FOR IMMEDIATE RELEASE:
August 28, 2013

CONSUMER FINANCIAL PROTECTION BUREAU LAUNCHES TOOLKIT TO HELP TEACHERS AND OTHER PUBLIC SERVANTS TACKLE STUDENT DEBT
One in Four American Workers May Be Eligible For Student Debt Forgiveness

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) launched a toolkit to empower school districts and other public service organizations to help their employees pay off student loan debt. The CFPB is asking these employers to make a pledge to inform their employees of their options. Up to a quarter of the U.S. workforce is in public service and may be eligible for existing student loan debt forgiveness programs, according to a CFPB report also released today.

“Our young people should not be mired in debt because they stir themselves to the call of public service. They deserve to know all their options,” said CFPB Director Richard Cordray. “Our toolkit and pledge can be a win-win for employers, the public they serve, and their employees who are facing student debt loads that are imposing unprecedented burdens upon this generation.”

According to a report released today, the CFPB estimates that more than 25 percent of the U.S. labor force is in public service. This includes teachers, librarians, firefighters, military personnel, law enforcement, first responders, nurses, and social workers. There are a number of special loan programs to assist these workers. For example, in 2007, Congress created the Public Service Loan Forgiveness program for public servants who pay their federal loans on time for ten years. People working at a nonprofit or those working for a federal, state, or local government are eligible for the program.

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By Martha Neil

From http://www.abajournal.com

Although Detroit is short of money to run the city, its Chapter 9 bankruptcy filing is expected to ring up business for multiple law firms.

Jones Day is representing the city, and bondholders, creditors, insurers, pension funds and retirees are expected to lawyer up, too, as big-bucks issues, such as responsibility for repaying some $8 billion in bond debt owed by Detroit, as well as another $5.7 billion in unfunded health care and retirement benefits to former workers, are negotiated, Reuters reports.

Opportunities for lucrative legal work abound. The Detroit Institute of Arts, for instance, retained partner Richard Levin of Cravath Swaine & Moore to represent its museum in a dispute over the city’s power, or lack thereof, to sell the museum’s art collection.

And Arent Fox, Kirkland & Ellis, Sidley Austin, Weil Gotshal & Manges and Winston & Strawn are also among the law firms either already hired or thought to be in the pipeline to represent entities caught up in the municipal maelstrom.

Already at issue is whether the state governor had the power to file for bankruptcy, under the Michigan state constitution, when doing so puts protected retirement benefits for public workers at risk. A state-court judge last week ordered the city’s emergency manager to withdraw the bankruptcy petition he filed on Thursday; however, the state attorney general has filed an appeal of that order, recounts another Reuters article.

Observers say they expect the bankruptcy judge to put the state-court case on pause, so that the city’s eligibility to file for bankruptcy can be dealt with in federal court. Also likely to be contested is whether Detroit made sufficient efforts to negotiate with creditors before filing.

July 25, 2013

Dear constituency list members of the Insolvency Law Committee, the following is a legislative update that may be of interest to insolvency professionals:

SUMMARY

On July 11, 2013 Governor Brown signed into law SB 426 which expands the anti-deficiency language in Code of Civil Procedure (“C.C.P.”) sections 580b and 580d by expressly prohibiting not only: (i) a deficiency judgment against the borrower in connection with either a “purchase money” deed of trust covered under C.C.P. §580b or following a non-judicial foreclosure of a deed of trust covered under C.C.P. §580d, but now also (ii) any liability for any deficiency in the foregoing situations.   However, SB 426 expressly recognizes the right of a lender to collect any such deficiency from any additional collateral held or from any third-party guarantor.

As discussed herein, the new statute could be viewed as “clarifying” rather than “amending” existing California law so that when it becomes effective, it will apply to deficiency obligations then existing and held by any lender or its assignee.

A.           New Legislation (C.C.P. §§580b and 580d)

Prior to the enactment of SB 426, C.C.P. § 580b prohibited a deficiency judgment in connection with the following: (1) any sale of real property for failure of the purchaser to complete the contract of sale;(2) under a deed of trust given to the vendor to secure repayment of the purchase price of the encumbered property; (3) under a deed of trust on residential property given to a lender to secure repayment of a loan (“purchase money loan”) used in whole or in part to pay for the purchase price of a residence to be occupied, in whole or in part, by the purchaser; or (4) a loan used to refinance a purchase money loan except to the extent that the lender advanced new principal to the borrower which was not used to repay existing principal or interest or loan fees and costs.

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CONSUMERS UNION NEWS RELEASE

For Immediate Release: Thursday, July 11, 2013

California Governor Brown Signs Bill To Strengthen Oversight of Debt Buyers Bill Will Help Protect Consumers From Unfair Debt Collection Practices

SACRAMENTO, CA – Governor Jerry Brown signed legislation today that will strengthen state oversight of the debt buying industry and protect consumers from unfair debt collection practices. SB 233, authored by Senator Mark Leno, requires debt buyers to provide consumers and the courts with documentation to prove that a debt is actually owed.

“There’s been an explosion of shady debt collection tactics in recent years that have triggered a record number of complaints from consumers,” said Suzanne Martindale, staff attorney for Consumers, the policy and advocacy arm of Consumer Reports. “Too many consumers are harassed for debts that they have already paid off or that don’t even belong to them. This new law will help protect consumers by making debt buyers prove they have a legitimate claim when they try to collect past debt.”

Tens of thousands of Californians are contacted every year by debt buyers they have never done business with, for debts that may be old or in an amount that doesn’t match the consumer’s memory or records. The debt may even be owed by someone else or the result of identity theft. Consumers Union’s 2011 report issued with the East Bay Community Law Center detailed how debt buyers are filing an increasing number of lawsuits against consumers even though often they don’t have proof to back up their claims.

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