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What a Crock! Turns Out Only 0.5% Public Service Participants Qualify For Loan Forgiveness

Around Fall of 2007, Pres. Obama’s administration came out with a program that allowed some students to have their loans forgiven if they worked for a “public service jobs” for 10 years.   Ten years later, these students who worked for 10 years at low paying jobs — are having their applications for loan forgiveness denied because the “public service job” they were doing for 10 years was not a “public service job” in the eyes of the Dept. of Education anymore.

Of 20,521 applications for loan forgiveness — only 96 borrowers were approved.  That is less than 1% !

The definition of “public service job” had changed throughout the year and the servicers misled borrowers by saying mischievously, “oh absolutely, you still qualify….keep paying that loan.“  I feel bad for these people — hopefully Congress fixes this (not holding my breathe).

Can you imagine after 10 years of working — you are told, “sorry, you don’t qualify but thank you for your service.  Next in line!“  That’s a bunch of crock and makes me so angry.

The original article by legal contributor Alan White on CreditClips can be found here.

State Bar Seeks Public Comment on Amending California’s Legal Malpractice Insurance Rules

The State Bar is seeking public comment on options under consideration as part of its statutorily mandated malpractice insurance study. The deadline to submit public comment is November 5, 2018.  Currently, malpractice insurance is not required for attorneys licensed in California. However, attorneys without this insurance are required to disclose this fact to clients for whom legal representation will exceed four hours.

The State Bar is currently seeking public comment on the following options regarding malpractice insurance for attorneys licensed in California:

  • Amending rules to require attorneys to disclose to clients that they do not carry legal malpractice insurance;
  • Mandating legal malpractice insurance for attorneys as a condition of licensing, except for in-house counsel and government attorneys;
  • Developing a Continuing Legal Education or Practice Management program that provides an interactive self-assessment of law practice operations in an effort to examine legal malpractice liability;
  • Mandating such a program for attorneys who choose not to carry insurance;
  • Promoting the voluntary purchase of insurance.

Additional details, including how to submit public comment, can be found here. 

Joint Tenancy – Special California Exception

Remember Property 101?  There are four unities re: joint tenancy:  unity of possession, interest, time and title.  As a rule, if any of these 4 unities is missing then the joint tenancy becomes a tenancy in common.  So, if A and B own property at JT’s and B transfers to C then A and C own the property as 50% TIC.

But — California has a statutory exception when someone who owns property by themselves wants to create a JT with others.

For example, Amy owns Blackacre.  When her kids became adults, Amy wanted to create a joint tenancy with them.  She is allowed to deed the property to them and name herself as joint tenants.  It will look like this — “Amy, as sole owner, hereby grants Blackacre to Amy (herself), Mary and Joe as joint tenants.”  Under California’s statutory exception — this new deed satisfies the unity of time and title even though Amy acquired the property many years ago through a different deed.   Read more…

Trivia: Oldest Form of Security Arrangement?

Security agreements are made between a lender and a borrower that creates a security interest in property whereby if the borrower does not pay back the loan then the lender can take steps to get the property.  We see this in real estate of course.  But do you know one of the oldest and simplest security arrangement between two people?  It is ….

Read more…

Prison Love Story + Bankruptcy — “Pay My Debt and I Promise To Love You Forever”

I came across a memorandum re: decision by one of my favorite judges, Peter Carroll, about a prison love story involving bankruptcy.  There should be a Lifetime channel movie made about this.  Debtor, a married prison correctional officer became romantically involved with an intern.  They moved in together and debtor continually told her he loved her and wrote love letters saying they would be together happily ever after.  She believed him and used $130,000 of her savings to pay his old debts.  The relationship soured and she sued him for fraud alleging he lied to her to induce her to use her funds to pay for his old debts.  Naturally, he files for bankruptcy and she commences an adversary proceeding to except that debt from discharge under 523(a)(2).

Judge Carroll, after hearing testimony and reviewing the love letters, wrote this riveting opinion.

Difference Between “False Pretense” and “False Representation” under 523(a)(2)

Section 523(a)(2)(A) excepts from discharge any debt for money obtained by false pretense, a false representation or actual fraud.   But how can you tell the difference?

False representation is an express representation.  “There are no leaks in the roof of my house.” 

False pretense is an implied representation or conduct intended to create a false impression.  “Whenever it rains, it is dry as a bone in this house, which is why I like it, I also got their decorated the right way with even an aquarium and glow in the dark fish ornaments I found online.”


Let’s go to SCOTUS — Can a Trademark Licensee keep using the mark after the Licensor files bk?

A good article I pasted below by David Kluft on an important Circuit Split headed to SCOTUS.   Can a Trademark Licensee keep using the mark after the Licensor files bk?  7th Circuit says yes but 1st Circuit says no.  Not that it has weight but I agree with 7th Circuit’s analysis.

All you trademark lawyers better sit down, because this may come as a shock: You are not “intellectual property” lawyers . . . at least not according to Section 11 U.S.C. § 101(35A) of the Bankruptcy Code, which intentionally omits trademarks from the definition of “intellectual property.”

Owing in part to this omission, there is an ongoing circuit split as to the rights of a trademark licensee when a licensor declares bankruptcy. Can the licensee keep using the licensed mark even if the debtor-in-possession of the bankrupt estate rejects the license? The Seventh Circuit says yes. The First Circuit says no.

But this split could be resolved soon. Last week, a petition for writ of certiorari to the Supreme Court was filed in Mission Products Holdings, Inc. v. Tempnology, LLC.

Read more…

Adequate Protection and Takings Issue?

Ever thought about “adequate protection” as being a 5th Amendment Takings Violation?

I never thought about it like this, but the bankruptcy concept of “adequate protection” presents an inherent constitutional 5th amendment takings issue!  Doesn’t it?  Think — a creditor who has a lien has both (a) right to payment [contract right] and (b) an interest in property of the debtor securing that right to payment [property right].   We all know that the Fifth Amendment protects this interest in property such that a persons interest in property cannot be deprived without due process or just compensation.

So my nerdy bankruptcy friends — isn’t Congress’s exercise of its bankruptcy powers under Article I subject to the Fifth Amendment?  In dealing with whether or not a creditor’s interest is “adequately protected” is Congress not prospectively regulating your property rights?   The answer after the jump….

Read more…

Can you file a time-barred proof of claim? Absolutely! said SCOTUS today.

Justice Breyer held that a debt collector can file a stale claim that is obviously barred by the statute of limitations and by doing so he/she does not violate the FDCPA because filing the stale claim is not a “false, deceptive, misleading, unconscionable, or unfair conduct.”  The dissent, led by Justice Sotomayor, said this will lead to more bottom-feeding (my words) professional debt collectors who “do not file these claims in good faith rather they file them hoping and expecting the bankruptcy system will fail” and nobody will notice.

The case is Midland Funding and can be found here.

Client’s been defrauded in sale of property — what date do you choose to determine the value of the property in calculating damages? Contract Date, Date of Close of Escrow, Trial Date?

In an unpublished BAP opinion (but citing published authority), the panel held that in order to determine the proper value of the damages re: the property that you were defrauded of — the court must use a date close to the contract date or date when escrow closed but not a date much later (i.e. trial date that was 7 years later or even date of confirmation).

In Joseph Zenovic (click here), the BAP found the proper date for valuing certain real property for the purpose of calculating damages claim is a date closer to the transaction date/close of escrow and not “as of the trial date” which in this case was about 6 years later.  The panel said that the danger of using an unduly late valuation date is that it might subject the defendant to liability for losses that the defendant did not cause.

As a side note, the panel found the proper prejudgment interest to apply is California’s 7.0% and not the fairly low, less than 1% federal rate.

Neat case.