Creditors’ Rights and Mortgage Foreclosure
Attempts to collect a debt can be expensive and time-consuming. In some cases, the inability to collect a debt can impact the operations of a business. Cohn Lifland counsels banks, financial institutions and other creditors regarding their rights and the remedies available to them in bankruptcy, foreclosure and debt collection litigation matters. In doing so, we seek to optimize recovery from commercial and consumer debtors in secured and unsecured transactions. The scope of our practice ranges from sophisticated loan restructuring and commercial workouts to consumer debt collections and commercial and residential mortgage foreclosures. We litigate these types of matters in various state and federal courts. If you need the legal advice or litigation experience of our firm, contact Cohn Lifland today.
Bankruptcy Litigation and Creditors’ Rights
Cohn Lifland has the experience and knowledge of bankruptcy laws that protect the rights of creditors. Bankruptcy cases are complicated matters. In the beginning of a bankruptcy case, a debtor is required to attend a 341(a) hearing, also known as a Meeting of Creditors. At the 341(a) hearing, a creditor has the right to attend and ask questions about the debtor’s finances. The creditor has the right to ask for financial documents to review. A creditor may also require the debtor to answer a list of questions. This is called a 2004 examination.
When faced with a debtor who files Chapter 7, a creditor may object to a court’s decision to grant a debtor’s discharge by filing the right Chapter 7 documents. Though this is unusual, some reasons a creditor may object may include:
- Concealed property in a bankruptcy case
- False statement under oath
- Withholding information
- Debtor’s failure to cooperate
Creditors are entitled to object to the elimination of debt due to them, in particular. Through the filing of a Complaint for the Nondischargeability of Debt, a creditor has the right to allege that the debtor committed fraud with regard to acquiring the debt with their institution. The court will review the case to determine if the debtor intended to pay the debt at the time of the charge. Some relevant factors include whether the item purchased was necessary or a luxury, the state of the debtors’ income and expenses at the time of the purchase, the amount of the charge and how close the purchase was to the bankruptcy filing. If a trustee, the appointed professional that will oversee a bankruptcy case, decides in favor of the creditor, the creditor will then have the opportunity to file a Proof of Claim with the court. A Proof of Claim will include the contact information of the creditor and the amount that is supposedly due.
In a Chapter 13 bankruptcy case, a creditor has the right to object for a number of reasons, including:
- Filing a case in bad faith
- A bankruptcy plan that is not feasible
A Chapter 13 bankruptcy plan determines a debtor’s monthly payments and the amount to be paid to the creditor. A creditor may object to the Chapter 13 bankruptcy plan because of nonpayment to the creditor, insufficient payment to the creditor or if a debtor is not able to make the payments.
One of the most effective ways to collect debts as a creditor is to offer a loan workout. Although more common in commercial matters, it is an effective tool in consumer matters as well. Loan workouts function to maximize recoveries while minimizing legal costs through restructuring debts outside of court. When addressing troubled loans, Cohn Lifland has had great success in negotiating and documenting loan modification and forbearance agreements customized to each particular set of circumstances. Our firm will work to utilize any legal means to avoid judicial foreclosure, bankruptcy or non-collectability in each case. If you are a creditor and would like to settle the matter outside of court, a loan workout may be a good option for you.
Foreclosures and Receiverships
Cohn Lifland represents clients in the foreclosure of commercial and residential mortgages. Our attorneys have decades of experience working with clients through the whole foreclosure process, including motions for rent receivers, defending frivolous counterclaims and handling the post-foreclosure sales issues. Our firm has worked with numerous national, regional and local lenders in foreclosures and will effectively represent the interests of concerned creditors.
Collateral Recovery and Replevin
Cohn Lifland represents banks, creditor unions and many other lending institutions through the collateral recovery process. Collateral recovery is the repossession of goods by a secured lender in order to recover a debt that is unpaid. Our firm has extensive knowledge of New Jersey law and can assist creditors in the recovery of a variety of goods through replevin. We will offer our clients a number of legal strategies to use in order to enforce the repayment of debts or the return of collateral. Cohn Lifland has experience working with lenders to recover a wide variety of goods, including cars, ships, airplanes and construction equipment.
Consumer Collections and The FDCPA
Failure to collect debts can put a strain on a business and impact the ability to pay employees, cover overhead costs and keep a business running well. In order to collect a debt from a consumer and others, a creditor must follow the law. In 1977, the federal government enacted the Fair Debt Collection Practices Act (FDCPA). The law functions to protect consumers from abuse at the hands of debt collectors. The FDCPA has been amended multiple times in order to establish strict guidelines for debt collectors when trying to recover money. According to the FDCPA, a debt collector is someone who uses means of interstate commerce or the mail system in order to collect debts for their purposes or someone else’s. The FDCPA prohibits many actions in order to collect a debt, including calling outside of the restricted hours, misrepresentation and deceit, threats, profane language, and requesting more than the debt is owed, among countless other acts detailed in the FDCPA. In order for debt collectors to stay within the law, it is important for them to know the FDCPA and act within its guidelines.
Contact Cohn Lifland
Cohn Lifland is proud to be a legal resource to the creditors of New Jersey. Our firm has extensive experience working with lending institutions and other creditors who need the help of competent counsel in the collection of commercial and consumer secured and unsecured debt. Our firm will use its years of knowledge and skill to represent your interests. We understand that unpaid accounts receivable and other debts can affect the bottom line. If you need a firm with knowledge of New Jersey law regarding creditors’ rights, you should contact Cohn Lifland today.