Law Office of Ginger C. Cord, PSC. - Bankruptcy
Free Initial Consultation

Local 859-963-2073

Toll Free 800-762-6916

Call Today

Pursue A Bright Financial Future
[an error occurred while processing this directive]
Freedom From Debt Is On The Horizon

Attorneys debate impact of Supreme Court ruling

Kentucky residents may have heard about a recent Supreme Court ruling in favor of creditors making bankruptcy claims on stale debt. The ruling found that creditors may make claims even if the debt is otherwise past the statute of limitations for being collected. Attorneys discussed what the ruling could mean during a webinar held by the American Bankruptcy Institute.

According to one legal practitioner, the ruling adds confusion and burden to the bankruptcy system. He also said that it allows debt buyers to use the bankruptcy system to potentially bring up debts that are 20 or 30 years old. This person recommended that Chapter 13 filers and trustees be ready for such scenarios. However, to one attorney who represents secured creditors and financial institutions, the decision made sense. The Supreme Court ruled for Midland Funding 5-3 arguing in part that the claims were not made in a false, deceptive or misleading way.

The Midland case has been interpreted to mean that creditors can make a 'prima facie' case. This means that the claim is deemed to be correct until otherwise noted. Creditors that make misleading or frivolous claims may be sanctioned under rule 9011(b) of the Federal Rules of Bankruptcy Procedure. However, it is possible that the Supreme Court ruling effectively put an end to such sanctions.

Individuals who are seeking debt relief may find it by filing for bankruptcy. An attorney may be able to talk more about the potential benefits of doing so, such as an automatic stay of creditor collection efforts. Debtors may be able to postpone a foreclosure or a repossession until after the case has been concluded. This may provide a debtor with time to renegotiate secured loan terms with a creditor or arrange a short sale.

No Comments

Leave a comment
Comment Information