Bankruptcy Basics: Attorneys New to Bankruptcy Practice
This guide is intended for attorneys new to bankruptcy practice, taking them step by step through their first few bankruptcy cases. It is directed to the following users:
This guide is intended for attorneys new to bankruptcy practice, taking them step by step through their first few bankruptcy cases. It is directed to the following users:
As its title indicates, Bankruptcy Basics focuses on the key steps an attorney must take to successfully initiate and complete a consumer bankruptcy case. Far more detail is found in NCLC’s Consumer Bankruptcy Law and Practice (13th ed.
Many attorneys find the bankruptcy process and even bankruptcy terminology intimidating, not to mention the need to become familiar with a new court and new filing requirements. A common response is “I don’t do bankruptcies.” Oftentimes, consumer law attorneys and consumer bankruptcy attorneys will see the same problem through their own respective lenses, leading to complicated solutions to straightforward problems. When all you have is a hammer, everything starts to look like a nail.
The Bankruptcy Code, title 11 of the United States Code, is the most important source of law in bankruptcy cases. The Code is broken down into chapters that, with the exception of chapter 12, are assigned only odd numbers. Chapters 1, 3, and 5 contain provisions that are generally applicable to all types of bankruptcies, such as chapter 1’s definitions and rules of construction.
In 2005, the credit card industry and other creditors pushed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Public Law No. 109-8, 119 Stat. 23, through Congress. It extensively amended the Bankruptcy Code, 11 U.S.C. §§ 101–1532. This Act will be referred to in this guide as BAPCPA.
Despite calling itself a “consumer protection act,” BAPCPA sought to do two things: (1) make it harder for the average consumer debtor to discharge debts, and (2) make it more difficult, and more expensive, for debtors to file bankruptcy in the first place.
Attorneys finding this guide helpful should also consider the following NCLC publications:
Bankruptcy Basics is available in both a print and digital version. The guide is available for purchase as a digital-only version or a print version that includes access to the digital version. For assistance logging in to the digital version at www.nclc.org/library, contact [email protected].
The following organizations provide a variety of valuable resources for bankruptcy attorneys, including continuing legal educational programs:
Federal Rule of Civil Procedure 65 provides for injunctive relief at the court’s discretion. As the Supreme Court has stated, “[t]he basis for injunctive relief in the federal courts has always been irreparable injury and the inadequacy of legal remedies.”1298 Injunctive relief is a virtual staple of public interest litigation.
In housing cases, tenants have obtained injunctive relief to:
A tenant family’s right to continued participation in the HCV program is a cognizable property interest that a PHA may not terminate except in accordance with the (Fourteenth Amendment) Due Process Clause.1439 A termination hearing or decision that does not adhere to the regulatory procedural protections may also violate 42 U.S.C.
Any “person” who fails to comply with any requirement with respect to a consumer may be liable under the FCRA.29 Consumer reporting agencies, users of consumer reports, and those who furnish information to CRAs are liable for violations.
Special care must be taken before suing government defendants. Courts have at times been especially strict in construing terms in the FCRA to preclude application to government agencies (whether federal, state, or local).50 More importantly, government agencies may have sovereign immunity from suit. Government officials may have qualified immunity.51
Federal agencies are generally not considered to be CRAs and thus are not subject to the FCRA provisions regulating CRAs.53 But the federal government does act in other capacities regulated by the FCRA, including as a furnisher of data, a user of consumer reports, and a provider of credit card receipts. The FCRA’s definition of “person” explicitly includes “any . . .
State governments are even more clearly protected by sovereign immunity than the federal government. Under the Eleventh Amendment of the U.S.
Sovereign immunity also protects American Indian tribes, absent a clear and unequivocal abrogation of that tribal immunity by Congress.103 The Seventh Circuit has held that the FACTA amendments to the FCRA did not abrogate that immunity through the FCRA’s definition of a “person” subject to the Act, which includes “any . . . government,” but does not explicitly mention American Indian tribes.104
Federal Trade Commission investigations and actions,105 studies,106 and private suits have demonstrated the existence of widespread systematic illegal practices in the consumer reporting industry. Class actions provide a potentially effective tool for ameliorating many such abuses. In addition, it may be easier, or at least more cost-effective, to prove some claims in a class action context, such as showing that a consumer reporting agency’s (CRA’s) procedures are not reasonable.
Among the types of claims that have been the subject of class action treatment are the following:
Motions to strike class allegations prior to discovery “‘are disfavored because a motion for class certification is a more appropriate vehicle’ for argument about class propriety.”115 Nevertheless, courts will generally consider whether there are any clear impediments to class certification on the face of the complaint.
Whether a court will certify a class often turns on issues relating to damages. Where actual damages are sought, the defendant will argue that the superiority and predominance requirements of Federal Rule of Civil Procedure 23(b)(3)are not met because individual actual damages inquiries would be required for class members who chose to pursue such damages. This contention is generally unsuccessful in FCRA and other class actions.119 In Clark v.
As with other federal consumer protection statutes, the FCRA imposes no limit on the size of a class action award for actual damages.127 Unlike certain others, including TILA, the FDCPA, and the ECOA, however, it also does not cap the amount of an award of statutory damages in class actions.128 As a result, one issue that sometimes arises under the FCRA but not under these other statutes, is whether putative class actions for statutory damages should be denied certification as not being the supe
Defendants often contend that a class action should not be certified because it would not be superior to individual suits, as required by Federal Rule of Civil Procedure 23(b)(3). The Fourth Circuit rejected this contention in Stillmock v. Weis Markets, Inc.,140 holding that a class action is superior because, inter alia, even the availability of punitive damages and attorney fees is unlikely to result in enforcement of FCRA by individual actions at a scale comparable to the potential enforcement by way of class action.
A separate issue regarding class certification is whether a Rule 23(b)(2) class for declaratory or injunctive relief may be certified under the FCRA. Because the majority view is that neither declaratory nor injunctive relief is available under the federal FCRA in any kind of action,142 cases discussing whether the criteria for certification of a Rule 23(b)(2) class have been satisfied in this context are rare.
As noted in § 11.3.1.3.1, supra, the standing of the putative class representative is often challenged in FCRA litigation. Another defense argument is that the class representative is neither typical nor adequate.
Prior to the Supreme Court’s decision in Spokeo, Inc. v. Robins,176 and the Supreme Court’s decision applying the Spokeo framework in TransUnion L.L.C. v.