A Change in the FICO Scoring System Seals the Gap for Authorized User Accounts

by Joseph Krcmar October 10 2007, 20:40
I. Introduction:


In June 2007, the Fair Isaac Corporation announced its plans to modify the FICO scoring system to better ensure the “continued reliability and predictive power of FICO scores.” [1] These changes were set in motion on September 1, 2007, and are declared to be the most significant alterations made to the scoring system in the last ten years. [2] Analysts are unsure how the new scoring model, known as FICO 08, will affect the overall credit system, but they have “no doubt that [FICO 08] will have a major impact on credit scores across the country.” [3] One of the major changes that will affect over 50 million consumers [4] is that FICO scores will no longer factor authorized user accounts into their credit scoring formulas. [5] [More]

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Bankruptcy

Credit after Filing a Chapter 7 Bankruptcy: how individuals can improve their credit score after a Chapter 7 bankruptcy.

by Joseph Krcmar September 12 2007, 20:43
According to the American Bankruptcy Institute, there were 18,466 non-business Chapter 7 bankruptcy claims filed in the state of Illinois last year.[1] Even though this amount is nearly three times as less as the amount of Chapter 7 claims filed in 2005, analysts at the Federal Reserve indicate that household debt is at a record high relative to disposable income for 2007.[2] Consequently, some analysts are concerned that the high level of indebtedness will lead to more bankruptcies in 2007.[3] Nonetheless, filing for a Chapter 7 bankruptcy is not the end of the world for one’s credit. [More]

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Bankruptcy

Going "Stealth": Executive Compensation in Chapter 11 After Dana

by Jillian McClelland October 10 2006, 00:13
A rose by any other name may still smell as sweet, but execs at Dana Corp. recently discovered that calling executive compensation by another name did not pass the smell test in court. S.D.N.Y. Bankruptcy Judge Burton Lifland recently denied Dana's proposed executive compensation package as contrary to the provisions of the Bankruptcy Code. [1] Nearly one year after BAPCPA, has the Dana case finally ushered in a new approach to evaluating executive compensation plans, as envisioned by Congress? [More]

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Bankruptcy

No One at the Helm: Trustee Appointed to Manage Death Row Records

by Jillian McClelland September 12 2006, 00:13
Suge Knight’s hopes of maintaining control of Death Row Records during its Chapter 11 reorganization were dashed on July 7, 2006, when United States Bankruptcy Judge Ellen Carroll placed the company under the management of a case trustee. Judge Carroll cited gross mismanagement of the record company’s finances, stating, "it seems apparent that there is no one at the helm." [1]


The Death Row case illustrates a pervasive tension in corporate reorganizations: at what point does the interest of the creditors trump the vested control of management, which may have driven the company insolvent in the first place? Under certain conditions, the bankruptcy court has the power to transfer control of the estate from the debtor-in-possession to a trustee under section 1104(a) of the Bankruptcy Code. [2] [More]

Can Congress Save the PBGC? Implications of a Delphi Corp. Distress Termination of Pension and Benefits Plans in Bankruptcy

by Jillian McClelland April 11 2006, 00:14
The negotiation efforts of Delphi Corp.'s union employees took on new urgency on March 31 as Delphi filed a motion with the U.S. Bankruptcy Court seeking to reject its collective bargaining agreements and modify its retiree benefits plans under sections 1113 and 1114 of the Bankruptcy Code. [1] If Delphi's pension and benefits obligations are ultimately rejected and then terminated, it will have a profound effect on the Pension Benefit Guaranty Corp., the federal agency that insures pension obligations. Already operating at a deficit, PBGC can ill-afford to take on any of Delphi's estimated $10.7 billion in under-funded liability for hourly employees' retirement benefits. [2] In response to the recent distress terminations of pension plans in the steel and airline industries, Congress has introduced several measure to bolster the PBGC. As a consequence, Chapter 11 debtors may find it more difficult to avoid pension liability as part of a reorganization plan. [More]

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Bankruptcy

Bankruptcy Judges Take on "Inane" Credit Counseling Requirements

by Jillian McClelland March 14 2006, 00:15
While bankruptcy judges are obliged to apply and uphold the rule of law as specifically set out by Congress, some have chosen to publicly air their misgivings about the lack of discretion left to judges to administer bankruptcy cases by the 2005 amendments to the Code. A recent order by Judge Monroe of the Western District of Texas has gained widespread attention for its scathing attack on the credit counseling requirement. [1] It remains to be seen whether bankruptcy judges and practitioners will be able to prompt review of this provision, but the frustration evident in Judge Monroe's decision has sent Congress a clear message. [More]

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Bankruptcy

The Bankruptcy Exception to State Sovereign Immunity

by Jillian McClelland February 21 2006, 00:16
On January 23, 2006, the U.S. Supreme Court handed down its decision in Central Virginia Community College v. Katz [1], holding that a state cannot assert its sovereign immunity as grounds to block the avoidance of a preferential transfer to a state agency under § 547(b) of the Bankruptcy Code [2]. At the heart of the matter was whether Congress overstepped its constitutional power when it enacted § 106(a) of the Code, which waives state sovereign immunity in bankruptcy.



However fair the outcome may be, the rationale of the Court cannot be reconciled with its prior decisions addressing Congress's ability to waive state sovereign immunity under its Article I powers. Indeed the Court's theory of implied waiver does little to justify why there should be a "bankruptcy exception" at all. On its face, Katz may be expected to open the door to broader Congressional abrogation of state sovereign immunity in the future, but the addition of Justice Alito to the bench almost certainly promises that Katz will receive a very narrow reading when the issue next reaches the Court. [More]

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Bankruptcy

Bankruptcy Abuse Prevention Takes Aim at Attorneys

by Jillian McClelland November 1 2005, 00:18
"I don't think you can make a lawyer honest by an act of legislature. You've got to work on his conscience. And his lack of conscience is what makes him a lawyer." [1]



While the lawyer joke is an art form dating back centuries, it is not actually the case that firms throughout the country are staffed with snakes, shysters, and snollygosters. Nor is there much evidence that attorneys who counsel clients through bankruptcy proceedings are a particularly shady lot. So it has come as a surprise to many attorneys that Congress has enacted strict requirements, backed by monetary and criminal sanctions, for attorneys practicing in consumer bankruptcy. The burden of personal liability raises fundamental questions about the role of the attorney and the sanctity of the attorney-client relationship under the new bankruptcy law. [More]

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Bankruptcy

Under Pressure: Delphi Files Chapter 11 in Advance of New Law

by Jillian McClelland October 11 2005, 00:19
On Saturday October 8th, Delphi Corporation ended the intense speculation of media and industry watchers by filing for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York.[1] Sources inside Delphi had indicated as late as Friday that such a move was likely unless Delphi could negotiate a last-minute reprieve in the form of a bailout package from its largest creditors, General Motors and the United Autoworkers Union.



While Delphi is surely struggling, it is not currently strapped for cash. So why file now? The answer lies in both the legal climate and in business strategy. [More]

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Bankruptcy

Should Katrina Victims be Exempted from the New Bankruptcy Law?

by Jillian McClelland September 20 2005, 00:19
The aftermath of Hurricane Katrina has sparked renewed debate over stricter provisions in the new bankruptcy law that takes effect on October 17th. Higher filing fees, more stringent document requirements, and mandatory credit counseling are all cited as especially burdensome for victims of natural disasters. Democrats are concerned that the controversial financial means test will deny Katrina victims the ability to declare a fresh start, and have proposed an exemption in a bill referred to the Senate Committee on the Judiciary on September 8th. [1] [More]

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Bankruptcy

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