Banking White Papers

The underlying theory behind BAPCPA is that debtors who could pay their debts, or at least a portion of their debts, were abusing the system by eliminating all of their debts in a Chapter 7. BAPCPA set up a system to analyze the debtor’s income and expenses in a structured way to determine eligibility for Chapter 7. The overwhelming majority of debtors who could file chapter 7 bankruptcy under prior law can still file chapter 7. All bankruptcy practitioners have had to learn the “means test”. The means test is used to create a presumption whether the debtor may file a Chapter 7 petition.

How a secured creditor may approach a bankruptcy case in order to protect its collateral often depends on the Chapter under which the bankruptcy was filed.  Chapters 7, 11 and 13 are highlighted.

After several false starts, the FTC has finally initiated enforcement of the Fair and Accurate Credit Transactions Act's, Red Flags Rule, and has placed the burden of policing identity theft activity squarely on the shoulders of both big and small businesses. However, the FTC may be the least of your concerns if you originate credit for an identity thief because attorneys across the country have been eagerly awaiting this dangerous and virtually impossible regulation. Your problem? Verifying the identity of your customer. If you don't have required and accepted procedures in place to do so, it could cost you everything you've ever worked for. Your Required Red Flags Rule Policy & Program. First, your operation must develop and implement a Red Flags Rule Policy which must include four required key elements in addition to other regulations and issues that must be addressed. To demonstrate the importance the FTC places on the Rule, your operation's Board of Directors is required to approve your Red Flags Rule Policy and Program. For those operations without a board, a committee of senior management must approve the initial Program and monitor it on an annual basis.

The Loan Workout is an inexact science in which a Lender and Borrower work together to resolve a troubled loan. The options available are only limited by the parties' imagination and willingness to cooperate. The range of what "is" a Loan Workout starts somewhere in the vicinity of a Forbearance Agreement, passes Receiverships and ends at Foreclosure. A variety of factors will help determine which neighborhood a Loan Workout ends up residing in - some are within the control of the Lender and Borrower and some are outside their control. Regardless of the acronym used for the Lender's Group that is handling the troubled loan (i.e. SSG, ARG, REMA, SAD, SAM, or SAG), the general methodology and best practices remains the same. Of course, the makeup of the collateral, history of the Borrower and Lender and many other distinct features make each Loan Workout a similar but wholly unique situation. These aspects make resolving troubled loans interesting, frustrating, rewarding and sometimes even fun.

In the absence of agreement or court order, a creditor does not usually have the right to seize, repossess or otherwise proceed against property belonging to a debtor in order to satisfy debts owing from the debtor to that creditor. Thus, no matter what the creditor may think (or what may be the practice in certain instances), a furniture salesman who has sold an item on credit may not in most instances seek to repossess that item when the customer does not pay, unless the customer has agreed that this could occur, or a court has ordered such a procedure. But see 11 M.R.S.A. § 2-702 (allowing seller to reclaim goods sold on credit in certain instances where buyer is insolvent). Similarly, a creditor who lends a debtor money cannot, without an agreement or a court order, seize that debtor's property when the debtor does not make required repayment absent agreement or court order. At the time a credit sale or loan is made, the creditor may obtain the buyer's or borrower's agreement to allow certain personal or real property to be used to satisfy the resulting debt. With several exceptions, in Maine such an agreement and the parties' resulting rights and obligations are governed by Article 9-A of the UCC if the collateral involved is personal property and not real estate.

Liability, Cures & Defenses, & Rescission Under the Truth in Lending Act

The Fair Debt Collection Practices Act (FDCPA) is a federal statute codified at 15 USC section 1692 et. seq. The purpose of the statute is to eliminate abusive, deceptive, and unfair collection practices. 15 USC 1692(e). It is also designed to insure that collectors who refrain from abusive practices are not put at a competitive disadvantage and to bring uniformity and consistency to the laws protecting consumers from abusive collection practices.