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Columbia Creditors Rights Law Blog

What is a Fraudulent Conveyance?

As explained by the Cornell Legal Information Institute, a fraudulent conveyance is a transfer of real property — money or assets — for the primary purpose of putting it outside of the reach of creditors. If a transaction is deemed to be a ‘fraudulent conveyance’ a creditor may have the right to void it. In this article, our Columbia, SC debt collection attorneys highlight the most important things creditors should know regarding South Carolina’s laws on fraudulent conveyances.

South Carolina Law: Fraudulent Conveyances

South Carolina is one of many states that has signed onto the Uniform Fraudulent Transfer Act (UFTA). The UFTA makes it a civil violation for debtors to transfer assets to a third party simply to avoid paying back creditors. A fraudulent conveyance is generally not a criminal issue. When such a transfer occurs, the UFTA provides a remedy to creditors, allowing them to get access to fraudulently transferred property that would have otherwise not been available to satisfy a debt. To prove a fraudulent conveyance occurred, South Carolina creditors are generally required to meet the following three elements:

  1. The debtor in question actually transferred assets;
  2. The debtor received less than fair market value in the transaction; and
  3. The debtor is insolvent or was made insolvent as a result of the transfer.

If a debtor receives fair market value for the transfer of property, then, by definition, a fraudulent conveyance has not occurred. The debtor’s ability to satisfy their obligations to creditors would remain unchanged. In addition, a debtor that is fully solvent cannot make a fraudulent conveyance, as all creditors would still be able to hold them responsible irrespective of the transaction.

When Does Intent Matter? Voluntary Conveyance vs. Valuable Consideration

In South Carolina, fraudulent conveyance claims come in two different forms: those involving a ‘voluntary conveyance’ and those involving ‘valuable consideration’. With a voluntary conveyance — meaning a transfer in which no compensation was offered or grossly inadequate compensation was offered — creditors do not need to prove that the debtor had an actual intent to defraud. The intent is deemed irrelevant if the debtor received nothing, or very little in the return for transferring property (Royal Z Lanes, Inc. v. Collins Holding Corp). In contrast, when ‘valuable consideration’ was offered to the debtor — even though that consideration may have been below the true market value of the property — the burden of proof flips. In this circumstance, a creditor must be able to prove that the debtor actually made the transfer with the intent of avoiding satisfying their debts to the creditor.

Get Help From a Columbia, SC Creditors’ Rights Lawyer Today

At Crawford & von Keller, LLC, our South Carolina collection attorneys have the skills and experience needed to handle the full range of fraudulent conveyance claims. To set up a fully confidential, no obligation consultation, please do not hesitate to contact our legal team today. From our office in Columbia, we represent clients throughout South Carolina, including in Richland County and Lexington County.

 

Three Things Lenders Should Know About South Carolina’s Foreclosure Laws

Property foreclosures are far from rare in our region. In fact, a recent analysis from the credit reporting agency Experian found that South Carolina has the 7th highest foreclosure rate of any state in the country. For national banks and mortgage service providers operating in South Carolina, it is crucial that they have a basic understanding of our state’s foreclosure laws. Here, our Columbia, SC foreclosure attorneys provide an overview of three key things that national mortgage lenders should know about the foreclosure process in South Carolina.

    1. South Carolina is a Judicial Foreclosure State

South Carolina is a judicial foreclosure jurisdiction. In other words, mortgage lenders in South Carolina do not have a ‘power of sale’. A creditor cannot foreclose on a property by itself; state law requires mortgage lenders operating in South Carolina to take the borrower to court and — through a lawsuit — prove that they have the right to foreclose on a property. With a judicial foreclosure, the borrower has the right to raise defenses and file a counterclaim. As in other judicial foreclosure states, counterclaims are not uncommon in South Carolina. Lenders initiating a foreclosure must always be prepared to defend against a counterclaim. Our attorneys can help.

  1. South Carolina Follows the ‘Hammer Rule’

In foreclosure cases, some states give borrowers a ‘right to redemption’. Essentially, redemption is the ability of a borrower to buy back a property that has been foreclosed upon even after the foreclosure sale has already been completed. The right to redemption lasts for a pre-specified period of time, which varies from state to state. However, there is no right to redemption in South Carolina. Instead, the state follows the ‘Hammer Rule’. Once a foreclosure sale is complete, the homeowner’s rights to the property are fully extinguished.

  1. Deficiency Judgements are Permitted

Under South Carolina law (S.C. Code Ann. § 29-3-660), mortgage lenders have a right to seek a deficiency judgement after a foreclosure sale. A deficiency exists when the foreclosure sale price is insufficient to satisfy the full amount that the borrower still owes. For example, if the borrower owes $225,000 on their mortgage and the property is foreclosed on and sold for $210,000, a $15,000 deficiency remains. In South Carolina, lenders have a right to hold the borrower personally liable for that gap.

However, borrowers have appraisal rights in deficiency claims. If the fair market value of the property is deemed greater than the actual sales price, then that figure will be used for calculating any potential deficiency. So if the fair market value of the property was actually determined to be $230,000 instead of the $210,000 it was sold for, then there is no deficiency.

Contact Our Columbia, SC Foreclosure Lawyers Today

At Crawford & von Keller, LLC, our foreclosure lawyers have extensive experience representing national firms in South Carolina courts. With more than seven decades of collective legal experience, our attorneys are effective advocates for our clients. For a fully private consultation, please do not hesitate to contact us today. With an office in Columbia, we handle foreclosure cases throughout South Carolina.

 

Four Things Debt Collectors Need to Know About their Obligations Under the FDCPA

According to data provided by the National Consumer Law Center (NCLC), approximately one third of Americans have at least one debt in collection in 2017. With so many people dealing with debt collectors on a regular basis, a substantial body of law has been developed regarding how collectors can deal with consumers.

Under federal regulations, debt collectors must comply with certain requirements. Most notably, under the Fair Debt Collection Practices Act (FDCPA), a number of different obligations have been put on debt collectors. Here, our Columbia consumer collection lawyers explain four of the most important things that companies need to know about fulfilling their duties under the FDCPA.

  1. There are Restrictions Regarding Communication With Debtors 

The FDCPA puts considerable restrictions on how debt collectors can communicate with consumers. To start, collectors are generally limited to making collection efforts during normal business hours — 8:00 am to 9:00 pm in the location wherever the consumer resides. In addition, collectors must cease general communication with a consumer when requested to do so. Finally, debt collectors can only contact third parties in order to seek basic contact information for a consumer.

  1. Collectors Must Clearly State the Amount of the Debt

In making debt collection efforts, a company that is not the original creditor must always clearly state the amount of the debt being sought. The failure to do so could amount to an FDCPA violation. As an example, in the 2018 case of Park v. McCabe Trotter & Beverly, P.C., a federal court in South Carolina ruled that a law firm committed an FDCPA violation by including its attorneys’ fees in the total amount the debtor owed. The firm failed to indicate that its fees were included, simply sending the consumer a notice with a single number on it.

  1. The Debt May Need to Be Validated

Collectors have a duty to provide consumers with certain basic information to validate the debt. Specifically, in its initial communications, a debt collector should highlight the total amount of the debt and the name of the original creditor, and they should notify the consumer that they have 30 days to challenge the validity of the debt or it will be assumed valid.

  1. Abusive, Unfair Practices are Prohibited

Finally, abusive and unfair debt collection practices are prohibited under the FDCPA. Abuse and harassment can include things like coercion, threats, and intentional annoyance. Unfair practices can include tactics such as making false statements, misrepresenting potential legal consequences of not paying, and attempting to collect fees and penalties that are not permitted under United States law.

Speak to Our South Carolina Consumer Collection Attorneys Today

At Crawford & von Keller, LLC, our top-rated consumer collection lawyers always comply with all relevant legal requirements under the Fair Debt Collection Practices Act. We are committed to providing our clients with comprehensive, fully personalized legal guidance. To set up a strictly confidential initial consultation, please do not hesitate to contact our law firm today.

What Unsecured Creditors Should Know About Bankruptcy and Priority Debt

When a debtor files for bankruptcy, debts are repaid to creditors according to their “priority.” The U.S. Bankruptcy Code sets the order of priority for claims, which means that certain debts will be paid (or, in other words, certain creditors will be paid) before others. It is important for creditors in Columbia, South Carolina to learn more about how priority debts are classified and to understand how priority debts can affect payouts to creditors in bankruptcy cases.

How the U.S. Bankruptcy Code Defines Priority Debt

Under § 507 of the U.S. Bankruptcy Code, certain types of claims receive “priority” status, which means that they must be paid first out of the bankruptcy estate. Generally speaking, secured debt is not going to be in consideration under § 507 since those creditors typically can repossess property in order to pay off the debt owed. What kinds of debts, then, are priority debts? The U.S. Bankruptcy Code lists some of the following as priority debts:

  • Debt for domestic support obligations;
  • Administrative expenses tied to certain loans;
  • Certain wages, salaries, and commissions;
  • Certain contributions to an employee benefit plan;
  • Certain tax debt;
  • Certain penalties owed; and
  • Money owed from personal injury claims arising from DUI accidents.

There are other types of priority debts, too, and an experienced Columbia creditors’ rights lawyer can help you if you have questions about seeking the money you are owed. To be clear, whether a claim is classified as a “priority” depends on the type of debt that is owed (although priority debts typically are unsecured debts).

Priority Debts That Cannot Be Discharged

In some cases, creditors who are owed priority debts that cannot be discharged can be in a good position to get repaid when the debtor files for bankruptcy. For example, tax debt and child support debt are both “priority” debt, as are debts owed for personal injury judgments in DUI cases. As an example, most tax debt cannot be discharged in a personal bankruptcy case. Since it is not dischargeable but is also a priority debt, this means it will get paid before any creditor for a non-priority debt receives any money. Since the tax debt could not be discharged in the bankruptcy anyhow, getting paid out of the bankruptcy estate typically is a good thing because it means some of that debt will get repaid, whereas attempts to collect on that debt otherwise could prove difficult.

At the same time, creditors of non-dischargeable, non-priority debt can end up receiving nothing from the bankruptcy estate. It is rare for debtor to have funds to repay all creditors entirely. If this were the case, the debtor likely would not have filed for bankruptcy in the first place.

Regardless of whether you have a priority debt, in order to receive payment from a bankruptcy estate, an unsecured creditor must file a proof of claim, which registers the creditor’s claim against any assets from the bankruptcy estate. In the proof of claim, the creditor clarifies the amount it is owed and whether the debt has priority status.

Contact a Columbia Creditors’ Rights Attorney

If you have questions about collecting on a priority or non-priority unsecured debt from a bankruptcy estate, you should discuss your options with a Columbia creditors’ rights attorney as soon as possible. Contact Crawford & Von Keller Law Firm for more information.

 

Creditors Should Know About Time-Barred Debt

If you are a creditor that is attempting to collect on a debt that is owed, it is essential to understand how time-barred debt could impact your ability to collect. In short, there is a statute of limitations on debt. After a specific amount of time passes (that time window is specified by the statute of limitations), a creditor no longer has the right to file a lawsuit against the debtor in order to seek the money owed. However, when a debt becomes time-barred, this does not mean that the creditor is left without any remedies. We will say more about the statute of limitations and how it affects time-barred debt, and then we will say more about other possible remedies for creditors who are owed time-barred debt.

Old Debt and the Statute of Limitations

The statute of limitations is a particular period of time that exists—a time window—in which a party can file a lawsuit or seek a legal remedy in a court of law. Statutes of limitations exist for many different legal issues, including consumer and business debt. Under South Carolina law (S.C. Code § 15-3-530), the statute of limitations for most types of consumer and business debt is three (3) years. As an article from the U.S. Federal Trade Commission (FTC) explains, the statute of limitations typically begins “ticking” once a debtor fails to make payments on the debt. More specifically, this is the time window for claims arising out of contracts, obligations, and liabilities, which tend to include most agreements between creditors and debts.

If a debtor fails to make payments to a creditor, one of the remedies the creditor has in order to seek repayment is to file a civil lawsuit against the debtor. However, this lawsuit must be filed within three years, or else the creditor is barred from filing a claim. This is what is known as “time-barred” debt. Once a debt has become time-barred, the creditor is no longer able to sue the debtor. However, other remedies may be available to creditors who are attempting to collect on time-barred debt.

Reviving Time-Barred Debt in South Carolina

One way in which creditors in South Carolina may be able to continue seeking the money they are owed is if the debt is revived. What does it mean to revive time-barred debt? First, just because a debt is time-barred does not mean that a creditor (or a debt collector, if the creditor has passed the debt onto a collection agency) cannot continue to contact the debtor in order to seek the money that is owed. To be clear, attempting to collect through contact with a debtor is not time-barred even if the possibility of filing a lawsuit is now time-barred.

When a creditor contacts a debtor about time-barred debt, the debtor may “revive” the debt. Under the South Carolina Consumer Protection Code and § 15-3-120 of the South Carolina Code, a debtor can “revive” the debt by acknowledging that it is owed in writing. The law in South Carolina also makes clear that, when a debtor decides to pay any part of the principal or interest on a debt—even if it is time-barred—that payment is equivalent to making a “promise in writing,” and as such the debt is revived. Once a debt is revived, it is no longer time-barred and the creditor may be able to file a lawsuit.

Learn More from a South Carolina Creditors’ Rights Lawyer

Creditors may have additional options to seek payment for time-barred debt, and a Columbia creditors’ rights lawyer can help. Contact Crawford & Von Keller Law Firm to learn more.

What Creditors Should Know About Time-Barred Debt

debtIf you are a creditor that is attempting to collect on a debt that is owed, it is essential to understand how time-barred debt could impact your ability to collect. In short, there is a statute of limitations on debt. After a specific amount of time passes (that time window is specified by the statute of limitations), a creditor no longer has the right to file a lawsuit against the debtor in order to seek the money owed. However, when a debt becomes time-barred, this does not mean that the creditor is left without any remedies. We will say more about the statute of limitations and how it affects time-barred debt, and then we will say more about other possible remedies for creditors who are owed time-barred debt.

Old Debt and the Statute of Limitations 

The statute of limitations is a particular period of time that exists—a time window—in which a party can file a lawsuit or seek a legal remedy in a court of law. Statutes of limitations exist for many different legal issues, including consumer and business debt. Under South Carolina law (S.C. Code § 15-3-530), the statute of limitations for most types of consumer and business debt is three (3) years. As an article from the U.S. Federal Trade Commission (FTC) explains, the statute of limitations typically begins “ticking” once a debtor fails to make payments on the debt. More specifically, this is the time window for claims arising out of contracts, obligations, and liabilities, which tend to include most agreements between creditors and debts.

If a debtor fails to make payments to a creditor, one of the remedies the creditor has in order to seek repayment is to file a civil lawsuit against the debtor. However, this lawsuit must be filed within three years, or else the creditor is barred from filing a claim. This is what is known as “time-barred” debt. Once a debt has become time-barred, the creditor is no longer able to sue the debtor. However, other remedies may be available to creditors who are attempting to collect on time-barred debt.

Reviving Time-Barred Debt in South Carolina

One way in which creditors in South Carolina may be able to continue seeking the money they are owed is if the debt is revived. What does it mean to revive time-barred debt? First, just because a debt is time-barred does not mean that a creditor (or a debt collector, if the creditor has passed the debt onto a collection agency) cannot continue to contact the debtor in order to seek the money that is owed. To be clear, attempting to collect through contact with a debtor is not time-barred even if the possibility of filing a lawsuit is now time-barred.

When a creditor contacts a debtor about time-barred debt, the debtor may “revive” the debt. Under the South Carolina Consumer Protection Code and § 15-3-120 of the South Carolina Code, a debtor can “revive” the debt by acknowledging that it is owed in writing. The law in South Carolina also makes clear that, when a debtor decides to pay any part of the principal or interest on a debt—even if it is time-barred—that payment is equivalent to making a “promise in writing,” and as such the debt is revived. Once a debt is revived, it is no longer time-barred and the creditor may be able to file a lawsuit.

Learn More from a South Carolina Creditors’ Rights Lawyer

Creditors may have additional options to seek payment for time-barred debt, and a Columbia creditors’ rights lawyer can help. Contact Crawford & Von Keller Law Firm to learn more.

What is the Difference Between a Creditor and a Debt Collector Under the FDCPA?

debtorMost creditors in Columbia, South Carolina know about the Fair Debt Collection Practices Act (FDCPA) and know that debt collectors are required to abide by the terms of debt collection outlined in this federal law. But can creditors also be subject to the terms of the FDCPA? In some cases, creditors may be considered “debt collectors” for the purposes of the Act. We will explain what the FDCPA is designed to do, and then we will discuss ways in which creditors may be considered to be debt collectors under the Act and thus bound by its terms.

What is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act “broadly prohibits a debt collector from using ‘any false, deceptive, or misleading representation or means in connection with the collection of any debt,’” according to the language of the statute. The South Carolina Department of Consumer Affairs clarifies that the FDCPA requires that debt collectors treat debtors “fairly by prohibiting certain methods of debt collection.” More specifically, the FDCPA prohibits debtors from engaging in any of the following:

  • Contacting debtors before 8:00am and after 9:00pm;
  • Contacting debtors at times the collector knows to be “inconvenient”;
  • Continuing to contact debtors after receiving a written demand from the debtor to terminate further contact;
  • Contacting a debtor directly when the debtor has a lawyer;
  • Failing to notify debtors about their rights to challenge the validity of the debt;
  • Failing to provide basic information to the debtor; and
  • Lying to the debtor about the collector’s identity.

The Act outlines other specific deceptive or fraudulent actions that are also prohibited under the law. But how can a creditor know whether it is considered a “debt collector” under the FDCPA?

When is a Creditor a Debt Collector for FDCPA Purposes?

As an article from the U.S. Federal Trade Commission (FTC) explains, by the terms of the Act, debt collectors are covered by the FDCPA while creditors are not. However, “certain courses of conduct” by creditors can mean that they are “squarely within the jurisdiction of the FDCPA.”

What makes a creditor a “debt collector” under the FDCPA in certain circumstances? First, the FDCPA itself defines a debt collector as “any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”

As the FTC article underscores, many creditors assume that, since they collect their own debts, they are not subject to the FDCPA. However, in many instances where a creditor was also collecting debt under a different business name, courts have held that the creditor was also a debt collector under the FDCPA definition. It is also important to note that, even if you are a creditor who is not covered by the FDCPA, you are still required to avoid deceptive or unfair collection practices under Section 5 of the FTC Act.

Contact a Columbia, SC Creditors’ Rights Attorney

If you are a creditor and have questions about whether you have obligations under the FDCPA, it is important to speak with a creditors’ rights attorney in Columbia, South Carolina as soon as you can. Whether or not specific creditors have obligations under the FDCPA, it is important to understand lawful remedies available for collecting on debts that are owed. Contact Crawford & Von Keller Law Firm to discuss options for enforcing contracts with debtors.