Are Debt Collectors Getting Away With Illegal Debt Collection Under The

Watchful Eye Of A Chapter 7 Trustee?

by: Robert J. Nahoum The Law Offices of Robert J. Nahoum, P.C, practices in the area of
consumer protection and stopping debt collectors. Contact us today to
April 19, 2011 see if you have a case against a debt collector. (845) 450-2906;
rjn@nahoumlw.com,; www.FDCPAAttorney.net

I. SUMMARY

A Chapter 7 bankruptcy trustee represents the estate of Chapter 7 bankruptcy debtors and

is responsible for recovery, preservation, liquidation and distribution of the Chapter 7 estate

assets. Among the property of the estate are causes of action or lawsuits for wrongful damage

caused to the debtor. For example, if the debtor was injured when hit by a car running a red

light, the claim against the driver is an estate asset for which the Chapter 7 trustee is responsible

to pursue.

The federal Fair Debt Collection Practices Act1 ("FDCPA" or the “Act”) provides a

private right of action to consumers who have been the victim of illegal debt collection practices.

Those found to have violated the Act may be liable to the consumer for at least $1,000.00 in

statutory damages, as well as actual damages, including attorneys’ fees and costs.

II. The Problem

At the early stages of the Chapter 7 bankruptcy case, the debtor attends a meeting of

creditors called a 341 meeting. The 341 meeting is an informal, short meeting and often the only

legal proceeding the debtor must attend during the case. The purpose of the meeting is to ensure

that the debtor fairly and honestly represented his or her assets, income and debts. The Chapter 7

trustee asks the debtor questions, under oath, about his or her finances, property and other assets.

1
15 U.S.C. §1692 et seq.
 The Chapter 7 trustee’s primary goal at the 341 meeting is to determine if there are assets

to be administered and if so, to liquidate them for payment to creditors. If an asset is discovered,

the chapter 7 trustee may file a motion or bring an adversary proceeding (which is a lawsuit filed

within the bankruptcy case), in the bankruptcy court.

It’s no great leap of faith to assume that bankruptcy debtors have been hounded by debt

collectors, some of whom have likely violated the FDCPA. If these debt collectors did violate

the FDCPA, a claim against them is an asset belonging to the estate for which the Chapter 7

trustee is responsible for pursing. The question is, are they? All indications are that they are not.

In fact, nowhere in the over 200 page Handbook for Chapter 7 Trustees is there even a

mention of the FDCPA. The appendix to the Handbook includes a script for Chapter 7 trustees

to use at the 341 meetings, nowhere in the script can you find questions relating to debt collector

harassment. What’s more, collection letters (where most FDCPA violations are found) are NOT

included in the records necessary to complete the Chapter 7 bankruptcy petition.

Considering this, the question is, are debt collectors getting away with illegal collection

activities under the watchful eye of a Chapter 7 trustee? The unfortunate answer is, probably

yes.

III. The Solution

As part of their fiduciary duty owed to debtors’ estates, Chapter 7 trustees should be

investigating and pursuing FDCPA claims. To do so is a win-win for everyone (except of course

the unscrupulous debt collector). This is particularly true when considering that the FDCPA is a
fee shifting statue in which, if found liable, the debt collector must pay the attorneys’ fees of the

consumer. So, prosecution of an FDCPA claim will come at NO COST TO THE ESTATE.

Prior to the 341 meeting, the debtor and his or her counsel should be instructed to bring

with them for inspection any and all collection letters they received in the preceding 12 months

(FDCPA has a 1 year statute of limitations). At the 341 meeting, the Chapter 7 Trustee should

ask questions of the debtor relating to debt collector harassment. For example, the trustee should

ask:

 Are there some communications where debt collector did not indicate they are
from a debt collector? (15 U.S.C. §1692e(11))

 Did the debt collector fail to send the debtor a validation notice within five days
of the initial communication, either written or oral? (15 U.S.C. §1692g)

 If the debtor made a timely validation request (within the first 30 days of the
initial communication from the debt collector), did the collector continue
collection activities? (15 U.S.C. §1692g)

 Does the communication contain a false impression of the character, amount, or

legal status of the alleged debt? (15 U.S.C. §1692e(2))

 Does the communication give the false impression that any individual is an
attorney or that any communication is from an attorney? (15 U.S.C. §1692e(3))

 Does the communication threaten to take any action that cannot legally be taken
or that is not intended to be taken (e.g. suit, harm to credit reputation)? (15 U.S.C.
§1692e(5))

 Does the communication give the false impression that the debtor committed any
crime or other conduct in order to disgrace the debtor? (15 U.S.C. §1692e(7))

 Has the debt collector used any other false, deceptive, or misleading
representation or means in connection with the debt collection? (15 U.S.C.
§1692e(10))

 Does the debt collector attempt to collect any amount (including interest, attorney
fees, collection costs or expenses) not authorized by the agreement creating the
debt or permitted by law? (15 U.S.C. §1692f(1)
  Has the debt collector taken or threatened to unlawfully repossess or disable the
debtor’s property? (15 U.S.C. §1692f(6)

 Does the debt collector use any other unfair or unconscionable means to collect or
attempt to collect the alleged debt (e.g., collecting time barred debts that are older
than 6 years, filing suit without legal authority)? (15 U.S.C. §1692f)

 Has the debt collector used or threatened the use of violence or other criminal
means to harm the debtor or his/her property? (15 U.S.C. §1692d(1))

 Has the debt collector used profane language or other abusive language? (15
U.S.C. §1692d(2))

 Has the debt collector caused the phone to ring or engaged any person in
telephone conversations repeatedly? (The telephone is hung up and collector calls
back immediately?) (15 U.S.C. §1692d(5)

 Has the debt collector engaged in any other conduct the natural consequence of
which is to harass, oppress, or abuse any person in connection with the collection
of the alleged debt?(15 U.S.C. §1692d )

 Has the debt collector communicated with the debtor after it knows the debtor to
be represented by an attorney? (15 U.S.C. §1692c(a)(2))

 Has the debt collector contacted the debtor’s place of employment when the debt
collector knows or has reason to know that the debtor’s employer prohibits such
communications (after the debtor told the debt collector to not call him/her at
work)? (15 U.S.C. §1692c(a)(3))

 Has the debt collector contacted the debtor after the debtor has notified the debt
collector in writing that the debtor refuses to pay the debt or that the debtor
wishes the debt collector to cease further communication? (15 U.S.C. §1692c(c))

 In communications with persons other than the debtor, has the debt collector
stated that the debtor owes any debt? (15 U.S.C. §1692b(2))

 In communicating with persons other than the debtor, has the debt collector
contacted that person more than once (unless requested to do so)? (15 U.S.C.
§1692b(3)).

By not asking these questions, and by not conducting this sort of an investigation, not

only might the Chapter 7 trustee be allowing unscrupulous debt collectors to get away with

violations of federal law, but the trustee might also be missing the liquidation of potentially

valuable assets on behalf of the estate.

 The foregoing is for informational purposes only and is not legal advice. For legal

advice, you should consult a qualified licensed attorney.

About the Author

Robert Nahoum is a New York State attorney practicing consumer protection and general

litigation in the Tri-State Area including New York City, Westchester Rockland, Nassau and

Suffolk. His practice includes Fair Debt Collection Practices Act (FDCPA), Fair Credit

Reporting Act (FCRA), putting an end to illegal debt collection practices and debt collection

harassment, debtor’s rights and mortgage foreclosure defense.

Contact The Law Offices of Robert J. Nahoum, P.C today to see if you have a case

against a debt collector (845) 450-2906; www.FDCPAAttorney.net

The Law Offices of

R JN Robert J. Nahoum, P.C.

Robert J. Nahoum, Esq.

99 Main Street, Suite 311
Nyack, NY 10960-3109
Ph: (845) 450-2906
Fax: (888) 450-8640
Email: RJN@nahoumlaw.com
Web: www.NahoumLaw.com
Web: www.FDCPAAttorney.net