article III standing because his alleged injury—a delay in processing his dispute—was not “fairly traceable” to any inaccuracy in his credit file. Judge Schroeder agreed. While Keller alleged he was denied a mortgage loan due to Experian’s inaction, the court found that the delay itself did not cause that injury. Even if Experian had promptly acted, Truist would have repeated its same erroneous report, and Keller’s credit file would have remained unchanged. The harm flowed from Truist’s records, not from Experian’s temporary hesitation. The court also noted Keller could have directly disputed the information with Truist under 12 C.F.R. §1022.43, further breaking the causal chain. The court thus found no injury “fairly traceable” to Experian—and therefore no standing. Amendment Futility Keller’s proposed Second Amended Complaint alleged multiple duplicative tradelines and data conflicts within Experian’s report. Judge Schroeder was unmoved, finding these allegations simply restated the same underlying dispute with Truist—still a legal disagreement, not a factual inaccuracy a CRA could resolve. The amendment would be futile. Class Action Dismissal Because a named plaintiff without standing cannot represent a class, the entire case was dismissed without prejudice. The court declined to allow substitution of another representative since no class had been certified and no other injured party had been identified. Commentary Keller II closes the loop on a dispute that began with Experian’s overzealous fraud-screening policy. Where Keller I held that Experian wasn’t responsible for resolving legal disputes between borrower and lender, Keller II finds that even if Experian’s internal procedures delayed a reinvestigation, no actionable injury resulted. This decision exemplifies how, post- TransUnion v. Ramirez and Spokeo, courts in the Fourth Circuit continue to demand a concrete and traceable injury—not just a statutory violation or procedural misstep—before FCRA plaintiffs can proceed. For consumer attorneys, Keller II reinforces two key lessons: Causation matters—even procedural delays or CRA negligence require a clear factual link to a real-world credit denial. Parallel disputes with furnishers should be pursued directly and promptly under §1022.43, especially when the CRA’s role is limited. And for CRAs, Keller II provides further validation that their “suspicious mail” safeguards, though frustrating to consumers, are unlikely to result in standing-worthy claims absent concrete harm. See prior coverage: M.D.N.C.: Keller v. Experian I – Reinvestigation Duties Limited to Factual, Not Legal Disputes (July 15, 2024). With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document keller_v._experian_ii.pdf (153.67 KB) Category Middle District

M.D.N.C.: Atkinson v. Coats II – “Breach of the Peace” in Repossession Requires More Than a Deputy’s Quiet Presence

M.D.N.C.: Atkinson v. Coats II – “Breach of the Peace” in Repossession Requires More Than a Deputy’s Quiet Presence Ed Boltz Thu, 10/16/2025 - 17:43 Summary: When a repossession turns into a shouting match—or worse, when the debtor is still inside the car—any lawyer who’s ever seen the phrase “without breach of the peace” in N.C. Gen. Stat. § 25-9-609 should immediately start thinking “state-court claim and delivery,” not “self-help.” In Atkinson v. Coats II, No. 1:22-cv-369 (M.D.N.C. Sept. 23 2025), Judge Osteen followed the Fourth Circuit’s earlier decision in Atkinson v. Godfrey, 100 F.4th 498 (4th Cir. 2024), and dismissed the remaining claims against the Harnett County Sheriff, finding no Monell liability for the deputy’s role in a contentious repossession. The tow operator had called the sheriff’s office for “assistance” after lifting the debtor’s vehicle—with her still inside—off the ground. A deputy arrived, ordered her out, and the repo was completed. The debtor alleged that the sheriff’s office had a policy of aiding creditors in self-help repossessions. No Clear Constitutional Violation, No Policy Liability The Fourth Circuit had already held that the deputy was entitled to qualified immunity because neither North Carolina nor federal precedent clearly established that his conduct—ordering the debtor from the car—was unconstitutional. Judge Osteen reasoned that if the constitutional “terrain was murky,” there could be no notice to the Sheriff sufficient to support municipal liability. The plaintiff’s claims that Harnett County had a “policy” of helping repossessors were conclusory, based only on this single incident and “information and belief.” Without multiple examples or evidence of an official directive, there was no “express policy,” “custom,” or “deliberate indifference” sufficient to meet Monell’s standards. Why This Matters for Consumer Counsel While Atkinson II ultimately shields the sheriff’s office from federal § 1983 liability, it leaves open a key state-law issue: repossession “without breach of the peace.” Under U.C.C. § 9-609 and North Carolina’s enactment, self-help repossession is permissible only so long as it does not breach the peace. That standard is a factual, state-law inquiry—and when an officer’s presence or command compels a debtor’s compliance, the line from “peacekeeping” to “state-sanctioned seizure” may be crossed. Consumer debtor attorneys should therefore remind creditor counsel—particularly those representing buy-here-pay-here dealers and third-party repossessors—that bankruptcy “surrender” does not itself authorize self-help repossession. If the debtor refuses access or remains in possession, the creditor’s lawful course is a claim-and-delivery action under N.C. Gen. Stat. § 1-472 et seq., not a midnight tow backed by a deputy’s badge. Attempting repossession in those circumstances risks both tort and UDTPA exposure, as well as possible contempt in bankruptcy court if the vehicle remains property of the estate. Practice Pointer Advise creditors: even post-bankruptcy, obtain judicial process before repossessing over objection. Advise debtors: document any law-enforcement involvement, as the presence of an officer often transforms a private dispute into state action. Advise law enforcement: “civil standby” should never become “civil participation.” In short, Atkinson v. Coats II narrows federal liability but reminds everyone else—especially those holding tow straps and titles—that repossession power ends where the peace begins. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document atkinson_v._coats_ii.pdf (191.87 KB) Category Middle District

Who Owns “Product Line” Successor Liability Claims: The Debtor Or The Claimants? (In re Whittaker–Part 3)

By: Donald L Swanson The question of who owns “product line” successor liability claims is addressed and resolved in In re Whittaker Clark & Daniels, Inc., Case Nos. 24-2210 & 24-2211 (3rd Cir., decided September 10, 2025).## Facts The Whittaker Debtor processes, manufactures, and distributes industrial chemicals and minerals, including talc. Through a series of corporate... Continue Reading →

N.C. Ct. App.: Pelc v. Pham – Contempt Vacated; Execution, Not Incarceration, Required for Enforcement of Money Judgment

N.C. Ct. App.: Pelc v. Pham – Contempt Vacated; Execution, Not Incarceration, Required for Enforcement of Money Judgment Ed Boltz Wed, 10/15/2025 - 20:17 Summary: In Pelc v. Pham (No. COA25-27, filed Oct. 15, 2025), the North Carolina Court of Appeals (Tyson, J.) vacated a Mecklenburg County contempt order imprisoning a former spouse for failure to pay a contractual debt arising from a Form I-864 “Affidavit of Support” and related loan. The appellate court held that the trial court lacked jurisdiction to use contempt powers to enforce a money judgment grounded in breach of contract. The Court reaffirmed the longstanding principle that monetary judgments must be enforced through execution proceedings under N.C. Gen. Stat. § 1-302, not contempt. The Court also noted that the debtor had properly filed a Motion to Claim Exempt Property under N.C. Gen. Stat. §§ 1C-1601 and -1603, which the trial court erroneously disregarded when assessing his “ability to pay.” After years of litigation between the parties—whose disputes began over financial obligations from a failed international marriage and immigration sponsorship—the district court had ordered payment of damages for breach of the Affidavit of Support and unjust enrichment. When the defendant failed to pay, the court imprisoned him for civil contempt. The Court of Appeals found this improper, vacating the order and remanding with instruction that the creditor may instead proceed by execution, “subject to Defendant’s statutory and lawful exemptions.” Commentary: This decision stands out as a rare example of the North Carolina appellate courts interpreting and applying the state’s exemption procedures under N.C. Gen. Stat. § 1C-1601, particularly in the context of enforcing a civil judgment outside of bankruptcy or domestic-support enforcement. The Court’s holding underscores the sharp statutory distinction between (1) support obligations enforceable by contempt (e.g., child support under § 50-13.4(f)) and (2) contractual or quasi-contractual debts, which must proceed through execution and respect debtor exemptions. Judge Tyson’s opinion reinforces both the jurisdictional limits of the contempt power and the policy underlying the North Carolina Exemptions Act—to preserve a debtor’s basic means of living and prevent imprisonment for debt. The trial court’s refusal to honor Pelc’s claimed exemptions (including his residence and Australian retirement account) improperly blurred the line between contempt and execution, essentially transforming a civil money judgment into an imprisonable offense. In practical terms, this opinion reminds creditors (and domestic attorneys dealing with Affidavit-of-Support claims or other contractual obligations) that execution—not contempt—is the lawful enforcement mechanism, and that exemption procedures under §§ 1C-1601 et seq. must be afforded full effect. For consumer and bankruptcy practitioners, Pelc v. Pham also offers an instructive illustration of how North Carolina exemption law continues to operate outside of bankruptcy proceedings—rare appellate guidance in a state where exemption jurisprudence is more often developed in the bankruptcy courts than in the North Carolina appellate courts. Additionally worth noting is that based on the Form I-864 “Affidavit of Support” and unjust enrichment / loan repayment, this debt would likely be dischargeable in bankruptcy, though with nuances depending on how it’s characterized and which chapter is used. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document plec_v._pham.pdf (149.57 KB) Category NC Court of Appeals

M.D.N.C.: Scott v. Full House Marketing — No “Bad Faith” in FCRA Claim, Even After Jury Loss

M.D.N.C.: Scott v. Full House Marketing — No “Bad Faith” in FCRA Claim, Even After Jury Loss Ed Boltz Wed, 10/15/2025 - 18:40 Summary: In Scott v. Full House Marketing, Inc., No. 1:21-cv-242 (M.D.N.C. Sept. 30, 2025), Judge William Osteen, Jr. denied the defendant’s motion for attorneys’ fees and costs after a jury verdict in its favor on claims under the Fair Credit Reporting Act (FCRA). Full House Marketing argued that both the plaintiff, Derrick Scott, and his counsel acted in “bad faith” by pursuing a baseless claim and prolonging litigation unnecessarily. The court disagreed, holding that neither 15 U.S.C. § 1681n(c) nor 28 U.S.C. § 1927 justified a fee award. Scott had sued Full House Marketing and its background-check vendor, Resolve Partners, alleging that he was denied employment based on an inaccurate consumer report that confused him with another person. Although the jury found for Full House on the negligence claim, it found against Resolve. After the verdict, Full House sought sanctions and fees, asserting that Scott had fabricated portions of his résumé and continued litigating after evidence undermined his case. Judge Osteen found that the FCRA’s bad-faith fee provision requires proof of subjective bad faith at the time of filing — not merely that the claims later failed. He emphasized that earlier rulings denying Rule 11 sanctions and summary judgment already established that Scott’s claims had “some factual basis.” Likewise, § 1927 sanctions against counsel were inappropriate, since overestimating a case’s strength or rejecting settlement offers is not “unreasonable and vexatious” conduct. As the court concluded, “[a] mistake in judgment does not amount to bad faith.” Commentary: This decision offers a measured reaffirmation of the high bar for fee-shifting under both the FCRA and § 1927 — a bar that remains especially relevant in consumer litigation where plaintiffs’ counsel often press close factual questions against corporate defendants. The court’s refusal to equate loss at trial with bad faith in filing stands as an important guardrail against chilling legitimate, if ultimately unsuccessful, FCRA claims. For consumer practitioners, Scott reinforces two parallel themes familiar from dischargeability and fee-reasonableness disputes: Objective weakness ≠ subjective bad faith. Just as an unsuccessful § 523(a)(2) complaint does not automatically trigger § 523(d) fees, a losing FCRA claim is not “bad faith” merely because a jury disagreed. The focus remains on the filer’s mental state at filing — a distinction crucial when creditors attempt to penalize debtors or their counsel for asserting rights under the FCRA, FDCPA, or RESPA. Counsel’s persistence is not misconduct. Judge Osteen’s observation that “a mistake in judgment does not amount to bad faith” could easily apply to debtors’ attorneys who litigate plan confirmation or stay-violation claims that later fail. Zealous advocacy and aggressive strategy — even when frustrating to the other side — are not sanctionable absent genuine vexatiousness or dishonesty. In sum, Scott v. Full House Marketing tempers the reflexive urge to punish consumer plaintiffs after a defense verdict, reminding courts that losing a close case is not the same as filing a frivolous one. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document scott_v._full_house_marketing.pdf (170.83 KB) Category Middle District

Chapter 11 Bankruptcy In New York: A Strategic Path To Business Recovery

When Debt Threatens Your Business, Chapter 11 Offers A Lifeline Running a business is hard enough without the crushing weight of debt making every decision feel impossible. Maybe you’re lying The post Chapter 11 Bankruptcy In New York: A Strategic Path To Business Recovery appeared first on Wayne Greenwald, P.C..

Post-Purdue Clarity: Narrow Readings of Settlement Bar Orders Under Section 105(a)

N.C. Ct. App.: TOM, LLC v. South River Land Co. — “Time Is of the Essence” Clause Ends $2.7M Flip Deal, All Claims Dismissed

N.C. Ct. App.: TOM, LLC v. South River Land Co. — “Time Is of the Essence” Clause Ends $2.7M Flip Deal, All Claims Dismissed Ed Boltz Tue, 10/14/2025 - 18:17 Summary: In this unpublished but instructive decision, Judge Wood (joined by Judges Stroud and Carpenter) affirmed the dismissal of an attempted “flip” real-estate buyer’s sprawling complaint after the collapse of a $2.7 million contract to buy the Seawatch at Sunset Harbor subdivision in Brunswick County. Jack Carlisle, acting through his closely held entities TOM, LLC and Hoosier Daddy, LLC, contracted in late 2020 to buy Seawatch from South River Land Company, LLC (“South River”) for $2.8 million—later reduced to $2.7 million—with a non-refundable $100,000 deposit and a “time is of the essence” closing clause. The contract expressly acknowledged that South River didn’t yet own the property—it was still to acquire it from the North Myrtle Liquidating Trust (“NMLT”), which held Seawatch under a complex “Bond Replacement Agreement” securing subdivision improvements dating back to 2013. When Seawatch at Sunset Harbor, LLC (the prior developer) sued NMLT and obtained an injunction prohibiting any transfer unless new improvement bonds were posted, the sale collapsed. Eleven months passed without communication between buyer and seller. By the time the litigation ended in late 2021, South River (through a related entity, South River Communities, LLC) purchased Seawatch itself for about half the original price. Carlisle then sued nearly everyone in sight—South River, its principal Steven Tatum, NMLT and trustee Andrew Bolnick, Brunswick County, and the bonding company—alleging breach of contract, fraud, voidable transfers, UDTPA, and civil conspiracy. The Court of Appeals methodically affirmed dismissal of every claim: Breach of Contract: The “time is of the essence” clause controlled. The final amendment extended closing to January 29, 2021, and plaintiffs neither tendered performance nor alleged any waiver. The contract therefore “naturally terminated” by operation of its own terms—much like the analysis in S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 189 N.C. App. 601 (2008). Fraud: The “as-is” contract expressly incorporated the Bond Replacement Agreement, defeating any reasonable reliance on alleged nondisclosures. Plaintiffs also failed to allege what defendants gained by any supposed deceit beyond earnest money they in fact refunded. Voidable Transfer & UDTPA: Without an enforceable contract, plaintiffs were not “creditors” and could not show any unfair or deceptive conduct “in or affecting commerce.” Civil Conspiracy: Could not stand absent an underlying tort, and mere overlap of corporate officers didn’t establish any conspiratorial agreement. Moot Parties: Because all substantive claims failed, Brunswick County and the bonding company—named only as nominal defendants—were properly dismissed as moot. Commentary: This case is a reminder that “flip” buyers operating on speculation and optimism—especially when their seller doesn’t yet own the property—stand on perilously thin legal ground once a “time is of the essence” date expires. Carlisle’s attempt to recharacterize a dead deal into a multi-defendant fraud and conspiracy suit foundered on the same shoals as countless expired purchase agreements: no timely tender, no enforceable contract, no claim. The opinion also underscores a pragmatic lesson: North Carolina courts will enforce “time is of the essence” provisions strictly, even where parties later amend or extend closing dates, so long as the clause is incorporated by reference. Attempts to imply waiver from post-deadline negotiations will not save a lapsed contract. While TOM, LLC v. South River Land Co. held that parties without an enforceable contract were not “creditors” and thus could not claim unfair or deceptive conduct “in or affecting commerce,” the Fourth Circuit’s decision in Koontz v. SN Servicing reaches the opposite conclusion for consumers. In Koontz, the court held that the FDCPA, and by extension similar consumer-protection statutes like RESPA and N.C. Gen. Stat. §§ 75-50 et seq., can apply even when the underlying personal debt is no longer enforceable, such as after a bankruptcy discharge. What matters is that a creditor or servicer acts as if the debt remains collectible or communicates in a way that could mislead or pressure the consumer. Thus, TOM in contrast reflects a commercial contract principle—no enforceable obligation, no standing to sue for unfair trade practices—whereas Koontz affirms a consumer-protection principle—even a legally unenforceable debt can trigger liability if a collector’s conduct is deceptive or coercive. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document tom_v._south_river_land_co.pdf (195.46 KB)

Bankr. W.D.N.C.: In re Ford (II) — Court Rejects “Tribal Sovereignty” Claims, Denies Recusal, and Increases Sanctions Against Debtor for Pseudo-Legal Defenses

Bankr. W.D.N.C.: In re Ford (II) — Court Rejects “Tribal Sovereignty” Claims, Denies Recusal, and Increases Sanctions Against Debtor for Pseudo-Legal Defenses Ed Boltz Tue, 10/14/2025 - 17:43 Summary: In In re Ryan Lashon Ford, Judge Edwards issued two companion opinions chronicling the court’s escalating efforts to bring order to what she aptly described as an “atypical” pro se Chapter 7 case that had metastasized into a performative exercise in pseudo-law. Background and Procedural History Beginning in December 2024, the debtor filed a barrage of more than two hundred pleadings—motions to dismiss, convert, compel, and “declare tribal property”—along with serial assertions that her assets belonged not to the bankruptcy estate but to the self-styled “Xi Amaru Tribal Government,” a group offering “jurisprudence” courses and “law consultation” to its adherents. When questioned, the debtor could recall neither what she had paid for these courses nor basic details about her bank accounts, transfers, or tenants. The Chapter 7 Trustee and Bankruptcy Administrator sought routine discovery into these transfers and the “course materials” that appeared to be generating her pleadings. Despite multiple continuances, explicit directives, and an Omnibus Order requiring production of bank and course records, the debtor refused—citing non-existent federal statutes, fabricated tribal immunity, and even copyright restrictions. The court entered a civil-contempt order with daily sanctions and, after continued defiance, increased the fine to $150 per day. The July 2025 Opinion ( In re Ford I) The earlier opinion had already sanctioned the debtor for contempt after repeated failures to comply with discovery orders. The court recounted her pattern of evasive testimony, including claims that production of the “tribal coursework” would violate “15 U.S.C. § 114”—a statute that, as the court dryly noted, “does not exist.” The decision catalogued her shifting explanations and concluded that her refusal to comply was deliberate bad faith warranting escalating sanctions. The September 2025 Opinion ( In re Ford II) The latest decision addressed the debtor’s “Amended Motion for Recusal” seeking removal of both the Trustee and the Bankruptcy Administrator. Judge Edwards patiently—but firmly—reiterated that (1) the Trustee’s duties under § 704 run to the estate and creditors, not to the debtor; and (2) both the Trustee and Bankruptcy Administrator are statutorily required to investigate omissions, object to improper claims, and ensure orderly administration. Finding no factual basis for bias or misconduct, the court emphasized that adverseness to the debtor is not only permissible but inherent in those fiduciary roles. The debtor’s filing of a state-bar grievance against the Trustee, moreover, was itself prohibited under the Barton Doctrine and the automatic stay—echoing In re Seertech Corp. (W.D.N.C. 2007)—and could not be wielded to create the very “conflict” she alleged. Judge Edwards then dismantled the debtor’s claims of “tribal” privilege and bias. Analogies drawn by the Trustee and Administrator between the debtor’s filings and the sovereign-citizen movement, she wrote, did not equate recognized tribal sovereignty with pseudo-legal theories; they merely illustrated that unrecognized assertions of sovereignty cannot nullify federal law. “[A]nalogies,” she observed, “are a bridge, not a mirror.” Commentary: This pair of orders, in what (given the persistence of sovereign citizens) might eventually be termed the Ford Trilogy, underscores Judge Edwards’ measured but increasingly direct confrontation with the growing sovereign-citizen phenomenon in bankruptcy. As noted in commentary previously circulated to the bankruptcy bar on August 5, 2025 (but withheld from public posting to avoid inflaming a sovereign citizen), I wrote that: While Judge Edwards rightly imposed sanctions and attempted to bring order to the case, it is fair to question whether the court's extended engagement with the debtor’s pseudo-legal defenses gave undeserved credence to what is, ultimately, sovereign-citizen nonsense. By parsing phantom statutes and issuing repeated compliance orders, the court risked signaling that these filings were defective pleadings rather than fantasies. Yet, with these later opinions, Judge Edwards appears to have reached the same conclusion—drawing a bright doctrinal line between legitimate procedural patience and indulgence of performative obstruction. The opinions now serve as a practical template for future cases: a record of escalating judicial responses—from explanation, to order, to contempt, to sanctions—culminating in a clear reaffirmation that bankruptcy courts are courts of law, not forums for tribal mythos or AI-generated “jurisprudence.” More decisive early action—whether through dismissal under § 707(a) for bad faith, denial of discharge under § 727(a)(4) for false oaths, or referral for unauthorized practice—could conserve judicial resources and deter the cottage industry of “sovereignty educators” peddling this nonsense to vulnerable debtors. With proper attribution, please share this post. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_ford_ii.pdf (616.9 KB) Document in_re_ford_i.pdf (481.9 KB) Category Western District