April 6, 2020
Urgent Call to Action: CLLA Needs Your Voice!
Dear CLLA Member,
I hope this missive reaches you in health and safety in these unprecedented times. We, like all other Americans, are facing this time of crisis with solidarity, resolve, and an effort of togetherness.
While we wholeheartedly agree and support recent legislative consumer relief actions, there is legislation, such as Senate Bill S.3565, which provides for a blanket prohibition of debt collections, fraught with unintended consequences. For a breakdown of the reasoning, please visit this link to CLLA’s letter to the White House.
Here’s how you can help!
- You can download either of these form letters: one for CLLA members and their employees (link to CLLA Member and Employee Letter), and another for credit grantors and small business owners (Business Owner and Employee Letter).
- Place your letterhead on top, and then send it to your local congress people.
- You can use this easy link: https://www.govtrack.us/congress/members
- Share this post or email this to anyone you know that you think would be willing to help!
Be smart out there, and I hope to see you soon.
April 3, 2020
Response to Senate Bill S.3565 by Timothy Wan, CLLA President
RE: RESPONSE TO SENATE BILL S.3565
I am the current President of the Commercial Law League of America (“CLLA”) and write to voice the CLLA’s objection to Senate Bill S.3566. The CLLA, founded in 1895, is the nation’s oldest organization of attorneys and other experts in credit and finance actively engaged in the field of commercial law, bankruptcy, and reorganization. Its membership consists of over 650 members who employ over 10,000 citizens. The CLLA is made up of lawyers, from both small and large firms, judges from virtually every state in the United States, and credit professionals, including members who own or work for collection agencies. CLLA members represent individuals, small businesses, and large corporations, all of whom are involved in the commercial credit industry. Although the CLLA has long been associated with the representation of creditor interests, it is known for seeking fair, equitable, and efficient administration of state law collection and bankruptcy cases for all parties-in-interest.
We, like all other Americans, are facing this time of crisis with solidarity, resolve, and an effort of togetherness.
While we wholeheartedly agree and support recent consumer relief actions, Senate Bill S.3565 will actually damage small businesses by cutting off their ability to require customers to pay for their goods and services, and does not accomplish the goals for which it was created. It is important that we avoid unintended consequences. READ MORE
March 30, 2020
Federal Government Resources for CLLA Members
If your state has received the necessary disaster designation, SBA’s Economic Injury Disaster Loan Program can provide low interest loans in this difficult time. A streamlined application process is now available at https://covid19relief.sba.gov/#
Information on administration and processing for the expanded SBA 7(a) loan program which is part of the CARES Act, which passed on Friday, March 27, 2020, is not yet available. Those loans are to be processed by approved SBA lenders. Your current bank or lender is the best current source for this information, as it becomes available. CLLA Board of Governors member Ted Hamilton, Esq. has published a summary of the CARES Act which may be of assistance in digesting the voluminous law.Linked below, state specific programs may be available, including state disaster assistance available in:
This is a brief summary of the Small Business Sections of the third COVID-19 Act (H.R. 748) signed into law by President Trump on March 27, 2020 (herein “The Act” or “Act”). This Act distributes over $2 trillion of federal support to the U.S. Economy. The Act provides specific benefits to Businesses under 500 employees. These benefits include loans with low interest and with forgiveness provisions, tax credits for those that keep their employees working, and unemployment benefits for those laid off. In addition, tax credits are available to individuals. READ MORE
March 28, 2020
Massachusetts Bans Consumer Debt Collection for 90 Days
On March 27, 2020, the Attorney General of Massachusetts announced an enacted emergency regulation making consumer debt collection unfair and deceptive under the State’s Consumer Protection Act. The regulation is effective until the earlier of ninety (90) days or the end of the state of emergency declared by the Governor of Massachusetts. The State’s existing debt collection regulations and other applicable laws remain in effect.
March 27, 2020
Senate Passes Coronavirus Stimulus Bill: New Bankruptcy Amendments
Rolling Meadows, IL – March 27, 2020 – Early on the morning of March 27th, the Senate passed the CARES Act. The bill goes to the House of Representatives where it is expected to pass by unanimous consent. The President is expected to sign the bill.
The bill has some key provisions dealing with bankruptcy, which include the following:
First, the newly enacted Small Business Reorganization Act of 2019 (Chapter 13 for small business) will see an increase in the eligibility threshold from $2,725,625 to $7,500,000.
Second, the definition of ‘income” in the Bankruptcy Code for Chapter 7 and 13 will exclude coronavirus-related payments from the federal government from being treated as “income” for purposes of filing bankruptcy. This provision affects the means test calculation.
Third, “disposable Income” for purposes of confirming a Chapter 13 plan shall not include coronavirus related payments.
Fourth, Chapter 13 debtors may seek plan payment modifications, if they are experiencing a material financial hardship due to the coronavirus pandemic, including extending their payments for up to seven years after their initial plan payment was due.
These provisions will sunset in one year.
Finally, there would be a six month repayment holiday with respect to student loans.
There are also discussions on Capitol Hill that the next phase of COVID19 relief may including expanding the dollar limits for Chapter 13 eligibility. The League is also watching to see if dischargeability of Student loans, an increase in Trustee Commissions and the elimination of credit counseling may work its way into future legislation.
March 27, 2020
CLLA Legal Update: Coronavirus Response Act
Rolling Meadows, IL – March 27, 2020 – Effect of Families First Coronavirus Response Act (FFCRA)H.R. 6201. The United States Congress and the President passed the second coronavirus response act in mid-March of 2020. It passed as House Resolution 6201. (Herein “The Act”) The Act became law on March 18, 2020 amid the Coronavirus outbreak in the U.S. This Act poses dramatic changes to small businesses and sole proprietorships throughout the Country including law firms and collection agencies. It goes into effect on April 3, 2020. Almost all Small Businesses in the U.S. will feel the effects of this law over the next few months.
This Article will provide a brief overview of the Act. It is not intended to be relied upon for a complete analysis of specific applications of the Act in all circumstances. Part of this Act included the Emergency Family and Medical Leave Expansion Act. This EFMLEA Act extends family and medical leave during the a Public Health Emergency to all employers who employ under 500 employees. The current threshold for family and medical leave is any business over 50 employees. As a result, all small businesses and sole proprietorships must now give Family and Medical Leave of up to 12 weeks for Coronavirus related causes. These causes include the following:
- Subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- Advised by a health care provider to self-quarantine related to COVID-19;
- Is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
- Is caring for an individual subject to a quarantine order or in self-quarantine;
- Is caring for a child whose school or place of care is closed for reasons related to COVID-19;
- Or is experiencing any other substantially-similar condition specified by the Secretary of HHS.
Duration of Leave:
For reasons (1)-(4) and (6) a Full-time employee is eligible for up to 80 hours of leave, and a part-time employee is eligible the number of hours of leave that the employee works on average over a two-week period.
For reason (5): A Full-time employee is eligible for up to 12 weeks of leave at 40 hours a week, and a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.
CALCULATION OF PAY
For Leave reasons (1),(2), or (3): employees taking leave shall be paid at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).
For leave reason (4) or (6); employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).
For leave reason (5); employees taking leave shall be paid at 2/3 their regular pay or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period- two weeks of paid sick leave followed by up to 10 weeks of paid expanded family and medical leave). The first 10 days of leave are unpaid. After 10 days the Employer “shall provide paid leave for each day of leave taken after the 10 day unpaid period. The employee may then take 12 weeks of paid leave at 2/3 of the regular rate of pay not to exceed 200 per day or 10k in the aggregate.
GETTING IT BACK
The Employer receives a Tax credit against payroll taxes for each calendar quarter up to an amount equal to 100 percent of the qualified sick leave wages paid by such employer with respect to such calendar quarter. Should the payroll tax amount paid the employer on a quarterly basis not be sufficient to cover the amount paid under the act, the Employer treats the amounts paid as not covered by payroll taxes as a credit against estimated income taxes on taxes. Of course, this does not deal with the fact that there may be extensive losses due to the Virus outbreak. This entire provision sunsets on December 31, 2020.
Thursday, March 12, 2020
On March 11th, H.J. Res. 76 passed the Senate by a Yea-Nay vote of 53-42. H.J. Res. 76 would overturn the 2019 Department of Education student loan forgiveness rule which makes the process more burdensome and limits potential relief, versus the 2016 rule which it replaced. The 2019 rule is currently scheduled to take effect July 1st.
H.J. Res. 76 was initially introduced to the House on September 26th, and passed with a 231-180 Yea-Nay vote on January 16th. As of yesterday it had 162 co-sponsors, all of whom are Democrats. The companion measure of S.J. Res. 56 was also voted on yesterday in the Senate and was indefinitely postponed by unanimous consent. The next step is for H.J. Res. 76 to be cleared and sent to the White House.
Wednesday, February 26, 2020
Tuesday, January 14, 2020
Supported by 148 Democrats as of January 13th, H.J. Res. 76 would overturn the Education Department’s 2019 student loan forgiveness rule. This rule established policies for the borrower defense program, and is scheduled to take effect July 1. Democrats have said the rule, which replaces a 2016 Obama administration rule, places the burden on borrowers and limits potential relief. It also provided $11.1 billion less in aid in compared to its predecessor. Overturning the 2019 rule will alleviate those burdens by returning to:
- allowing the department to forgive student loans for students at schools that close, if they don’t enroll in another program within three years;
- allowing automatic discharges for groups and not forcing them to apply individually (as the 2019 rule requires);
- allowing for a longer than three-year statute of limitation on claims;
- and barring schools from requiring student to sign predispute arbitration agreements.
H.J. Res. 76 was introduced on September 26, 2019, and was referred to the House Education and Labor Committee. The House may consider it as soon as January 15th. A simple majority would be required for passage. The White House has made a statement that they oppose the measure, and the president’s advisors recommend he veto H.J. Res. 76.
Tuesday, January 14, 2020
Sen. Warren’s plan to ease student loan debt would be through administrative authority, and not revolve around Congressional approval. This move to cancel or modify a scope of around $640 billion of student debt would be acted out through the Department of Education. Funded by the Warren Administration’s proposed wealth tax (on household of $50 million or more), this amount would be a fraction of what the campaign estimates would generate $2.75 trillion.
This is currently legal and possible through the Higher Education Act which details that the Department of Education has the discretion “to modify, compromise, waive or release student loans”. She would authorize the Department to provide as much as $50,000 in relief for 95% of student loan borrowers.
Warren also intends to address racial disparities in the education system, increase outreach and relief for borrows, assist in improving the student loan debtors credit history, crack down on predatory lending and end federal aid to for-profit colleges.
This proposal has the potential to eliminate private student loan debt for approximately 42 million Americans. The Warren campaign noted that the American government has tackled much more difficult tasks in the name of big business bailouts, tax giveaways and other such concessions.
Wednesday, January 8, 2020
Sen. Elizabeth Warren released a plan yesterday to restore bankruptcy protections, in direct opposition to a 2005 law that fellow presidential candidate Joe Biden successfully promoted as a Delaware Senator.
Warren, as a bankruptcy lawyer, opposed and campaigned against the 2005 law from the start, as she believed that it damaged accessibility with increased costs and eligibility requirements only benefit creditors at the cost of working families. Her presidential plan would be to replace the two current main types of bankruptcy with a single system that would be more available to all debtors. Instead of Chapter 7, where individuals have to surrender their property, or Chapter 13, in which multiyear payments are entered into, Warren’s plan would offer a “menu of options” and would be a case-by-case basis whose options include payment plans or surrendering property. This is a big change from the current system.
Her plan actively works to remove some of the hurdles from bankruptcy, such as the following example from Warren: “the same onerous paperwork requirements on a middle-class American filing bankruptcy that it did on a wealthy real-estate developer”. In her plan, student loan debt would be dischargeable (as well as homes and cars), same as other consumer debts. Additionally, it would allow debtors to modify their mortgages (mostly prohibited) and reverse the provision in the 2005 law requiring credit counseling and fees for anyone below the poverty line.
Warren has also vowed to increase accountability for creditors and crack down on bankruptcy practices that the wealthy and big corporations use to shield their assets, stop companies from collecting debts that are no longer valid, and allow people to sue creditors who try to collect debts that have already been discharged.
In summation, the two candidates’ opposing positions on bankruptcy are clear, and Warren’s plan recalls this historical opposition.