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Authored by Timothy D. Hedrick and Mark S. MitchellThe Fair Debt Collection Practices Act (the “FDCPA”), codified at 15 U.S.C. §§ 1692–1692p, is a consumer protection statute intended to curtail false, deceptive, or unfair debt collection practices. The FDCPA regulates the conduct of “debt collectors,”[1] and provides consumers with a civil cause of action against those debt collectors who violate it.[2] Among the FDCPA’s prohibitions are that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt” and that “[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.”[3] Courts have uniformly held that threatening to sue—or actually filing suit—based on a time barred debt violates these prohibitions.[4] If filing a lawsuit based upon a time-barred claim violates the FDCPA, a new question arises—does filing a proof of claim in a bankruptcy case based on a time-barred claim violate the FDCPA? The answer is less clear that one might expect.

Read More from: Florida Banking Law Blog

6 hours 31 min ago
During a consultation, clients may need to discuss how they can deal with a cosigned debt. It might be that they want to untangle themselves from a cosigned debt or it might be that they need to protect someone that has co-signed a debt obligation for them. Or, someone may say, “Well, my sister signed first and I signed second.” It is generally at that point I try and explain that as far as the creditors are concerned, it doesn’t matter who signed the obligation first or second, both who signed are equally responsible. If the loan was for the benefit of the sister and she was making payments but later defaulted, the creditor will begin collecting from the cosigner and vice-versa. Either way, if one defaults, the other will be considered by the creditor as “Plan B” and be called upon to step up to the line and finish the race.

Read More from: Bonds & Botes, P.C.

6 hours 49 min ago
The Chemical Brothers perform on day 1 of the Electric Zoo EDM festival at Randall
Robert Altman/Invision/Associated Press
Concert promoter SFX Entertainment Inc. is looking at ways to restructure its debt with the help of its financial adviser, Moelis & Co. Read the Daily Bankruptcy Review story via the Wall Street Journal. SFX, which puts on concerts such as the Electric Zoo festival in New York, noted in recent regulatory filings that it may not have sufficient cash to fund its debt obligations during the next year. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)

Read More from: Bankruptcy Beat

6 hours 55 min ago
The desire to turn over a new financial leaf usually blossoms when the bills from Christmas arrive in January. What was a seed of an idea about getting out of debt, sprouts and grows after the holidays. After the New Year, I see a surge of people who have explored bankruptcy with me months before.  They show up in the New Year, actually reappear to file a bankruptcy case after the holidays. And I end up saying, not now. Why, when it was obvious to me from our initial meeting that bankruptcy was necessary and appropriate? Because their holiday buying on credit may be tagged as fraudulent as to the card issuers. Fraud not dischargeable in bankruptcy It’s a principle of bankruptcy law that you cannot incur debt, knowing that you don’t intend to repay it.  That’s fraud, or it looks like fraud. Debts incurred by fraud can’t be discharged in bankruptcy.  The creditor  has to file a timely complaint and prove its case, that’s true. Sometimes, the creditor doesn’t bother.  But, many of them do.  Lose that trial and the debt survives the bankruptcy. It doesn’t look good if you saw a bankruptcy lawyer in September, say, treated your family to a lovely Christmas in December by using your credit cards, then filed bankruptcy in February. Those facts make it look like you planned all along to shed the December spending in bankruptcy in the New Year.
8 hours 5 min ago
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Read More from: Young, Klein & Associates

13 hours 24 min ago
Posted by Kathy Bazoian Phelps    Below is a summary of the activity reported for November 2015. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 77 years of newly imposed sentences for people involved in Ponzi schemes; at least 9 new Ponzi schemes worldwide; and an average age of approximately 54 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.    Troy Barnes, 53, was indicted in connection with an alleged Ponzi scheme operated through Work with Troy Barnes Inc., which later changed its name to The Achieve CommunityKristine Louis Johnson, 60, pleaded guilty to charges in June 2015. The scheme defrauded over 10,000 investors who lost at least $7 million, having been promised returns of up to 700%. At the time the scheme shut down for the self-stated reason that it could not handle “the volume of money we’re paying our members,” the company owed promised returns of about $51 million.     John Paul Baron, 55, was sentenced to 6 years in prison in connection with a $3 million Ponzi scheme. Baron had promised annual tax free returns of 15% to 28%.

Read More from: The Ponzi Blog

23 hours 47 min ago
Are you considering debt relief through a consumer credit counseling  or debt consolidation service ?  You may be surprised to learn that they can do more harm than good to your credit.  Many times, bankruptcy is a better option, and we will be happy to sit down with you and thoroughly discuss your personal financial situation in order to help you decide what is the best solution for your financial problems.  In analyzing your particular situation, we always consider if there is an alternative to filing bankruptcy.  The decision to file bankruptcy is a difficult choice for many people to make.  A bankruptcy will affect, in some fashion, your future credit.  Bankruptcy, though,  does not totally destroy your ability to get credit in the future.  The decision to file bankruptcy must be carefully made in consultation with an experienced bankruptcy attorney. photo credit: hang_in_there via photopin cc
1 day 1 hour ago
Richard Cordray, the director of the Consumer Financial Protection Bureau, takes issue with American Banker 's recent story about errors in the agency's complaint database.

Read More from: BankThink

1 day 1 hour ago
Frequently, when I am meeting with a prospective client, this question will be asked. Often, those prospective clients are worried about keeping a credit card for emergency use. Or, they are under the mistaken belief that if their home or car is included in their case, then they will lose their car or home. These concerns are completely understandable on their part. However, these really shouldn’t be of concern in a bankruptcy case. Keeping a credit card is not going to be possible because the credit card issuer will suspend your credit privileges when you file your bankruptcy case. Regardless of that, it would not be a good idea anyway. Adding more debt while you are in a bankruptcy case is contrary to the main purpose of getting yourself to debt freedom, which is why you filed your case in the first place. Including your home mortgage and/or car debt is necessary to ensure that these debts are properly handled or you will face negative (and usually very serious) consequences during or after your bankruptcy case is over. List All Debts

Read More from: Bonds & Botes, P.C.

1 day 6 hours ago
An essential element to any cramdown plan is the presence of at least one impaired accepting class.  Even when a plan proponent purports to satisfy this requirement, objecting parties will often challenge the plan’s classification scheme or whether a particular class is truly impaired.  A recent decision from the Southern District of New York, In re Ashley River Consulting, LLC, serves as a reminder that when a secured creditor is retaining its collateral under a plan, the secured creditor’s agreement to accept less than it is entitled to – by making a contribution to other creditors – can render the secured creditor impaired and provide the impaired accepting class necessary for cramdown if that secured creditor votes to accept the plan.  Background
1 day 6 hours ago
Get in tax trouble and the penalties often grow to equal the tax. What starts as a manageable problem can soon tower over you. Breathe deep;  there is a solution. Chapter 13 bankruptcy can cut tax penalties down to size. All tax penalties discharged in 13 Old or new, large or small, Chapter 13 discharges all unsecured tax penalties. In contrast, Chapter 7 discharges some tax penalties.  Discharged are penalties for taxes that are themselves dischargeable. Also dischargeable in Chapter 7 are penalties where the transaction or event that triggered the tax occurred more than three years before filing, whether or not the tax itself is dischargeable.  523(a)(7)(B). That’s good, but if you are eligible, Chapter 13 is better.  All penalties are discharged. Who can file Chapter 13
1 day 6 hours ago
With the Consumer Financial Protection Bureau's disclosure rule potentially slowing down the loan process, institutions need to focus on communication strategies to keep young borrowers at the closing table.

Read More from: BankThink

1 day 7 hours ago
Receiving Wide Coverage ... Brazilian Bank CEO Jailed: The chief executive of Brazil's largest independent investment bank has resigned after being arrested last week. Andre Esteves left his post at the helm of BTG Pactual, the Wall Street Journal reports. Esteves is the bank's controlling shareholder and also served as chairman. The Brazilian banker has found himself caught up in investigations regarding corruption at the state-controlled oil company Petroleo Brasileiro (Petrobras). His resignation follows a decision...

Read More from: BankThink

1 day 7 hours ago
Most loan contracts include provisions allowing the collection of attorneys’ fees in the event the borrower defaults.  These attorney fee provisions are routinely enforced in collection suits brought in state courts. However the federal bankruptcy courts operate independent of the state court debt collection system.  Bankruptcy cases often generate a variety of controversies that will not occur in a state court collection suit.  Thus, the issue frequently has arisen whether a general unsecured creditor may be allowed a state law-based contract claim against the bankruptcy estate for the attorneys’ fees the creditor incurs during a bankruptcy case. In the bankruptcy proceeding of the Tribune Media Company, an indenture trustee filed a proof of claim for more than $30 million of attorneys’ fees it had incurred in connection with that bankruptcy.  The trust indenture included customary text permitting the indenture trustee to recover costs and expenses of collection.   On November 19, 2015, the highly-influential U. S. Bankruptcy Court for the District of Delaware issued an opinion, disallowing the indenture trustee’s claim for attorneys’ fees.

Read More from: eSQUIRE Global Crossings

1 day 7 hours ago
NextEra Energy Inc. said Friday it has agreed to sell two Texas natural gas power plants to Energy Future Holdings Corp.’s Luminant unit for $1.59 billion. Read the story in The Wall Street Journal. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit, scroll to the bottom and click “try for free.”) A federal judge ruled that TelexFree LLC ran a vast pyramid scheme that ensnared investors around the world, a finding that has been widely anticipated since the company collapsed into chapter 11 protection last year. Read the Daily Bankruptcy Review story via WSJ. Abengoa SA’s chief executive resigned Friday as the embattled Spanish renewable energy and engineering firm begins to negotiate with creditors, the Journal reports.

Read More from: Bankruptcy Beat

1 day 8 hours ago
To be in the credit counseling business you have to be a nonprofit.  Credit card companies will frequently refuse to set up repayment plans with for-profit debt counselors.  Mandatory bankruptcy credit counseling courses may only be sponsored by nonprofits.  And the common perception is that “real” credit counselors should be nonprofit agencies. There are historical reasons for these perceptions.  At one time credit counseling was sponsored by donations from banks and community grants.  Small community agencies offered face-to-face counseling that went beyond the financial issues as counselors delved into the personal issues that caused financial distress.  Counselors acted as social workers who taught basic budgeting concepts and sought to redeem the wayward debtor. Jane McNamara, GreenPath CEO. Earned $590,883 in 2010 The reality of today’s credit counseling industry are much different.  Personal credit counseling is a thing of the past. Oh sure, they still go through the motions.  A budget worksheet may be prepared and handouts about saving money, cutting coupons, establishing savings accounts, etc, are shared, but that is just the window dressing.  No real face-to-face counseling occurs.
1 day 21 hours ago
Have you ever opened your credit card statement only to find that despite last month’s payment, your unpaid balance has actually increased because of credit card interest, penalties or fees?As a practicing consumer bankruptcy attorney in Atlanta, Georgia for over 25 years, I know that out of control credit card debt can force people in to Chapter 7 or Chapter 13 bankruptcy. In many cases credit card debt that was manageable becomes unmanageable because of common mistakes made by individuals in how they handle their credit card debt.If you can avoid these mistakes you may be able to avoid the stress and financial distress caused by excessive credit card debt.How Credit Card Debt and Credit Card Interest can Get Out of ControlThe first step towards controlling your credit card debt involves your spending. This may seem obvious but many of my bankruptcy clients fail to recognize this reality. If you find yourself carrying a balance (rather than paying off your debt in full at the end of the month) you need o change your usage habits.  If you carry a balance you will end up paying unnecessary and expensive credit card interest.Your credit card is not a substitute for cash – instead your credit cards represent a high interest loan with a 20 days repayment term. Interest on unpaid balances will eat you alive.

Read More from: The BK blog

1 day 22 hours ago
The New York Times recently ran a very sad, if extreme and unrepresentative, story of student loan debt. There's lots one can say about the article, but two points really jumped out at me.  First, it's a real problem that the Department of Education cannot refuse to lend on the basis of a borrower's unsustainable debt load.  The DoE should be allowed to refuse to lend to overleveraged consumers, both as a consumer protection matter and as a protection of the public fisc. There's a problem begging for a bipartisan legislative fix.  Second, by my back of the envelope calculations, the DoE simply cannot collect most of the debt from Ms. Kelly. Let's assume that the only real source of recovery for the DoE is by garnishing Ms. Kelly's income. Her other assets are either legally off-limits to creditors or not valuable enough to go after. As far as I can tell, the maximum garnishment amount will not even cover the interest accruing on the loans. In other words, her loans will negatively amortize even with full-bore collection activity. 

Read More from: Credit Slips

1 day 23 hours ago
The financial wonkosphere just doesn't get it about Glass-Steagall.  Pieces like this one by Matt O'Brien concentrate on the questions of whether Glass-Steagall would have prevented the last crisis or whether it is better than other approaches to reducing systemic risk.  That misses the point entirely about why a return to Glass-Steagall is so important. No one argues that Glass-Steagall is, in itself, a cure-all.  Instead, the importance of a return to Glass-Steagall is political. But totally absent in much of the wonkospheric discussion is any awareness of the political impact of busting up the big banks.   Let's be clear about why Glass-Steagall matters:  the route to campaign finance reform runs through Glass-Steagall.

Read More from: Credit Slips

2 days 6 min ago
Let’s talk about the morality of being in – and being unable to get out of – debt. There’s no clause in a credit card contract that speaks to morality or ethics. There are bad people who have credit cards and pay them on time. There are also good people who can’t make their payments on time. This is, after all, a business deal. There’s a contract, and everyone agrees to be bound by whatever it says. If you pay back the money according to the terms of the agreement then the lender makes a profit. You, in turn, get the benefit of being able to use the money for awhile. Still, my clients can’t shake the feeling that bankruptcy is somehow dishonest. After all, don’t good people pay their bills? When you take a closer look at the Bible it’s easier to see that bankruptcy is acceptable What Does the Bible Say About Bankruptcy? Most bankruptcy lawyers can rattle off a bunch of verses about how the Bible looks at bankruptcy. Deuteronomy 15:1-2 talks about the Lord’s Release, and how every seven years each creditor shall release what he has lent to his neighbor. In Luke 7:42, the Bible says, “When they were unable to repay, he graciously forgave them both. So which of them will love him more?” And Romans 13:8 says, “Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.” Bankruptcy, in other words, isn’t terrible when viewed in a vacuum. Nobody is a sinner because they walk into bankruptcy court.
2 days 13 hours ago