Reset Button Is Approaching Student Debt from a New Angle - ABI

According to research by Villanova law professor Jason Luliano, a million student loan debtors have filed for bankruptcy in the past five years. However, 99.9 percent of them did not include their student loan debt in their bankruptcy filing. This research was the seed of what would become Reset Button, a new startup founded by Luliano and Rob Hunter looking to help student loan debtors who have gone through bankruptcy find a new way to include those debts in their filing, reported. Reset Button is targeted directly at folks who have already filed for bankruptcy but were told they couldn’t include their student loan debt in those filings, and so they didn’t. Reset Button has built a network of litigation lawyers who have experience in seeking student loan discharges. When a new user fires up Reset Button, the startup sends them through an evaluation process that collects financial information, etc. to assess whether or not one of those lawyers could litigate the discharge of that user’s student loan debt. Reset Button, as the connective tissue between debtor and lawyer, is able to automate a lot of that process for the lawyers, delivering a package of information on the case and connecting the user with the right lawyer for them.

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Trump’s DOJ Urges Supreme Court to Keep CFPB Up and Running - ABI

Facing an existential threat at the U.S. Supreme Court, which will hear oral arguments on March 3 in a constitutional challenge to the unusual structure of the Consumer Financial Protection Bureau, the CFPB has found an unlikely champion. The Trump administration believes that the bureau's lone director is unconstitutionally shielded from accountability to the president, yet the Justice Department’s final brief before oral argument urged the Supreme Court not to issue a ruling that will halt the CFPB’s “critical work," Reuters reported. “The bureau,” DOJ argued in a reply brief filed on Friday, “is the federal government’s only agency solely dedicated to consumer financial protection.” Invalidating the entire statute that created the CFPB, DOJ said, will wreak havoc not just for consumers but for the banks, mortgage lenders, credit card companies, and other financial institutions regulated by the CFPB. The government even cited the billions of dollars CFPB has recovered in enforcement actions as proof of its crucial mission. The California debt relief firm that brought the CFPB case to the Supreme Court, meanwhile, continued to argue in its final brief that if the Supreme Court deems the CFPB’s structure to be a violation of separation of powers doctrine, the justices must either strike down the entire Consumer Financial Protection Act or else leave it to Congress to fix the problem. The case is Seila Law v. CFPB, 19-7.

Small Business Bankruptcy Law Rolls Out With New Trustees - ABI

The U.S. Trustee Program has some 250 new trustees at the ready to assist with small business cases as a change in bankruptcy law intended to make it easier for smaller companies to reorganize goes into effect, Bloomberg Law reported. The Small Business Reorganization Act of 2019, signed into law in August, adds a subchapter to the bankruptcy code’s chapter 11 to cut the legal costs incurred by qualifying small corporate debtors, defined as those with about $2.7 million of debt or less. It also expedites the restructuring process and allows owners of the bankrupt company to retain a stake.“The SBRA represents an innovative effort to expedite and reduce the cost of bankruptcy for small business debtors to reorganize their debts and save their businesses,” said USTP Director Cliff White. “The USTP has spent the past six months preparing for its implementation and is committed to ensuring that the law is carried out as intended.” In addition to the selection of the new subchapter V trustees, the USTP developed a comprehensive manual and handbook to guide staff and subchapter V trustees in carrying out their new SBRA responsibilities; provided extensive training to staff, subchapter V trustees, bankruptcy professionals, and others interested in the new law; and coordinated with the bankruptcy courts on administrative issues to ensure a successful implementation. Click here to read the USTP's press release.

Insurers Drive Up Prices for U.S. Businesses - ABI

U.S. companies are paying more for insurance, a reversal after years of flat or declining rates for property and liability policies, the Wall Street Journal reported. Insurers have raised prices aggressively in the past year on companies of all sizes across the country. And they have warned price hikes are likely to continue. Pretax operating income for the U.S. property-casualty insurance industry fell by 8 percent from 2014 to 2018, even as revenue from insurance premiums grew, according to ratings firm A.M. Best. Excluding investments and other income, the industry lost money from underwriting in 2016, 2017 and 2018. A retreat from some accounts and lines of business by two major insurance players, American International Group Inc. and Lloyd’s of London, has also helped drive prices higher, according to brokers and underwriters. Prices on nearly every type of insurance are rising, according to insurers and brokers. An exception is workers’ compensation, which is highly regulated by states. Excluding workers’ compensation, rates for property-casualty insurance sold to businesses rose 6.7% from a year earlier on average in the first three quarters of 2019, on track for the highest annual increase since 2003, according to brokerage Willis Towers Watson.

Charging into Adulthood: Credit Cards and Young Consumers - Liberty Street Economics

The New York Fed’s Center for Microeconomic Data today released the Quarterly Report on Household Debt and Credit for the fourth quarter of 2019. Total household debt balances grew by $193 billion in the fourth quarter, marking a $601 billion increase in household debt balances in 2019, the largest annual gain since 2007.

Coronavirus Will Cost Businesses Billions, But Insurance May Not Help - ABI

American Bankruptcy Institute (ABI) - The coronavirus outbreak has closed suppliers in China, but insurance policies meant to protect companies from business interruptions probably won’t cover the losses, the New York Times reported. On Tuesday, the Organization for Economic Cooperation and Development laid out just how bad things could get: If the coronavirus continues to spread, it could cut the year’s global growth by half, to 1.5 percent for the year instead of the 2.9 percent that the Paris-based research group had forecast before the epidemic took off. Many businesses have insurance policies that are meant to kick in when disaster strikes. But few of those policies will cover losses incurred because of the outbreak. Companies typically buy a kind of coverage known as business interruption insurance as part of their property policies, which pays cash to make up for lost revenue when a business has to halt operations unexpectedly. A close relative, contingent business interruption insurance, kicks in when the shutdown is at a supplier of the insured company. At first glance, those might seem perfect for the current epidemic, which has caused quarantines that shut down factories in China, severed links in supply chains and disrupted business activity for hundreds of companies from Microsoft to Marriott. But those policies almost always cite “direct physical loss or damage” as a requirement to get a payment.

For Growing Numbers of Struggling U.S. Cities, the Downturn Has Arrived - ABI

American Bankruptcy Institute (ABI) - A decade of growth in the U.S. economy allowed cities to patch fiscal holes left by the financial crisis and recession, but a surprising number now see new signs of trouble, the Wall Street Journal reported. The proportion of American cities expecting general-fund revenue to drop more than 3 percent when the books close on the 2019 fiscal year increased to 27 percent from 17 percent in fiscal 2018, when adjusted for inflation. That is one of the findings from a Wall Street Journal analysis of data collected from 478 U.S. municipalities by the National League of Cities, an advocacy group. The total general-fund revenue reported by these cities — locales that span the U.S. — is expected to be lower in fiscal 2019 than in fiscal 2018, adjusted for inflation, the first such dip in seven years. Cities in the survey range in population from the low tens of thousands to the millions.