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Bankruptcy Notes

Bankruptcy Notes

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Published by jjjin1
Bankruptcy Law Outline
Bankruptcy Law Outline

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Published by: jjjin1 on Jul 10, 2012
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07/10/2013

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Bankruptcy Notes
- The Nature of Debt and the Meaning of Life- Non-judicial Collection methods
 
Debt
: Obligation to pay money a court of competent jurisdiction will enforce
Classification of Debt
:(1) Legal Status:- Contractual (voluntary)- Implied at law (torts)- Statutory Obligation (tax)(2) Purpose:- Consumer (personal, family, household)- Business (trying to make profit)
Constitution: Art.1 §8 c.4
 
The right for Congress to establish uniform laws of bankruptciesthroughout the U.S.
 © United States v. Kras
Holding: No constitutional or fundamental right to discharge bankruptcy. “Bankruptcy legislation isin area of legislation…”
 
What lawsuit does/doesn’t do
 
Does: money judgment (liability + judgment amount)
 
Doesn’t: make debtor pay (not self 
-executory)
Peaceful Repo
 
is lawful (as long as doesn’t break peace)
 
possible liability for conversion
want to document (video and witnesses)Religious Notions
(Moral Obligation): Owe to God, “The wicked borrow and do not repay.” “Let nodebt stand outstanding except to love others.”
 
Why people repay debts (MEPRS)
:(1) Moral Duty (obligation: right thing to do)(2) Fear of Public Enforcement(3) Peer Group Pressure/Disapproval(4) Reward when Promise kept(5) Social Expectation
Leverage
: Can get leverage against debtor if know what button to push. “similar to possessingnukes”
 
Notions of Punishment
:(1) Retribution (sanctions)
 –
notion of proportionality(2) Utilitarian (appropriate when overall consequences are better)Look at Hostess Articles
Chapter 22? (When a corporate files for Chapter 11 for 2
nd
time)
 
- Priorities Among Creditors- Other Collection Issues
 
What is debt
?
Good debt/bad debt
? Mortgage
Classification of debt by legal status
?(1) voluntary(2) implied in law(3) statutory
by purpose
?(1) consumer(2) businessAll debts incur danger of default.Constitution
Art.1 §8 c.4< Questions >(1)
Why have Americans taken on so much debt
? (greed? Excess? Credit?)
Default judgment
: ∆ doesn’t respond
 
Consent judgment
: both parties agree (not-uncommon)
Judgment
(expedites legal process)
by confession
(illegal in many states): if someone defaults,someone can gain judgment on that person automatically (debtor is in default by default)
see Overmeyer v. Frick Co.
 –
JbC ok in business setting, not in consumer
Leverage
 
 –
who has it?Question 1.2 (pg 29)- What is strategy going to be?- What order will Talis put priority on?- How could we improve legal position?- We want to know full picture
more information needed
 
- Collection Remedies
Why people repay debts
? (5)
3 kinds of judgments
?(1) consent judgment: both parties agree to stipulations/may reduce(2) default
 judgment: didn’t respond according to rules of civil procedure
 caveat) has to prove damages(3) judgment by confession: must be included in original documentMost states prohibit (class D misdemeanor)
 –
consumer or business?
Fair Credit Reporting Act (FCRA)
- Gives debtor opportunity to fix monster inaccurate information- Asked to enter own view regarding disputable information- Entitled to copy of credit report
Fair Debt Collection Practices Act
Are attorneys bound by FDCPA?
Yes, if engaged in collection practices.-
Can’t harass consumer debtor to gain info on them
 -
Can’t call at unusual hours
 -
Can’t call if you know debtor is represented by attorney
 -
Can’t call debtor at work if you know that employer prohibits
 - Caller must stop communicating if debtor requests cessation-
Collection Agency can’t use threatening language
 -
Can’t impersonate
someone else
Judgment Creditor’s Objectives
(ILKE)
(IMPORTANT!!
 –
conceptual framework for all cases)(1) Identify property available to satisfy judgment- unencumbered assets (assets with no security interest)- non-exempt assets(2) Locate assets (physical)(3) Keep assets in place (prevent transfer, sale, disposition)
(4) Realizing (execute) assets (levying, liquidating…)
Beneficial to client
** Don’t get fixed on
one asset!! Multiple assets!!
Should always have backup plan!!
Workout
: Non-bankruptcy negotiated settlement that consensually modifies contractual rights ofcreditors, in order to resolve the financial difficulties of debtors
Readjustment in credito
r’s
expectations! (possible in both consumer/business)Examples) may give an extra day, change in interest rate, change in issuance ofdividend, allow debtor some security interest status
Why workout
?- can avoid bankruptcy, avoid costs- can influence business-
found out security interest doesn’t exist
 
Problems
?- Not feasible- General economic situation-
Problem with complexity of claims (unions, environmental, products liability, tax…)
 
Aging judgments
(law rewards the diligent)(1) Dormancy: Lack of effort to collect
still valid but unenforceable (mostly procedural and socould probably revive)
 –
Some creditors may attempt to collect once a year to keep it alive(2) Limitations: Judgment no longer (good, valid, enforceable)
ways around
 –
file new claimbased on old judgment before limitations and get new judgment and extend another 10 years.

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