Written September 29, 2007 by Jay Fleischman, New York Bankruptcy Lawyer
The recent case of In re Mu’Min, 2007 WL 2791364 (Bkrtcy.E.D.Pa. 2007) the court held that the refusal of University of Pennsylvania to provide a transcript to a debtor, due to the existence of an unpaid, student loan debt that is nondischargeable under 11 U.S.C. § 523(a)(8), violates the automatic stay provision of the Bankruptcy Code, 11 U.S.C. § 362(a)(6). The court further held that regardless whether the facts giving rise to Penn’s asserted “good faith” would have constituted a defense to monetary liability under the standard set forth in by the Third Circuit in In re University Medical Center, 973 F.2d 1065 (3d Cir.1992), after the 2005 amendments to the Bankruptcy Code, Penn’s defense was no longer legally viable and awarded actual damages to the Debtor.
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In the case of Munoz v. Pipestone Financial, LLC, Civil No. 04-4142 (JNE/SRN) (D.Minn. 8/30/2007), the Plaintiff claimed that Pipestone Financial, LLC, and Messerli & Kramer, P.A., (collectively, Defendants) violated the Fair Debt Collection Practices Act (FDCPA) by attempting to collect interest at an impermissible rate, misrepresenting their entitlement to attorney fees, and using envelopes that reveal personal and confidential information about him in communications with him. The court held in part as follows:
[S]tipulated attorneys’ fees are no part of the original debt; [and] the right to them does not accrue until the payee incurs the liability, and then only to the extent of the reasonable value of the attorneys’ services actually performed or to be performed, which must be proved. . . . The full amount for which the maker is liable on such stipulations is not really due when suit is brought, for the services of the attorney are not then fully performed.
Therefore, if a collection letter include legal fees then that collection letter violates the FDCPA.
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Many lawyers and debtors have asked over the years, “How small is too small?” In other words, what are the odds of a trustee seizing a vehicle with $500 of non-exempt equity?
In the past, the answer was clear-cut; in my home courts, a trustee usually wouldn’t bother with a small asset because it just wasn’t worth it. Other places, however, tell a different tale - I’ve heard of trustees would would administer a $200 asset.
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The latest installment of ABI podcast chats is available ABI World Web site. This edition of the ABI podcast features an interview by ABI Executive Director Sam Gerdano with Prof. Todd J. Zywicki of the George Mason University School of Law about his perspectives on bankruptcy, including the relationship between medical debt and bankruptcy. The podcast will be available at http://podcast.abiworld.org/.
Those of you who followed the road to passage of BAPCPA will recall Prof. Zywicki was the one who said that the bankruptcy reform bill was perfect and that not one letter needed to be changed. In light of the litigation that has ensued over just about every comma, period and semicolon I would suggest that Prof. Zywicki was perhaps just a tad overzealous.
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