Category Archives: credit

Satan’s Credit Cards

This article in CNNMoney identifies 9 credit cards industry experts told CNNMoney were among the worst in America for nose-bleed interest rates and ridiculous fees. Here’s the list:

  1. Applied Bank Unsecured Visa Gold Card
  2. First Premier Bank MasterCard
  3. Baby Phat Prepaid Visa RushCard
  4. Hooters MasterCard
  5. The Shack Credit Card
  6. Shell Select Member Card
  7. Visa Black Card
  8. JCPenney Rewards Credit Card
  9. Household Bank Premium Platinum MasterCard



Harris v. Gander Partners (ND IL)

Harris N.A. v. Gander Partners LLC ,(N.D.Ill.)

Issue: When an LLC is in Chapter 11 reorganization, can a creditor collect directly from the principals of the company instead?

Answer: Apparently not in the Northern District of Illinois

Upshot: Here, the Court upheld an injunction entered by the Bankruptcy Court after determining that

  • The participation of these principles was essential to the company’s reorganization
  • If these principles were distracted by this lawsuit the reorganization would likely fail
  • Many other creditors would be harmed financially if this reorganization failed; and
  • The creditor seeking to collect only faced only a temporary stay, anyway.

In the immortal words of Spockcirca Star Trek IIthe needs of the many outweigh the needs of the few.


Ransom v. FIA Card Services (U.S. S.Ct.)

Ransom v. FIA Card Services, N.A., f/k/a MBNA America Bank, N.A.
Certiorari from the U.S. Court of Appeals for the 9th Cir., Case 09–907
Argued October 4, 2010—Decided January 11, 2011

The Issue: Here the question was whether a Chapter 13 debtor could deduct the allowable auto payment from his monthly budget even though he did not have a car payment (i.e the vehicle was paid for). Put another way, is it fair for all debtors to be entitled to the maximum allowable deduction from their monthly disposable income, or must debtors establish what they actually pay?

The Answer: The Court ruled 8 to 1 (Scalia J. dissenting) that if a debtor makes more than the median income for his State then he must establish that he incurrs the amounts deducted from his monthly living expenses. No more automatic deductions if debtor cannot prove what he pays.

The Gist: To determine “disposable income” BAPCPA gave us the Means Test, which starts with gross monthly income then deducts living expenses – i.e. “amounts reasonably necessary for maintenance or support” of the debtor. In a Chapter 13 case the expenses considered “reasonably necessary” are identified in 11 U.S.C. §1325(b)(2)(A)(i) and include “applicable monthly expense amounts” as specified in National and Local IRS standards. Since BAPCPA was adopted, it has become common practice to include expenses at the maximum allowable level even if the debtor does not have, or pay for, that type of asset. This case appears to say that the party is over for Chapter 13 debtors.

See Also: this post from Chicago Attorney Steve Jacobowski on the Bankruptcy Litigation Blog regarding the Scalia dissent.


Simmons v. Roundup Funding, LLC, 09-4984

2nd Cir.
Adversary Decided: October 5, 2010
Holding: A proof of claim filed in bankruptcy court cannot form the basis for a claim under the Fair Debt Collection Practices Act.
Download and read a copy of the Opinion in .pdf format here.
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Disproportionality Even in Bankruptcy

Bankruptcy Claims More Female Victims

An editorial by Rafia Khader, Law Clerk, M. Hedayat & Associates, P.C.

Bankruptcy is a trying situation for any individual. But for women it seems as if the laws yet again disproportionately burden them. I came across an interview with Harvard Law Professor Elizabeth Warren a while ago that was both shocking and predictable. In it she said that changes to the bankruptcy law made in 2005 (oh those again!) made it much harder for women to make ends meet.

Before 2005 women dependent on domestic support from their ex-husbands were able to collect such payments with full confidence because declaring bankruptcy meant that the ex-husband’s debts, excluding domestic support obligations of course, would be wiped out. But no, the credit card companies didn’t like that! Why should ex-wives be able to collect the ex-husband’s money and not they! The injustice!  So in 2005, they had the laws changed. Today, discharge of credit card debt is not necessarily guaranteed and women are, as Warren says,  in ‘direct competition’ for the ex-husband’s resources. Thanks, credit card companies!

But perhaps what is most truly startling are the statistics from theU.S. Women’s Chamber of Commerce. A study found that women were 32% more likely to have received supbrime mortgages than men. And that’s irrespective of income! Women were also 41% more likely have received higher cost subprime loans for their businesses. And we all know what suprime means. Thanks, Wall Street!

Sure, these statistics don’t establish any type of causal relationship and you can’t really blame credit card companies for ruining women’s lives (there are other institutions in places that have contributed to that), but the bottom line is this: women definitely do have it tougher. But of course I am a woman and I would say that.

But I am also right.


Some Good News for Small Business Owners

This past Monday, President Obama delivered a speech urging banks bailed out by the Troubled Asset Relief Program (TARP) to start lending on a wide scale basis again.

Translation: it’s about time the banks pay back the millions of taxpayers who helped them survive.

Immediately following, Bank of America stated that it would increase its lending to small and medium-sized businesses by $5 billion. With $41.9 billion in outstanding business loans as of September, Bank of America is currently the second largest small business lender.

Let’s see if other TARP recipients heed the President’s message and follow suit.


Forecasted Online Sales: A Few Clouds in Sight