BANKRUPTCY – PORTER
PART I – INDIVIDUAL DEBT COLLECTION
Chapter 1 – Collection W/out Courts
Nonjudicial Collection Methods
i. Leveraging
1. Creditors have to decide what actions are worth taking in order to collect a debt. The creditor looks for ways to enhance its leverage with the debtor in order to increase the likelihood that the debtor will repay.
ii. Indirect Leverage in the Legal System
1. The gov’t sometimes shifts the leverage of parties.
a. EX: an ex-spouse may be put in jail if he finals to pay child support or alimony.
iii. The Credit Information Process
1. Creditor reporting systems allow creditors to make credible threats to deny access to future credit may increase their collection leverage.
2. 15 U.S.C 1681
a. §611 – If debtor tells agency that their information is wrong the agency has to investigate and remove the information if is it wrong.
b. §615 – Requirements on Users of Consumer Reports
i. If you take adverse action base on a consumer report you have to:
1. Provide notice to the consumer
2. Provide info for the reporting agency
3. Provide notice that the consumer has the right to get a free copy of the consumer report.
Restrictions on Nonjudicial Collection
i. Usury Laws
1. Used to be in place to limit the interest that could be charged.
2. Some states still have them.
3. However, that are some that don’t and if the bank is in one of those states they can charge as much interest as they want, even to nonresidents, so interest rates are characterized as deregulated.
ii. Federal Statutory Controls on Nonjudicial Collection
1. Fair Debt Collection Practices Act.
a. 15 U.S.C 1601
b. A lawyer IS a debt collector under the Fair Debt Collection Practices Act, if the lawyer regularly, through litigation tries to collect debts. Heintz v. Jenkins.
c. Who is a Debt Collector?
i. Under §803(6)(f) you are not considered a debt collector if you are collecting your own debt. But if you are collecting your debt under another name you may be considered a debt collector under §803(6)(A).
d. Fees
i. Third party debt collectors are not allowed to charge a fee unless the fee was agreed to in the original contract. §808(1).
e. Post Dated Checks
i. Can’t accept post dated checks unless the person writing the checks is notified of the debt collector’s intent deposit the check. If they are getting checks two weeks ahead of time then they need to notify the customer bef
hapter 2 – State Law Debt Collection
Fraudulent Conveyances and Shielding Debtor Assets
i. Uniform Fraudulent Transfer Act
1. §5(a) – Transfers Fraudulent as to Present Creditors
a. Presumed Fraud
b. Easier for creditors.
c. Permits a creditor to avoid any transfer made (1) in exchange for an unfairly low consideration (2) at times when the debtor was insolvent; doesn’t matter if debtor was already insolvent or the transfer made him insolvent.
2. §4(a)(1) – Transfer Fraudulent as to Present and Future Creditors
a. Actual Fraud
b. A transfer is fraudulent if:
i. (1) There was an actual intent to hinder, delay, or defraud any creditor; OR
ii. W/out receiving a reasonably equivalent value and
1. (i) the debtor was engaged or about to engage in a transaction for which the assets were unreasonably small; OR
2. the debtor knew or should have known that they were incurring debts beyond their ability to pay.
(b) The following can be used to determine intent:
