Creditors Rights - Creditors Rights Professor Warner Rights...

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Creditors Rights Professor Warner Rights of a Creditor Before Bankruptcy—State Law I. General Background * an unsecured creditor has no interest in a debtor’s property. If a creditor takes someone’s property they are guilty of conversion and will be liable for damages— possibly punitive * unsecured creditors have no right to self help II. Informal Debt Collection * Creditors use “dunning letters”, phone calls, visits, threats etc. to encourage payment. Debtors have some recourse at common law: * Intentional Infliction of Emotional Distress—doesn’t work very often, court tends to give creditor some leeway in his actions, don’t often find their conduct extreme, also extreme distress is often not found, some courts actually require a physical manifestation of the distress * Extreme Conduct * Extreme Distress * Intent * Invasion of Privacy * Publication to general public of a private fact * Falsity (many states don’t require this element) * Tendency to bring shame/humiliation * Audience has no legitimate interest in the information * Invasion of Privacy II * balance the nature of intrusion against the right of the party to bother you * Defamation * Falsity—usually can’t satisfy this element * There is a privilege for a statement made to someone with a legitimate interest without malice, even if it is false * Interference with Contract * often claimed where creditor notifies debtor’s employer and debtor is fired. * Plaintiff will often have trouble proving that they were fired because of the contact * Because the tort system was not an effective way to protect debtors from abusive debt collection practices, the legislature has stepped in * Fair Credit Reporting Act * Prior to the FCRA you could not obtain a copy of your credit file. You would be forced to sue a credit reporting agency and obtain a copy during discovery. Even if false information was on the credit report the agency is protected by the good faith legitimate interest qualified privilege to defamation
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* The FCRA gives you a right to view your credit report, creates a duty for the agency to use reasonably procedures to assure the maximum possibly accuracy, and limits the number of people who may receive your credit report. * Correcting Your Credit Report * § 609: right to obtain your credit report. You have a right to a free copy if you request it within 60 days of being denied credit * § 611: credit reporting agency must reinvestigate information that a consumer challenges. If the information can not be verified it must be deleted * frivolous demands may be ignored * when there is a dispute between a debtor and creditor about whether a debt is owed and the creditor continues to reverify it, it won’t be deleted but the debtor has a right to add an explanation of the debt and dispute to his credit report * Fair Debt Collection Practices Act * When a debtor is sued this is often a counter claim. The statute was enacted to prevent abusive conduct by creditors and protect debtors employment * Remedies for the Debtor * any actual damages
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