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Bankruptcy Basics: Amendments

Despite using best efforts to obtain complete and accurate information in preparing the schedules, it is not uncommon for errors or omissions to be discovered after the documents are filed, sometimes in response to questions posed to the debtor at the meeting of creditors. If an amendment is needed Bankruptcy Rule 1009 provides that the debtor may amend the initial papers as a matter of course at any time before the case is closed. The procedure is a simple one involving the filing of an amended document verified by the debtor.

Bankruptcy Basics: Attending the Meeting

The debtor (both debtors in a joint case) must attend the meeting of creditors. The meeting of creditors is conducted by the panel trustee or the chapter 13 standing trustee. It is not usually held at the bankruptcy court but rather at a separate government or office building. As a result of the COVID-19 pandemic, on August 28, 2020, the United States Trustee Program established a policy requiring that meetings of creditors take place by telephone or video appearance until sixty days after the expiration of the COVID-19 national emergency.

Bankruptcy Basics: Enforcing the Discharge

Before the attorney’s client file is closed it is very important that the debtor be advised about the scope and effect of the discharge. This advice should include a discussion of the protections from discrimination by government agencies, private employers, and student loan providers. See Chapter 3, supra. The debtor should be reminded of the specific debts, if any, that have not been discharged.

Bankruptcy Basics: Consequences of the Audit

The failure of the debtor to satisfactorily explain a material misstatement in an audit or to satisfactorily explain a failure to make necessary papers or property available for inspection can be grounds for revocation of a discharge under section 727(d)(4).

Fair Credit Reporting: 10.6.2 State Deceptive Practices Statutes

Every state has a deceptive practices statute that, with few exceptions, provides important consumer remedies for marketplace misconduct.244 Remedies, depending on the state, might include attorney fees, actual damages, treble damages, punitive damages, and/or statutory damages for deceptive conduct. In addition, many of these statutes also prohibit unfair or unconscionable conduct, and not just deceptive conduct.

Fair Credit Reporting: 10.6.3 State Identity Theft Laws

Many states have enacted criminal and civil laws that target identity theft.256 As discussed below in detail in § 10.7, infra, however, the FCRA specifically preempts states from imposing any requirement or prohibition with respect to the “conduct required” by many of the provisions of the FCRA aimed at preventing and reme

Fair Credit Reporting: 10.7.2.1 A Roadmap

The general FCRA rule is that state law is not preempted unless it is inconsistent with the FCRA or unless it is explicitly preempted by the FCRA’s express preemption provision, section 1681t(b).289 Section 1681t(b) states that “[n]o requirement or prohibition may be imposed under the laws of any State” with respect to five different areas:290

Fair Credit Reporting: 10.7.2.2 General Principles of Interpretation

When Congress employs express preemption in a federal act, the scope of the clause depends on its language, along with that of any savings clause in the act.309 When examining an express preemption clause, a court must focus on the plain wording of the clause, because that wording is “the best evidence of Congress’ pre-emptive intent.”310

Fair Credit Reporting: 10.7.2.3 Applicability of Pre-FACTA Case Law to Current FCRA Preemption Provisions

The FCRA’s explicit preemption provisions were due to expire on January 1, 2004,319 but the Fair and Accurate Credit Transactions Act of 2003 (FACTA) removed this sunset clause, thus retaining the earlier preemption language. The FACTA amendments to the FCRA also added new language whereby additional FCRA provisions preempt state law. Case law prior to the FACTA amendments will still be good precedent for the preemption language that has been retained unchanged, but only partially relevant to the new preemption language.

Fair Credit Reporting: 10.2.1.3 FCRA Private Remedy for Furnisher Reinvestigation Obligations in Response to a CRA Request

Creditors, debt collectors, and others who furnish information to CRAs must participate in reinvestigations conducted by the CRAs when consumers dispute the accuracy or completeness of information with the CRA, and must follow certain steps to correct erroneous information.27 There is a FCRA private right of action to sue creditors and other furnishers who fail to comply with these requirements.28

Student Loan Law: 17.2.3.1 Generally

The Higher Education Act (HEA) does not include any minimum requirements for state consumer protection oversight. It simply provides that to be eligible for Title IV funding, an institution must be “legally authorized” by the state to provide a program of postsecondary education.224 This is referred to as “state authorization.” State regulatory requirements vary widely.

Student Loan Law: 8.1 Overview

The government has extraordinary powers to collect student loan debt. Federal student loan collection powers have grown so much over time that the government rarely sues borrowers, opting instead for an array of extra-judicial collection tools. These extra-judicial collection tools are discussed in detail in Chapter 9, infra.

Student Loan Law: 18.2.2.1 Generally

The FDCPA applies to collection of “debts” by “debt collectors.” “Debt” is defined as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services that are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.”10 Student loan debts fall within this definition.11

Student Loan Law: 8.3.5.1 Generally

This section discusses laws and requirements related to credit reporting on federal student loans generally and defaulted loans in particular.

Student Loan Law: 18.2.1 Fair Debt Collection Practices Act Overview

Whether it be a federal or private student loan, the federal Fair Debt Collection Practices Act (FDCPA) is the main statute offering student borrowers remedies for debt collection deception and harassment.1 The FDCPA prohibits a number of specific collection practices, more generally prohibits unfair and deceptive collection practices, and sets out a number of affirmative obligations for collection agencies.2

Student Loan Law: 9.4.2.3 Notice of Garnishment

The DCIA requires notice to the borrower before garnishment.140 Notice must be sent by mail to the borrower’s last known address a minimum of thirty days before the initiation of garnishment procedures.141 The notice must inform the borrower of the nature and amount of the debt, the agency’s intention to initiate garnishment, and an explanation of the borrower’s rights.142 Failure to follow these notice requirements or misrepresentations abou

Student Loan Law: 7.4.4 Costs Associated with Rehabilitation

Federal law permits collection fees of up to 16% of the unpaid principal and accrued interest at the time of sale of a rehabilitated loan to be added.201 However, borrowers may be assessed far lower collection fees, especially if their loans are held by the Department or if they rehabilitate quickly after defaulting.

Student Loan Law: 8.4.2 Application of Collection Fees to Payments

Before the Department of Education (the Department) decided to end the use of private collection agencies (PCAs) in 2021,152 the collector payment system was structured so that the contractors were typically paid a percentage of the money they collect. PCAs charged the Department a contingent fee for any payments made by the borrower on a loan placed with the PCA by the Department. The Department passed these costs onto borrowers to the extent allowed by law.153