The commencement of a bankruptcy creates what is called the Automatic Stay. It prohibits Creditors from taking actions that the Creditor would normally take like calling the Debtor, sending the Debtor demand letters, attempting to repossess collateral, using an ignition interrupter or GPS on a financed motor vehicle or suing the Debtor. All these actions and others are prohibited by the Automatic Stay that arises upon commencement of the bankruptcy case. Certain creditors may take the opportunity to ask the Court for relief from the Automatic Stay. Tom Reilly frequently represent both commercial and consumer creditors Options to obtain relief form the automatic stay.
Whether you are a small business sending out invoices, a company leasing equipment, or a bank lending money, the first step in assuring payment is good, clear, concise documentation supporting your extension of credit.
It is important to remember that the courts do not exist to enforce debts, but are, in our culture the method of resolving disputes. Thus, a suit on a debt or foreclosure takes the course of any other lawsuit. However, proceeding through, court process is the necessary first step in obtaining a judgment. In addition to the enforcement remedies, judgments also create liens on the defendant’s interest in real property. Thus, a simple suit to judgment may create an involuntary way to “secure” the debt.
Civil courts also provide remedies to recover possession of collateral. For instance in installment sale contracts under the Motor Vehicle Installment Finance Act or other third party lending and loans where collateral is taken. An action in replevin is provided for in the Pennsylvania Rules of Civil Procedure, which results in the entry of a judgment for possession of the collateral that can be enforced by the sheriff taking possession of the property. There is also a more immediate remedy under the replevin rules, which would entitle the creditor upon posting of a bond and demonstrating a probable likelihood of its claim for possession the court may grant a writ of seizure allowing the sheriff to take possession of the property before a final judgment is entered and allowing the…
The value of property securing a debt is a very significant issue in determining how a creditor will be treated in a bankruptcy. Too much value above the debt and you may be adequately protected and prevented for getting Relief from Stay. Too little value and you may be deemed unsecured for significant amount of the debt. Value in most cases but not all is based on an educated guess called an appraisal. In a narrow type of case the value is based on a market report.
In commercial obligations in Pennsylvania, a confession of judgment clause, or cognovit clause, may be employed in a document that would entitle the creditor to simply go to court and obtain a judgment immediately without pursuing the normal court processes. Although expeditious, the Defendant still can attempt to defend against the confessed judgment but the procedure is strict and limited. A Creditor's compliance with these rules is essential in making certain that the Creditor both executes its remedies effectively and avoids the potential pitfalls of violating a customer’s constitutional rights by employing civil process when it is not appropriate. Tom Reilly is familiar with the use of these rules having participated in drafting the current rules and can use his familiarity to your…
In addition to the remedies that the rules and statues provide, an area of courts power called law called equity provides other ways that debits may be collected or property recovered that can be used to pay the debt. A constructive Trust is a court decree that says that a person who owns property holds it in Trust for another purpose and must as trustee carry out that purpose like pay an amount of money to the creditor on each sale of a piece of real estate.
What terms should you include in your purchase orders, invoices and other correspondence? How do you identify your customers when creating an account? Can you charge a late charge? Is there a way to secure your debt? Which court's jurisdiction should you use to govern any disputes arising from your documents? These are a few of the questions that can be answered in a discussion with Attorney Tom Reilly about the way you decide to extend credit. They are the foundation of the ultimate collection of a debt and should be considered before you lend any funds.
Setting up a program to extend credit to your customers has many pitfalls. Which laws or regulations are you required to comply with? How do you price the credit you are planning to extend? Do the charges comply with applicable interest rate laws? What am I risking in doing it one way or another? How technical or simple do my documents have to be to be enforceable. Attorney Tom Reilly has encountered these issues in his practice and can assist you in developing the best program for you and your business.
If you are a Creditor with collateral, you are entitled to receive Adequate Protection so the value of your collateral does not diminish by the Debtor’s continued use during a proceeding. If Adequate Protection is not offered, a Creditor can request the court to lift the Automatic Stay to allow the creditor to recover its collateral. Both Chapter 13 and Chapter 11 involve plans to rehabilitate a Debtor’s financial circumstance. Chapter 13 pertains to “wage earners” and usually intends to cure mortgage arrearages. Motions for Relief from Stay, Objections to the proposed Plans and Motion to Dismiss or Convert based on lack of feasibility and failure to comply with statutory requirements are the main Creditor tools. Chapter 11s are more sophisticated and require more strategic planning…
Once a judgment is acquired the creditor can undertake “discovery” by serving interrogatories (questions about the defendant’s assets) or depositions to ask those questions about assets in an effort to find out if the Defendant has assets from which the judgment can be paid.
For 40 years, Attorney Tom Reilly has drafted and modified documents for a wide variety of creditor relationships. Whether developing a standard form or a one of a kind document, Tom Reilly has the experience to create the document you require for your situation.
Fair Debt Collection Practices Act. This ‘Act covers attorneys in their efforts to collect debts for personal family or household purposes depending on the frequency of the attorneys efforts in such cases. It provides statutory damages for violations and attorneys fees and is a trap for the unwary and sometimes the wary practitioner. Avoiding the claims and resolving such claims soon is many times the better choice.
A creditor might find that the assets the Debtor once owned are now titled in another’s name or encumbered by liens favoring other parties. This may fall within the theme of “Asset Protection Planning.” While certain strategies to protect from liability are valid others may fall within those that are considered fraudulent as to creditors. Where the elements of the statutory provision can be established, courts may set those transfers aside for the creditors benefit. These remedies can be employed in state federal and bankruptcy courts.
The Federal Trade Commission preservation "holder in due course rule." This rule is the reason most consumer purchase money contracts contain a Notice that makes the lender and its assignees aware that they are subject to claims that the Debtor may have against the party with whom they first dealt. Not only does the creditor have tone concerned with defending the claim, but also its potential rights against its assignor. Tom Reilly has handled many of these scenarios requiring timely and proper pleading, proper joinder, demands for defense and indemnification. Such cases involve the interplay of the Uniform Commercial Code, other regulations and statutory provisions including the Unfair Trade Practices and Consumer Protection Law, Motor Vehicle Installment Sales Finance Act, and the…
For a creditor, bankruptcy is another step along the way to the ultimate resolution of the debt.
Acting on the theory that the best defense is a good offense, customers or obligors often commence suit against the creditor.
With a judgment the creditor can use the power of the court acting through the Sheriff to force payment by seizing and selling the Assets of the Defendant. This can include real estate or person a property like a car, art, furniture shares of stock in companies and members interests in Limited liability companies. Certain items of a debtor are exempt from the execution process. The rules are complex and involve in many instances practices and procedures of the various Sheriffs.
Similar to developing Credit programs Attorney Tom Reilly has prepared the documentation used in personal property Leasing programs and has enforced Leasing documents that appear to straddle the line between Leasing and Lending.
When a third party owes a debt to your debtor your judgment may be enforced by a garnishment execution. The most common example involves the debtor’s bank account. A bank account is simply a promise by a bank to pay money to you or at your direction to another up to the amount of the credit on deposit. So the bank owes a debt to the depositor (the Debtor in our case) for the balance in the account. IN a garnishment the Court tells the sheriff to go to the bank and seize the debt on deposit owed to the Defendant and tell the Bank to answer interrogatories ( questions) saying how much do you owe the to the Defendant. The creditor then enters judgment against the bank for the amount it says it owes the defendant. Then the Bank satisfies the judgment by paying the amount the bank(…
A sheriff sale of real estate can be used to enforce a judgment lien. Similarly, the legal action in mortgage foreclosure concludes with a sheriff sale of real property, It is setup in the same way as a sale on a judgment. The distinguishing difference is the lien priority and liens removed by the sale. Negotiating the rules, regulations and process that govern the creditor's exercise of the mortgage foreclosure remedy is essential to acquiring good title to the real estate that is the subject of the foreclosure.
The Bankruptcy Code excepts certain kinds of debts from discharge because of the way the debts arose. Fraud, false financial statements, embezzlement, larceny, defalcation of a fiduciary and other reasons may work in a Creditor’s favor to preserve the debt from discharge The debt will exist and be enforceable after the Debtor receives a discharge for other debts. To obtain a Decree that the debt is not discharged requires an Adversary Proceeding which is essentially a civil law suit in the bankruptcy court where the creditor most often must prove both the debt and the factors that render it non-dischargeable. Tom Reilly has successfully handled a variety of proceedings excepting debts for discharge.
When a Debtor either pursues Bankruptcy or is placed in Bankruptcy filing a Proof of Claim is usually required to place on the record the amount and character of the Creditor's claim against the Debtor. While many Creditors file on their own, a timely, accurate and complete Proof of Claim is essential to protecting the Creditor's rights against the Debtor and the Debtor's assets. In Chapter 13 proceedings, the Proof of Claim will also include the arrears that a mortgage Debtor's plan intends to cure and the amounts and elements the future mortgage payments. Because the Chapter 13 is an ongoing process, changes in the regular payment because of variable rates or escrow recalculations, require amended Proofs of Claim and notices of payment changes.
Receivership has become a remedy used to gain control over collateral assets when a business or individuals financial circumstances are declining. In some instances, creditors documents such as mortgage authorize the appointment of a receiver to take control of and dispose of collateral for the creditors benefit. In other circumstances the remedy is available under the Court's Equity powers. The advantage of receiverships is that the initiating creditor often dictates the terms the receivership with court supervision. Tom Reilly can address whether this remedy would provide an effective for means for resolving a relationship with a debtor and take the necessary action to obtain the receivership relief.
Drawing on the experience of representing Creditors in preparing documentation and taking action in civil courts and in bankruptcy, the firm is able to provide additional services, in particular: Expert Witness Thomas E. Reilly has been called upon to prepare Opinion evidence to be presented in Court through his testimony as an expert in areas of his concentration. These include the reasonableness of action taken to enforce a debt; the reasonableness of the attorney's fees incurred in the enforcement of the debt; the quantum meruit value of the attorney's services rendered in enforcing a debt. This is significant because creditors' documents entitle them to recover "reasonable attorneys fees". Because the attorneys' fees actually incurred cannot be determined until the conclusion of…
The Civil Courts offer creditors a variety of remedies to enforce collection when a customer fails to pay. It is important to remember that the Courts do not exist to enforce debts, but are in our culture the method of resolving disputes.
This Federal Law imposes restrictions and duties on debt collectors which includes attorneys. The Fair Credit Extension Uniformity Act in addition to governing the conduct of Debt Collectors pertains to creditors conduct in collecting their own debts. Whether you are dealing with how to comply or fending off complaints asserting lack of compliance Thomas E. Reilly can assist you.
The Pennsylvania Unfair Trade Practices and Consumer Protection Law provides Consumers with a vehicle to assert claims against Creditors that arise from Consumer transactions. The Law enables the Consumer to act as a "Private Attorney General" with the incentive that the attorneys fees incurred by the Consumer and can be shifted to and imposed on the Creditor. Claims arising from debt collection, automobile finance, Real Estate sellers disclosure responsibilities and other laws can be asserted by the Consumer. With the potential for incurring liability for the Consumer's attorney's fees as well as the Creditor' fees, an early evaluation of the validity the claim, establishing a strategy for defending the claim and the asserting an effective Defense is essential. Tom Reilly has…
Pennsylvania has an interest rate law that sets the interest rates that creditor may charge a debtor, setting 6% as the “legal rate.” However, there are a variety of other rates based on various laws both State and Federal as well as exemptions from rate restrictions. Fixing the correct rate and defending a contention that the rate charged is “usurious” requires a knowledge both of State and Federal law and regulation. It requires the ability to explain the difference between the disclosed annual percentage rate and the interest rate or the basis for the 1.5% month rate found on many invoices. Tom Reilly has addressed these issues in litigation and assisted Creditors in establishing the necessary prerequisites to charging the appropriate and desirable interest in their transactions.