1. Unit 2 Seminar Bankruptcy Law

2. Credit Cards Bank Loans Home Mortgages Car Loans Student Loans Character: employers, country clubs and some colleges and universities

3. Collection Agencies use the threat of a bad credit rating as a powerful tool to legally collect debts. What happens when the threat of ruining a person’s credit doesn’t work?

4. Creditors can proceed to the court system to collect debts. There are 2 ways:  Default Judgment  Cognovit Judgment

5. Court decision in which the creditor wins by default because the debtor does not file a response to the complaint. Most default judgments are handed down because the debtor failed to appear at the hearing. **Often times, a creditor will seek a default judgment first for tax purposes in order to write off the loss.

6. This is a judgment by confession. The parties agree on a judgment by confession when the initial contract is signed. The debtor agrees early on that should he/she default in the future, that an automatic judgment would be entered without hearing or notice. What steps would be taken if the debtor wants to contest the judgment?

7. The debtor would go to court to strike, or make void, either the default or cognovit judgment by proving that the judgment was improper.

8. The debtor is held liable for a specific amount. This is amount is subject to an interest rate determined by state stature. Interest will accrue until the judgment is paid in full or no longer enforceable. **Check the state statute for the exact duration of years a judgment can exist. Some state are as long as 20 years.

9. A court order that forces someone who holds the debtor’s property to pay proceeds directly to the creditor. **Under Federal Law, a creditor can only garnish income after required state and federal deduction have been taken. The remaining balance is disposable income. What does the Federal Wage Garnishment Act entail?

10. It limits the amount of garnishment to 25% of the debtor’s disposable income or the amount by which disposable earnings exceed 30 times the minimum hourly wage, whichever is smaller. **Always look to the laws of the state, they vary. For example, some states limit garnishments on the salary of heads of household only. What is an attachment?

11. Either through a writ of attachment or another or another court order, the debtor’s property is seized and sold to pay off the debts. Any remaining monies are returned to the debtor. What are some of the disadvantages of obtaining a write of attachment?

12.  Personal Liability against the creditor for wrongful attachment  Attachment has deprives the debtor of his o her property  Actual damages can be recovered as a result of the wrongful attachment  Punitive damages may be awarded if malicious intent can be proven

13. Judgment Lien: In several states, it is automatically granted with the judgment; however in other states a lien will be placed on the property of the debtor only after the creditor records the judgment with county clerk in the county where the debtor own real estate. **If the debtor owns property in another state, you may have to domesticate the judgment to make it enforceable.

14. The clerk will issue a write of execution from the same court that rendered the original judgment. This writ directs the sheriff, or some other government agent to seize the property described in the writ. After seizure and appraisal of the property, due notice is given to the public that the property will be sold at a public sale and auctioned. What is a creditors bill?

15. Designed for creditors who are unable to completely satisfy a judgment. The creditor would request the court to compel the debtor to turn over his/her property so that it may be sole to satisfy the creditor’s judgment.

16. Designed for a creditor who is unable to completely satisfy a judgment. In this instance, the creditor will ask the court to compel the debtor to turn over his property so that it may be sold to satisfy a judgment.

17.  Transferor/debtor who conveyed property and/or ownership to another retain possession and/or full control and use of the conveyed property?  Conveyance made by the debtor during the course of a lawsuit over monetary damages?  Debtor transferred money or property to another family member without consideration

18. Also known as a running account. It keeps an account open, crediting the debtor for any payments made and debiting the amount of new purchases. Both the creditor and the debtor consider their business dealings as one continuous transaction rather than many small transactions.

19. When a creditor submits a bill to the creditor submits a bill to the debtor and the debtor expressly and implicitly accepts the amount indicated is accurate. **An advantage for the creditor is that they do not have to prove the validity and accuracy of each separate transaction in the final amount due. They must simply allege and prove that he/she submitted the bill to the debtor and the debtor agreed to the bill and the amount.

20. 1. Can a collection agency tell a debtor that failure to a debt will result in an adverse credit rating? 2. Owing credit is a criminal offense. 3. Judgment by confession is also known as cognovit judgment. 4. The Federal Wage Garnishment Act does not limit the amount that a debts’ salary can be garnished. 5. Each state has it’s own statute of limitations regarding how long a judgment remains in effect.