A debt management company is one option for consumers looking for resolution to being over their heads in debt. The business model is relatively simple: the company and the debtor enter into an agreement providing that the management company will negotiate on behalf of the consumer with his or her creditors, seeking to lower payments and interest rates.
In a long-awaited decision, the U.S. Supreme Court on March 20, 2019 held unanimously that when a business initiates an In Rem only nonjudicial foreclosure on behalf of a mortgage lender, the provisions of the Fair Debt Collection Practices Act (FDCPA), with the exception of S 1692f(6), do not apply because the business does not fall under the primary definition of a "debt collector." The decision was limited to the facts situation that the firm of McCarthy & Holthus LLP was only enforcing the Security Instrument and was not attempting to collect on the Note.
The U.S. Supreme Court recently held oral arguments in Obduskey v. McCarthy & Holthus LLP on January 7, 2019. The Supreme Court will decide whether the federal Fair Debt Collection Practices Act or FDCPA applies in a nonjudicial foreclosure action. While courts, generally, accept that the FDCPA covers judicial foreclosures, the lower federal courts are split concerning nonjudicial proceedings.
In the recent case of Duncan v. Asset Recovery Specialists, Inc., the U.S. Court of Appeals for the Seventh Circuit, which includes Indiana, looked at whether the Fair Debt Collection Practices Act applied when a vehicle repossession company attempted to charge a $100 fee for returning personal property from a repossessed car to the debtor-owner.
The short answer is yes, but it is very difficult for borrowers to meet the high standard in federal law required to discharge them. At Gerner & Kearns Co., L.P.A., our highly experienced bankruptcy attorneys advise and represent lenders and other companies holding student-loan debt. Our knowledge of the intricacies of creditors' rights in bankruptcy allows us to provide informed, nimble guidance about the collectability of student loans and the likelihood of a court allowing discharge in any given borrower bankruptcy.