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Repossessions: 14.3.6.7 Bankruptcy Stay

When a debtor files bankruptcy, the automatic stay prevents an RTO company from retaking the rented items.368 A creditor that repossesses the property in violation of the automatic stay may face actual and punitive damages.369

Repossessions: 14.3.6.8 Discrimination

There is some evidence that RTO dealers treat delinquent customers differently based on their race.370 African-American customers may experience more rapid repossession and may be less likely to have late fees waived than white customers.371 The Equal Credit Opportunity Act (ECOA) arguably applies to RTO transactions.372 If so, RTO dealers cannot treat customers differently post-default based on prohibited grounds.

Repossessions: 14.3.7 Consumer’s Right of Reinstatement

Article 2A does not provide for a right to cure or to reinstate, but RTO statutes in effect in most states provide a right to reinstate.376 A consumer might not want to reinstate an RTO contract because the contract so often is a bad deal. In addition, the right to reinstate can be viewed as just a gimmick to allow RTO companies to assess additional late charges.

Repossessions: 14.3.8 RTO Company and Consumer Liability After Repossession

Once the RTO good is repossessed, the RTO firm retains the good, and most likely rents the same appliance to a new customer, perhaps on the same rental terms. The question then arises as to what liability the consumer has to the RTO company and whether the RTO company which has kept the consumer’s built-up equity has to return anything to the consumer. If Article 9 applies, such liabilities are examined in , supra. This subsection assumes Article 9 does not apply.

Repossessions: E.1 Sample First Set of Interrogatories

Federal Rule of Civil Procedure 33(a) and certain state rules of civil procedure limit the number of interrogatories to twenty-five including subparts. This limitation may be avoided only by leave of the court with written stipulation of the parties. Nevertheless, because most repossession litigation is in state court, this sample set includes more than twenty-five interrogatories.

Repossessions: E.2 Sample Document Request

Automobile Creditor,

Plaintiff

v.

Consumer,

Defendant

Case No.

FIRST REQUEST FOR PRODUCTION OF DOCUMENTS

Pursuant to Rule 34 of the Federal Rules of Civil Procedure [or other appropriate state procedural rule], Defendant requests that Plaintiff produce the documents, electronically stored information, or other materials listed hereinafter for inspection and/or copying at the office of the attorney for Defendant on [specify date and time].

Repossessions: E.3 Sample Supplemental Interrogatories for Dealer Only Auto Auction

A typical method to dispose of repossessed automobiles is through an automobile auction whose rules permit attendance only by dealers. These are additional sample interrogatory questions designed for cases in which the response to the first set of interrogatories indicates that the vehicle was resold at such a dealer only auction.2

Automobile Creditor,

Plaintiff

v.

Consumer,

Defendant

Case No.

DEFENDANT’S SECOND SET OF INTERROGATORIES TO PLAINTIFF

Repossessions: E.4 Sample Second Document Request

Automobile Creditor,

Plaintiff

v.

Consumer,

Defendant

Case No.

SECOND REQUEST FOR PRODUCTION OF DOCUMENTS

1. Produce each and every document which you identified or described in response to Defendant’s First Set of Written Interrogatories.

2. Produce each and every document upon which you relied in the preparation of your Reply to Defendant’s Answer and Counterclaim in this action.

Submitted by,

Attorney for Defendant

Consumer Bankruptcy Law and Practice: 3.1 General Explanation of Chapter 7 Bankruptcy

When most people think of bankruptcy, they think of the type of bankruptcy provided for in chapter 7 of the Code—a liquidation proceeding sometimes called straight bankruptcy. This type of bankruptcy has by far been the most popular type of proceeding for individuals. Although the percentage of debtors choosing chapter 7 has diminished somewhat since enactment of the Code because of the advantages that chapter 13 offers, chapter 7 continues to be the chapter most frequently utilized, and it remains a lifeline for up to a million consumer debtors each year.

Consumer Bankruptcy Law and Practice: 3.2.1.3 Effect of Prior Bankruptcy Cases on Eligibility to File

One limitation exists on the broad right to file under chapter 7. An individual is not eligible to file a petition if, within the preceding 180 days, (1) they were the debtor in a bankruptcy case dismissed for willful failure to abide by orders of the court or to appear before the court in proper prosecution of the case or (2) they requested and obtained voluntary dismissal of a bankruptcy case following the filing of a request for relief from the automatic stay provided by section 362.20

Consumer Bankruptcy Law and Practice: 3.2.1.6 Dismissal for Abuse and the Means Test

Although not an eligibility requirement, section 707(b) permits a bankruptcy court to dismiss a chapter 7 case, after notice and a hearing, if the court finds that granting relief under chapter 7 would be an abuse of its provisions. Section 707(b) applies only to debtors whose debts are primarily consumer debts. A means test, found in section 707(b)(2) of the Code, determines whether there is a presumption of abuse based on the debtor’s ability to repay creditors. This test does not apply to debtors whose income is below certain standards.

Consumer Bankruptcy Law and Practice: 3.2.2 The Initial Forms

Although the bankruptcy filing process may seem intimidating at first, a voluntary case is actually started by the debtor69 filing a simple eight-page petition, which includes a statement of compliance with the prebankruptcy credit counseling briefing requirement,70 along with a statement of the debtor’s Social Security number or lack thereof,71 and, if applicable, an initial statement about any prepetition eviction judgment entered against the debtor.

Consumer Bankruptcy Law and Practice: 6.1.1 Explaining the Options to Clients

Whether, how, and when to file a bankruptcy petition is probably the single most important decision made in a bankruptcy case. Like most questions of legal strategy, it is rarely simple. It involves the interplay of a number of factors. Many of these are unique to each client; others turn on state law, custom, or practice in a community, or the provisions of the Bankruptcy Code.

Consumer Bankruptcy Law and Practice: 6.2.1.2 Protection of Property and Income from Unsecured Creditors

Bankruptcy is often the only sure way to protect a debtor’s property from execution by unsecured creditors. Bankruptcy may provide total protection for a home, car, or other vital property. The amount of property debtors are allowed to protect from creditors through use of exemptions in bankruptcy is, in many states, far greater than the amount they can protect in state law execution processes.8

Consumer Bankruptcy Law and Practice: 6.2.1.6 Litigation Advantages of the Bankruptcy Forum

An important factor to consider in opting for bankruptcy is the opportunity to litigate disputes with creditors in a federal court, which has at least initial jurisdiction over such disputes after a case has been filed.27 In some places the bankruptcy court may provide a far more sympathetic forum than the local state court, and it may be far more familiar with the applicable law.

Consumer Bankruptcy Law and Practice: 6.2.2.1 Generally

Despite all of the possible advantages that bankruptcy may provide, there are many valid reasons for choosing not to file a petition. Some of these concern problems in the cases of particular clients, and others relate simply to the fact that bankruptcy is not the only means to address a client’s legal problems and may not be necessary.