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Bankruptcy Basics: Why Every Attorney Should Be Prepared to File a Consumer Bankruptcy

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.

Bankruptcy Basics: The Bankruptcy Code, Rules, and Forms

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.

Bankruptcy Basics: Fifteen Years of BAPCPA

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.

HUD Housing Programs: Tenants’ Rights (The Green Book): 14.10.1.1 Types of Injunctive Relief and Their Uses

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:

Fair Credit Reporting: 11.2.2.1 Generally

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.

Fair Credit Reporting: 11.2.2.2.1 Introduction

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

Fair Credit Reporting: 11.2.2.2.2 Federal agencies

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 . . .

Fair Credit Reporting: 11.2.2.2.4 American Indian tribes

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

Fair Credit Reporting: 11.2.3.1 Generally

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.

Fair Credit Reporting: 11.2.3.3.1 Motions to strike class allegations

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.

Fair Credit Reporting: 11.2.3.3.2 Damages issues

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.

Fair Credit Reporting: 11.2.3.3.3 Possibility of annihilating damages

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

Fair Credit Reporting: 11.2.3.3.4 Alternative of individual suits

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.

Fair Credit Reporting: 11.2.3.3.5 Declaratory or injunctive relief

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.

Fair Credit Reporting: 11.2.3.4 Examples of Class Settlements

  • Credit/Debit Card Number Truncation Cases: Brown v. 22nd Dist. Agric. Ass’n, 2017 WL 2172239 (S.D. Cal. May 17, 2017) (despite misgivings, approving class settlement providing for $.50 reduction in future entrance fees for up to 1.5 million class members where fairground vendor printed entire expiration date of credit card); Gonzalez v. The Harris Ranch Beef Co., 2015 WL 756541 (E.D. Cal. Feb. 23, 2015) (preliminary approval: $90,500 for class of 281,000); Torres v. Pet Extreme, 2015 WL 224752 (E.D. Cal. Jan.