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Collection Actions: 4.2.4.3.1 The majority rule

The majority rule is that the affidavit authenticating the records of the original creditor must be sworn to by an employee of the original creditor and not by an employee of the debt buyer,157 because the debt buyer employee has no knowledge of how the originating creditor created the records and cannot testify to how they were created.158 To certify business records, the affiant must be familiar with the original creditor’s record-keeping practices—i.e., the habits and customary practices and

Collection Actions: 4.2.4.3.2 The minority rule of incorporation

A minority of courts recognize a “rule of incorporation,” which provides that records taken into custody by a business are considered “made” by that business if that business integrates the documents into its business records and relies upon them.168 But most state courts reject this extension of the basic rules of evidence.169

Collection Actions: 4.2.4.3.6 The New Jersey rule

The rule in New Jersey is that a witness who is not an employee of the entity creating business records can still lay the foundation for the records if a number of conditions are met. The witness must demonstrate that the record is what the witness claims it to be, that the witness is sufficiently familiar with the record system used, and the witness can establish that it was the regular practice of the business to make the record.

Collection Actions: 4.2.4.4 Electronic Records

Business records must also be authentic. Ordinarily, the same proof as required to qualify for the exception from the hearsay rule is sufficient to show authenticity.188 But electronic records create special authentication issues.189 Has the record been preserved during the time it was in the electronic file so as to ensure that the document being proffered is the same as the document that was originally created?

Collection Actions: 4.3.1 Introduction

Chapter 3, supra, examines situations in which the entity collecting the debt does not have authority to use the state’s courts—such as when the entity is not properly licensed to collect on a debt or has not properly registered with the state as an out-of-state corporation.198 This section examines whether the entity suing on the debt has standing to bring the action—is

Collection Actions: 4.3.2.1 Generally

Even when a collection action is brought by a bank or other creditor, issues of real party in interest and proving ownership can still arise. The first step is to determine if the entity suing on the debt has the exact same name as the entity that originated the credit. This may not be the case.

Collection Actions: 4.3.2.2 Securitization of Credit Card Obligations

It is common for a credit card issuer to securitize its credit card receivables—Citibank is a good example. There are a number of complex ways in which this is accomplished. To further complicate matters, a credit card securitization is different in many ways than a mortgage loan securitization. To oversimplify, a card issuer will sell the right to receivables from a portfolio of credit card accounts. After changing hands a number of times, ownership of those receivables will reside in a trust that can issue securities related to the assets held by the trust.

Collection Actions: 11.7.1 Introduction

Consumers who are denied housing based on a background check report may have a claim under the Fair Credit Reporting Act (FCRA). The reporting of criminal background information to prospective landlords is a “permissible purpose” under the FCRA—background screening companies can report non-conviction information that is less than seven years old and criminal convictions no matter how long ago they occurred.638

Collection Actions: 12.2.1 Introduction

Rental debt is money allegedly owed due to a current or prior tenancy, and includes amounts for rent arrears (or back-rent), claims for unpaid rent after breaking a lease, and alleged damages. Due in large part to recent economic disruptions, the Federal Reserve estimates that, as of late 2021, renters owed $9.3 to $10.9 billion in total back-rent.7

Collection Actions: 12.2.7 Tenant and Landlord Rights After the Collection Case

A prevailing tenant in the landlord’s collection case may be able to recover attorney fees, at least in some states. There are eight potential ways a prevailing consumer can recover fees39 in consumer credit collection actions. At least some, if not all, of these approaches will generally apply to tenants in a collection action for rental debt.

Collection Actions: 2.3.5 The Client Interview and Questions to Ask

An attorney should develop a system to obtain basic information from the client without taking up too much of the attorney’s time, so that the attorney can focus on the important parts of the interview. This habit is particularly important when the attorney follows the useful practice of obtaining information not just about the debt in question but about all of the consumer’s debt issues.

Collection Actions: 12.3.10 Responding to Debt Collectors

Debt collectors may be contacting the client to collect a debt incurred by the abuser. Make sure the client saves the detailed information on the debt that is provided with the first collection contact. The client can also ask for verification and contact information for the original creditor after receiving that notice. If the debt was incurred through fraud, the client should dispute the debt.68

Collection Actions: 8.4.2 Tort and Other Remedies

Initiation of a dishonored check prosecution without probable cause may be actionable as a tort, such as malicious prosecution,147 intentional infliction of emotional distress,148 abuse of process,149 fraud,150 or defamation.151 A consumer who is arrested may have a cause of action for false imprisonment, but note that, if the arrest is pursuan

Collection Actions: 14.3.6.1 Generally

Some states provide a “wildcard” exemption that exempts any property specified by the debtor up to a certain amount.104 Some states limit the wildcard exemption to personal property105 or tangible personal property,106 but in other states it can be applied to any property,107 including such assets as causes of action.108 In some states, the wil

Collection Actions: 14.3.3 Proceeds of Exempt Property

Many decisions hold that the proceeds of the sale of exempt property deposited in a bank account are exempt.70 However, commingling with non-exempt funds may present a problem of tracing for some courts,71 and some states require that the proceeds remain separate and identifiable until they are used for a new homestead.72

Collection Actions: 16.2.4.1 Occupancy

The establishment of a homestead generally requires actual occupancy, with intent to make the property one’s home.76 Nonetheless, the homestead exemption may apply to a home if the debtor is temporarily absent but intends to return.77 Immigrants who have the right to reside in the United States only temporarily may be unable to meet an occupancy requirement that requires an intent to reside in the home permanently.78 In some states, occupancy

Collection Actions: 14.3.2 Exempt Property Purchased with Non-Exempt Funds or Proceeds of Wrongdoing

Even though exemption laws are entitled to a liberal construction, exemptions may not be construed to aid wrongdoing.57 Thus, property purchased or improved with the proceeds of wrongdoing is generally non-exempt, and some courts enable a creditor to execute on the property by recognizing an equitable lien in favor of the creditor, at least up to the amount of the traceable funds.58 For example, courts hold a home non-exempt to the extent it was purchased or a mortgage on it paid down with t

Collection Actions: 14.4.1 Introduction

It is common for states to have special exemption schemes for particular types of debt. For example, a number of states—recognizing the special burden created by medical debt—have enacted statutes limiting medical debt collection or otherwise assisting debtors facing health problems. Medical debt, criminal justice debt, and debts owed to the federal government are discussed in other chapters of this treatise.