Collection Training

With bankruptcy filings continuing to increase, credit unions must recognize the changing trends in the law. Debtors and their attorneys are increasingly finding ways to attack some of the creditor-friendly amendments to the Bankruptcy Code, using new theories. What debtor arguments are prevailing, and what debtor arguments are failing? How can a credit union adjust its practices to reduce the gains caused by new debtor arguments and theories? Using the concepts and flow charts provided, the participant will be able to mitigate losses.

It's no secret that bankruptcy filings are up in this historic economy. You can make sure that your credit union is doing everything in its power to reduce the negative effect of member bankruptcies. Part of this process is ensuring a thorough understanding of the law, constant changes in the law, and how it affects your recovery activities. Liability awaits the credit union that is unaware of its obligations in bankruptcy, and unnecessary losses await the credit union that fails to exercise its rights due to a misunderstanding of permissible collection activities.

Christy Curtis JonesChristy Curtis Jones is a shareholder with the law firm of Sherpy & Jones, P.A. She graduated with honors from the College of Charleston and received her J.D. from USC School of Law. Christy was an Associate Articles Editor for the South Carolina Law Review and a member of the Order of the Wig & Robe. Ms. Jones has served as an adjunct professor at USC School of Law, teaching legal writing to first year students. She currently concentrates her practice in the areas of creditor/debtor rights, bankruptcy, collections, and foreclosure. Ms. Jones is a member of the South Carolina Bar Association, South Carolina Bankruptcy Law Association, and is admitted to practice before the South Carolina Federal Court, District of South Carolina. She is a regular speaker at multiple credit union leagues and conducts training for CUNA's National Collections and Bankruptcy Conference.


Day 1

Bankruptcy Learning Objectives

  • Differences between Chapter 13 and Chapter 7
    • Identifying members heading to Chapter 13 vs. Chapter 7 (worksheet)
  • Automatic Stay
    • What can and can't be done without violating the automatic stay?
    • What is a co-debtor stay, and what can be done about it?
    • Dealing with surrendered property and turnover demands
    • Insurance proceeds, right of set off and the automatic stay
    • Polls for the Audience re: whether Motion for Relief from Stay is worthwhile
  • Reaffirmation Agreements
    • Statement of Intention
    • No more Ride-Through
    • Cross-Collateral Issues; obtaining best possible outcome
    • Request for Confirmation of Stay Termination
    • Flow Charts, timelines and follow-ups
    • Fill out sample Reaffirmation Agreement
  • Cram Down Rule on Autos: Caselaw Interpretation on 910-day rule
    • What is the cram down?
    • Spotting cram down in a Chapter 13 plan
    • Does CU risk cram down when financing GAP insurance?
    • Does CU risk cram down when rolling in negative equity from trade-in?
    • Does CU risk cram down if vehicle being used for person other than debtor?
    • Review sample plan with cram down proposed
  • Proof of Claims
    • Proof of Claim Form
    • Attachment A – Itemized Pre-Petition Arrearage
    • Notice of Mortgage Payment Change
    • Notice of Post-petition Fees, Expenses, and Charges
    • Fill out sample POC form
    • POC & cross collateralization exercises
  • Stripping / Cram Down of Mortgage Liens
    • Concept of a mortgage as a consensual lien
    • Priority of mortgage liens over other liens affecting real property
    • How does Debtor attempt to strip mortgage lien in Chapter 13 v. in a Chapter 7case?
    • Cramming down first mortgage v. cramming down second mortgage
    • History of proposed bills to allow for cram down of first mortgage lien (maybe, if time permits)
  • Loss Mitigation Efforts – Putting it All Together
    • Better to have mortgage lien than judgment lien
    • Reconsider obtaining judgment on second mortgage loans or HELOCs
    • Workouts to obtain security for delinquent loans
    • Training lending department to make better second mortgage loans

Day 2

Collections Learning Objectives

  • Collections Procedures
    • Identify Common Activities that Collections undertakes, with purpose of determining needed procedures
    • Hallmarks of successful Collections Procedures
    • Quick, early action/intervention
    • Escalated demands, in urgency, frequency
    • Noting the file
    • Following up on Promises to Pay
    • Review Sample Collections Procedures
  • Collections Calls
    • Planning the call
    • Privacy considerations & special cases
    • Eliciting the Promise to Pay
  • Collections Letters
    • Samples
    • Hallmarks of successful letters
    • Reviewing your letters (correct sample letter)
  • Repossession Form Letters
    • Uniform Commercial Code
    • Right to Cure? (State by State)
    • Notice of Sale (and common mistakes)
    • Notice of Right to Redeem Collateral
    • Notice of Deficiency/Surplus (avoid common mistakes)
  • Servicemembers' Civil Relief Act
    • Who is a servicemember?
    • Verifying servicemember status & what is active duty?
    • Issues arising out of reducing an interest rate
    • Repossession/ foreclosure against servicemember
    • Credit Reporting and the servicemember
  • 1099-Cs
    • What are identifiable events?
    • Procedures to ensure non-testing period does not expire
    • Using the 1099 as a collections tool
    • Interplay between third-party collectors & 1099s
  • Short Sales
    • Short Sale defined & Evaluating the member's request for a short sale
    • Due diligence – make the member provide proper documents
    • Factors to consider and crucial information to be included in report to management
    • Negotiation tactics to get member or other parties to sale to pay more to credit union

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