Bankruptcy Outline

 
Bankruptcy Outline
Sullivan
Fall 2013       
 
 
 
 
·         Introduction
o    Leverage
·         The aim of the creditor is to get the money now (and all of it)
·         The aim of the debtor is to:
§  Avoid payment
§  Avoid consequences of non-payment
§  A significant amount of leverage is determined by where you live.
·         Non-Judicial Sources of Leverage
§  Creditor
·         Threat of repossession
·         Discontinue/ Withhold future service
·         Report to the IRS
·         Harass
·         Threat of negative credit reporting
·         As long as the information is accurate.
·         Lawsuit
§  Debtor
·         Delay in neg. leads to devaluation
·         Threaten suit
·         The value of the debt
·         Can scare off small debt
·         Cost- benefit analysis
·         Are our hands clean
·         What will the forum be.
o    Restriction on the Ways a Creditor Can Collect Debt?
·         Usury Laws
§  Applies to consumer products
·         Home Loans
·         Family
·         Personal Use
·         You have to look at the nature of the loan
§  Caps at 21 or 24% of the loan.
§  Biggest exceptions are pawn shops and payday loans
o    Recovery  of Attorney's Fees
·         They can be recovered, but there must be a statute that says so.
·         Alabama
§  Mini Code
·          A set of consumer  protection codes with the max attorney fee being 15% of the unpaid loan.
·         This really prevents to collection of small loans
·         There is a separate statute that allows for the recovery of attorney's fees in lease cases.
o    Fair Debt Collection Act
·         Consumers must be natural persons
·         The definition of the creditor is very broad
§  Means any person who offers or extends credit by creating  a debt or to whom credit is owed, but such term does not
include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt of another.
·         The definition of debt collector is very broad as well.
§  Means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is collection of any debts, or who regularly collects or attempts to collects, directly or indirectly, debts owed or due or asserted to be owed or due another.
·         One large exception is those collecting their own debts.
·         Section 804 (Acquisition of Location)
§  Debt Collector communicating with anyone besides the consumer must:
·         Identify himself- ask only location information and identity of employer
·         Not state the consumer owes debt
·         Not communicate more than once unless requested to do so.
·         Not communicate via postcard
·         Give any sign that the letter comes from a debt collector
·         After the collector knows the debtor is represented by an attorney- cannot communicate with any other person other that attorney- only exception is if the attorney does not respond.
·         Section 805
§  A debt collector cannot, without consent of court or debtor communicate with the debtor:
·         At an unusual place or time
·         Between the hours of 8-9 is only okay
·         If collector knows he is represented by an attorney – attorney fails or consumer consents
·         At consumer's place of employment if cannot receive calls
§  Communications with Third Parties
·         Except for 804, a debt collector can only communicate with the debtor, attorney, consumer reporting agency.
·         Section 806 (Harassment or Abuse)
§  A debt collector cannot:
·         Use a threat of violence or criminal means.
·         Cursing
·         Publish their names
·         Advertise the sell of a debt to coerce payment
·         Harassing phone calls
·         The placement of telephone calls without disclosing name
·         Section 807
§  Cannot give misleading or false information:
·         Connected to the Gov.
·         The false characterization of:
·         Character, amount, and status of the debt.
·         Any services or compensation due the debt collector.
·         Implication individual is an attorney
·         Nonpayment will result in arrest, seizure, garnishment, etc
·         Threat of action that cannot be legally taken
·         That the referral or sell of the debt will result:
·   Lose claim or defense of debt
·   Become subject to practice prohibited by title
·         Implication debtor commited a crime
·         Threatening to report false or information or that the debt is not disputed
·         The use of false information to obtain information about the consumer
·         Section 808 (Unfair Practices)
§  Collection of amount that is not agreed to or authorized by law.
§  The acceptance of by a debt collector of any debt that is postdated 5 days unless such person is notified in writing of the debt collector's intent to deposit the check not more than ten nor less than three business days prior to deposit.
§  The procurement of a post-dated check to threaten criminal action
§  Threatening to deposit the postdated check prior to the date.
§  Causing charges to be made to person for communications by concealment of the true purpose of the communication
§  Taking or threatening nonjudicial taking when:
·         There is no possessory right to the property
·         The property is exempt from dispossession
·         There is no intention to take the property
§  Communicating by post card
§  Using any symbol other that the debt collector's address on mailed communications
§  30 days to cure.
§  Some circuits consider filing a lawsuit to be a communication
o    Heintz v. Jenkins
·   Facts: Borrowed money for car. Lawyer sent letter to Jenkins.
·   Issue: Can a lawyer be a debt collector under the FDCPA
·   Holding: Yes, an attorney can be a debt collector when he or she regularly engage in consumer-debt collection activity, even when that activity consists of litigation.
 
·         State Law Debt Co