Thursday, November 29, 2012

Bankruptcy Law, The Law of Debtors and Creditors Problem Set Answers, Warren Westbrook Sixth Edition - Problem Set 1

 PROBLEM SET #1

    1. List of potential debts and assets for both consumer and business clients?
Asset. Anything of value that you own, car, stock, house, a claim against someone, insurance policy, some are contingent assets, i.e., the right to receive alimony. Debt. Debt is any money, property, or legal right that you owe to someone either currently or in the future.

1.2. Security Bank sees others being paid, but not it. Debtor’s expenses exceed income. Their options:
(1) Threaten to report her to a credit-reporting agency;
(2) Threaten to forgive the debt and report it as income to the IRS;
(3) Refinance and make the payments more manageable.;
(4) Ask Debtor for a security interest in her property; a security interest provides:
(a) Leverage—if the item is important to the borrower, then you won’t have to repossess, they will borrow from friends and family,
(b) Collateral control—if they need further credit, and the other creditors ask for collateral, they won’t have anything to offer as collateral,
(c) Loss reduction.  Somewhere down the line the bank make actually want to file suit.

1.4. FDCPA §§803-808. §803 defines who a debt collector is. If you are collecting your own debts you aren’t a debt collector and don’t need to follow the rules. §807 makes certain practices illegal, including misrepresentation that you plan to apply for a warrant for an arrest, because private citizens can’t do this. Marquette v. First Omaha allows banks to charge any interest rate that is legal in their chartered location.

1.6. Attorney sent out demand letter on client’s behalf stating that he would take immediate action, including a lawsuit, if the outstanding amount isn’t paid. ∆ seeks to settle if client will drop all claims b/c you violated the FDCPA.
  • The act defines debt collector as “those who regularly collect or attempt to collect, consumer debts owed…” 1692a(6). Attorneys are not exempted from the reaches of the FDCPA. See Heintz.
  • Must look at the statute to see if 1) the attorney is a debt collector (Does he regularly collect consumer debts owed?), and 2) did he actually violate any provision of the FDCPA?
  • Attorney has good arguments that he is not a debt collector and didn’t violate any provision. Must inform your client of the letter and then get her informed consent to take action.
 Problem Sets: Table of Contents

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