July 25, 2008
Foreclosure in San Fernando Valley
In the San Fernando Valley, north of Los Angeles, where I live the foreclosures are sizzling. According to the Daily News, there were 803 foreclosure sales in June, 08 compared to 263 in July, 07. There were 2,084 foreclosure sales in the valley in the second quarter of 08, up from 632 for the same quarter last year. The previous most foreclosure sales in one quarter in the valley was 1,818 in 1996.
I don't know what portion of the sales are because the lenders are adjusting the rates up to an amount the homeowner can't pay versus what portion is because the homeowner's just can't make the payments for other reasons. Its probably the first reason mostly which is incomprehendable to me.
Credit Card Arbitration Agreements - Creates Private Law According to Professor Elizabeth Bartholet
Harvard Professor Elizabeth Bartholt's testimony before the US Senate on July 23, 2008 gives a fascinating look at the reality of arbitration clauses in employment contracts and credit card agreements. She testifies that she herself was an arbitrator for a time in credit card cases. She ruled 18 times in a row for the credit card issuer and the 19th time for the consumer. After ruling for the consumer, she was systematically removed from doing any further arbitrations until she resigned the position. Arbitrations counted for 1% of her income. Prof. Bartholet's comments can be found here. The arbitration clauses as well as a significant portion of the procedure is standard language in credit card agreements of course. Congress? are you listening?
July 23, 2008
2007 BAPCPA Statistics
80 pages of statistics and I didn't bring my advil this morning. The report prepared by something called "Office of Judges Programs, Statistics Division, Administrative Office of the United States Courts" can be found here. Five attorneys were sanctioned for abusive filings during the year - two of those in the Eastern District of California. 55,000 chapter 13 "consumer cases" were "terminated" in 2007. 1,627 were plans that were completed and 53,007 were not, just cases that were dismissed. That statistic is a little misleading. In California, something like 50% of the chapter 13s filed lately are by pro pers who never file anything but the emergency petition. They are simply buying themselves a few weeks.
July 22, 2008
Must Read Empirical Study on Credit Card Profits
This is a great article by a young Harvard fellow, Michael Simkovic, which establishes with empirical data that bankruptcy filings are down because of the amendments, credit card profits are up hugely since the amendments, and credit card companies have not passed the savings from fewer bankruptcy case writeoffs onto the consumer. Interest rates, late charges and other fees have risen in the past two years. Why? Apparently because of the lack of competition among credit card issuers, the lack of ability of the consumer to compare the rates of different issuers, and the lack of ability to change cards once the consumer is up to his ears in debt. The article can be accessed here.
July 21, 2008
Aloha Committee Counsel Seeks $235,000 in Fees for One Month
The firm of Sonnenschein Nath & Rosenthal which represented the Creditor's Committee for the month before the chapter 11 case was converted to chapter 7 has filed a fee application seeking $235,000 in fees. GMAC has objected to the application calling it excessive (duh). For some telephone calls, Sonnenschein billed $2,000 per hour. That would be two partners in the $750 range and one in the $600 range. The objection of GMAC can be found here and here. The hearing is July 29. I will check back then. These matters are tough for the judge because the objection complains away but doesn't really tell the judge what number he should approve. Judges tend to simply lop off 10% or some other nominal amount since that is the safe path.
July 20, 2008
Circuit Court of Appeals Cases from Last Week
5th Circuit Court of Appeals, July 14, 2008
Kane v. Nat'l Union Fire Ins. Co., --- F.3d --- 2008 WL 2721157 (5th Cir. 2008)(trustee is real party in interest in pending non-bankruptcy action and has not abandoned the asset)
6th Circuit Court of Appeals, July 17, 2008
Phar-Mor, Inc. v. McKesson Corp., --- F.3d --- 2008 WL 2756588 (5th Cir. 2008)(administrative-expense priority on reclamation claim exists even though goods sold)
10th Circuit Court of Appeals, July 15, 2008
In re Tri-Valley Distrib., Inc., --- F.3d --- 2008 WL -2741629 (5th Cir. 2008)(appeals dismissed for lack of jurisdiction)
10th Circuit Court of Appeals, July 15, 2008
In re US Medical., Inc., --- F.3d --- 2008 WL 2736658 (5th Cir. 2008)(defendant-creditor is not a "non-statutory insider" of debtor for preference purposes)
Thanks to Findlaw.com