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Courts have largely rejected a restrictive definition of the term debt allowing coverage of a broad spectrum of “consumer debts” beyond what you might normally expect including such diverse obligation as rent, student loans, utility and insurance bills,condo and attorney fees, judgements, debts already discharged in bankruptcy, car rental agreements and even campground memberships.
Some debts are just not debts for FDCPA purposes including some debts that you might expect to be covered such as taxes, shoplifting civil claims, fines, license fees, car accidents and child support. If a collector is harassing you for any of these non-FDCPA debts, relief still might be found under either Washington or Oregon state collection laws or under the Bankruptcy code, but you cannot seek assistance under the FDCPA
If you are getting harassed by any creditor or collector give us a call today. We can discuss your situation over the phone or, even better, set up an appointment for you to come in either of our Washington offices in Seattle or Vancouver or one of our Oregon offices in Salem or Portland. We will look forward to hearing from you.
The original post is titled Consumer Debts Covered Under the Fair Debt Collection Practices Act , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
Written by: Robert DeMarco
The Fifth Circuit has confirmed that the absolute priority rule remains intact for an individual filing a chapter 11 bankruptcy petition. Judge Edith Jones, writing for the Court, in In re Lively, 12-20277, 2013 WL 2347045 (5th Cir. May 29, 2013), concluded that section 1129(b)(2)(B), as amended by the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005 (Pub.L. No. 109-8, 119 Stat. 23 (2005)) applies to individual debtor cases.
The scenario that Philip Lively [“Lively”] faced is nothing remarkable. To the contrary, it is rather commonplace. Lively initially filed a chapter 13 bankruptcy petition. However, Lively’s bankruptcy case had to be converted to on under chapter 11 once it was learned that the debtor’s claims exceeded the chapter 13 debt ceiling. See 11 U.S.C. § 109(e).
Lively proposed a chapter 11 plan that permitted him to retain all of his property, including the beneficial interest in a mortgage and none railroad tank cars that were being leased. The unsecured creditors’ class voted against confirmation, thereby putting into play the question of whether the absolute priority rule applies to an individual chapter 11 debtor.
The absolute priority rule provides that a Chapter 11 reorganization plan is “fair and equitable” with respect to a dissenting class of unsecured claims, if
(i) the plan provides that each holder of a claim of such class receive or retain on account of such claim property of a value, as of the effective date of the plan, equal to the allowed amount of such claim; or
(ii) the holder of any claim or interest that is junior to the claims of such class will not receive or retain under the plan on account of such junior claim or interest any property; except that in a case in which the debtor is an individual, the debtor may retain property included in the estate under section 1115, subject to the requirements of subsection (a)(14) of this section.
In re Lively, 12-20277, 2013 WL 2347045, pages 1-2 (5th Cir. May 29, 2013) (citations omitted) (emphasis in original). There was no dispute that the subject chapter 11 bankruptcy plan failed to comply with the absolute priority rule. Instead, Lively relied upon the minority position which, in reliance upon the above italicized language, holds that individuals are exempt from the rule’s application.
Judge Jones, in discussing why Lively’s position was in error, stated thusly:
Before the BAPCPA amendments, however, an individual Chapter 11 debtor would only have to satisfy the absolute priority rule with assets that were “property of the estate” at the date of filing for relief; the individual debtor’s personal post-petition earnings were not subject to liability to satisfy his creditors. In § 1115, Congress remedied this potential inequity in Chapter 11 by adding to the § 541 definition the individual debtor’s post-petition earnings and property acquisitions.
Id. at page 2. The Court then continued, quoting from In re Kanell, 451 B.R. 505, 511 (Bankr. C.D.Cal. 2011):
the property included in the estate under § 1115 includes all post-petition earnings, not limited by deduction for monthly expenses [as in Chapter 13] … [s]o, if the ‘absolute priority rule’ persisted after BAPCPA, it would have prevented the debtor from keeping any of his post-petition earnings as the price for cram down; thus enters the necessary amelioration in § 1129(b)(2)(B)(ii)…. But this is as far as one needs to go to make sense of the new statutory scheme.
Id. at page 3.
Be it good news or bad news, the issue is now resolved. An individual chapter 11 debtor, like any other chapter 11 debtor, must comply with the absolute priority rule in the Fifth Circuit.
DATED: May 31, 2013
Halsey Minor, founder of CNET, filed for bankruptcy in Los Angeles on May 24, 2013. What’s the lesson for the small business owner?
Let’s say you’ve hit on a grand business idea. You take a risk, throw a bunch of money at the venture, and dive deeply.
A few years later, you’re deep in the red.
Rather than fight an uphill battle against creditors, you do what the capitalist system allows.
You cut your losses, file for bankruptcy, and move onto the next big thing.
That’s what Halsey Minor did. And beneath the surface of his perceived excess, it makes perfect sense.
A Grand Opportunity
CNET was launched in 1994 as a production company for television programs dealing with the then-nascent technology industry. Riding the wave of the technology boom, CNET became a one-stop source for tech news and information, eventually expanding into radio and a series of web properties.
Those web properties are familiar to those who download software online (download.com) and look for the latest information about cutting edge technology. Some of the now-valuable domain named owned by CNET were:
- download.com
- downloads.com
- upload.com
- news.com
- search.com
- TV.com
- mp3.com
- chat.com
- computers.com
- help.com
- shopper.com
- radio.com
In 2008, CNET was bought by CBS Corporation for $1.8 billion. And with that sale, Halsey Minor did what every entrepreneur dreams of.
He cashed out.
Waking Up From The American Dream
From there, Minor embarked on a series of business transactions. He bought art. He bought real estate. He invested in companies such as Grand Central, the precursor to Google Voice.
Some made money (Grand Central was a big win) and others lost money (the real estate venture was a notable bust).
In the end, Minor was left with $100 million in debt and only $50 in assets.
The Bankruptcy Bargain
Minor chose to file for Chapter 7 bankruptcy, turning over his assets in exchange for a discharge of his debts.
For the American business person, it’s a fair trade: you gamble with the house’s money and, if you lose, you cash in your chips.
Minor clearly realizes this, and says, “if you win some you are going to lose some too.”
It’s no cavalier attitude, despite what the press may think. It’s the reality of the business world. You bet, you lose, you go home.
But that’s not the full story.
In the time after you begin your business dealings and before you file for bankruptcy, you employ people to help realize your dream. You pay them money and they, in turn, spend that money back into the economy.
That doesn’t make it easy or fun for the person filing for bankruptcy, of course. Losing hurts, after all.
You lose your business, your belongings, and a piece of your ego. It’s a harsh price to pay, but a fair one.
That’s What Makes The Country Move Forward
Without bankruptcy as a means for the business person to cut their losses, no risk or innovation happens.
The guy with the great idea doesn’t take a chance because he knows that if he loses, he’s got nowhere to turn.
That new technology never sees the light of day because nobody’s willing to put their neck on the line.
Those employees are never hired. They never buy homes and cars.
The wheels of commerce grind to a halt.
Next time you see a business fail, think about all the good that came out of it before the fall.
Image credit: jdlasica
Halsey Minor And The Bargain Of Business And Bankruptcy was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
Not all debts are covered by the Fair Debt Collection Practices Act. Consumer debts are the only debts that fall within the ambit of the Act. Though a collector may violate Washington or Oregon state collections laws by engaging in collections activity that would normally violate the FDCPA, if the debt itself is commercial rather than consumer, there is no violation of the Fair Debt Collection Practices Act.
The original purpose of the debt determines whether the debt is consumer or comercial. This is not an all or nothing approach. If the business purpose was a small part of an otherwise personal loan, the FDCPA likely applies. Moreover, personal checks made out to retain businesses create a rebuttable presumption that the debt was made for consumer purposes. It has been found that where personal debts incurred with a business credit card, the actual use of the card ultimately won out over the business label on the card.
The original post is titled Consumer and Business Debts and the FDCPA , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
The Fair Debt Collection Practices Act limits the places and times for a collector to contact an Oregon or Washington consumer. The Act also severely limits third-party contacts and bars a collector from contacting a consumer represented by counsel.
The presumption is that any phone call received between nine p.m and eight a.m was at an inconvenient or unusual time. Because many collectors, calling from out of state like to raise this defense–”I had no idea it was six in the morning, it’s nine a.m. where I am calling from–it is important to document your calls and note that you let the creditor know about the inconvenience of their calls and instructions to stop.
With respect to inconvenient places, the workplace stands out as a fundamentally inconvenient place for a call for many different kinds of workers, including nurses, teachers and restaurant workers. With respect to all other places, the question is whether the collector knew or should have known that the call was inconvenient. WIth respect to the workplace, once the consumer requests that the debt collector cease calls to the workplace, the collector is barred from doing so.
Document your phone conversations with your collectors and contact our offices if you have any questions at all. We would be happy to meet you at either of our Washington offices in Seattle and Vancouver or at either of our Oregon offices in Portland or Salem.
The original post is titled When and Where Can a Collector Contact Me? , and it came from Oregon Bankruptcy Lawyer | Portland, Salem, and Vancouver, Wa .
You’re sitting at the kitchen table, poring over the bills – again. What impact does it have on your family?
If you’re deep inside your own financial problems, you’re probably not in a frame of mind to think about those around you.
You don’t see their faces as they watch you grimace over the past-due bills.
When you’re talking with a debt collector, their reaction isn’t in your field of vision.
And you don’t know the impact on them when you snap, nerves on edge as you worry about how to pay the creditors before they sue you.
Don’t fool yourself.
The Things That Form Your Views In Life
Matt Bellamy, front man of the rock band Muse and partner of actress Kate Hudson, credits his father’s escape from debt with his own success.
According to an interview with Bellamy in The Sun:
“Money and success haven’t really changed my beliefs or opinions over the years. When I was growing up my mum and dad split when I was 13 or 14 during the early-’90s recession. At that time my dad went bankrupt and it played a huge part in it all at home.
“I experienced the sharp end of a tough time, living with a single parent, my mum, and she was really struggling to get a job. These are the things that form your views in life. They are established when you are growing up and being raised. That stuff doesn’t really go away, that stays with you.”
Overwhelming debt led his father to bankruptcy and his parents to divorce. Though this has instilled in Bellamy something of a Depression Era Mentality that drives his work ethic years later, it crushed his family.
The Problem, Not The Solution, Sharpens The Edge
Some may say that Bellamy’s father’s bankruptcy was what caused the, “sharp end of a tough time,” but those who work with people experiencing bill problems know otherwise.
Bankruptcy signals the end of the debt collection calls. It marks the moment that the bills stop showing up in the mailbox.
And the day a bankruptcy case is filed is the day the arguments stop about how to pay the bills.
This, in other words, is when the sharp end dulls a bit and conversations can involve other things. Things like family, togetherness, and the future.
Dull The Edge For Your Family’s Future
It doesn’t matter how you take care of your bill problems. There are lots of options out there, and your solution may not be the same one as the next person’s.
Regardless, you need to get a handle on things right now. Call a reputable credit counselor. Talk with a lawyer. Ask your accountant for a recommendation. Go to your local clergy or community leader to find someone who’s good at what they do and will treat you properly.
If you don’t, the impact on your personal life will get worse. The sharp edge will get sharper until it cuts you and your loved ones to ribbons.
And that’s not a good place to be.
Image credit: Kent, J
The Sharp Edge Of A Tough Time was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
Sallie Mae splits into two companies. Why should we all be worried?
On May 29, 2013 it was announced that student loan servicing giant Sallie Mae would be splitting into two separate companies – one to service existing loans, and one to lend money as a private student loan lender.
If you owe money for student loans, you probably know Sallie Mae fairly well. They service many federal as well as private student loans, and used to act as a federal student loan lender before 2010.
The difference this time is that Sallie Mae is getting into one of the most profitable loan markets, taking advantage of their industry strength to pummel student loan borrowers.
The Two New Sallie Mae Entities
One company, the education-loan management business, will continue to handle the $118.1 billion in federal loans and $31.6 billion of old private loans in the company’s book of business.
The other company will make student loans that are not federally-funded, guaranteed or controlled. In other words, the most profitable type of student loans – those not subject to federal regulations or interest rate caps.
Why Private Student Loans Are Great For Lenders
Over the past decade, the cost of attending a four-year undergraduate college have risen 41 percent. The average net tuition at a four-year private not-for-profit university rose to $13,880 in the 2012-13 school year from $13,150 a decade earlier. Room and board went to $10,460, up from $8,660.
For the 2012-13 school year, the limit for federal student loans was $5,500 for Freshmen, $6,500 for sophomores, and $7,500 for Juniors and Seniors.
That means an undergraduate student who needs student loans to pay for his or her entire cost of attendance is going to need $18,110 in non-governmental loans for the first year alone.
That’s where the private student loan comes in.
The Profit Behind The Loan
According to Chase, a large private student loan lender, the average interest rate it charges for these loans as of May 2013 is between 3.33% – 9.23%.
These loans accrue interest from the moment of disbursement, which means that a loan of $18,110 taken out in Freshman year at an interest rate of 3.33% (the low end of the spectrum) will have a balance of $20,645 by the time you graduate (assuming you’re on the four-year plan).
Payments come due immediately, and there are no repayment options such as income-based repayment available. You can’t get any of the federal student loan discharges or forgiveness either.
A Toe In Roiling Waters
More than half of outstanding student loans are in deferment, according to a report issued by TransUnion.
13.4 percent of student loans that are not in deferment are currently in default.
Outstanding total student loan debt is more than $1 trillion.
But with nowhere to turn, new students are forced to look to an ever-increasing private student loan market.
For Sallie, Nothing But Net
You’ve got a captive audience – students fed the lie that the only road to prosperity is a post-high school education.
Those student have no federal protection from private lenders. Many turn to co-signers to help get loans, obligating the last generation for the debts of the next.
There’s nothing but money in the pot for Sallie Mae and other private student loan lenders.
And not much upside for student loan borrowers unless consumer protection laws are changed to help manage the private student loan debt.
Image courtesy of Wikipedia
Student Loans And The Troubling Tale Of Two Sallies was originally published on Consumer Help Central. If you're seeing this message on another site, it has been stolen and is being used without permission. That's illegal, a violation of copyright, and just plain awful.
Comedian David Adkins, better known as Sinbad, filed for Chapter 13 bankruptcy protection. He filed for bankruptcy protection previously in 2009. The 56-year-old funny man jokingly claims to be broke, but documents related to his filing claim he makes $16,000 per month. This may not seem like typical pocket change but the comedian reportedly owes [...]
By John Clark
Just a few months after creditors accused him of committing bankruptcy fraud, the former head football coach at the University of Arkansas has settled his bankruptcy case, according to a report from Arkansas Business.
Sources say John Smith reached a deal with his creditors, but he will have to return hundreds of thousands of dollars following his Chapter 7 bankruptcy filing.
John Smith Dodges Charges of Bankruptcy Fraud
According to sources, John Smith, as well as his wife and children, have agreed to return $165,000 in cash and $600,000 worth of property to creditors to quiet claims of a “fraudulent transfer” prior to filing for bankruptcy.
The trouble for Smith started several months ago, when creditors complained to Smith’s bankruptcy trustee, John Lee, that Smith had transferred a large amount of money in order to keep it from his creditors.
The trustee eventually discovered that Smith and his wife had moved more than $500,000 into a revocable trust held by the wife between 2008 and 2012.
During that same period, Smith and his wife also transferred roughly $120,000 into accounts held by their children, according to an investigation by Lee.
But while the transfers were allegedly fraudulent, Lee noted in court that the recipients of the funds had “potentially valid defenses,” which may have made it more difficult for creditors to reach the money.
So, in an effort to ensure that they received some money, Smith’s creditors agreed to settle the dispute, despite the fact that they may have recovered more money had they pressed the issue further.
Smith Received Large Payments Before Filing Bankruptcy
In addition to the transferred funds, Smith also reportedly received upwards of $167,000 from the University of Arkansas right before filing for bankruptcy. The trustee ruled that these funds could be reached by creditors.
But the settlement is, in some respects, a victory for Smith, who is looking to discharge more than $17 million in debt during his Chapter 7 case.
And the price he paid to salvage his bankruptcy case seems to pale in comparison. In addition to the cash, Smith will also cede the rights to 44 acres of empty land in Kentucky. The land is worth roughly $600,000, according to sources.
In his defense, after the settlement was reached, Smith also tried to preserve his reputation by noting in court documents that he was innocent of all “allegations of inferences of bad faith or intent to defraud,” sources say.
Written by: Robert DeMarco
Halsey McLean Minor [“Minor”], founder of C|NET, filed a chapter 7 bankruptcy petition on May 24, 2013. The bankruptcy case was filed in the United States Bankruptcy Court for the Central District of California, case no. 2:13-bk-23787-TD. At this juncture, little can be discerned from Minor’s bankruptcy court documents. Minor does, however, estimate his assets to be worth less than $50 million and that his liabilities exceed $50 million with less than 70 creditors.
The Los Angeles Times reports that Minor sold his interest in C|NET to CBS for approximately $1.7 billion in 2008. Minor, however, was not a good steward of his money. Minor’s subsequent spending spree likely led to his financial ruin. As reported by The Bay Citizen on June 12, 2010, Minor’s financial challenges began shortly after 2008. “Minor was in the midst of a prodigious spending spree: $20 million for a Bel Air house; $22 million for Le Petit Trianon; $7 million for a failed luxury-hotel project in Charlottesville, Va., Minor’s hometown; $25 million in bids for art at Sotheby’s and Christie’s; $15.3 million for a Virginia plantation; $6.3 million for two thoroughbred racehorses; a $3 million deposit on a now-canceled order for a top-of-the-line Gulfstream jet.”
These statements find support in Minor’s bankruptcy petition. Minor, who filed the chapter 7 bankruptcy without his wife, identifies two affiliated bankruptcy cases wherein he was the managing member of the debtors. Both of these bankruptcies were filed under chapter 11 of the Bankruptcy Code and are currently pending. The first business enterprise to file bankruptcy was Minor Family Hotels, LLC [“Hotels’]. Hotels filed for chapter 11 on September 1, 2010, and is currently pending in the United States Bankruptcy Court for the Western District of Virginia, case no. 10-62543. The second business enterprise to file bankruptcy was Carter’s Grove, LLC [“Grove”], a historic residence, with underground museum and stables located on 750 acres on the north shore of the James River in Williamsburg, Virginia. Grove filed for chapter 11 on February 14, 2011, and is currently pending in the United States Bankruptcy Court for the Eastern District of Virginia, case no. 11-51330-SCS.
It is also noteworthy that Minor and his wife Shannon were listed as California’s top income-tax delinquents in 2011, owing the state $10.46 million, as reported by AllGov California on June 18, 2012. With citizens like Minor, there is little mystery as to why California is in the middle of a financial crisis.
DATED: May 31, 2013
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