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Debtors and Creditors
Rutgers University, Newark School of Law
Ondersma, Chrystin


Problem Set


Consumer Assets

Security Deposits



Loaning money to someone

Judgments you win (ex: if you’re a tort victim)

Tax refunds

Life insurance

Social Security

Uncashed lottery tickets, poker chips in the casino

Down payments on items ordered

Warranties on products

Consumer Debts

House mortgage

Car Loan

Student Loan

Personal loans (pay day loans)

Credit card bills


Medical expenses for services already rendered

Unpaid utility bills

Past due taxes

Judgments against you


House mortgage, car loan and alimony is probably a higher priority to her. We can sue, restructure the agreement to higher or lower the interest and negotiate a new time for her to pay, threaten to report her to credit report company , can reduce the money she owes if she pays more promptly,

Fair Debt Collection Practices Act

Only applies to third party debt collectors that are regularly collecting on behalf of someone else or debt collectors that are collecting on behalf of themselves but use language as if they are collecting on someone else then it applies to them

Third party debt collectors are used so companies don’t have to have reputational consequences associated with debt collection and because it’s cheaper and less effort than trying to collect it yourself

only applies to consumer debt not business debt
has rules for collection process

can’t repeatedly call over and over harassing/abusing debtor
can’t call really early or really late (sets hours for when you can call)
once you find out debtor has a lawyer, you can no longer contact the debtor to collect
can’t contact the debtor at their place of employment
can’t threaten violence or physical harm
can’t threaten legal action if you have no intention of actually suing
can’t falsely say that you are going to jail if you don’t pay the debt


step 1: see if the FDCPA even applies to them. Only applies to third party debt collectors, are they collecting their own debt? If so, the FDCPA does not apply- state laws would apply

step 2: what provisions are being violated

threatening arrest , some states outlaw payday loans , post dated checks


are they third party debt collectors? Yes, FDCPA applies

is this a debt? Definition in act: obligation that arises under a transaction. Yes, they purchased something from the discount retailer0

the fees were not expressly authorized – 808(1)


Does FDCPA apply? First argue that we are not regularly collecting debt and don’t count as a debt collector under FDCPA. See how often the firm collects debt, may not be “regularly” under FDCPA

Is it a consumer debt? Must be consumer debt for FDCPA to apply. Debt definition under FDCPA includes transactions of property

If FDCPA does apply, — Section 807 (5) The threat to take any action that cannot legally be taken that is not intended to be taken.

Other potential violation- is the amount that was written in the letter correct? Otherwise it is a FDCPA violation.

Solution – go to small claims court and follow thru , then it won’t be a false threat anymore. It would be relatively inexpensive

Chapter 1 Recap

FDCPA: It only applies to third parties. So make sure you know who is collecting the debt to see if this applies. If a creditor is collecting it on his own, but is representing himself as a different entity, the FDCPA applies.

Large debt collectors, attorneys collecting regularly,

FDCPA is a good leverage tool for debtors that know their rights and the limitations the FDCPA has for collection practices

Chapter 2:

Collection Process

Begins with a “writ”.

A writ is simply a court order.
First type is called an “execution writ” or “writ fi fa” or “writ of attachment”.

The writ orders the sheriff or marshal to look for non-exempt property of the judgment debtor, to seize it, to sell it, and to pay the proceeds to the judgment creditor, until the judgment is fully paid.
It is issued to the court clerk and delivered to the sheriff for execution.

The process is seizure is usually called a “levy”.

Turnover Orders

All the judgment creditor has to do is get the necessary information about the asset. Typically, a turnover statute permits examination of the debtor under oath (with attendance required on pain of contempt), so assets can be found. Once that information is in hand, the debtor can be ordered to produce the property, again under threat of contempt and jail.

Judgment Liens by Recordation

In nearly every state special recordation proc

nt to take property or assets

Step 1: obtain judgment

Step 2: get writ of execution from county clerk

Step 3: deliver the writ to the sheriff with specific instructions about where to look and what to look for in terms of personal property to seize

Step 4: levy – sheriff seizes the property, this is the moment the unsecured creditor has a property interest. Anything before levy would be theft

Secured Creditors: when they give the loan, the agreement includes collateral (ex: car loan- if I don’t pay/default on payments, I agree that secured creditor can repossess my car. This is a contingent interest, only can repossess on the event that they default)

Multiple Unsecured Creditors

Majority rule: first to levy is the winner – entitled to be paid in full first, before next in line gets anything

Minority rule: first to deliver the writ to the sheriff is the winner- entitled to be paid in full first but they still don’t have property interest until the levy

(If no levy then no property interest, under both rules)

Example: Dwight only has $500 in assets for bobble heads. Dwight has judgment of $500 to Angela for emotional distress from killing her cat. Then, Dwight traps Meredith in bag with a bat. Meredith sues for battery and gets judgment of $500.

Monday Angela got her judgment

Tuesday Meredith got her judgment, Meredith delivers writ

Weds Angela delivered writ

Thurs Sheriff levies for Angela, not Meredith

Friday: Sheriff levies for Meredith

Sale brings $500

Who gets the proceeds?

Majority rule: Angela wins since she levied first- gets all $500

Minority rule: Meredith wins since she delivered the writ first- gets all $500

Step 1: does the person have a property interest? (did they do what they needed to be entitled to property interest/collateral)

Step 2: are they first in line to get proceeds? (majority vs minority rule)