I. Intro to Debt Collection Practices
· PRE-BR STUFF: Before BR comes into play, there are a number of Debt Collection and Judicial options Cr’s can use in an attempt to exert leverage and pressure on the D to pay debt. D’s make judgment call on who to pay based on what they need most at the time. In trying to become one of the D’s higher priorities Cr’s can go overbroad …..
A. Fair Debt Collection Practices Act
· § 803(6): DEBT COLLECTOR means any person who uses any instrumentality of interstate commerce or the mails in business the principle purpose of which is to collect debts OR who regularly collects debts owed to another. Includes a creditor who uses in diff name in collecting their own debts.
o §803(5) DEBT means Consumer debt arising from a transaction primarily for personal, family or household purposes.
o PROHIBITED Acts of “Debt Collectors”……..
o §805(c): Consumer can notify in writing that she does not want to hear from them anymore and is not going to pay.
o PENALTY FOR VIOLATION OF FDCPA…..
§ §813: violating Debt Collector is liable for amount equal to the sum of …..
· (1) Actual Damages
· (2) For IND, additional damages up to $1,000 (punitive).
· (3) Costs of Atty to Debtor
o #1). D default on $2000 new computer payment. Store calling and sending threatening letters. Does she have remedy? What if is from Collection Agency? What if is from Atty for Cr?
§ No remedy if its Cr themselves cuz they are not a “Debt Collector.”
§ If is a collection agency, they are subject to the act and we have to consider the time and frequency of the calls as well as the nature of the statements made to see if there is violation under § 806-807.
§ If is a Atty, they must be in the primary practice of debt collection or do it all the time, see Heintz v Jerkin.
o #2) Would answer change is D was the owner of a small family owned business that used computer?
§ Yes, not “consumer debt” to don’t get protection under the FDCPA.
B. Judicial Collection Actions
· When Cr’s cant get D to pay voluntarily they must sue, get a judgment and attempt to execute on it. There are 3 STATE options to realizing upon a judgment…….
· WRIT o EXECUTION: clerk issues no earlier than 21 days after the entry of a judgment, its good for 90 days and after that you have to re-new and get another writ. When sheriff takes shit under the writ, CR becomes a “judgment lien Cr” and will have priority to $ from sale of property seized.
o Credit Bureau v. Broken Bow: “physical seizure by sheriff is not required, only constructive seizure.”
· Problem: D has three judgments against it by Cr’s each in the amount of $10,000. A got judgment on Nov 1, B got on Nov 10 and delivered to Sheriff on Nov 15, C got on Nov 20, delivered on Nov 22 and got deputy to seize all D’s shit on Nov 25. All stuff is worth $15,000, who get what?
o In MI, the applicable date is the
mum amount taken out can not exceed the lesser of ………25% of disposable earnings OR 30 times the minimum hourly wage ($196)
· Garnishee Employer Firing D for Garnishment…..
o CCPA §1674: can not fire for one indebtedness even if garnished more than once, can fire for more than one indebtedness.
o MCLA 600.4015:Can not fire for any number of indebtedness, more protective than Fed Law.
§ Violators shall be required to reinstate the principal defendant to employment and reimburse all compensation lost by the discipline or discharge.
o On Feb 1, Cr#1 get $3,000 judgment against D and get writ to sheriff for served on G where D has checking account which was overdrawn $10. On Feb 5 D put $5,000 in. On Feb 7, Cr#2 get judgment for $3,500 and get writ to sheriff. Sheriff server both writs to G on Feb 9, what should G do?
§ 3 claims (Cr#1, Cr#2 and Bank cuz overdraft). Served on Feb 9, “point in time” = $5 G’s.
§ Priority: Bank can set off and Cr#1 and Cr#2 split $ because they were served at same time.
o Before you tell G what to do, D writes a $500 check. Bank pays $ and on Feb 16 employer of D deposit wages of $300. What now?
§ If G paid on the check, will be liable to Cr#1 and Cr#2 for $500, as to the additional funds deposited, in MI they do not count cuz “point in time” in other states they would be rolled in.