Chapter 13 Debtor Creditor and Consumer Credit Law

Chapter 13 Wage Owners

For wage owners with a fixed income -organize a plan -Must pay total amount of debt and needs a required income of the debtor -5 year pay out; happens in sole proprietorship

State Law

Guarantors, Sureties, and Co-signors

Real Property Exception

Homestead can only have one, urban or rural

Guarantor

Secondarily Liable - Creditor must first contact debtor, then go to guarantor.

Security Agreement

document creating the Security Interest in Collateral

Rural Homestead

-family can choose 200 acres of land -single adult can choose 100 acres of land -can be more than one parcel -includes all improvements also -debtor designates the exempt property

Important factors for Secured Creditor to maintain

-have enough collateral to cover debt and expenses--after acquired property -Priority ----Be able to take the collateral before any other secured creditors ----can get complicated

Liens

-not established by written security agreement but does give specific rights to lienholder in certain property

Creditor

-party who extends the credit -also called lending institution

Chapter 11

-primarily for business -debtors telling him to back off trying to pay the debt - General Motors, Chrysler -organize a plan to work out of debt -usually 5 year plan -rarely successful

Execution of Liens

1) Must foreclose on the property ---this is difficult ---requires legal steps

Secured Creditor

-owns security interest ---gives the secured creditor claims in specified property of Debtor

Debtor

Party who owes the debt -referred as the consumer

Artisan's lien

"Common Law" -someone who provides services or labor to the debtor on the debtor's personal property Ex: Uniform to cleaners have a lien since they were not paid upfront Ex: Shoe repair Possessory lien-lienholder must be in possession of the property

Worker's Lien

"Statutory law in Texas" -available to garages "Mechanics" -is special type of Artisan's lien -mechanic can repossess the property -requires a separate written agreement signed by the debtor -lien is lost if property has been sold to a bona fide purchaser -debtor is also liable for costs of storage, costs of sale, and attorney fees

Mechanics, contractors, or Materialmen's Lien

-This is a perfect lien must be filed -Real Estate ---covers repairs, improvement, labor or materials If the lien is not filed then the lien will be lost Ex: Carlos does the lawn, but was never paid. He can purchase a mechanic's lien.

Personal Property Exemption "Second type"

-can't take bible, retirement accounts, saving plans, General Amount of the exemption ---Family - $60,000 worth of property exempted ----Single adult - $30,000 worth of property exempted Property must be free and clear or secured party can take it Debtor gets to choose the exempt property

Rights in Collateral

-debtor can hold and use property -Secured Creditor can seize property if Debtor does not pay debt ----hold property ----sell property ----apply proceeds: costs, original debt

Chapter 7 Liquidation

- The debtor gives up -property seized by the bankruptcy judge -property sold

2) Attachment

-First way to do it b. Writ of Attachment ---this is a court order ---allows seizure of property if -------debtor is indebted to the creditor --------debtor will probably dispose of the property ---Writ of only available if debtor a) is about to leave the state b) take the property out of state c) is hiding the property of defraud creditors d) has already disposed of some of the property e) is about to sell the property under false pretenses f) is not a resident of Texas

Future of Consumer Credit Law

-June 2009 President Obama called for major overhaul of lending practices to protect consumers in credit transactions. -Consumer Financial Protection Agency ----if passe this will rewrite current rules governing U.S. Finance and Banking Industries.

Types of Collateral

-Real Estate -Purchase Money Security Interest (PMSI) ----automatic PMSI when debtor purchased an item with the borrowed money

Garnishment

2nd way to do it -This is limited in Texas b. Write of Garnishment 1) court order to seize the money of someone else 2) usually directed at a financial institution where Debtor has money on deposit c. Texas cannot garnish against employers in wages with the exception of child support obligations. Other states do allow garnishment against employers d. can be used if 1) a writ of attachment has been issued for a debt and debtor does not have sufficient non-exempt property to satisfy debt in Texas. e. can only be issued by a Court f. Bank that receives the writ is the garnishee 1) not allowed to pay the debts of debtor out of that account nor release funds to the debtor 2) is allowed to charge an administrative fee for costs, paid first g. If creditor wins, money is released to Creditor after paying the administrative fees h. If creditor does not get enough money to satisfy debt, can proceed with other means of collection

Fair Debt Collection Protection Act (FDCPA)

Collection Agencies -designated to stop perceived abusive, deceptive, and unfair debt collection techniques by the collection agencies -Provides protection for the Consumer/Debtor -Creditors are required to write a notice Penalty owed if not followed by debt collector: -actual damages -$1,000 -Costs of court -Attorney fees -Additional damages if debt collector acted in bath faith to harass the consumer This hard to prove, so be wise and use a recorder.

Consumer Credit Law "Federal Law"

Consumer Credit Protection Act (CCPA) -umbrella law since it covers multiple things such as TILA, FDCPA, FCRA and gets the credit more uniform -requires disclosure to the consumer about the cost of the credit extension

When you want to correct inaccurate billing on a credit card statement, what law can you use?

Fair Credit Billing Act

Which consumer act applies to collection agencies ?

Fair Debt Collection Protection act

Consumer Leasing Act

Part E of the TILA -Personal property leased by a consumer for personal use -total payments due not exceed $25,000 -does not apply to real estate leases -requires disclosures Penalties for non-disclosure: Actual damages, Recover not less than $100 but more than $1,000.

Surety

Primary liable, does not have to collect from the debtor first.

Electronic Funds Transfer Act (EETA)

Purpose: -to provide basic framework establishing the rights, liabilities, and responsibilities of participants in the electronic transfer systems -primary objection is good for the Consumer -EFT transfer of funds that is initiated through electronic terminal, etc. to debit or credit an account Regulation E adopted by the board to carry out EFTA Damages Civil -----actual damages ----an amount of not less than $100 nor greater than $1,000 ----Treble damages IF Criminal 1) if gives false or inaccurate information 2) fails to provide required information ---Penalty a) $5000 fine b) one year in prison c) both

Fair Credit Reporting Act (FCRA)

Purpose: to insure the banks and other lending institutions have accurate credit information which is supplied to them by credit reporting agencies Violations by Credit Reporting Agency -Enforced by FTC in U.S. District Court or Administrative Court Punishment -actual damages to the Consumer -additional damages not to exceed $1,000. -attorney fees

Landlord's Lien

Two Types Farmers - applies to crops for the growing season Building owners on Tenant's property - exempt property that can NOT be seized if the tenant does not pay ------wearing apparel ------tools, apparatus, and books of a trade or profession -----Schoolbooks -----A family library -----FAMILY portraits and pictures -----one couch, two living room chairs and a dinning table and chairs -----beds and bedding ----kitchen furniture and utensils ----food and foodstuffs -----medicine and medical supplies -----one automobile and one truck -----agricultural implements -----children's toy not commonly used by adults -----goods at leased premised not owed by the renter -----other secured property

Fair Credit Billing Act (FCBA)

part D. of Truth Lending ----Requires credit card issuers to give Consumer notice of their rights and duties at time account is opened and every 6 months -Allows consumers to object to inaccurate billing ---within 60 days ----notify creditor in writing

Execution of Judgement

a. If creditor wins the lawsuit, can request a Writ of Execution "Wait 30 days" b. Civil Practice and Remedies c. Writ of Execution 1) court order to seize non-exempt property from debtor 2) judgement does not become final until after 30 days 3) good for 10 years and can be extended another 10 years. d. Appropriate executing officer seizes property 1) Sheriff 2) Constable e. must be property that is not mortgage, subject to lien , and in trust f. If debtor does not pay the judgement, property can be 1) sold 2) Proceeds paid a. to costs b. to creditor g. Writ of Execution can be used against either real or personal property

Credit Repair Organization Act (CROA)

a. ensure truthful disclosure of all information about the services sold to consumers by credit repair organizations b. that the credit repair organizations are not being unfair or deceptive in advertising their services c. that the credit repair organizations are not being unfair or deceptive in the services they provide. Enforced by FTC Penalties for non-compliance by the credit repair organization a. Actual damages 1) suffered by Consumer 2) the amount paid to the credit repair organization b. Punitive damages as determined by court 1) the noncompliance by the credit repair organization 2) the nature of the noncompliance 3) The extent to which such noncompliance was intentional 4) in the case of any class action, the number of consumers adversely affected c. Reasonable attorney fees d. court costs Statue of limitations is 5 years for the CROA

Penalties in non-home loans

enforced by FTC and seven other Federal agencies Types 1) reimbursement of any amount overcharged and any billing erros 2) actual damages 3) twice the finance charge 4) attorney fees

Purpose of Writ of Attachment

is to prevent the disposal of property Writ of attachment -requires the appropriate court order -creditor must file affidavit proving need for writ in court -Creditor must file a bond to cover debtors expenses if creditor loses -Property is held subject to the Writ until the lawsuit is finalized

Equal Credit Opportunity Act (ECOA)

is to stop discrimination in the issuance of credit due to race, color, religion, sex, national origin, and marital status with some exceptions Regulation B issued by Federal Reserve Board as per ECOA -Consumer Law Enforcement FTC and other agencies enforce -FDIC ----national banks ----Savings and Loans -National Credit Union Administration-Credit Unions -DOT - airlines Enforced by FTC in administrative courts or injunctive relief in Federal District Court Damages ---actual damages ---Punitive Damages up to $10,000 ---injunction to stop further discrimination ---attorney fees and court costs

Urban Homestead

land used for home or family or a single adult 10 acres and all the improvement s thereon if 20 horses on property, creditor cannot take the property

Bankruptcy "Federal Law"

last resort for the debtor can file every seven years, fresh start if plan accordingly

Truth in Lending Act (TILA)

only applies to loans for -personal items -family needs -household purposes b. Only covers loans up to 1) up to $25,000 but not over buy through bank or dealership 2) repaid in more than 4 installments 3) by creditors who regularly extend credit a. finanical institutions, credit card companies , stores who extend credit 4) applies to closed-ended credit transactions a) set number of payments b) set amount of payments 5) also covers open-ended credit transactions a. creditor makes a series of loans over time b. debtor can pay in full or making minimal payments c. Example: Credit cards c. Disclosure Law d. Administered by The Federal Reserve Board 2) Regulation Z requires disclosure of cash price, finance charges, APR, staring date and ending date . -----must be in clear language and easy to understand Allows consumer to do compare shopping of loans

The Equal Credit Opportunity Act applies to

race, color, religion, sex, and national origin type of income received including welfare marital status in Texas age

Co-signors

singed the debt obligation are just as responsible to repay the debt

Disclosure must be made under the Truth in Lending Act if

the amount is more than $25,000 there are more than 4 payments in certain real state loans

Lien

the lien must be in writing; underlined and conspicuous

Creditor acted with a pattern of negligence Non-Home

then will criminal charges -$5,000 fine -1 year in prison -Enforced by the Department of Justice