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Credit Discrimination: Introduction to Sample Pleadings

The pleadings reprinted in this appendix can also be found online in Microsoft Word format as companion material to this treatise. The companion material online also contains a number of additional pleadings that are not reprinted here. All pleadings in the text and online are for demonstration purposes only and must be adapted by a competent professional to fit the circumstances of a given case and the requirements of local rules and practice.

Consumer Credit Regulation: 15.1.1.2 History of RALs

From the 1990s until about 2015, the RAL market was much larger than it is today. In 2004, there were about 13.8 million RAL applications, and about 12.4 million taxpayers taking out RALs at a cost of $1.24 billion.6 By 2014, applications had dropped by over 99.7% to 34,000 applications sent to non-bank lenders.7

Consumer Credit Regulation: 15.1.1.3 Potential Abuses with No Fee RALs

In 2016, several bank and non-bank lenders began offering a form of RALs that did not impose a fee on the consumer, which the lenders referred to as an “advance.”16 These so-called advances, or “no-fee” RALs, are alleged to be non-recourse. In other words, the consumer is not required to repay the loan if the tax refund is not received. Even so, there were reports by some of being required to repay when the tax refund was not disbursed as expected.17

Consumer Credit Regulation: INTRODUCTION

This set of summaries encompasses state statutes that allow lenders other than depository institutions to extend unsecured open-end consumer credit, by credit card or otherwise, for cash advances. It excludes open-end credit statutes that are limited to:

Consumer Bankruptcy Law and Practice: 4.1 General Explanation of Chapter 13 Bankruptcy

Chapter 13 bankruptcy gives debtors the opportunity to adjust their financial affairs without having to liquidate current assets. Rather than being designed to pay debts out of those assets, a chapter 13 case usually involves payment of debts out of future income (although the debtor may also choose to make some payment out of current assets). The debtor is allowed to keep and use all property, whether exempt or not, and to pay some or all debts according to a plan approved by the court.

Consumer Bankruptcy Law and Practice: 4.2.1.2 Individuals with Regular Income

To qualify as an “individual with regular income,” one must be “any individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under chapter 13.”4 This definition was clearly intended to encompass not only wage earners, but also recipients of government benefits, alimony or support payments, or any other regular type of income.5 The question of how regular the income must be is left to case law but, as types of income such as commissions are meant

Fair Debt Collection: 16.2.3.2 Types of Activities Covered

The typical state debt collection statute covers contacts made for the purpose of debt collection. An allegation that the defendant left messages requesting the called party to call a certain number may be insufficient, without more, to establish the debt collection purpose of the calls.110 Some courts hold that contacts made in connection with mortgage foreclosure, or to offer a mortgage workout, are not made in connection with debt collection.111

Fair Debt Collection: 16.2.3.3.1 Creditors collecting their own debts

While some state debt collection statutes apply only to collection agencies,115 many go beyond the FDCPA and apply to creditors collecting their own debts.116 One implication of this broader coverage is that, while landlords are usually immune from liability under the federal Fair Debt Collection Practices Act because they are collecting their own debts,117 they are often subject to state debt collection and other state consumer protection statutes

Fair Debt Collection: 16.2.3.3.2 Assignees and debt buyers

The scope of state debt collection statutes is particularly complex as applied to debt buyers. Most state debt collection statutes were originally enacted before the proliferation of debt buying, and some are ambiguous as to whether they apply to debt buyers. Many of these statutes’ definitions have been amended piecemeal over the years, and it is common for the definition of “debt collector” or “collection agency” to include multiple prongs, any number of which may apply to debt buyers.

Fair Debt Collection: 16.2.3.3.3 Entities not in the business of debt collection

Some state debt collection statutes exclude entities that collect debts only occasionally.147 For example, one of North Carolina’s two debt collection statutes allows a claim only if the acts or practices were “in or affecting commerce,” which is construed to mean those normal day-to-day activities regularly conducted by the business and for which the business was organized.148 Illinois exempts businesses whose collection activities are confined to and directly related to the operation of a busi

Fair Debt Collection: 16.2.3.3.4 Attorneys

It is common for debt collection statutes to exclude lawyers from their licensing provisions, and sometimes from their substantive prohibitions as well.150 In other states, courts distinguish between the practice of law on the one hand, and running a collection agency151 or buying defaulted debts for purposes of collection on the other.152 Some states exempt lawyers from the registration requirements for collection agencies, but apply the substanti

Fair Debt Collection: 16.2.3.3.6 Child support collectors

Some states have special provisions covering private collectors of child support, or explicitly subjecting them to the provisions of general debt collection statutes.177 Many of these statutes focus primarily on preventing collectors from taking advantage of vulnerable obligees, but they may also set limits on debt collection tactics.

Fair Debt Collection: 16.2.3.3.7 Out-of-state collectors

Some debt collection statutes apply to out-of-state debt collectors who collect debts from residents of the legislating states.178 Consumers being dunned by an out-of-state collector may also be protected by the debt collection laws of the collector’s home state.179 Other state debt collection statutes, however, exclude interstate communications.180