Interest by Any Other Name Would Cost Just as Much

Some odd news has reached my desk about Illinois's Predatory Loan Prevention Act (PLPA) and efforts to clarify its application to pawnbrokers. As many Credit Slips readers will know Illinois passed a 36% APR cap on consumer lending in 2021. The cap applies "notwithstanding any other provision of law" and specifically excepts banks but no other other lenders.

Despite this language, the pawnbroker industry filed suit claiming it was not covered by the law. Every state has a specialized law regulating pawnbrokers. It was not frivolous to claim the PLPA did not apply, but it did not seem like a winner given the PLPA's clear statutory directive. Nonetheless, a state trial judge granted a preliminary injunction preventing the Illinois Department of Professional and Financial Regulation from enforcing the PLPA against pawnbrokers. It was perhaps a lucky break they drew the same state trial judge that had issued a temporary restraining against the vaccine and testing mandates by the Chicago Public Schools only to be reversed twelve days later. Two years has passed since the preliminary injunction was issued, and that litigation still languishes (which is another story for another day).

There have been efforts for legislative action to clarify the application of the PLPA to pawnbrokers. This is where the odd news comes in because the story is that there is squabbling over whether pawnbrokers are already subject to a 3% per month/36% per year cap. To understand that, we need to dig a bit into the Illinois Pawnbroker Regulation Act.

Consumer Law Scholars Conference--Call for Abstracts

The Center for Consumer Law & Economic Justice at Berkeley Law has announced the call for abstracts for the 2024 Consumer Law Scholars Conference. Abstracts are due by September 8, 2023, for the conference scheduled for February 29-March 1, 2024. The conference welcomes abstracts from a wide array of methods and virtually any topic involving consumers in the marketplace. More information about abstract submission is here. 

Job Opportunity -- Executive Director of National Consumer Bankruptcy Rights Center

With Tara Twomey's selection as the new head of the Executive Office of U.S. Trustee, the National Consumer Bankruptcy Rights Center (NCBRC) is seeking a new director. The NCBRC helps shape consumer bankruptcy law, as it did for many years under Twomey's leadership. This is an opportunity for someone else to do the same. See the NCBRC's web site for the job posting and more details.

Postpetition Asset Sales in Chapter 13s--Modification, Not Estate Property

Debtors selling houses during a chapter 13 continues to cause conceptual problems for the courts. A recent decision, In re Marsh, from Judge Fenimore in Kansas City is an example. (Hat tip to Bill Rochelle for flagging this decision in his DailyWire column from the American Bankruptcy Institute ($). If you are a bankruptcy lawyer and don't get this column in your inbox each morning, you are missing out.) Judge Fennimore's opinion is a good point of departure to discuss why I don't think these conceptual problems are as difficult as lawyers make it out to be.

In the case at hand, the debtors scheduled the value of their home at $140,000. Between the $125,000 mortgage and a $15,000 homestead exemption, there was no value for unsecured creditors. The debtor confirmed a plan that provided for payment of the mortgage through the trustee, known as a "conduit plan." Although the debtor was below-median income and qualified for a three-year plan, the debtor opted to do a five-year plan, presumably to make it easier to cure the mortgage arrearage. The plan specified that unsecured creditors were to receive no distribution.

Forty-three months into the case the debtors filed a motion to sell the home for $210,000, which the court approved and which generated about $78,000 in cash after payment of the mortgage and fees. The debtor filed a "motion to retain" the cash. The chapter 13 trustee resisted, noting the cash would pay unsecured creditors in full.

Biden DOJ's Excellent Pick to Head USTP

The Department of Justice has announced Tara Twomey as the next head of the U.S. Trustee Program (USTP). This is an outstanding selection. I will leave her impressive biographical details to the DOJ press release, which you really should read. We here at Credit Slips would have added that she is a former guest blogger for us (which is probably why we are not allowed to write DOJ press releases).

Having known Director-designate Twomey for quite a few years, I wanted to add a few things that are not in the release. She is universally respected by her colleagues. Twomey is innovative in her approaches to legal questions, both as an advocate and a scholar. She is giving of her time to help better the law and the profession. More than once, she has served as pro bono counsel to help with an amicus brief, including for me. In her current position, she has filed many amicus briefs herself in the courts of appeals and Supreme Court, with one of her most recent efforts being cited favorably in a Tenth Circuit opinion released just this morning.

Many congratulations to Director-designate Twomey. Also, many congratulations to Attorney General Merrick and the Biden Administration on their excellent decision. Along with the work of the USTP during the leadership of the interim director, Ramona Elliott, the profession's confidence in the USTP is being restored. My inbox this morning has been full of nothing but positive comments on the selection.