Gary G. Neustadter Debtors and Creditors Rights
Debtors’ and Creditors’ Rights
Professor Neustadter
Syllabus
Fall 2006
Course description
3 units, graded, no prerequisites
Class meets MF 9:00 – 10:15 a.m., Bannan 110
The course explores the methods by which unsecured creditors may seek satisfaction of debt through use of the state judicial process or in a debtor’s bankruptcy, and explores the methods by which debtors may seek relief from or discharge of debt under both state law and federal bankruptcy law. A substantial portion of the course considers these issues in the context of consumer debtors. Many of the legal issues raise fundamental questions about your views on personal responsibility, forgiveness, and compassion. The course also explores some of the rights of secured creditors in a debtor’s bankruptcy. The rights of secured creditors under state law are the subject of two separate courses: Secured Transactions (covering personal property and fixtures used as collateral) and Real Estate Finance (covering real property used as collateral).
The course qualifies as an elective for the Certificate in Public Interest and Social Justice Law.
Required reading materials
Warren and Westbrook, The Law of Debtors and Creditors (5th Ed., Aspen)
Bankruptcy Code, Rules and Official Forms, 2006 Law Student Edition (West) (hereafter “statutory supplement”)
Additional materials posted on electronic reserve
Recommended reading
At times indicated in the reading assignments below, I recommend that you read some of the following law review articles, or portions of them, for enrichment. Each is on special reserve or may be viewed or downloaded through Lexis or Westlaw.
* Whitford, A Critique of the Consumer Credit Collection System, 1979 Wisc. L. Rev. 1047 (1979)
* Culhane and White, Debt After Discharge: An Empirical Study of Reaffirmation, 73 Amer. Bkry. L.J. 709 (1999)
* Neustadter, When Lawyer and Client Meet: Observations of Interviewing and Counseling Behavior in the Consumer Bankruptcy Law Office, 35 Buff. L. Rev. 177 (1986)
* Neustadter, 2005: A Consumer Bankruptcy Odyssey, 39 Creighton L. Rev. 225 (2006)
* LoPucki, A General Theory of the Dynamics of the State Remedies/Bankruptcy System, 1982 Wisc. L. Rev. 311 (1982)
Selected reference materials
Blum, Bankruptcy and Debtor/Creditor, Examples and Explanations (4th Ed. Aspen) (a student study aid on special reserve)
Collier on Bankruptcy, 15th Ed. (a comprehensive multi-volume treatise) (general stacks)
Electronic communication
Please take advantage of several available means of electronic communication:
1. Web site: Please visit and explore the materials (including past examinatons) and links available at my web site (http://law.scu.edu/FacWebPage/Neustadter/).
2. Electronic reserve (ClaraNet): I will post reading assignments for each class, other announcements, supplemental assigned reading, or other items of interest on the ClaraNet page for this course. You will find a link to that page on my web site.
3. E-Mail: Please feel free to communicate with me by e-mail (gneustadter@scu.edu).
Attendance and participation
I expect regular class attendance and consistent preparation of assignments in anticipation of class discussion. Please let me know prior to the start of class if you are not prepared for class discussion because of illness or for other appropriate reasons.
Classroom etiquette
The classroom environment must be conducive to learning for all students. Distractions made possible by advances in technology undermine that goal. Accordingly, during class, in addition to the usual courtesies, kindly
* disable and refrain from using cell phones, pagers, and any other communication device except for your laptop computer
* refrain from connecting to the Internet and from using a laptop or other electronic device except in a manner directly related to classroom activity
* refrain from displaying wallpaper, screen savers, or other material on your laptop computer that you can reasonably expect to be offensive or distracting to other students
Grading
There will be one final examination, administered on December 4, 2006. It will be a limited open book essay examination, for which you will be permitted to refer to the assigned books for the course (including your annotations in them), any materials downloaded from the ClaraNet page for this course, and any materials (such as notes, outlines, charts) that you have prepared yourself or in collaboration with other students in the class. You will not be permitted to refer to any other materials, including prior examinations or model answers to prior examinations. Your final course grade will be your grade on the final examination, except that I reserve the right to adjust your final course grade downward for excessive absenteeism or frequent lack of preparation.
Contact information and office hours
Office: Bergin 207
Phone (with voice mail): (408) 554-4378
E-mail: gneustadter@scu.edu
FAX: (408) 554-4426
Web site: http://law.scu.edu/FacWebPage/Neustadter/
My formal office hours are MW 3:30 – 5:00 p.m. I am on campus a significant portion of most weekdays except late Tuesday and Thursday afternoons and am happy to set appointments to meet with you at times other than formal office hours.
Reading assignments
Reading assignments for the entire semester appear below. In advance of each class, I will identify the required reading for that class in the announcement section of the ClaraNet page for this course.
Most reading will be from the Warren and Westbrook casebook. During our study of bankruptcy, you should also study sections of the Bankruptcy Code, Bankruptcy Rules, and Official Bankruptcy Forms to which the casebook refers.
We will spend most class time discussing the assigned problems in the Warren and Westbrook casebook. Absent your request, we will spend little time discussing the expository writing or the cases in the casebook, except as they may be relevant to resolution of the assigned problems. Generally, the casebook offers the cases for illustration only. Development of skills in reading and analyzing judicial opinions is not a course objective.
As we study enforcement of judgment, attachment, and wage garnishment, I encourage you to look at California Judicial Council Forms relating to those topics. The forms may be found at the web site of the California Judicial Council under the headings Enforcement of Judgment, Attachment, or Wage Garnishment. A few of the forms are also posted on the ClaraNet page for the course. To view these forms, you will need Acrobat Reader software. If you do not have that software, you may download it to your computer free of charge from the following graphical link.
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As we study bankruptcy, I also recommend that you periodically visit the web site of the American Bankruptcy Institute to keep abreast of developments in bankruptcy law, including the significant developments arising from the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”).
A. The State Remedies System
1. Introduction to debt collection in the state remedies system: Preface (pp. xxiii-xxvii), Special Notice (xxxiii), and pp. 3-8.
2. Post judgment remedies:
The following reading will be more meaningful if, while you read, you also peruse a sample of forms used to enforce judgments. A few of the key forms used in California are posted on my ClaraNet page for the course. All of the California forms are posted at the California Judicial Council web site noted above.
a. Introduction to the enforcement (collection) of judgments: pp. 33-48.
b. Priorities among competing creditors: pp. 48-61 (problems 2.1 – 2.2).
c. Garnishment: pp. 61-65 (problems 3.1 and 3.2 at pp. 77-78).
3. Pre-judgment remedies:
* Pp. 78-79
* California and Texas statutory provisions governing attachment (posted on ClaraNet)
* Problem on attachment (posted on ClaraNet)
* Skim Judicial Council forms relating to attachment posted at the California Judicial Council web site noted above.
4. Special issues involving consumer debtors (following conclusion of these issues, I recommend that you read the Whitford law review article cited in the recommended readings).
a. Fair credit reporting: pp. 8 -14 (no class discussion).
b. Fair debt collection practices: We skip the casebook’s abbreviated materials on fair debt collection practices (pp. 15-28), a topic that is more fully covered in a separate one-unit mini course offered on September 15-17, 2006.
c. Other credit practices: FTC Credit Practices Rules, 16 C.F.R. 444 (posted on ClaraNet).
d. Restrictions on wage garnishment:
* Pp. 65-66
* Wage garnishment problem (posted on ClaraNet), using federal and Calif. statutes governing wage garnishment (posted on ClaraNet)
* Problem 3.3 at pp. 77-78
* Skim Judicial Council forms relating to wage garnishment posted at the California Judicial Council web site noted above.
5. Fraudulent conveyances: pp. 79-86 (problems 4.1-4.4, 4.6 at pp. 98-99, using the Uniform Fraudulent Transfer Act, reprinted beginning at p. 971 of your statutory supplement).
6. State collective remedies: pp. 99-102 (no class discussion).
B. Consumer Bankruptcy
7. Introduction: pp. 105-22.
8. Property of the estate: pp. 123-36 (problems 5.1-5.2, 5.4).
9. The automatic stay: pp. 137-46 (problems 6.1-6.2).
10. Chapter 7 liquidation. Copies of the documents in a sample consumer Chapter 7 file will be distributed in class for your review.
a. Introduction and eligibility:
* Pp. 149-69 (problems 7.1-7.5, taking 7.5 after 7.2) (for additional discussion of pre-petition credit counseling and means testing, see sections I and II of Neustadter, 2005: A Consumer Bankruptcy Odyssey, cited in the recommended readings)
* Eligibility and means testing flow chart (posted on ClaraNet)
* Official Forms 1 (Voluntary Petition, 6 (Schedules A – J), and 7 (Statement of Financial Affairs) in sample consumer Chapter 7 file
* Official Form B22A (Statement of Current Monthly Income and Means Test Calculation) in sample consumer Chapter 7 file.
* The following page on the web site of the United States Trustee Program providing relevant data for means testing: http://www.usdoj.gov/ust/eo/bapcpa/meanstesting.htm.
b. Exemptions, exemption planning, and lien avoidance:
* Pp. 169-92 (problems 8.1 on pp. 194-95)
* California exemptions from enforcement of money judgment and California “bankruptcy in lieu exemptions” (posted on ClaraNet)
* Commentary on exemptions in bankruptcy (posted on ClaraNet)
* Pp. 192-94 (problem 8.4 on pp. 195-96, excluding questions (a) – (d) at the top of p. 196)
* Pp. 196-218 (problems 9.1-9.4).
c. Claims and distribution:
* Pp. 218-29 (problems 10.1-10.4, 11)
* Official Form 10 (Proof of Claim)
d. Discharge:
* Pp. 229-54 (problems 12.1-12.6)
* Official Form 9 (variation B9A, Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines) and 18 (Discharge of Debtor and Final Decree) in sample consumer Chapter 7 file
e. Redemption and reaffirmation:
* Pp. 254-71
* Section 521 of Bankruptcy Code
* Official Form 8 (Variation B8, Chapter 7 Individual Debtor’s Statement of Intention) in sample consumer Chapter 7 file.
* Official Form B240 (Reaffirmation Agreement) in sample consumer Chapter 7 file.
* The debtor portal that you will find at http://www.722redemption.com/
* Problems 13.1-13.4, 13.6-13.8 at pp. 277-79. Note that Problem 13.3 is somewhat of a trick question. For question 13.4, also consult sections 521(a)(6) and 362(h) of the Bankruptcy Code.
Following our discussion of reaffirmation, I recommend that you read the Culhane & White article on reaffirmation cited in the recommended readings.
11. Chapter 13 adjustment of debts
a. Introduction:
* Pp. 281-85
* Peruse the web site of a standing Chapter 13 trustee in Illinois
* Review a sample Chapter 13 plan (posted on ClaraNet).
b. Payments to secured creditors, including mortgagees: pp. 285-313 (problems 14.1-14.7).
c. Payments to unsecured creditors: pp. 313-321 (problems 15.1-15.5 at pp. 326-28).
d. Miscellaneous topics: pp. 321-26 (problem 15.6 at p. 328).
e. Chapter 13 problem (posted on ClaraNet).
12. Chapter 12 for Family Farmers: pp. 338-39 (no class discussion).
13. Overview of the consumer bankruptcy system: pp. 339-62. Time permitting, I may assign a debt counseling problem posted on ClaraNet. Following conclusion of this topic, I recommend that you read Neustadter, When Lawyer and Client Meet: Observations of Interviewing and Counseling Behavior in the Consumer Bankruptcy Law Office, cited in the recommended readings.
C. Business Bankruptcy
14. Introduction: pp. 369-75.
15. Involuntary bankruptcy: pp. 375-93 (problems 182.1, 18.2, 18.5).
16. Introduction to Chapter 11 reorganization: pp. 395-414.
17. The automatic stay revisited: pp. 414-15, 422-30 (problems 19.1-19.6 at pp. 434-37).
18. Operating the business in Chapter 11: pp. 437-38, 446-47, 451-52, 459-60, 475.
19. Reshaping the estate: p. 478
a. Strong arm clause: lecture.
b. Preferences: p. 484, 490 (bottom) – 491 (problems 23.1-23.8, 23.10 at pp. 491-93).
c. Time permitting, we may also consider some material on executory contracts and fraudulent conveyances.
20. Negotiating and confirming the plan:
a. Background: pp. 592-611.
b. Best interest of creditors and feasibility: pp. 611-23 (problem 32.1).
c. Classification and voting: pp. 623-628, 631-33 (problem 33.1 at pp. 644-45).
d. Cramdown and the absolute priority rule: pp. 655-74 (problem 35.1).
I recommend that you read the Lopucki law review article cited in the recommended readings as a useful retrospective on many of the topics covered in the course.
