tag:blogger.com,1999:blog-32165041376247589472024-03-13T15:25:47.718-04:00Steve Harms - Credit and CollectionsPartner: Muller Muller Richmond Harms and Myers, a debt collection law firm based in Birmingham Michigan. Note these blog postings are not intended to be legal advice, they are simply articles of general interest on collection topics...the reader must always seek legal counsel on these topics and shall not rely on these blogs.Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.comBlogger74125tag:blogger.com,1999:blog-3216504137624758947.post-37777035458144193532014-03-28T15:14:00.002-04:002014-03-28T15:14:19.768-04:00FDCPA....your letters don't have to use the EXACT language if they mean the same thing!<span style="font-family: Verdana, sans-serif;">So, what would happen if your validation letter to a debtor read that the debtor has to respond within "30 days of receiving this letter" rather than within "30 days after receiving this letter"???</span><br />
<span style="font-family: Verdana;"></span><br />
<span style="font-family: Verdana;">A suit was brought on the use of "of" being misleading.</span><br />
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<span style="font-family: Verdana;">The matter was appealed to the Sixth Circuit Court of Appeals, and lo and behold, score one for the debt collector! The Sixth Circuit held that using "of" instead of "after" didn't alter the meaning of the validation language, so the court dismissed the suit against the debt collector.</span><br />
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<span style="font-family: Verdana, sans-serif;">As per a well written article in Inside Arm.com,</span><br />
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<h3>
the three-judge panel noted that a collector need not parrot the FDCPA to comply with it. “A statement works if it speaks with enough clarity to convey the required information to a reasonable but unsophisticated consumer,” the unanimous panel wrote. “The letter to Wallace did that. It informed him that he had thirty days to dispute the debt, that the clock would start running when he received the letter (rather than, say, when Diversified sent the letter), and that if he did not act the collector would assume the debt’s validity.”</h3>
<h3>
Wallace argued that “of” and “after” are different words, and that they can bear different meanings. The judges agreed, but noted that “this possibility does not make Diversified’s choice of preposition improper. No reasonable consumer, even an unsophisticated one, would read the letter as an instruction to travel back in time (though no more than thirty days back) to dispute the debt.”</h3>
<h3>
The judges also conceded that both “within thirty days of receiving notice” and “within thirty days after receiving notice” are ambiguous about when to start counting. But they said that even if the plaintiff had argued a different point, the result likely would have been the same. (<a href="http://www.insidearm.com/daily/debt-collection-news/debt-collection/debt-collector-wins-appeal-in-precedential-letter-language-case/">http://www.insidearm.com/daily/debt-collection-news/debt-collection/debt-collector-wins-appeal-in-precedential-letter-language-case/</a>)</h3>
<span style="font-family: Verdana, sans-serif;">The case is entitled Wallace v Diversified Consultants, Inc.</span>Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com5tag:blogger.com,1999:blog-3216504137624758947.post-80441533652393780732014-03-28T12:00:00.003-04:002014-03-28T12:00:48.347-04:00Fair Debt Collection Practices Act: A bill to modify it<span style="font-family: Verdana, sans-serif;">Collection attorneys dealing with consumer debtors in matters of litigation are frustrated endlessly by the FDCPA communication requirements as "communications" are to be conveyed to a debtor only if the debt collector id's himself/herself as a debt collector (following the validation letter).</span><br />
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<span style="font-family: Verdana;">Well, there may be some, limited relief in the offing:</span><br />
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<h2 class="primary">
<span>Summary:</span> H.R.2892 — 113th Congress (2013-2014)</h2>
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There is one summary for this bill. <a href="http://beta.congress.gov/help/legislative-glossary/#glossary_billsummary" target="_blank">Bill summaries</a> are authored by <a href="http://beta.congress.gov/help/legislative-glossary/#glossary_crs" target="_blank">CRS</a>.</div>
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Shown Here:<br /><span>Introduced in House (07/31/2013)</span></h3>
Fair Debt Collection Practices Technical Clarification Act of 2013 - Amends the Fair Debt Collection Practices Act to exclude from the definition of "debt collector" any law firm or licensed attorney: (1) serving, filing, or conveying formal legal pleadings, discovery requests, or other documents pursuant to the applicable rules of civil procedure; or (2) communicating in, or at the direction of, a court of law or in depositions or settlement conferences, in connection with a pending legal action to collect a debt on behalf of a client. <br />
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(NOTE: the Summary content is credited to Congress.Gov, a web site)</div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com10tag:blogger.com,1999:blog-3216504137624758947.post-23800842363225204302014-03-28T08:28:00.000-04:002014-03-28T08:28:30.233-04:00Collection through garnishment: there are some exemptions<span class="content-TopTips-heading"><span style="font-family: Verdana, sans-serif;">In prior postings on this site, I've expressed the need to be creative and be willing to develop strategies as to the most effective forms of post judgment collection remedies.</span></span><br />
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<span class="content-TopTips-heading"><span style="font-family: Verdana, sans-serif;">Be aware that numerous resources are exempt in whole or in part from garnishment. </span></span><span style="font-family: Verdana, sans-serif;">Some major exemptions, such as Social Security, unemployment compensation, and worker’s compensation benefits.</span><br />
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<span style="font-family: Verdana, sans-serif;">Generally, pensions such as IRAs and the like are exempt as well. As a related matter, some of your garnishments may be met with statements that a higher priority writ is in effect. For example, child support debts, tax liens, loans to the bank you are garnishing, and prior writs issued before yours may have the effect of bumping you down the line. You won’t receive payment on your garnishment until those claims are satisfied.</span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com2tag:blogger.com,1999:blog-3216504137624758947.post-42589158872552195762014-03-17T12:16:00.004-04:002014-03-17T12:18:23.872-04:00Contracts: every business relationship requires enforceable contracts!<br />
<span class="content-body"><span style="font-family: Verdana, sans-serif; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">A contract
generally consists of an offer, acceptance, and consideration. In business, the
offer typically consists of a purchase order, and the acceptance is the
shipping of the goods or the providing of services named in the purchase order.
The consideration is the purchase price. Offer, acceptance, and consideration
can be implied depending on the circumstances.</span></span><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span><br />
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<span class="content-body"><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">With some important exceptions (such as sales
of real property), contracts do not have to be in writing. Although the UCC
provides that all contracts over $1,000 should be in writing, UCC 2-201(1), </span><a href="http://www.icle.org/modules/repositories/probatesourcebook/CiteCheck.aspx?cite=440-2201" target="_blank"><span style="color: windowtext; font-family: Verdana, sans-serif;">MCL 440.2201(1)</span></a><span style="font-family: Verdana, sans-serif;">,
there is a notable exception to this rule. Where a seller of goods ships to a
buyer and the buyer receives and retains those goods, there is an implication
that a contract exists. If the buyer fails to timely return the goods, no
writing is needed to imply that the buyer intended to contract for the purchase
price of the goods. UCC 2-201(3)(c), </span><a href="http://www.icle.org/modules/repositories/probatesourcebook/CiteCheck.aspx?cite=440-2201" target="_blank"><span style="color: windowtext; font-family: Verdana, sans-serif;">MCL 440.2201(3)(c)</span></a><span style="font-family: Verdana, sans-serif;">.
The UCC also provides for substitutes for a writing or exceptions to the
writing requirement where there is a written confirmation between merchants,
UCC 2-201(2), </span><a href="http://www.icle.org/modules/repositories/probatesourcebook/CiteCheck.aspx?cite=440-2201" target="_blank"><span style="color: windowtext; font-family: Verdana, sans-serif;">MCL 440.2201(2)</span></a><span style="font-family: Verdana, sans-serif;">;
specially manufactured goods, UCC 2-201(3)(a), </span><a href="http://www.icle.org/modules/repositories/probatesourcebook/CiteCheck.aspx?cite=440-2201" target="_blank"><span style="color: windowtext; font-family: Verdana, sans-serif;">MCL 440.2201(3)(a)</span></a><span style="font-family: Verdana, sans-serif;">;
an agreement admitted in court, UCC 2-201(3)(b), </span><a href="http://www.icle.org/modules/repositories/probatesourcebook/CiteCheck.aspx?cite=440-2201" target="_blank"><span style="color: windowtext; font-family: Verdana, sans-serif;">MCL 440.2201(3)(b)</span></a><span style="font-family: Verdana, sans-serif;">;
and partially performed agreements, UCC 2-201(3)(c), </span><a href="http://www.icle.org/modules/repositories/probatesourcebook/CiteCheck.aspx?cite=440-2201" target="_blank"><span style="color: windowtext; font-family: Verdana, sans-serif;">MCL 440.2201(3)(c)</span></a><span style="font-family: Verdana, sans-serif;">.</span></span></span><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<span class="content-body"><span style="font-family: Verdana, sans-serif; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The UCC does not require price terms,
delivery terms, or other details for the sale of goods. Past experience of the
parties and other statutory default provisions will help to determine most of
the terms of a contract, including a purchase price. Therefore, it is fairly
easy under the UCC to establish the existence of a contract without having to
prove specifically the elements of offer, acceptance, and consideration.</span></span><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<span class="content-body"><span style="font-family: Verdana, sans-serif; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The contract has to be entered into before
the goods are delivered or services are provided. For that reason, the purchase
order and the documentation before the sale, including the credit application,
become the contract between the parties. The credit application is an often
overlooked but important document. Credit applications often set forth extremely
important terms such as interest rates to be paid should the account become
delinquent, personal guaranties to be invoked if the account becomes
delinquent, the parties’ agreement concerning full settlement checks, etc. For
a sample credit application, see .</span></span><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<span class="content-body"><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">A common misconception among business people
is that an invoice is a contract. An invoice may contain a description of the
goods, shipping dates, and price terms, but it is not a contract. The invoice
is prepared and mailed out after the goods are shipped and after the contract
is entered into. For this reason, the terms printed on the back of invoices
(most companies insist on filling up the back of their invoices with various
terms in small print: immediate inspection, immediate return of any defective
goods, a return authorization number on any defective goods, and so forth) are
generally not enforceable. <i>See Power Press Sales Co v MSI Battle Creek
Stamping</i>, </span><a href="http://www.icle.org/modules/mlo/cases/display.aspx?style=book&cite=238%20Mich%20App%20173" target="_blank"><span style="color: windowtext; font-family: Verdana, sans-serif;">238 Mich App 173</span></a><span style="font-family: Verdana, sans-serif;">,
183, 604 NW2d 772 (1999). Thus, for example, if a customer voluntarily agrees
to pay interest on a delinquent account based on the terms set forth in the
invoice, that is all well and good, but if the customer later decides not to
pay the interest, it is likely that a court will not enforce the interest terms
if they are only in the invoice.</span></span></span><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<span class="content-body"><span style="font-family: Verdana, sans-serif; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The courts will generally enforce contracts
that are within the parties’ expectations. If there is a one-sided (unilateral)
mistake, the contract is enforceable. However, if there is a mutual mistake,
the court will generally not enforce it. For example, if both parties thought
that the steel was Grade A worth $57.00 per pound and it turned out, by mistake
of both parties, that the steel was Grade B, then the court will not enforce
the contract.</span></span><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;"></span><br />
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<span class="content-body"><span style="font-family: Verdana, sans-serif; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Sometimes contracts are purely unilateral. In
other words, acceptance of the contract occurs through performance. For
example, if someone offers to pay $500 if the contracting party drives a car to
California, acceptance occurs when the car is driven to California.</span></span><span style="mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;"></span><br />
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<span class="content-body"><span style="font-family: Verdana, sans-serif; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Consideration is difficult to measure and
courts often will not bother to measure it at all. If there is the existence of
any legal consideration, the contract will most likely be enforced. Thus, if
the buyer overpays for a product, a court will not question the overpayment
unless there was actual fraud or a mutual mistake.</span></span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-49135921931631339162014-02-10T08:50:00.002-05:002014-02-10T08:50:46.405-05:00Bankrupcy issues when a personal guaranty is involved
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">Questions
have been raised regarding a discharge in a business bankruptcy and the
recourse to a personal guarantor on a commercial debt which is discharged in
bankruptcy.<span style="mso-spacerun: yes;"> </span>In addition a question has
been raised as to the application of the automatic stay to the personal
guarantor when there is a bankruptcy filed by the corporate (or other
artificial entity). This blog is fortunate enough to be treated to a detailed answer to that inquiry by none other than Wanda Borges, whose credentials in this area of law are tremendous. Her contact information follows as well. Here is Wanda's take on the issue:</span></span></div>
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</span><br />
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<span style="font-family: "Courier New", Courier, monospace;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">There
are several provisions in the Bankruptcy Code which address the issue of
discharge:<o:p></o:p></span></span></div>
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</span><br />
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<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">Bankruptcy
Code §727 says “The court shall grant the debtor a discharge, unless – (1) the
debtor is not an individual.<span style="mso-spacerun: yes;"> </span>It is quite
clear, therefore, that there is no discharge of a business which files a
chapter 7 proceeding.<span style="mso-spacerun: yes;"> </span>This makes perfect
sense because if a business files a Chapter 7 proceeding, it closes its doors
and no longer exists so there is no entity remaining that would benefit from
the discharge<o:p></o:p></span></span></div>
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</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">Bankruptcy
Code §1141(d)(1)(A) provides that Confirmation of a Plan “discharges the debtor
from any debt that arose before the date of such confirmation…”<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">There
is no distinction in that provision between a chapter 11 of a corporate (or
other artificial entity) debtor or an individual debtor.<span style="mso-spacerun: yes;"> </span>Confirmation of a Plan bars creditors from
going after that entity for anything other than what the Plan provides.<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">Bankruptcy
Code §362 of the Bankruptcy Code<span style="mso-spacerun: yes;">
</span>provides that any bankruptcy petition operates as a stay, “applicable to
all entities” of<o:p></o:p></span></span></div>
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</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p><span style="font-family: Times, "Times New Roman", serif;"> </span></o:p></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">1.<span style="mso-tab-count: 1;"> </span>the commencement or continuation of any
action against the debtor to collect or recover a claim which could have been
commenced prior to the filing of the petition<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">2.<span style="mso-tab-count: 1;"> </span>the enforcement against property of the
debtor of any judgment obtained before the filing of the petition<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">3.<span style="mso-tab-count: 1;"> </span>any act or action to obtain possession
of property of the debtor<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">4.<span style="mso-tab-count: 1;"> </span>any act or action to perfect a lien
against property of the debtor’s estate<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">5.<span style="mso-tab-count: 1;"> </span>any action to enforce a lien created
before the filing of the bankruptcy petition<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">6.<span style="mso-tab-count: 1;"> </span>any act to collect or recover a claim
that arose before the filing of the petition<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">7.<span style="mso-tab-count: 1;"> </span>any setoff of any debt owed to the
debtor that arose before the filing of the petition<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">8.<span style="mso-tab-count: 1;"> </span>the commencement or continuation of a
Tax Court proceeding concerning a tax liability for a period ending prior to
the filing of the petition.<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p><span style="font-family: Times, "Times New Roman", serif;"> </span></o:p></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">Each
of these provisions is specifically aimed at the bar of any action against the
debtor which has filed a bankruptcy petition.<o:p></o:p></span></span></div>
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</span><br />
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<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">The
automatic stay does not prevent any action against the personal guarantor when
the artificial entity (i.e. corporation, limited liability company, limited
partnership, etc) files a chapter 7 or chapter 11 proceeding.<span style="mso-spacerun: yes;"> </span>Creditors are within their rights to proceed
to pursue the personal guarantor to collect the debt originally owed by the
artificial entity.<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">There
is an exception to this in the case of a Chapter 13 filing.<span style="mso-spacerun: yes;"> </span>Bankruptcy Code §1301 provides that “a
creditor may not act, or commence or continue any civil action, to collect all
or any part of a consumer debt of the debtor…” from a co-debtor.<span style="mso-spacerun: yes;"> </span>However, if this co-debtor became liable as
part of its own ordinary course of business (e.g. signed a promissory note
individually and not merely as a co-debtor), then the creditor is free to
pursue that debt.<span style="mso-spacerun: yes;"> </span>Notice also that this
only applies to consumer debts.<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">Be
aware, however, that although it is true that a personal guaranty will survive
an artificial entity/business chapter 7 proceeding and a chapter 11 proceeding
it has become commonplace for a chapter 11 debtor to include within its Plan,
an exculpation clause that effectively releases an individual guarantor.<span style="mso-spacerun: yes;"> </span>One must be extremely diligent when reading a
chapter 11 plan to be certain that it does not contain a release of the
guarantors.<span style="mso-spacerun: yes;"> </span>If the Plan does contain
that kind of exculpation or release language, a creditor should immediately
seek advice from a bankruptcy practitioner to determine if grounds exist to
object to that Plan.<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">Another
cautionary note is to be aware of a chapter 11 business which continues
operating after confirmation of its plan.<span style="mso-spacerun: yes;">
</span>If you have a personal guarantor and a debt from a business exists on a
given date (e.g. $10,000 owing on 1/3/14), that guaranty survives the business
bankruptcy for that sum of money when the bankruptcy is filed after that
date.<span style="mso-spacerun: yes;"> </span>HOWEVER, I have seen cases where a
business chapter 11 has been filed so the personal guarantor's debt to the
creditor is $10,000 prior to the bankruptcy filing and then the business debtor
continues business operations AFTER the confirmation of a chapter 11 Plan.<span style="mso-spacerun: yes;"> </span>I would not rely on the personal guaranty
continuing in effect after the chapter 11 proceeding for new debt incurred by
the post-confirmation debtor.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">There
is one final question raised which states "While the Bankruptcy Code looks
pretty clear in that the automatic stay pertains to debtors (not guarantors)
courts have started to jump on a catch-all in the code to support a broader
premise that the automatic stay should apply to non-bankruptcy guarantors of
corporate debt in some Chapter 11 situations. … the rationale of that approach
is that personal guarantors typically act as a source of funding for the
corporation and the preservation of their credit is instrumental in the
recapitalization process. Also, personal guarantors also typically manage the
corporation and having to defend themselves against debt collection action
distracts them from efforts to effectively operate and reorganize the debtor
entity."<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">Let
me address that scenario.<span style="mso-spacerun: yes;"> </span>Bankruptcy
Code §105 gives the Bankruptcy Judge broad equitable powers to do whatever it
takes to enable a chapter 11 to proceed towards confirmation of a Plan.<span style="mso-spacerun: yes;"> </span>Specifically, §105 states “The court may
issue any order, process, or judgment that is necessary or appropriate to carry
out the provisions of this title.”<span style="mso-spacerun: yes;"> </span>In
certain instances Bankruptcy Judges have expanded the automatic stay to cover
the principal(s) of a debtor when the court believes that the principal needs
that protection in order to properly run the business without having to fight
his personal creditors (those holding guaranties).<span style="mso-spacerun: yes;"> </span>A debtor must show extremely good cause in
order to get the Bankruptcy Judge to grant this expanded automatic stay protection.<span style="mso-spacerun: yes;"> </span>This was done in the <i style="mso-bidi-font-style: normal;">Philadelphia Newspapers </i>wherein the Bankruptcy Judge cited the
impact that a lawsuit against the principals would have on the debtor’s ability
to manage its reorganization process.<span style="mso-spacerun: yes;">
</span>The automatic stay was extended also in the <i style="mso-bidi-font-style: normal;">AH Robins </i>case and in the <i style="mso-bidi-font-style: normal;">Brier
Creek </i>case.<span style="mso-spacerun: yes;"> </span>However, in each of
these cases and in any other case wherein the automatic stay is expanded beyond
the debtor, the circumstances must be such that would cause “adverse economic
consequences” to the debtor or some other “unusual circumstances” which would
warrant such expansion.<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">On
the other hand, we have recently been involved with a case in the State Court
wherein we sued two corporate entities who were the primary debtors, two
personal guarantors and a corporate guarantor.<span style="mso-spacerun: yes;">
</span>The primary corporate debtors each filed chapter 11 proceedings.<span style="mso-spacerun: yes;"> </span>The State Court Judge would not let us
proceed with the litigation against the guarantors because the State Court
Judge said the automatic stay of the Bankruptcy Code prohibited him from
proceeding even against the guarantors.<span style="mso-spacerun: yes;"> </span>We
were compelled to file a motion with the Bankruptcy Court showing that the
automatic stay is not applicable to the non-debtor guarantors except in unusual
circumstances.<span style="mso-spacerun: yes;"> </span>Citing the <i style="mso-bidi-font-style: normal;">AH Robins</i> case as well as <i style="mso-bidi-font-style: normal;">Calpine </i>and other cases of note readily
persuaded Bankruptcy Judge Craig to issue an Order finding that the automatic
stay was inapplicable to the third-party non-debtor guarantors.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: Times, "Times New Roman", serif;"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p> </o:p></span><span style="font-family: "Times New Roman","serif"; font-size: 12pt;">As
an aside, once the Bankruptcy Court Order finding the automatic stay to be
inapplicable was filed with the State Court, settlement discussions ensued.<o:p></o:p></span></span></div>
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</span><br />
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<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">WANDA
BORGES<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">BORGES
& ASSOCIATES, LLC<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">575
UNDERHILL BLVD., STE. 118<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">SYOSSET,
NEW YORK 11791<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">516-677-8200
x225<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="font-family: Times, "Times New Roman", serif;">516-677-0806
fax<o:p></o:p></span></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
</span><br />
<div class="MsoPlainText" style="margin: 0in 0in 0pt;">
<a href="mailto:wborges@borgeslawllc.com"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="color: blue; font-family: Times, "Times New Roman", serif;">wborges@borgeslawllc.com</span></span></a><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p></o:p></span></div>
<span style="font-family: Times, "Times New Roman", serif;">
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<a href="http://www.borgeslawllc.com/"><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><span style="color: blue; font-family: Times, "Times New Roman", serif;">www.borgeslawllc.com</span></span></a><span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p></o:p></span></div>
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt;"><o:p><span style="font-family: Times, "Times New Roman", serif;"> </span></o:p></span></div>
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Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com4tag:blogger.com,1999:blog-3216504137624758947.post-81351226301638353112014-01-27T15:10:00.002-05:002014-01-27T15:10:55.066-05:00Credit Risks Require Current Financial Information!
<span style="font-family: Verdana, sans-serif;">Every extension of credit is a risk. Some customers are
worthy of more risk than others. Making a decision of whether or not to extend
credit is really an art more than a science and is a tricky business. Much of
the process is rooted in your instincts toward a customer and conditions in
general. Your instincts are guided by the credit risk factors and the five <i style="mso-bidi-font-style: normal;">C</i>s of credit (character, collateral,
capacity, capital, and conditions).<o:p></o:p></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: Verdana, sans-serif;"></span><br />
<span style="font-family: Verdana, sans-serif;">The core concept isn’t complicated: Some customers are better
credit risks than others because of their financial condition, age, payment
history, industry, quality of management, or willingness to provide liens or
guaranties make them more likely to pay for their purchases.<o:p></o:p></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: Verdana, sans-serif;"></span><br />
<span style="font-family: Verdana, sans-serif;">But after you trust a customer enough to extend credit, how
much credit should you give? The answer varies by business and industry. A
$50,000 line of credit may be a minimal risk for some businesses, but a $5,000
line of credit may be high for others. The key here is your margin of profit; your
ability to take risks while extending credit rises and falls with your profit
margins. The smaller your margins, the less risk you can afford. </span><br />
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: Verdana, sans-serif;"></span><br />
<span style="font-family: Verdana, sans-serif;">So you track credit information, apply the five <i style="mso-bidi-font-style: normal;">C</i>s, and carefully consider your
customer’s situation and industry trends. You set up a system to gradually
extend credit to customers who are newly formed or are just new to you. You
watch for red flags that indicate trouble ahead. </span><br />
<br />
<span style="font-family: Verdana, sans-serif;">Your customer may suddenly want to double or triple credit
purchases. Your sales department wants the increase in business, but your
credit department is going to have to deal with any credit headaches that
result. Whether you’re evaluating a new customer or large orders, conducting a
routine periodic credit review, or responding to concerns about a customer that’s
slowing down in its paying habits, you need your customer’s financial
information to evaluate credit.<o:p></o:p></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: Verdana, sans-serif;"></span><br />
<span style="font-family: Verdana, sans-serif;">The most important reason to maintain current credit
information (such as tax returns, balance sheets, operating statements, credit reports, and aging sheets on payment history with your firm) in your customer’s file is to spot trends. Downward trends are red
flags that indicate increased credit risk and require action.<o:p></o:p></span><br />
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com1tag:blogger.com,1999:blog-3216504137624758947.post-3210967884251933762013-12-19T10:15:00.001-05:002013-12-19T10:15:04.207-05:00Collection law...a little knowlege goes a long way...
<span style="font-family: Verdana, sans-serif;">Often times a collector is on the phone trying to convince a delinquent debtor to pay up for goods which were sold and delivered, but not paid for. The debtor often uses a tactic of tying to throw the collector off track by claiming a "legal defense" to the claim. A little legal knowlege on collection topics may go a long way to helping battle debtor claims. The following are a few common examples:</span><br />
<div class="MsoListParagraphCxSpFirst" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span style="font-family: Symbol; font-size: 12pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-size: 12pt; line-height: 115%; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">You waited too long to try and
collect, I’m not going to pay you because I have no legal obligation to do
so.<span style="mso-spacerun: yes;"> </span>All claims have an expiration
period.<span style="mso-spacerun: yes;"> </span>Under the UCC, the expiration (<i style="mso-bidi-font-style: normal;">statute of limitations</i>) is 4 years for an
action under <i style="mso-bidi-font-style: normal;">breach of contract</i> for
the sale of your product.<span style="mso-spacerun: yes;"> </span>The parties
can even reduce the period of limitations to not less than 1 year but may not
extend it.<span style="mso-spacerun: yes;"> </span>Obviously, a seller/creditor
that waits more than 4 years to bring a contract action involving the sale of
goods is likely to be met with that defense.<span style="mso-spacerun: yes;">
</span><o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 12pt 0in 0pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span style="font-family: Symbol; font-size: 12pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-size: 12pt; line-height: 115%; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">I’m not going to pay because you
never told me the price you were going to charge.<span style="mso-spacerun: yes;"> </span>The good news is this is generally not a
valid defense under the UCC.<span style="mso-spacerun: yes;"> </span>The parties
do not have to include terms.<span style="mso-spacerun: yes;"> </span>The
essential elements of a contract for the sale of goods is a description of the
items and the quantity of the items.<span style="mso-spacerun: yes;">
</span>Price can be presumed based on a reasonable price at the time of
delivery for those particular goods, prices charged in the past to that
customer for similar goods or whatever is the standard or market price in the
industry. <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoListParagraphCxSpLast" style="margin: 12pt 0in 10pt 0.5in; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span style="font-family: Symbol; font-size: 12pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-size: 12pt; line-height: 115%; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">You failed to honor your warranties
so I’m not going to pay you.<span style="mso-spacerun: yes;"> </span>If you sell
product, you must honor your warranty concerning that product.<span style="mso-spacerun: yes;"> </span>However, if the debtor hasn’t paid for that
product, the warranty becomes a “which came first, the chicken or the egg”
situation.<span style="mso-spacerun: yes;"> </span>You don’t want to honor the
warranty until the product is paid for and that’s a reasonable approach because
you don’t want to throw good money after bad in fixing the product.<span style="mso-spacerun: yes;"> </span>On the other hand, the debtor was entitled to
a produce that worked and therefore is entitled to warranty repairs when the
product breaks.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 12pt 0in 11pt 0.25in;">
<span style="font-family: "Calibri","sans-serif"; font-size: 12pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">Another
wrinkle is if you are a leasing company.<span style="mso-spacerun: yes;">
</span>The UCC provides that leasing companies can waive any obligations which
would normally be raised.<span style="mso-spacerun: yes;"> </span>If the debtor
defaults on the lease payment plan and starts making claims of defective goods
like delivery, etc., the creditor/leasing company has no further obligation,
and the debtor/lessee, must look exclusively to the manufacturer for all
warranties and issues concerning the product itself.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoListParagraph" style="margin: 12pt 0in 10pt 0.75in; mso-add-space: auto; mso-list: l0 level1 lfo2; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span style="font-family: Symbol; font-size: 12pt; line-height: 115%; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-size: 12pt; line-height: 115%; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;">Your contract is over bearing and I’m
not going to honor it.<span style="mso-spacerun: yes;"> </span>In cases of
commercial businesses dealing with other commercial businesses, courts pretty
much give free rain to the parties to contract for whatever they wish.<span style="mso-spacerun: yes;"> </span>Therefore, this would not be a valid defense.
<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 12pt 0in 11pt 51.1pt;">
<span style="font-family: "Calibri","sans-serif"; font-size: 12pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">If the debtor is a consumer, however, they sometimes have a
defense of <i style="mso-bidi-font-style: normal;">unconscionability</i> as a
defense to a contract or a particular clause in a contract.<span style="mso-spacerun: yes;"> </span>This usually arises in a situation where one
party has a huge negotiating advantage over the other such as the typical
credit card or bank contract where the bank establishes the contractual terms
and the consumer either accepts them or rejects them.<span style="mso-spacerun: yes;"> </span>There really is no negotiation.<span style="mso-spacerun: yes;"> </span>It is simply “take it or leave it”.<span style="mso-spacerun: yes;"> </span>Well, if the credit card agreement contains
strongly unfair terms, a court might refuse to enforce those particular terms
as <i style="mso-bidi-font-style: normal;">unconscionable</i>.<span style="mso-spacerun: yes;"> </span>However, although a specific clause may be
unfair, the debtor is going to have a hard time convincing the court that the
whole contract should be tossed out because of one unfair clause.<span style="mso-spacerun: yes;"> </span>In other words, the defense will mostly fail.<o:p></o:p></span></span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com6tag:blogger.com,1999:blog-3216504137624758947.post-16010523211700470102013-11-22T13:04:00.000-05:002013-11-22T13:04:39.958-05:00Why do I need a collection professional for debt collection?
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">To answer this question, often asked by clients and sales
prospects, the following comments may be helpful. <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
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<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"> <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">Debts which are six months old only have a 50% chance of being
collected.<span style="mso-spacerun: yes;"> </span>Once a debt is 12 months old,
you’re lucky if it has even a 10% chance of being collected. The older a debt
gets, the more uncollectible it becomes.<span style="mso-spacerun: yes;">
</span>A debt is not fine wine and it doesn’t become more enchanting with age.<o:p></o:p></span></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"> <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"><span style="mso-spacerun: yes;"> </span>If a debtor has broken
numerous promises or is just simply refusing to honor a commitment, it just may
be time to bring in a professional to assist in the collection process and to
take it to the next level.<o:p></o:p></span></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"> <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">During difficult economic times, you may even be facing a
situation where a number of debtors are breaking promises and your accounts
receivable are building to uncomfortable levels.<span style="mso-spacerun: yes;"> </span>It just may be time to bring in a
professional to handle your collections so you can move onto your other
responsibilities.<o:p></o:p></span></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"> <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">You need to know who to hire, how to find debt collecting
professionals, what to look for in terms of credentials and ultimately how the
system really works so you can get your money’s worth.<o:p></o:p></span></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"> <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">A collection specialist who is who we look to when we are at wits
end.<span style="mso-spacerun: yes;"> </span>In the credit and collection
business, wits end is usually arrived at following a series of broken promises.<o:p></o:p></span></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"> <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">Far and away the biggest mistake credit executives make is to wait
too long before engaging collection professionals.<span style="mso-spacerun: yes;"> </span>Whether the debt is a business debt or a consumer
debt, many factors occur as the debt becomes older making it more and more
difficult to collect including:<o:p></o:p></span></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt 0.25in; mso-level-font-family: Symbol; mso-level-size: 10pt; mso-pagination: none; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span lang="X-NONE" style="font-family: "Calibri","sans-serif"; mso-ansi-language: X-NONE; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">·</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> Relocating (skipping) to
parts unknown.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt 0.25in; mso-level-font-family: Symbol; mso-level-size: 10pt; mso-pagination: none; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span lang="X-NONE" style="font-family: "Calibri","sans-serif"; mso-ansi-language: X-NONE; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">·</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> Loss of motivation to
pay—the more time which elapses, the less motivated debtors are to pay.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt 0.25in; mso-level-font-family: Symbol; mso-level-size: 10pt; mso-pagination: none; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span lang="X-NONE" style="font-family: "Calibri","sans-serif"; mso-ansi-language: X-NONE; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">·</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> Faded memories—they forgot
all about this debt.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt 0.25in; mso-level-font-family: Symbol; mso-level-size: 10pt; mso-pagination: none; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span lang="X-NONE" style="font-family: "Calibri","sans-serif"; mso-ansi-language: X-NONE; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">·</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> Statute of limitations
concerns—legally, the claim is no longer enforceable.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt 0.25in; mso-level-font-family: Symbol; mso-level-size: 10pt; mso-pagination: none; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span lang="X-NONE" style="font-family: "Calibri","sans-serif"; mso-ansi-language: X-NONE; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">·</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> Businesses go under—the
lifespan of a troubled company is short, especially in difficult economic
times.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt 0.25in; mso-level-font-family: Symbol; mso-level-size: 10pt; mso-pagination: none; text-indent: -0.25in;">
<span style="font-family: Verdana, sans-serif;"><span lang="X-NONE" style="font-family: "Calibri","sans-serif"; mso-ansi-language: X-NONE; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">·</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> Here today gone tomorrow—some
debtors intentionally run up debts, take the goods and services and run (or
form new businesses with new legal identities which make collections difficult
or impossible).<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"><span style="mso-spacerun: yes;"> </span>Doesn’t the collection
professional go about bill collecting the same way I do?<span style="mso-spacerun: yes;"> </span>Yes, in many instances the procedures are
very similar but just the impact of having a third party involved can be very
effective coupled with the very specialized training and techniques developed
by collection professionals to bring about results.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"> <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;">Collection professionals know what to say and when to say it.<span style="mso-spacerun: yes;"> </span>They use their instinct, imagination and
creativity, within the bounds of state and federal regulations (which they are
trained to follow) and they are highly motivated and have sufficient time to
become familiar with your files, familiar with your debtors, and learn and
determine what collection techniques work the best.<o:p></o:p></span></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt; mso-pagination: none;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><span style="font-family: Verdana, sans-serif;"> <o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p><span style="font-family: Verdana, sans-serif;"> </span></o:p></span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com9tag:blogger.com,1999:blog-3216504137624758947.post-42614603305221396542013-11-04T16:53:00.000-05:002013-11-04T16:54:36.502-05:00Collection Techniques: Keep YOUR promises…don’t make idle threats<br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-family: Verdana, sans-serif;">If
you’ve spent time around a toddler, you know that you should never, ever make
an idle threat. As soon as the little one knows you’re flexible and won't really enforce the threats you make,
she’ll start pushing the limits to see when (if ever) you’ll actually carry out
your threat. Yes, I’m going to say it: Customers are like toddlers.<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;"></span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-family: Verdana, sans-serif;">Threats
like, “I’m going to sue you with the biggest lawsuit you’ve ever seen if you
don’t send me my $500 by Friday,” or, “I’m cutting you off Friday and you’ll
never purchase from us again, unless I receive $500 . . .” are more often made
by a hotheaded credit executive than by a calm collections professional.<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;"></span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-family: Verdana, sans-serif;">What
can happen if you make a hollow threat?<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;"></span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>If the debtor doesn’t believe you, or you
don’t in fact do what you threatened, expect further abuses of your credit
policies by your slow-paying customer. You’ll have thrown away your
credibility.<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;"></span><br />
<div class="BulletLast" style="margin: 0in 0in 11pt 1in;">
<span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Threats made in the heat of the moment can
alienate good customers and cause them to take their business elsewhere.<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;"></span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-size: 11pt;"><span style="font-size: small;"><span style="font-family: Verdana, sans-serif;">Either
way, cash flow suffers.<o:p></o:p></span></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<o:p><span style="font-size: x-small;"> </span></o:p></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com1tag:blogger.com,1999:blog-3216504137624758947.post-16362556749536438002013-10-23T09:46:00.000-04:002013-10-23T09:46:32.298-04:00Credit Risk: how much can you stand?
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: Verdana, sans-serif;">Savvy credit managers know that new customers almost always
pay for their first few orders in order to build up their reputation as good
pay. But then the third or fourth credit extensions show signs of slipping.
Payments slow to 30 days or so beyond your selling terms. Without careful
monitoring and close follow up, your new
customer can quickly become your new headache.<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;">
Appearances may deceiving. The trappings of wealth,
including luxury cars, fancy offices, the latest and greatest of all gadgets
and gizmos, sometimes signal that the customer is a poor risk, not a good one.
Some folks just have to look successful, even when there’s no money in the till
to pay bills. Your goal is to discern which customers are worthy of credit
without being deceived by appearances.<o:p></o:p></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: Verdana, sans-serif;">Your biggest risks come from<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span><b style="mso-bidi-font-weight: normal;">New Accounts</b>:
Whether newly in business, or established business and simply new to you; and <o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="BulletLast" style="margin: 0in 0in 11pt 1in;">
<span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span><b style="mso-bidi-font-weight: normal;">Marginal
accounts</b>: Customers in some degree of financial instability, or start-ups
with unknown finances.<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;">
Monitor risky accounts often – <span style="mso-spacerun: yes;"> </span><i style="mso-bidi-font-style: normal;">really
often</i> – for any change in payment patterns and any red flag events, including
their general attitude toward your business relationship, drops in orders, new
management, or changes of address or phone numbers.<o:p></o:p></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<span style="font-family: Verdana, sans-serif;">Be on guard for the customer who is always in a rush, the
“We need it today” or “Please help us get this done over the weekend” customer.
All too often, you will pour your body, soul and direct disproportionate company
resources into that customer to make them look good, only to find they had no
idea what they were doing. Next, you hear that you won’t get paid until they’re
paid by their own customer, and their customer is upset. You’ve incurred bills of
your own to pay for materials and owe overtime pay to your own employees, and
now you may get nothing back.<o:p></o:p></span><br />
<span style="font-family: Verdana, sans-serif;">
</span><br />
<span style="font-family: Verdana, sans-serif;">When a customer introduces pandemonium to your business, avoid
being set up by slowing down the process, and don’t make no exceptions to your
credit policies (including a credit application, financials, and a full credit
evaluation).<o:p></o:p></span><br />
<span style="font-family: Verdana, sans-serif;"></span><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: Verdana, sans-serif;">When you extend credit, the type of legal entity you are
extending credit to is a key factor in the decision of how much credit to
grant. There are huge differences between lending to an individual versus a
corporation. Many business entities, including corporations, provide a
significant shield against collections, allowing their owners or shareholders
to avoid any personal responsibility for their unpaid debts.<o:p></o:p></span></div>
<span style="font-family: Verdana, sans-serif;">
For example, you’re about to start doing business with a
famous, wealthy, well-respected person. Or should I say, that person’s newly
formed corporation. Their wealth and fame leads you to extend considerable
credit. The next thing you know, you find yourself down in the dumps when the
corporation goes out of business leaving its debts unpaid, and the “respected”
person behind the company has neither the responsibility nor the inclination to
pay your bill. Famous people can fail in business, just like anybody else. Remember
that over 90% of all new businesses fail in the first five years, and some of
those are… er… were owned by successful and highly respected folks. <o:p></o:p></span><br />
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com2tag:blogger.com,1999:blog-3216504137624758947.post-10245183988929124902013-10-16T15:39:00.001-04:002013-10-16T15:41:15.223-04:00Contracts: read 'em to avoid disapointments<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif";">When
you enter into a contract that obligates you to do something in the future,
even if it’s as simple as paying for goods or services you’ve received, you may
find a contract provision that allows your customer to escape payment. Imagine that
you’re manufacturing an expensive piece of machinery. What if a contract clause allows the customer to not pay until they have been paid in full by their own customer. That’s a debtor
escape clause</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">…sometimes referred to as a “pay-when-paid”
clause</span><span style="font-family: "Calibri","sans-serif";">.<o:p></o:p></span></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: large;"></span><br />
<span style="font-family: "Calibri","sans-serif";"><span style="font-size: large;">From
the standpoint of a debtor, it’s easy to see the advantage of an escape clause.
If their customer cancels the order or never pays for the machinery, they don’t
have to pay you. You end up taking on a
huge risk that you can’t control. You’ve shipped a valuable product to your customer, your customer used it (sold it to their customer), and you still can’t get paid because your customer hasn't been paid.<o:p></o:p></span></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: large;"></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: large;">When
you’re negotiating contract terms with a buyer, particularly if the buyer has
presented you with its own form contract, watch carefully for any debtor escape
clauses like the one just mentioned.</span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: large;"></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: large;">Remember to read
contracts before entering into them. Some contracts contain provisions that you
may not like. Before you sign you can renegotiate their terms or, if not
possible, you can refuse to enter into the contract. Sure, you can just go
along with the contract and hope for the best, but that approach has a way of
sometimes blowing up in your face.</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: large; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"></span><br />
<span style="font-size: large;"><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Another
example is an arbitration clause in a contract.<span style="mso-spacerun: yes;">
</span>While it may be a good idea in many circumstances, arbitration clauses
are not particularly helpful</span><span style="font-family: "Calibri","sans-serif";">
</span><span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">in many ordinary collection cases as
they result in more costs than a routine collection case and the creditor still
has to file the matter in court to have the arbitration award accepted as a
final order of judgment, required to enforce collection via garnishment or
other forms of court-ordered collection.<span style="mso-spacerun: yes;">
</span>For example, a $30,000 collection case could easily cost $3000 to
arbitrate, whereas an ordinary collection law suit may only cost a few hundred
dollars to file and serve.<span style="mso-spacerun: yes;"> </span>Of course,
this decision should be made on a case by case basis after consulting with an
attorney as there are distinct advantages and disadvantages to each.</span></span><span style="font-family: "Calibri","sans-serif";"><o:p></o:p></span>Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-52311142284007260742013-10-08T07:56:00.002-04:002013-10-08T07:56:48.525-04:00Credit Reports: be cautious when you access them
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> We've said this before, and it bears repeating, that theUnited
States District Court in the Ninth Circuit held that the Fair Credit Reporting
Act severely limits when a creditor can access a consumer credit report. Specifically,
the court held a consumer credit report (Experian, Equifax, and Trans Union are
the key players in this arena) could only be drawn when the underlying debt
involves a “credit transaction.” <o:p></o:p></span><br />
<br />
<div class="Default" style="margin: 0in 0in 0pt;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">So, what is
a CREDIT TRANSACTION? Well, it is where the consumer voluntarily seeks
credit, such as a credit card, promissory note, or other voluntary credit transaction.
Examples of an involuntary credit transaction, where the creditor can’t pull
a credit report, would be where the consumer didn’t voluntarily enter into
a credit relationship with a creditor, such as where the debt arose from a
traffic ticket or towing charges for failure to pay a ticket. <o:p></o:p></span></div>
<br />
<div class="Default" style="margin: 0in 0in 0pt;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Many
industry groups have opposed this ruling as it has become common practice to
draw a credit report during the collection process of any debt, no matter how
the debt was incurred. How-ever, the United States Supreme Court ( in a January
2011 refusal to grant Certiorari), has refused to review the Ninth
Circuit’s decision, thus, the ruling stands. <o:p></o:p></span></div>
<br />
<div class="Default" style="margin: 0in 0in 0pt;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">So, bottom
line, a consumer credit report can be drawn only where: <o:p></o:p></span></div>
<br />
<div class="Default" style="margin: 0in 0in 0pt;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">1. There is
a judgment against the consumer for a debt, regardless of source. Or, <o:p></o:p></span></div>
<br />
<div class="Default" style="margin: 0in 0in 0pt;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">2. The
underlying debt before a judgment is entered is based upon a “credit
transaction” which means, according to the court, a voluntary transaction such
as a credit card, a note, a debt voluntarily entered into...basically,
situations where a consumer requested and re-ceived credit. <o:p></o:p></span></div>
<br />
<div class="Default" style="margin: 0in 0in 0pt;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The case was
Pintos v Pacific Creditors Association. It was heard in May 2010. The U.S. Supreme
Court refusal to review the Ninth Circuit holding was done in January 2011. <o:p></o:p></span></div>
<br />
<div class="Default" style="margin: 0in 0in 0pt;">
<span style="font-family: "Calibri","sans-serif"; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Where do we
go from here? Well, stay tuned as there may be more case decisions on point as
we go forward, perhaps from other circuits. However, for now, we must look at
the underlying debt on each file to determine whether (unless we have a
judgment) we have a permissible purpose to pull a consumer credit re-port—the
key being whether the consumer voluntarily requested the credit transaction. <o:p></o:p></span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-48324736090204177612013-10-03T12:30:00.000-04:002013-10-03T12:31:33.013-04:00Sometimes it pays to read the manual...<br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;">When you’re in business, you may feel that a competitor
always lurks on the horizon, plotting and scheming to take away your customers,
cut into your market share, and take your profits. And you’re right.
Competition is a fact of life, and with it comes the pressure to extend credit
to all the customers who come your way, whether they deserve it or not. After
all, if you don’t give customers credit, they can probably find a competing
business that will.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;">If you’re relatively new to the credit and collections
process, you may be asking yourself several questions:<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in; mso-prop-change: "Aaron Larson" 20090429T1938;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Should I always be willing to open a line of
credit for a customer?<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>How do I balance the risks of extending credit
against the risk of losing the business of customers I turn down?<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in; mso-prop-change: "Aaron Larson" 20090429T1938;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>What happens if a client doesn’t pay an
invoice?<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>How can I deal with issues such as any bad
checks or disputed claims with a customer I’ve done business with?<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>What do I do if a customer suddenly moves,
leaving no address or phone number to make contact?<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Can I file a lawsuit, and how do I sue?<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="BulletLast" style="margin: 0in 0in 11pt 1in;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>When do I need a collections professional to
help me, and how do I find one?<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-family: Verdana, sans-serif; font-size: x-small;">The book <b style="mso-bidi-font-weight: normal;"><i style="mso-bidi-font-style: normal;">Credit and Collections Kit for Dummies</i></b>
addresses those questions, both in short form in Chapter 1 and in detailed form
in the remaining chapters of this book.<span style="mso-spacerun: yes;">
</span>As for Dummies book readers know, each chapter of a Dummies book
provides a stand-alone guide to a particular topic, so you can peruse the
topics that most interest you and come back for all the rest at your leisure.</span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-family: Verdana, sans-serif; font-size: x-small;">As an example of the types of practical tips offered in the
book:</span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-size: x-small;"><span style="font-family: Verdana, sans-serif;">You can avoid a lot of difficulties with defaults in
payments from customers if you monitor your clients for changes in their
business and financial health. For example, if you find out that a customer’s
business has new ownership, or that the owners have formed a new but similar
company (John’s Bike Shop is now John and Mary’s Bike Shop), it may be time to
thoroughly recheck that customer. Sometimes your clients really don’t want you
to find out about changes, and that’s a reason in and of itself to recheck them.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Production" style="margin: 0in 0in 0pt;">
<o:p><strong><em><span style="color: blue; font-family: Verdana, sans-serif;"> </span></em></strong></o:p></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="font-size: x-small;"><span style="font-family: "Trebuchet MS", sans-serif;"><span style="font-family: Verdana, sans-serif;"><span style="background: yellow; mso-highlight: yellow;"><span style="background-color: white;">If a
customer won’t take the time to fill out a credit application</span></span>, and you
choose (or need) to extend credit to the customer anyway, you can protect
yourself. Make sure you interview that customer to obtain the information you
need to determine creditworthiness and to use as a resource if the customer’s
paying habits deteriorate. If you interview the customer by phone, keep a
recording of the call (but be sure you can legally record the call under the
laws of your state), or write the answers down on your standard credit
application and add the completed document to the client’s credit file.</span> </span></span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-66846867044112347792013-09-18T12:43:00.000-04:002013-09-18T12:43:20.807-04:00More on collecting on bad (NSF) checks
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;">Many
states have laws which impose serious penalties on the act of writing
insufficient funds checks.<span style="mso-spacerun: yes;"> </span>Some of these
laws are criminal where you can call the police upon receiving an NSF check.<span style="mso-spacerun: yes;"> </span>The criminal law consequences are typically
applicable when a check fails to clear based on a C.O.D. delivery.<span style="mso-spacerun: yes;"> </span>Refer to this as a contemporaneous exchange
of value and intent to defraud.<span style="mso-spacerun: yes;"> </span>Intent
is presumed from the fact the customer didn’t put enough money in the account
to clear the payment.<span style="mso-spacerun: yes;"> </span>Contemporaneous is
the lack of credit terms where the customer was supposed to pay you at the same
time he delivered the goods or services.<span style="mso-spacerun: yes;">
</span>Payment on the account or post dated checks failing to clear would not
be considered </span></span><span style="font-family: "WP TypographicSymbols"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-char-type: symbol; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin; mso-symbol-font-family: "WP TypographicSymbols";"><span style="mso-char-type: symbol; mso-symbol-font-family: "WP TypographicSymbols";">A</span></span><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;">contemporaneous</span></span><span style="font-family: "WP TypographicSymbols"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-char-type: symbol; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin; mso-symbol-font-family: "WP TypographicSymbols";"><span style="mso-char-type: symbol; mso-symbol-font-family: "WP TypographicSymbols";">@</span></span><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;"> and therefore
will not be prosecuted.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;">Consider
this: a customer is to purchase a box of nails from your company.<span style="mso-spacerun: yes;"> </span>He is new or just has not been approved for
credit yet, so he must pay by cash or check.<span style="mso-spacerun: yes;">
</span>That is called C.O.D. which stands for collection on delivery.<span style="mso-spacerun: yes;"> </span>The law frowns on people who bounce checks
for such purchases and this is an example of where the police or the prosecutor
might prosecute on the bad check you have received.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;">Many
states also impose civil penalties which are different from criminal
penalties.<span style="mso-spacerun: yes;"> </span>Civil penalties occur where
you can sue the customer for additional sums of money such as 2 or 3 times the
amount of the insufficient funds check.<span style="mso-spacerun: yes;"> </span>Michigan,
for example allows the recipient of a bad check to sue for the amount of the
check plus twice the amount, plus $250 costs…basically three times the check
amount plus costs!<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;">Theft
by check may be a misdemeanor or even a felony (a bad crime punishable by more
than one year in prison) but that does not guaranty you will ever see your
money.<span style="mso-spacerun: yes;"> </span>If the offender is put in jail
for the crime, he may even become less collectible for the insufficient funds
check.<span style="mso-spacerun: yes;"> </span>How ironic.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;">For
the police to even look at a case where there was an NSF check, there must have
been no agreement to hold the check for a period of time.<span style="mso-spacerun: yes;"> </span>Also, if the NSF check was given as a payment
on open account <span style="mso-spacerun: yes;"> </span>or other credit
transactions, it is not a crime.<span style="mso-spacerun: yes;"> </span>You can
sue in civil court however.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;">Contact
your own bank and arrange for overdraft protection as a defense mechanism for
receiving bad checks.<span style="mso-spacerun: yes;"> </span>Overdrawing an account
is easy.<span style="mso-spacerun: yes;"> </span>When you arrange in advance for
an overdraft protection, an accidental overdraft will be covered and you won</span></span><span style="font-family: "WP TypographicSymbols"; mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-char-type: symbol; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin; mso-symbol-font-family: "WP TypographicSymbols";"><span style="mso-char-type: symbol; mso-symbol-font-family: "WP TypographicSymbols";">=</span></span><span style="mso-ascii-font-family: Calibri; mso-ascii-theme-font: minor-latin; mso-hansi-font-family: Calibri; mso-hansi-theme-font: minor-latin;"><span style="font-family: Calibri;">t have the
embarrassment of having written an NSF check yourself.<span style="mso-spacerun: yes;"> </span>You will then receive a bill or a debit on a
line of credit you have established with the bank.<span style="mso-spacerun: yes;"> </span>Planning like this, avoids
embarrassment.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-14845995834258999582013-08-23T10:52:00.000-04:002013-08-23T10:54:53.353-04:00Collections: knowing when it is time to take the next step in the collection process...<br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;">If you have
good collection policies, your policies include timeframes in which to take
certain actions, such as the following:<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Following up with demand letters requiring
payment when an account balance becomes delinquent.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Following up with collection phone calls when
demand letters don’t produce payment.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="BulletLast" style="margin: 0in 0in 11pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Immediately following up with the debtor when
the debtor doesn’t keep promises to make payment.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;">When you’ve taken
the actions defined by your collection policy (see my book, <strong><em>Credit and
Collections Kit for Dummies</em></strong> for specific credit policies you can implement) and
your debtor still hasn’t paid, you should shift into collections mode. Delay in
initiating collection action, including bringing in collections professionals
as appropriate, can be the death knell for collecting on the account. If your
debtor still has (or may have) some ability to pay but continues to stall
payment, you need to move quickly.</span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;">Remember, accounts that aren't collected within 12 months after the due date are generally only 10% collectable!</span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;">After you
decide to start the collections process, do you collect the delinquent account
yourself, or do you bring in a professional? You should consider placing an
account with a professional when<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Lines of communication between you and the
debtor have completely broken down.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>You can’t reach your debtor by phone, and you
think your debtor may have skipped town.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>You sense that your debtor has financial
difficulties and has several other unpaid creditors who will be going after
what’s left of your debtor’s money.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>You don’t trust the debtor’s words or
intentions because of the passage of time since the last payment and the number
of promises the debtor has broken.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="Bullet" style="margin: 0in 0in 5.5pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Your debtor’s delinquency threatens your own
credit by putting you in danger of violating standards set by your auditors,
banks, factors, or receivable insurance contracts.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="BulletLast" style="margin: 0in 0in 11pt 1in;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;"><span style="mso-tab-count: 1;"> </span>*<span style="mso-tab-count: 1;"> </span>Your instinct tells you it’s time to bring in
a professional.<o:p></o:p></span></span></div>
<span style="font-family: Verdana, sans-serif;">
</span><br />
<div class="MsoNormal" style="margin: 0in 0in 11pt 51.1pt;">
<span style="color: black; mso-themecolor: text1;"><span style="font-family: Verdana, sans-serif;">Strive for a solid
relationship with your collection agency or attorney in which the agency or
lawyer is an extension of your credit department. Without a good relationship,
you may feel awkward referring a case to an outside collector, but relying on
team members for assistance seems only natural.<o:p></o:p></span></span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-49738070546960014712013-08-15T10:07:00.001-04:002013-08-15T10:07:46.484-04:00Collections alert: debt buyers may not be able to add interest to purchased accounts
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="color: #1f497d;"><span style="font-family: Calibri;">The following is a summary of a new Michigan case on the subject of debt buyers adding interest to their accounts...it is a warning, of sorts:</span></span></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="color: #1f497d;"><span style="font-family: Calibri;"></span></span> </div>
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="color: #1f497d;"><span style="font-family: Calibri;">Asset Acceptance purchases pools
of charged-off credit cards. In its purchasing agreements, there is
clause where the original debtor waived its right to charge interest after the
date of charge off. After Asset purchased the accounts, they brought suit
for the charged-off amount, <i>plus interest from the date of charge off to the
date of filing the complaint in state court.</i><o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="color: #1f497d;"><o:p><span style="font-family: Calibri;"> </span></o:p></span><span style="color: #1f497d;"><span style="font-family: Calibri;">This was held to be a violation
of the FDCPA. “Because [the original creditors] waived interest, Asset
could not retroactively impose interest for the period in which it did not own
the accounts.” “Further, Asset purchased the debts subject to the waiver,
thereby precluding Asset from imposing interest or revoking the original
creditor’s waiver”. Thus, Asset violated Sec. 1692e(2)(A) and
1692f(1). <o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="color: #1f497d;"><o:p><span style="font-family: Calibri;"> </span></o:p></span><span style="color: #1f497d;"><span style="font-family: Calibri;">Also worth noting, it appears
that the violation occurs upon the filing of the state court action, and the
statute of limitations on the violation is 1 year from that date.<o:p></o:p></span></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="color: #1f497d;"><o:p><span style="font-family: Calibri;"> </span></o:p></span><span style="color: #1f497d;"><span style="font-family: Calibri;">BOTTOM LINE…. EITHER REVIEW THE
DEBT-PURCHASER’S PURCAHSER’S AGREEMENT TO SEE IF WE CAN COLLECT INTEREST
POST-CHARGE-OFF, <b><i><u>OR</u></i></b> (BETTER YET), DON’T CLAIM INTEREST
FROM THE DATE OF CHARGE-OFF!!!<o:p></o:p></span></span></div>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com1tag:blogger.com,1999:blog-3216504137624758947.post-49195632303939295452013-06-25T12:11:00.000-04:002013-06-25T12:20:28.724-04:00Advantages of being a SECURED CREDITOR when it comes to bill collecting<span style="font-family: Verdana, sans-serif;">There are significant advantages to being a secured creditor versus being unsecured. This is particularly true if there are several creditors competing against the same pool of assets when a debtor defaults in payments. This is extremely significant should the debtor file for bankruptcy.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Let’s take an example. A debtor is struggling and seeks money from several sources. <strong>Bank A</strong> provides a loan on an unsecured basis. <strong>Bank B</strong> provides a loan containing a lien on assets which is not perfected. <strong>Bank C</strong> loans money, taking a perfected security interest in collateral through either possession or properly filed financing statement and security agreement. </span><br />
<br /><span style="font-family: Verdana, sans-serif;">The debtor runs into financial problems and starts defaulting on loans. Trade creditors are typically unsecured. Trade creditors file suits quickly because they know they must move swiftly. This typically has a domino effect. In other words, once trade creditors start filing their collection lawsuits, secured creditors move in in order to protect their collateral.</span><br />
<br /><span style="font-family: Verdana, sans-serif;">In the circumstance described above, <strong>bank A</strong> provided a loan on an unsecured basis so it is basically in the same situation as the trade creditors. Should the debtor’s business fail completely, trade creditors usually receive less than $.10 on the dollar and bank A will find itself in that position, typically. Therefore, being an unsecured creditor is very dangerous. The only reason trade creditors are unsecured is because of competition. If a trade creditor were to try and seek a security interest in its collateral, the debtor would simply go down the street and purchase goods from another vender, particularly if those goods were commodities, which are easy to find. </span><br />
<br /><span style="font-family: Verdana, sans-serif;"><strong>Bank B</strong> loaned money and a security agreement was attached but was not perfected. Therefore, a security agreement is valid as between the bank and the debtor, but not valid as protection against third parties. Bank three did perfect. Therefore, if bank A, bank B and bank C start to move in on the collateral at the same time, bank C wins. A perfected creditor is going to have superior collateral rights to a creditor who has only attached a security interest, which is the situation with bank B. Bank A, as indicated above, is just another unsecured creditor with no rights against assets of the debtor absent a legal judgment.</span><br />
<br /><span style="font-family: Verdana, sans-serif;">In a worst case scenario, the debtor files for bankruptcy. Bank A and Bank B are both out of luck. They are being treated as unsecured creditors and unsecured creditors typically get less than $.10 on the dollar in bankruptcy liquidations.<strong>Bank C</strong>, by way of contrast, gets to foreclose on its collateral in most circumstances and at least will recover some money, depending on the value of the collateral it secured. If the collateral is worth the full amount of the loan, bank three will be made whole. Banks A and B will, as stated, be walking away with less than $.10 on the dollar.</span><br />
<br /><span style="font-family: Verdana, sans-serif;">In order to appreciate the difference between the secured positions of <strong>Bank B</strong> and <strong>Bank C</strong>, the following discussion is offered. <strong>Bank B</strong> <em><strong>attached,</strong></em> but did <strong><em>not perfect</em></strong> its interest as a secured creditor, whereas <strong>Bank C</strong> <strong><em>attached and perfected.</em></strong> Attaching and perfecting are separate concepts, and both are necessary to attain the highest status of becoming a truly secured creditor.</span><br />
<br /><span style="font-family: Verdana, sans-serif;"><span style="color: #660000;"><strong><em><u>To attach</u></em></strong>,</span> the parties simply prepare and sign a security agreement, which is a document describing the collateral and pledging the collateral as security to the debt. It should be noted while we normally consider the security agreement to be written, and electronic version is perfectly acceptable in most jurisdictions. </span><br />
<br /><span style="font-family: Verdana, sans-serif;"><strong><em><u><span style="color: #660000;">Perfection,</span></u></em></strong> under the Uniform Commercial Code occurs in commercial transactions where the lien is filed with the appropriate authorities; typically the Secretary of State in the state where the debtor transacts business and sometimes a copy is filed within the local county (a political sub-division of the state) where the property is located. Simply put, the filing is the action which creates perfection of the lien. </span><br />
<br /><span style="font-family: Verdana, sans-serif;">The filing process is very inexpensive and there are forms readily available. These forms are typically referred to as “UCC 1” forms or “Financing Statements”. Lenders who choose to do business with a particular debtor will search the public records to find evidence of other secured creditors. A search through the records of the Secretary of State will turn up all filed financing statements. A creditor can then be aware of persons or businesses which have taken a lien on collateral. These same public record searches also show any tax liens filed against a debtor. A creditor can then be guided accordingly in making a decision as to whether to lend money or not. For example, if you are loaning money, you need to know whether your debtor has other secured creditors or tax liens having liens on the same property you are about to take as collateral! </span><br />
<br /><span style="font-family: Verdana, sans-serif;">It is extremely valuable to be a perfected secured creditor! This is particularly true if you are a lender. Lenders deal exclusively in money. They don’t provide a product; they simply are in business to loan money and recover it back plus interest in order to make a profit. Therefore, it is extremely important for lenders to loan money on a secured basis. </span><br />
<br /><span style="font-family: Verdana, sans-serif;">Manufacturers, to the contrary, take more risk in terms of providing goods to their customers on open account terms, which means on an unsecured basis. Presumably, the manufacturer has a sufficient profit that it can absorb certain losses each year for maybe 2% or 3% of its customers failing to pay/filing for bankruptcy. In a situation where a manufacturer is operating on a very tight profit margin or, where a manufacturer provides “big ticket items”, very expensive milling machines or robots, a manufacturer in this category would be foolish to continue to do business with debtors who were “marginal” without taking a security interest in the products that it sells. </span><br />
<br /><span style="font-family: Verdana, sans-serif;">Whether a lender or a manufacturer, or any other position in the “chain” of commerce, <span style="color: red;">it pays to be a perfected secured creditor!</span></span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span><br />
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<span style="font-family: Verdana, sans-serif;">Author:</span></div>
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<span style="font-family: Verdana, sans-serif;"><br /></span></div>
<div style="text-align: center;">
<span style="color: blue; font-family: Verdana, sans-serif;">Steven A. Harms</span></div>
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<span style="color: blue; font-family: Verdana, sans-serif;">Muller, Muller, Richmond, Harms & Myers</span></div>
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<span style="color: blue; font-family: Verdana, sans-serif;">33233 Woodward Avenue</span></div>
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<span style="color: blue; font-family: Verdana, sans-serif;">Birmingham, MI 48009</span></div>
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<span style="color: blue; font-family: Verdana, sans-serif;">248-645-2440</span></div>
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<span style="color: blue; font-family: Verdana, sans-serif;">steve@mullerfirm.com</span></div>
<span style="font-family: Verdana, sans-serif;"><br /></span>Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com1tag:blogger.com,1999:blog-3216504137624758947.post-89627779780141384362013-06-11T11:49:00.000-04:002013-06-11T11:49:19.307-04:00Collections: Getting Slow Payers Back on Track!<span style="font-family: Verdana, sans-serif;"><strong><em>Stopping Slow Payers in Their Tracks</em></strong></span><br />
<span style="font-family: Verdana, sans-serif;"></span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Short of going over to your customer and handing them their check book so they can write you a check for payment on outstanding invoices, the most effective action you can take to keep customer payments coming in smoothly is to closely monitor progress and communicate with the customer as often as necessary to keep the check or checks coming in promptly. You might even look at this as a training process. You are literally training your customers to respect your selling terms.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">At the first sign of slowness, which will show up on your aging sheet, communicate promptly in writing. At this stage, the letter is just a gentle reminder. It is important to keep good customer relations. After all, the customer may have just simply forgotten to make the payment. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">The next communication may be just as polite but should be done by phone. It seems there are quite a few ways to communicate with customers these days but the two most effective ways to communicate are still two of the oldest: face to face contact and the telephone. Face to face contact is probably not practical or even possible with most of your customers (years ago in house bill collectors were common place. A lot of shoe leather was spent knocking on doors and collecting accounts). The telephone is a close second, however. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;"><strong><em>Avoiding Bad Habits and Broken Promises</em></strong></span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Using a letter plus a very polite telephone call acts to keep an otherwise good paying customer in line. It also acts as a quick signal to you if a customer does not keep a commitment. For example, if you contact a customer on Tuesday and that customer indicates a check is in the mail to you that day, you may expect to have that check in your possession a few days later. If it doesn’t arrive, a follow up communication is necessary to see if some chance the check is lost in the mail but the odds are greater that the customer has simply broken his promise to you. </span><br />
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<span style="font-family: Verdana, sans-serif;"><strong><em>Watching for Fires and Putting Them Out Quickly</em></strong></span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">When it comes to collecting on invoices from customers, it is much better to be pro active than reactive. Simply put, you need to stay ahead of the game by spotting problem areas very promptly and following up with quick action. The following is a discussion of typical areas in customer relations in connection with the prompt payment of invoices. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;"><strong><em>Changes In Ownership of A client Business</em></strong></span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">A change in ownership of the customer can change bill paying habits dramatically. You may have had a great relationship with a customer for years which may have resulted in being lax on updating credit information such as information contained on the credit application, financial statements and other documentation. Upon making a call, you may discover that there are different voices on the phone and it can be revealed that new ownership took over. The name of the company remained the same so as to show some continuity of business. People like to deal with businesses that have been around for a while with little change.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Perhaps the most dramatic event which can occur on a change of ownership was refusal of the new owners to pay debts incurred by the prior owners. For example, if the change of ownership occurred in June last year, even though the name of the company remained the same, no changes were reported to you, an investigation may have to be initiated as to which invoices were actually sold to the prior owners, which invoices were sold to the current owners, and are the current owners liable for the debts of the prior owners. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Changes in ownership can significantly affect bill paying habits. Therefore, this is a key reason to periodically have your client submit a new credit application as the application itself defines the name of the business entity and who the owners are. Don’t count on your customer to be forth right in providing that information. </span><br />
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<span style="font-family: Verdana, sans-serif;"><strong><em>Changes of Address or Phone Number</em></strong></span><br />
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<span style="font-family: Verdana, sans-serif;">Observing a change of address or phone number is significant. It may reflect new ownership. It may be a result of a conflict with the landlord (an eviction perhaps). </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Two trends have become increasingly popular in terms of address and phone number. With regard to addresses, it is increasingly common for small and medium sized businesses to show a post office box as the address or, more disturbing, the address of a mail drop service (such as a UPS store) as the physical address of the company. It is much easier for a customer to become elusive if a physical address is not disclosed to you. If a customer uses a post office box or a mail drop address, your credit application or some other form should insist that a physical address also be disclosed. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">A customer having the same phone number for a long period of time use to signify stability because phone numbers were tied in with addresses. Now, a phone number can receive a call and through modern technology that call can be forwarded anywhere in the world. Thus, a customer having the same phone number for a long period of time no longer signifies stability. You must keep tabs on the customer as to the physical address where the customer is located per the discussion above. </span><br />
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<span style="font-family: Verdana, sans-serif;"><strong><em>Enforcing Good Pay to Improve Your Cash Flow</em></strong></span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Both a seller and a buyer are more comfortable with their relationship when goods and services are flowing smoothly and payments for those goods and services are being made promptly. You will find your customers do not object to close monitoring and eager follow up for prompt payment of invoices. Indeed, those customers who do find your close monitoring to be offensive, are customers you probably are going to have some trouble with down the road any way. </span><br />
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Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-19720493471570200342013-04-17T16:17:00.000-04:002013-04-17T16:17:19.718-04:00Debt collection starts with a credit application!<span style="font-family: Verdana, sans-serif;">Debt collection really begins when you first sign on your client or customer! At the beginning of the relationship, you aren't anticipating collection problems, of course, but you do know that a certain percentage of customers go bad and turn into collection problems.</span><br />
<br />
<span style="font-family: Verdana;">So, why not protect yourself right from the beginning, starting with a credit application (you may not call it that, but you should have a form that new clients/patients/customers fill out).</span><br />
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<span style="font-family: Verdana;">What should it contain, well consider these items:</span><br />
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<span style="font-family: Verdana, sans-serif;">Consider accumulating the information in some way so that you have the following data on each of your clients: </span><br />
<span style="font-family: Verdana, sans-serif;"></span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">1. The correct and full legal name of the applicant, the physical address (not merely a post office box), and the position of the individual who is applying (treasurer, president, etc.). To make sure that the customer clearly specifies the type of business entity, provide check-off boxes for proprietorship is also a good idea. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">2. Any trade names the company operates under. For example, if the Brake Shop is a division of Win Management Corporation, the application should require that both names be listed along with the relationship between the two.</span><br />
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<span style="font-family: Verdana, sans-serif;">3. Names, addresses, and telephone numbers of any authorized purchasers at any branches.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">4. Names, addresses, telephone numbers, and social security numbers of partners and officers. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">5. Name, address, and telephone number of the bank where the company maintains its accounts. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">6. Names, addresses, and telephone numbers of several trade references. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">7. Type of product(s) sold.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">8. Year the business was formed.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">9. A statement similar to the following: “A signature on this document provides permission to pull a credit bureau report on any individual who may be liable under this agreement (such as a personal guarantor, proprietor, general partner, or similar person).”</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">10. Financial statements.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">11. Amount of credit requested.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">12. Anticipated monthly purchases.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">13. A statement that the customer agrees to pay interest at a specific percentage rate, or the maximum legal rate of interest from the date of the last invoice. The interest charges are to be construed as a time-price differential and therefore not considered interest.</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">14. A personal guaranty, which should be obtained on all credit applications. Obviously, the signing of a personal guaranty is optional and requires a separate signature from the signature on the credit application itself. The language of the personal guaranty should be somewhat similar to the following:</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Should the account become delinquent, the undersigned personally guarantees payment of the account balance to Creditor Company plus the interest and other charges referred to in this application, including reasonable attorney fees. This is a guaranty of payment. The guaranty is personal in nature and the undersigned acknowledges personal liability and consents to having a credit bureau report ordered by the creditor. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com2tag:blogger.com,1999:blog-3216504137624758947.post-13763738374492226852013-04-01T13:20:00.000-04:002013-04-01T13:20:05.066-04:00Service of Summons and Complaint to collect money<span style="font-family: Verdana, sans-serif;">A collection law suit (or any suit for that matter) is started by filing a Complaint, which lets the debtor (defendant) know--in a matter of numbered paragraphs--what you are suing for. That is, it explains the contract or account, and then the balance currently owed plus any interest/costs. </span><br />
<br />
<span style="font-family: Verdana;">The suit also includes a cover sheet referred to as a Summons, which is form language required by the court explaining to the debtor the case number, how many days to answer the suit, the fact that this is a suit, and some other details.</span><br />
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<span style="font-family: Verdana;">BOTH the Summons and the Complaint must be served on the debtor/defendant, within the time allowed before it expires (the Summons may have the expiration date right on it).</span><br />
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<span style="font-family: Verdana;">If the defendant is an individual, as opposed to a business, personal service is required. This generally means the debtor (at least in Michigan, and the practice does vary a bit from state to state, country to country) is handed the document. However, in Michigan at least, this does not require a physical touching of the Summons and Complaint. It does require three things: Inform the debtor of the action; offer them to the debtor; and leave them in the debtor's physical control.</span><br />
<br />
<span style="font-family: Verdana;">So, what does the process server do if the debtor takes off running into his house and slams the door (happens often, or some variation of this)? Well, the process server shouts that he is delivering a suit, he offers to hand the papers (remember...BOTH the Summons and the Complaint) to the debtor, then he leaves them right outside the door, or in the door handle, if the debtor refuses to open the door he just ran into. That is sufficient. In one case, the papers made it half way into the door as it was being slammed shut, the debtor grabbed them out of the door and threw them back at the process server. Still good service according to the Michigan Court of Appeals. <em>Barclay v Crown Building</em> is one good example.</span><br />
<br />
<span style="font-family: Verdana;">Michigan also allows service on an individual by certified mail if the delivery is restricted to a specifically identified person, and if that person signs for it and the receipt is produced.</span><br />
<br />
<span style="font-family: Verdana;">There are also a number of ways to obtain substituted service, but that requires a petition or motion be filed with the court, and court permission to so serve the papers...effective if direct service just isn't going to happen. Frequently the plaintiff who started the suit will also petition the court for an extended Summons if the process server runs out of time, usually requiring an affidavit from the process server and other address verification such as a postal trace from the Post Office.</span><br />
<br />
<span style="font-family: Verdana;">What may seem easy, sometimes isn't. Completing good service of a law suit is a prime example of that!</span><br />
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Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-11583199810437260592013-03-06T16:57:00.000-05:002013-03-06T17:07:26.830-05:00FDCPA update: Mortgage foreclosure work is debt collection<span style="font-family: Verdana, sans-serif;">The United States Court of Appeals for the Sixth Circuit ruled in Glazer v Chase Home Finance (decided January 2013) that mortgage foreclosure work is debt collection under the Fair Debt Collection Practices Act. Lawyers who meet the definition of being "debt collectors" must therefore comply with the FDCPA when engaged in mortgage foreclosure as per the facts in the Glazer case. </span><br />
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<span style="font-family: Verdana;">This may come as a shock to some as this type of work is frequently not considered to be debt collection. The logic the Sixth Circuit used was that the foreclosure is basically a means to an end, and the end is to collect the amount owed on the note that accompanied the mortgage. Assuming the loan from the note secured by the property foreclosed upon was used for personal, family or household use, the logic follows that the proceeds of the foreclosure action are being used to pay a consumer debt which is the heart and sole of the FDCPA...this case, of course from the context, involved a consumer debt or, as the court called it: a home loan to a consumer.</span>Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com4tag:blogger.com,1999:blog-3216504137624758947.post-43492172942682634812013-03-06T11:23:00.001-05:002013-03-06T11:23:23.413-05:00Michigan Law App for your i-phone<div class="MsoPlainText" style="margin: 0in 0in 0pt;"><span style="font-family: Arial;">http://www.michigan.gov/documents/cis_ofis_ceilings_24956_7.pdf</span></div><div class="MsoPlainText" style="margin: 0in 0in 0pt;"></div>Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-72261148785635622112013-03-06T11:21:00.001-05:002013-03-06T11:21:32.139-05:00A few comments on Michigan Collection practices<span style="font-family: Verdana, sans-serif;">Just a few quick comments on Michigan collections (I usually try to make comments in a generic fashion, applicable to most of our states) as follows:</span><br />
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<span style="font-family: Verdana, sans-serif;">1. MCL 600.2559 has been amended. This has to do with court officer fees for service of process and related service charges. For example, personal service of a suit is now $23.00 plus mileage; and service of a garnishment is $20.00 plus mileage. Writs to seize assets: 7% of the first $8000 and 3% of amounts over that are owed to the officer; plus posting fees and other expenses (see .2559 (1). The amended section calls for further fee increases each year in 2014 and 2015 as well. These fee charges are all reasonable and necessary, but they are something attorneys working in enforcement of judgments should be aware of.</span><br />
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<span style="font-family: Verdana;">2. Cool apps are available. Check out MICHIGAN COURTS in the App Store for I-phones, I-pads and I Pod touch for powerful tools including State and Federal court rules, access to PACER and the like. Try:</span><br />
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<span style="font-family: Arial;">http://www.michigan.gov/documents/cis_ofis_ceilings_24956_7.pdf</span></div>
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Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-71470454145873520642013-03-01T15:12:00.001-05:002013-03-01T15:15:24.544-05:00FDCPA defendant may recover costs against an unsuccessful plaintiff<span style="font-family: Verdana, sans-serif;">Good news for collectors who are sued <span style="font-family: Verdana, sans-serif;">unsuccessfully</span> by a plaintiff for violating the Fair Debt Collection Practices Act (FDCPA): the United States Supreme Court just ruled that the defendant in the case may recover costs against the unsuccessful plaintiff. </span><br />
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<span style="font-family: Verdana;">The plaintiff in the case before the Supreme Court argued that costs could only be assessed against a plaintiff if the action was brought in "bad faith" as per Section 1692 k (a)(3) of the FDCPA.</span><br />
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<span style="font-family: Verdana;">The Supreme Court said the bad faith requirement does NOT prevent a court from awarding costs against a plaintiff who brings a FDCPA claim, even if in good faith, if the suit is<span style="font-family: Verdana, sans-serif;"> unsuccessful. A portion of the rather long opinion is attached here:</span></span><br />
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<span style="font-family: "Courier New", Courier, monospace;">Petitioner Marx filed suit, alleging that General Revenue Corporation (GRC) violated the Fair Debt Collection Practices Act (FDCPA) by harassing and falsely threatening her in order to collect on a debt.The District Court ruled against Marx and awarded GRC costs pursuant to Federal Rule of Civil Procedure (FRCP) 54(d)(1), which gives district courts discretion to award costs to prevailing defendants“[u]nless a federal statute . . . provides otherwise.” Marx sought to vacate the award, arguing that the court’s discretion under Rule54(d)(1) was displaced by 15 U. S. C. §1692k(a)(3), which provides, in pertinent part, that “[o]n a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs.” The District Court rejected Marx’s argument. The Tenth Circuit affirmed, in pertinent part, agreeing that costs are allowed under the Rule and concluding that nothing in the statute’s text, history, or purpose indicates that it was meant to displace the Rule.</span><span style="font-family: "Courier New", Courier, monospace;"><br /></span><span style="font-family: "Courier New", Courier, monospace;">Held: Section §1692k(a)(3) is not contrary to, and, thus, does not displace a district court’s discretion to award costs under, Rule 54(d)(1).Pp. 4–16.</span><br />
<span style="font-family: "Courier New", Courier, monospace;"><br /></span><span style="font-family: "Courier New", Courier, monospace;">(a) Rule 54(d)(1) gives courts discretion to award costs to prevailing parties, but this discretion can be displaced by a federal statute or FRCP that “provides otherwise,” i.e., is “contrary” to Rule 54(d)(1).Contrary to the argument of Marx and the United States, as amicus, language of the original 1937 version of the Rule does not suggest that any “express provision” for costs should displace Rule 54(d</span><br />
<span style="font-family: "Courier New", Courier, monospace;">....Congress did not intend §1692k(a)(3) to foreclose courts from awarding costs under the Rule</span>.Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0tag:blogger.com,1999:blog-3216504137624758947.post-49351610680301869782013-02-26T08:46:00.000-05:002013-02-26T08:46:15.586-05:00Collection Seminar: Thursday June 6, 2013<br />
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<span style="font-family: Verdana, sans-serif;">UPCOMING COLLECTION SEMINAR</span><br />
<span style="font-family: Verdana;">will be recorded and available by CD</span></div>
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<span style="font-family: Verdana, sans-serif;">We are pleased to announce a full day of discussion on collecting money from your delinquent accounts.</span><br />
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<span style="font-family: Verdana, sans-serif;">This seminar is geared for attorneys and is based upon written materials submitted by the speakers and my book, Handling the Collection Case in Michigan.</span><br />
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<div style="text-align: center;">
<a href="http://www.icle.org/modules/store/books/book.aspx?product_code=2003551710">Handling the Collection Case in Michigan, a detailed analysis of a collection case.</a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyxkSxXNwNsYMUF-wuxm2raSagJfhQbdVO2mR9SjwYWS0NXCagNw9QV2QMIFS4qZGGcCMFMEyatjiAlNkCjOPGpOO-7F55IxzXyu8rxtOGt2VtWDE53b__C1_3_qNEYUIriXpzPHc1b_M/s1600/Handling+the+collection+case+July+09.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" gsa="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyxkSxXNwNsYMUF-wuxm2raSagJfhQbdVO2mR9SjwYWS0NXCagNw9QV2QMIFS4qZGGcCMFMEyatjiAlNkCjOPGpOO-7F55IxzXyu8rxtOGt2VtWDE53b__C1_3_qNEYUIriXpzPHc1b_M/s1600/Handling+the+collection+case+July+09.gif" /></a></div>
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<span style="font-family: Verdana, sans-serif;">The seminar, organized by the Michigan Institute for Continuing Legal Education, is a detailed look at many of the key collection topics, as per the day's agenda, printed below, and will be held at the beautiful INN AT ST. JOHN'S in Plymouth, MI on Thursday, June 6, 2013 (and available on CD thereafter).</span><br />
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<span style="font-family: Verdana;">Topics for the day:</span><br />
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<span style="font-family: Verdana;"><strong>Creditors’ Rights 2013</strong></span></div>
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<strong>(subject to any changes in topics or speakers)</strong></div>
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<strong>Thursday, June 6, 2013</strong></div>
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<em>The Inn at St. John’s, Plymouth</em></div>
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<em>Course Schedule</em></div>
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<em>Moderator</em></div>
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<em>Steven A. Harms</em></div>
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<em>Muller Muller Richmond Harms & Myers PC</em></div>
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<em>Birmingham</em></div>
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<em>Morning Session:</em><br />
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9:00 a.m. to 12:00 p.m.<br />
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The collection case from beginning to end, a complete discussion on the topics involved from negotiation before suit, right up through post judgment collection.<br />
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Steven A. Harms and other speakers<br />
<em>Afternoon Session:</em><br />
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1:30 p.m. – 5:30 p.m.<br />
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1:30 p.m. – 2:00 p.m. How to Use a Garnishment Effectively<br />
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• Practical tips for using garnishments effectively<br />
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• The new 180-day rule<br />
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• Using garnishment in insurance claims (e.g. fire)<br />
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• Thinking beyond banks and wages- garnishing accounts receivable, lottery winnings, state of Michigan income tax refunds, insurance proceeds, rent income (rent payments), and more<br />
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• Exceptions to garnishments: pension plans, child support, 401k, IRAs, etc. <br />
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• Priority writs that affect your garnishment<br />
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Daniel E. Best <br />
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Weltman Weinberg & Reis Co LPA <br />
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Troy<br />
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2:00 p.m. – 3:00 p.m. The Nuts and Bolts of Asset Seizures (Execution Writs)<br />
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• Process overview- how to get an order to seize property<br />
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• Elements of an execution writ (and what forms to use)<br />
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• Teamwork: court officer and attorney collaboration in asset seizures<br />
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• The attorney’s role in information gathering for effective asset seizures<br />
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• Court officer fees<br />
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Steven A. Harms<br />
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Muller Muller Richmond Harms & Myers PC<br />
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Birmingham<br />
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Jeff Kirkpatrick <br />
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Court Services Agency <br />
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Jackson<br />
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3:00 p.m. – 3:15 p.m. Questions and Answers<br />
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3:15 p.m. – 3:30 p.m. Networking Break<br />
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3:30 p.m. – 4:15 p.m. Tips, Tricks, Traps and Trouble: Collecting Money and Avoiding Consumer Claims<br />
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• Caselaw update: Fair Debt Collection Practices Act, Michigan Collection Practices Act, Fair Credit Reporting, and more<br />
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• Latest filing trends and fact patterns <br />
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• Best practices for collection law firms <br />
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Charity A. Olson<br />
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Olson Law Group<br />
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Ann Arbor<br />
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4:15 p.m. – 4:45 p.m. A Court’s Perspective on Attorney Fees and Costs<br />
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• New cases on attorney fees and costs<br />
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• Attorney fees as part of contract<br />
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• What "reasonable attorney fees" means<br />
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• Is a contingency fee a "reasonable attorney fee"?<br />
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• Chargeable costs<br />
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Hon. Dennis C. Drury<br />
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52nd District Court<br />
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Troy<br />
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4:45 p.m. – 5:15 p.m. Skip Tracing: Uncovering Debtors and Hidden Assets<br />
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Using subpoenas, credit reports, Internet resources, and public records together to locate assets<br />
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Skip tracing practice tips and advice<br />
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A practical approach to working with debtors<br />
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Commercial versus consumer skip tracing; constraints of FDCPA<br />
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Real property skip tracing<br />
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Skip tracing check sheet and its importance when conducting a creditor’s examination<br />
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5:15 p.m. – 5:30 p.m. Questions and Answers<br />
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Adjourn<br />
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<br />Steve Harmshttp://www.blogger.com/profile/07388066359985769948noreply@blogger.com0Retreat Center St John's, 44011 Five Mile Road, Plymouth, MI 48170, USA42.395767 -83.47819299999997642.394301 -83.480714499999976 42.397233 -83.475671499999976