Transfer on Death, and Other Uplifting Topics

TRANSFER ON DEATH PROPERTY

            Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions about a specific transfer of property, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege.

            Many states, Indiana included, allow for the automatic transfer of property at death. Section 32-17-14-1 of the Indiana Code, known as the Transfer on Death Property Act governs what property may and may not be transferred by and Transfer on Death Deed (TOD or TOD Deed). Generally, property that does not usually have named beneficiaries, but that are deeded, or recorded, or titled can be transferred at death. Things that are not considered eligible for a transfer on death designation are things that by their nature already have named beneficiaries such as life insurance policies, joint tenancies with rights of survivorship, and the like. For our purposes here I will discuss the most common transferred on death properties.

Real Estate. Houses and other real property are usually a person’s largest asset. And although they are regularly held by joint tenants with rights of survivorship or by the entirety (marriage), a couple may elect to transfer the property at the death of both of the parties to a person or persons of their choice. The reason for this can be many fold. For example, the homeowner(s) may wish to bring the value of their probate estate below the statutory cap for court administration of estates. In Indiana that amount as of this writing is $50,000.00. Creating a deed that will change ownership of the property at the death of the owners of the property automatically transfers that ownership, thus it removes the property from the estate and the estate may then proceed to disposition outside of the prevue of the courts, and thereby generally speed up the process. Another reason may be so there is no challenges to a will if one is left by a disinherited heir. The TOD, if done properly, will remove any potential challenges down the road. ***A HUGE caveat needs to be pointed out here.*** If the TOD is made to a person that is not a “relative” as understood by the Garn-St. Germain Depository Institutions Act of 1982, (also known as Alternative Mortgage Transaction Parity Act of 1982)12 U.S.C. 1701 et. seq., a property that is subject to a mortgage could be called under the due-on-sale or acceleration clause in the mortgage. And if the beneficiary who is a “relative” cannot afford the mortgage payments, there is no guarantee within the Act that there will not be an action to foreclose the mortgage.

Money or bank accounts. This is akin to what I have already written about in the Estate Planning suite of blog posts. A bank account may be transferred at death in the same manner as a Totten Trust. By assigning the account to the would-be beneficiary via TOD it automatically changes ownership and thus removes the property from the probate assets of an individual.

Vehicles. As with real property, all deeded vehicles can be transferred at death.

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Each of those are examples of common items or property transferred at death. But, so long as there is a transferring entity, that will take responsibility for transferring ownership of a piece of property after the death of the owner, there is little property that cannot be placed under a TOD designation. For the above stated items or property, the TOD Deed needs to be in the hands of the transferring entity before the death of the owner. So, for a parcel of real property the TOD Deed needs to be recorded in the county where the property sits before the death of the owner. Bank accounts need to be designated as TOD before the death of the owner. If it is not done before the death of the owner it cannot be transferred because the transfer was not made during the life of the owner when the owner had control over the property to be able to make the designation.

This leads me to the overall general rules regarding such a transfer. As just discussed the registration of the transfer must be recorded or otherwise set up during the life of the owner. The owner must be able to transfer ownership in all of what the owner owns (i.e., a person with an undivided one half interest in a parcel of real property cannot transfer ownership of the whole parcel. That owner can only transfer the undivided one half interest). The owner can revoke the transfer at any time prior to death, so the TOD designation does not create a vested property right for the beneficiary. The beneficiary will take the property subject to any encumbrances that the owner was subject to, e.g. liens, easements, restrictive covenants, mortgages, etc. It should also be restated that if the TOD property has a mortgage, that if the person is not a relative, as understood by the Garn-St. Germain Depository Institutions Act of 1982 (also known as the Alternative Mortgage Transaction Parity Act of 1982) 12 U.S.C. 1702 et seq., the due-on-sale or acceleration clause of the mortgage will most likely be triggered.

All in all, designating property as TOD during life can make the disposition of your estate upon your death go a lot smoother for the people who are to inherit the property. TOD Deeds should be considered when doing your estate planning, and should be considered as an estate planning device along with a Will, Power of Attorney, Healthcare Directive, Trust, or any other document you and your attorney conclude would be best for you and your family.

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions about a specific transfer of property, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege.

 

Contracts: making them and breaching them

CONTRACTS

Part 1

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions about a specific contract, or a breach thereof, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege.

Almost all Americans enter into contracts every day. When you swipe your credit card at the gas pump, when you click “I Agree” at the bottom of a terms of service page online, when you drive a car down the road, when you enter into a mortgage, when you buy a car, etc., etc. With almost anything in life there is a discernible contract involved. Simply put, a contract is a legally enforceable agreement between two or more parties. I’ll unpack that last sentence a bit. A legally enforceable agreement; meaning one cannot have a contract for something that is illegal. Between two or more parties: meaning one cannot make a contract with oneself, and that each party could be an individual, organization, corporation, public entity, or society writ large.

Contracts have three general components. 1. Offer, 2. Acceptance, 3. Consideration. Offer and acceptance are pretty straight forward, I offer to sell you a car, you accept. Consideration is more complicated and is the thing that is negotiated, and why the offer is made in the first place, i.e. money, goods, or services that equal the value of the car, or at least the value of the car to me, the seller, and you the buyer. Consideration, again, the thing exchanged between the contracting parties, can be almost anything, and it doesn't necessarily have to be commensurate with the general understanding of the value of the things exchanged. For example, I may have received a piece of sports memorabilia from the estate of my long lost uncle. It happens to be from a team or a sport that I don't particularly care for so I post the item for sale in an online forum. You may be a rabid fan of that particular team, so the item's value to you is astronomical and to me it is merely passing. I want to get the most money I can out of the deal, and since I have the item and you desperately want the item, I can hold out for a larger than market value price for the item because of its value to the niche market. When one sells a car the average person looks up the value, given the age and condition in Kelly Blue Book, but that can only give market prices depending on the particular market. If I'm selling a 1984 Ford Mustang in the general marketplace its value may be a few hundred dollars, but to enthusiasts for mid 80's Ford Mustangs its value may well be slightly, or significantly higher. All that is to say that consideration is fungible, and there may not be a set cost for any given good or service.

So long as the items, services, or money contracted for are legal, there is little one cannot do in a contract. In legal terms this is known as freedom of contract. At the outset, the law in America was to allow full freedom of contract (if that person happened to be a land owning white male). Over the centuries we, as a society, and as a legal profession, have put limits for what one can contract. For example, in many states there are usury laws, stating that a person may not be charge above a certain percentage in interest to borrow money. Of course organized crime has a foothold in illegal loan sharking where they charge huge interest rates to people who cannot get a loan by conventional means. Here enters the payday and title loan industry that charges huge percentages, but because itis determined to be a short term loan, the percentages are forgiven and there is a form of collateral, be it a paycheck, or a vehicle. Other contracts we might consider unconscionable if the terms are so onerous, and there is such unequal bargaining power, that the party agreeing has no or little ability to challenge the terms, these are also known as contracts of adhesion. It is very difficult to have a contract thrown out for being unconscionable. If, for example, you are trying to get a loan, and the terms are so bad as to be considered unconscionable, you are always free to walk away and seek a loan from another lender. So, given that there are almost always other service providers, lenders, or sellers, the individual has some rather significant bargaining power just by means of industrial competition. Those are only two of the hundreds of ways the ability to freely enter into any contract have been limited, and for the most part those limitations are intended to protect people against what one may be willing to do in desperate situations by allowing another to take advantage.

So aside from certain terms, conditions, or situations where the courts or legislatures have stepped in to limit full freedom of contract, one is almost able to enter into a contract for anything. As insignificant as agreeing to pay such an amount by signing your credit card receipt for a pack of gum, to getting a mortgage to purchase a home, all are contracts. Businesses, non-profit organizations, and public entities enter into contracts on a large scale all the time with each other and with individuals.

For individuals the most typical contracts that give rise to disputes are leases, contracts for the sale of a vehicle, and contracts with cell phone providers. Each of those, in a descending order, are contracts over which you have less and less of an ability to negotiate actual terms rather than just using your power as a consumer and walking away. The owner of a property for lease has an obvious need to get the space rented out and generating money, so a renter may ask for certain provisions allowing pets, or providing for more notice if the landlord needs to enter the premises, or anything you can get the landlord to agree to in the terms of the lease. For those concessions the landlord may impose a late fee if rent is late with less of a grace period, or that the tenant take on certain regular maintenance. While every term of the lease is technically up for negotiation, the landlord is still in a position of power in those negotiations, and probably has a greater ability to walk away from the transaction if asked for too much. It is very easy for either party to breach the terms of a lease without realizing it. You, as a renter, or as a property owner, should know the specific provisions of every lease entered into to keep track of any potential breach by the other party, and to know when you yourself may be in breach. Leases, like a number of contracts come with certain protections called “implied warranties” that apply to all of them, cannot be waived, and as the term “implied” implies, do not have to be expressly granted in the lease itself. Terminating a lease must also be done within the terms of that lease, and one party cannot unilaterally terminate a lease without owing some form of performance or damages to the other party (usually payment of the remainder of the term of the lease less any amount covered by re-letting the property). For more on leases please see a forth coming blog post on landlord/tenant relationships.

Contracts for the sale of vehicles are pretty straight forward, with little room to negotiate actual terms outside of the price for the vehicle, the interest rate paid to finance the vehicle, or what the warranty will cover. But those are still points of negotiation that will keep the contract out of the unconscionable realm.

Many people don’t understand the contracts that they have with their cell phone provider, and that is simply because many people don’t read them beforehand. And, when upgrading to a new phone, or upgrading the operating system on a current phone, a consumer will simply click on the “I Agree” button, and continue with the installation. No one reads updates in terms of service, but everyone is expected to do so. By clicking “I Agree” the consumer is agreeing that they have read, understand, and agree to those terms. An argument that tries to negate that will simply fail unless there is a change in the law that no one expects to be on the horizon.

So, a person finds himself in a contract and discovers that the other party is in breach of a term of that agreement, usually payment of consideration or performance of whatever act is called for, but it could be anything. What’s the next step? If your answer was to file a case in either small claims court or a court of general jurisdiction, you are probably wrong. Most consumer contracts have mandatory arbitration agreements that are stuck somewhere around the 27th paragraph on page 13, in those arbitration agreements the consumer is agreeing to be bound by the decision of an arbitrator that is paid by the company against which the dispute is brought, and has signed away his rights to seek redress in the courts. If such is the case, then there is very little that can be done. As it stands in the United States, and in particular, the State of Indiana, mandatory arbitration provisions are upheld. For aggrieved parties other than consumers, you may have the ability to go straight to the courthouse, but if it is a lease, or any other contract where a person or entity has a contractual right to remedy the breach beforehand, the aggrieved party will first have to provide notice of the breach and give the other party a chance to remedy that breach.

In closing out this first part on contracts I want to point out that once there is a breach of a contract penalties for the breach of that contract are legally allowed to begin to accrue. Missing a single mortgage payment is a breach of that contract, but there are federal laws and regulations that allow homeowners a bit of leeway in the enforcement of that breach. In the specific case of a mortgage, once the case is in foreclosure, there are federal programs available for homeowners that should definitely be taken advantage of, but no one is automatically entitled to a mortgage modification, or some other debt relief or loss mitigation plan because of an inability to pay. The same goes for leases. Failure to pay will always be a valid cause for eviction in the State of Indiana, if there are other problems with the condition of the leased property, the means to go about redressing those problems is in the court, not by self-help (by self-help I mean withholding rent).

And finally, if there has been no breach, but one of the parties sues the other for a breach, expect that case to be dismissed and for some form of sanction for wasting the court’s time. 

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions about a specific contract, or a breach thereof, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege. The author is licensed to practice in the state of Indiana. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, client or otherwise, should act or refrain from acting on the basis of any content included herein.

Small Claims: What to expect when you're expecting a lawsuit

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions about a small claims issue, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege.

            In general there are two types of court in America. One is what we see on television, be it in a weeknight drama, or on court T.V. showing the trial to the year for an over publicized event. The second is where many cases turn up, and that is small claims court. In this blog post I will write about the small claims process in a general overview, touching on how to file the case, when a litigant should get an attorney involved, how to defend a case, and how to collect on a judgment.

            In Indiana small claims court is for cases of eviction where back rent owed is less than $6,000.00, accounts payable totaling under $6,000.00, for property damage not more than $6,000.00, and almost any other case where the damages to collect will not surpass $6,000.00.

            The draw of small claims for most people is that there is very little by way of rules of evidence and there is no jury. Therefore, the judge, who knows the rules of evidence can make a decision about what should be given evidentiary weight and what shouldn’t. Another reason a litigant may want to go into a small claim rather than a case on the plenary docket is that the need for a lawyer is lower than in a case for the plenary docket. And thirdly, cases in small claims go through the litigation process much faster and trials are conducted much sooner than one could reasonably expect from plenary courts.

            First, I’ll write about what a plaintiff in a small claim can expect and later from a defendant’s perspective in the state of Indiana

Small Claims in the eyes of a Plaintiff

            Someone is renting an apartment unit from you and hasn’t paid in two months, or someone borrowed your entire collection of Doctor Who DVDs, hasn’t returned them, and claims they’re lost, or you performed a service for someone who didn’t pay you. In each of these scenarios and countless others, so long as the amount owed is less than $6,000.00 (hereinafter 6K), you may decide to take a person to court to recover the money or property lost.

            In Indiana you my walk in to the local courthouse and fill out a Notice of Claim form, or in the case of eviction, a Small Claims Eviction Complaint. Once it is filled out to the best of your ability to describe the nature of the case and the wrong done to you, you hand it to the small claims Clerk, pay a filing fee (except in very limited circumstances), and the court will serve the defendant. At that time you will also be given a time and date at which both the plaintiff and defendant will have their first hearing in the court.

            The first hearing for an eviction is a little different than for other types of small claims cases. So here I will split the two apart and write about each in turn.

Eviction

            The first hearing in an eviction is a possessory hearing where the court will determine whether there is cause to evict the tenant. Both the plaintiff and defendant will be given a chance to explain their position, and if the landlord/tenant laws or the terms of the lease were violated by the tenant, the judge may order that the defendant remove himself and his possessions from the property by a certain date, or to cure the breach. That’s it for the first hearing, however, if the terms of the lease or the landlord/tenant laws were not violated by the tenant, then it is reasonable to expect that the Court will not order the defendant to vacate the premises. If that happens there will be no second hearing, but if the tenant is at fault, the second hearing will be scheduled for some time down the road depending on how busy the court is.

            The second hearing in an eviction is to determine how much the former tenant owes the landlord for back rent and/or damages to the property that had to be fixed before it could be re-let. At the second hearing the landlord will be allowed to present evidence of past due rent as well as any damage to the property beyond normal wear and tear which the landlord had to fix. The former tenant will also be allowed to present evidence of his own to show the condition of the premises on the day he left, which is why it is always a good idea for a tenant, immediately before vacating the premises for good, takes pictures of every nook and cranny of the property as well as any appliances that are staying on the premises after the tenant leaves.

            Once a dollar amount of back rent and other damages is established the Court will reduce that to a judgment in favor of whatever party the Court determines to be in the right, and that is where eviction stops to divert from any other small claim.

Other Small Claims

            The first hearing in any other small claim will usually be uneventful. The judge or court staff person will most likely tell you to go out into the hall to see if there is any way to get the defendant to own up to the debt and work out a payment plan. If you can work out a payment plan with the defendant, then that’s as much as you need to worry about. The plaintiff will then put the amount to be paid and the frequency of that payment until the debt is satisfied into an agreement signed by both parties, have the judge sign it, which then makes it a court order, and everyone is on their way.

            If, on the other hand, the plaintiff and defendant cannot come to an agreement, or if the defendant denies owing any such debt that is the basis of the suit, the parties and the Court will have to set a time for a contested hearing. Again, depending on how crowded the court docket is, a contested hearing could be set for a few weeks or a few months in the future.

            At the contested hearing it will go much like a first or second hearing in an eviction. Each side will be sworn in and given the opportunity to present evidence, the rules of evidence are mostly ignored, and the contested hearing should last no longer than an hour. If the presentation is overwhelmingly in one party’s favor, the judge may issue a ruling from the bench after the close of evidence and any summation either party may choose to give. Or, the judge may take the facts and evidence provided under advisement and will issue a ruling on the matter after a few days or weeks.

            Assuming that the judge rules in the Plaintiff’s favor there will then be a need to collect the amount owed by the Defendant. That is usually done by way of proceedings supplemental to a judgment (PS). A PS hearing will be set for a few weeks or months in the future where the winning party asks questions of the Defendant under oath about assets and income that can be used to satisfy the judgment. In Indiana it is not unlikely that a Defendant may have his wages garnished (up to 25% of total take home pay). Other means of ensuring that a judgment is paid may be to place a lien on property owned or on bank accounts. A lien doesn’t give the prevailing party the right to take that property, but restricts the Defendant’s ability to transfer good title to that property, and in the case of bank accounts, will restrict access to the money in that account. Once the judgment is satisfied the Plaintiff must have the liens removed from whatever property they are attached.

Small Claims in the eyes of the Defendant

            Now assume you receive a summons in the mail stating that you are being sued by the Plaintiff in the action titled at the top of the document. It says that you owe a certain amount based on the assertion of the Plaintiff of money owed, property taken, or non-payment of rent under $6,000.00. On the notice of claim it will state the time and place where you are expected to show up for an initial hearing. If the entity being sued is a corporation or company, that corporation or company is required to be represented by an attorney, individual parties may represent themselves if they choose.

            As stated above, the initial hearing is basically for you to meet with the Plaintiff, or Plaintiff’s attorney, to see if there is a settlement to be had. However, you may raise defenses or counterclaims against the Plaintiff at this initial phase if there are any to be had. Common defenses in the era of third party debt buyers are plenty fold, but I will mention just a few here that are most common.

1.      Indiana Trial Rule 9.2 states that any suit based on a written instrument must have that written instrument attached to the pleadings. This is a fairly common sense rule, but one that is constantly ignored by Plaintiffs and Plaintiff’s attorneys, especially when there is a third party debt buyer who simply cannot present such a written instrument.

2.      Indiana Trial Rule 11 states that any affidavit must be acknowledged by a party with personal knowledge of the facts testified to in that affidavit. It is very often the case that employees of Plaintiff are made to fill out these affidavits of debt when they have absolutely no knowledge of what the underlying account is, or against whom the suit was filed.

3.      Wrong Defendant. Say Bob Smith lives in Indianapolis Indiana, he has a few credit cards, but is current on all of them. Another Bob Smith lives in Zionsville, Indiana, has multiple debts for which he has fallen behind in payments. Citi is one of Bob Smith of Zionsville’s (Bob Smith Z) creditors and attempts to locate him to pay the past due amounts. After so many months of sending out correspondence to Bob Smith Z, calling him without getting an answer, and other frustrations of trying to collect on the account, Citi charges off the debt and sells it to a collection agency for less than the amount owed. The collection agency is located in Chicago, and sees that there is a Bob Smith who is a customer of Citi living in Indianapolis, so Acme Collections files suit in small claims court in one of the Indianapolis small claims courts. Bob Smith of Indianapolis (Bob Smith I) receives a summons to appear in court. Bob Smith I should move to dismiss the case because he never had an account with Citi with the account number associated with the debt, or lived at an address listed on the account, or any other means he can demonstrate that they have the wrong guy. But for God’s sake, no one should ever ignore any documents sent to them from a court, it is so much easier to defend a case than to have a judgment overturned at a later date!

4.      Statute of Limitations. Very often when a debt has passed the relevant statute of limitations, creditors or debt buyers will attempt to sue on the debt despite the limitations period having run out. This is simply because the court will not enter a defense for you even if the court notices that the statute has run out, and if the claim is reduced to a judgment a whole new and different statute of limitations begins to run. Also, if the Defendant doesn’t know that the statute of limitations has run out, any agreement made by the Defendant with the Plaintiff to make payments on the debt will start a new statute of limitations once that agreement is reduced to a judgment as well.

-          For the benefit of defendants everywhere, and because Pasztor & Coe will not accept a matter for collections if the statute of limitations has run out, I will list the various time limits for certain debts in Indiana here:

·         Written contracts: 10 years

·         Oral contracts: 6 years

·         Promissory notes: 10 years

·         Open accounts (including credit cards): 6 years (links below)

Defendants have a great luxury to be creative in ways to defend against a debt, one that is owed, or otherwise. It is important to remember that Plaintiffs have the burden of proof when it comes to whether or not you owe a debt (as in almost all things), so admission is never in the best interests of a Defendant. To be sure, Plaintiffs also have a myriad of ways to be creative in pursuing a debt, owed or otherwise, that many consumers fall victim to before they realize it.

So, you are a Defendant, and you are not liable for the debt for which you were sued, what do you still have to do? In many cases, nothing. The suit goes away, and you are left to lead a happy life. However, when a Defendant argues a successful defense often times the Plaintiff’s attorney will offer to dismiss the case without prejudice. Dismissing a case WITHOUT prejudice means that it can come back later and sue you again, or another debt buyer can do so. If presented with an offer to dismiss without prejudice it is in the best interest of the Defendant to politely decline the offer and insist on a dismissal with prejudice. If you agree to a dismissal without prejudice plan on wasting more of your time with this debt at some point in the future.

Defendants in Eviction

            Many people often ask if they can withhold rent until repairs are made, or until the landlord does something he promised to do. The short answer is no, a tenant may never withhold rent. If a tenant withholds rent, that tenant will be a Defendant in an eviction proceeding very soon. If you have been withholding rent, and you are being sued, the only way to avoid getting kicked out of your home is to have the money in hand before the hearing, and ready to be paid in full. So long as you are in compliance with all of the terms of a lease, you have a defense to any eviction proceeding.

            This will tie in to a later blog post on landlord/tenant law, but it bears repeating here. If there is a breach of the lease, any term of the lease, or any implied or express warranty made in or because of the lease, by the landlord, the means of correcting that breach is in the small claims courts. To reiterate an important point, withholding rent is not the means to seek redress for a grievance with the landlord.

 

Should you have a lawyer?

            As mentioned above, corporations and companies must be represented by an attorney in small claims in Indiana. In many cases individual litigants choose to represent themselves simply because the dollar amount of the lawsuit doesn’t warrant the expense of hiring an attorney. But there are many instances where it is always advisable to engage the services of an attorney, and here I will list a few of those.

1.      Landlord/tenant or eviction. If you are a tenant suing over the breach of the lease by the landlord, there is likely a provision of your lease that says that a prevailing party in any litigation arising from that lease will be granted reasonable attorney’s fees. Your landlord may have only included a provision for attorney’s fees if the landlord is the prevailing party, but your lawyer may argue to the Court that such a one sided provision on attorney’s fees, in favor of the party will all of the bargaining power, is unjust and should thus apply to either party, whichever should prevail.

Landlords suing over the breach of any provisions of a lease should hire an attorney for the exact same reasons, and any lease should contain an attorney fee provision so you don’t have to spend all of your time in or preparing for court rather than managing and maintaining your rental property.

2.      Matters of consumer protection. Contracts entered into by consumers generally always have attorney fee provisions, and if you’re lucky enough to get such a contract without a binding arbitration clause, so much the better. Other consumer protection laws that have statutory attorney fee provisions are Indiana Unfair and Deceptive Acts and Practices (UDAP), the federal Truth in Lending Act (TILA), the Equal Credit Opportunity Act (ECOA), among others.

3.      Collections. This may restate the above in that most entities that will sue for collections will be a corporation or a company, but in all consumer sales, credit, leases, or any other contract should have attorney fee provisions.

4.      Matters of lost or damaged property. In the case of lost property, or unreturned property legal theories on conversion, trespass to chattel, subrogation, among others may come into play. It should not be incumbent on everyday Americans to have to know what all these mean, and it is the job of attorneys to deal with these issues, hiring a lawyer will ease the burden, and let you get back to your life. For damaged property issues of liability, as well as comparative or contributory negligence. All factors that while anyone may learn over the course of some months, your attorney has studied and is able to argue them succinctly given the limited amount of time granted for small claims hearings.

5.      The only reasons not to hire an attorney to represent a plaintiff in a small claim is if the amount claimed does not make economic sense to incur such an expense, and there is no means of collecting attorney’s fees from the Defendant. The only reason for a Defendant not to hire an attorney in a small claim is if the Defendant knows that the money is owed, there is adequate documentation to support the debt, and there are no defenses to be raised by the Defendant.

Small claims is a being unto itself. It is fast paced, and fluid. It is, by its nature, easy to fall through the cracks and get lost in the turmoil. A small claims judge may see hundreds of people in a day, and not one of them may stand out in the crowd. This blog post was intended to give an introduction to the world that is small claims practice in the State of Indiana. It is highly recommended that if one is considering the prospect of filing a small claim as a plaintiff, or if one is named as a defendant in a small claim that you speak with an attorney who has experience practicing in the small claims arena, if for no other reason than to understand the process. It is my sincere hope that this post has explained some of that process so when you speak to an attorney, or when you go to court, you will be better informed than you were before.

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions regarding a small claims issue, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege. The author is licensed to practice in the state of Indiana. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, client or otherwise, should act or refrain from acting on the basis of any content included herein.

Links: http://www.bankrate.com/finance/credit-cards/state-statutes-of-limitations-for-old-debts-1.aspx

General Estate Planning

GENERAL ESTATE PLANNING

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions about your estate, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege.

                The old saying is that nothing is certain but death and taxes. Taxes will be the subject of a future blog post. In this post I want to speak about what, for some, is a difficult topic, planning for your ultimate demise.

            Because we will all one day die, this post is for everyone. However, in this post I will not be able to go into the specifics of all manner of vehicles by which one can convey property to their loved ones when considering end of life gifts, but will instead speak to the main and most commonly used methods of transferring property posthumously. In later posts we will speak to more complex and/or uncommon methods for people with specific needs and/or unusually large estates.

            So, let’s begin with the most well-known item in an estate plan.

The Last Will and Testament (Simple Will). It is always recommended that one prepares a will, it may become obsolete at the time of your death depending what happens during your life, but it is the cornerstone of every estate plan. The purpose of a Will is to state, in no uncertain terms, what you would like to happen with your personal property and real estate after your death. To administer your wishes set forth in your Will, State probate courts are employed to ensure that the person designated to be in control (commonly referred to as the “executor,” but in modern times more often referred to as the “personal representative.”) acts in a reasonable manner to accomplish those wishes, rather than just running off with all of the property to enrich himself.

            Items included in a Will are devised to ones’ devisee/s either specifically or generally. An example of a specific devise would be: “I bequest to my eldest niece, Jane Doe, my collection of fine china and silverware I stored in the china cabinet in the dining room.” A general devise would read something like this: “the remainder of my estate will be divided among my children, should any of my children predecease me, then their heirs shall receive that child’s share per stirpes by representation.”

All items in the Will are part of what is called the Probate Estate. The probate estate includes those items one owns at death that are tangible, liquid, or not made part of one’s non-probate estate by statute. At typical probate estate includes such things as a house, boat, planes, trains, and automobiles, tangible personal property within the home or other facility, bank accounts, brokerage accounts, and other property. Items that pass outside of a probate estate are life insurance benefits, property used to fund a trust where the beneficiary, or the residual beneficiary, is someone other than the deceased, jointly held property, or property held by the entirety (between spouses).

In your Will you should name what is commonly referred to as an Executor or “Personal Representative” (PR). That person will be responsible for opening the estate and overseeing the administration of the estate. The PR or an heir at law can petition to have the Will probated. If the Will provides, or if the beneficiaries of a Will consent, the estate may be probated without court supervision, meaning less time to administer and close, and less cost to the estate. Otherwise, the court will supervise the administration of the estate requiring inventories, accountings, and other filings to be presented to the court on a regular basis. In this process, it is the PR’s responsibility to ensure that creditors are given notice of your death so any debts owed can be paid by the estate and to distribute remaining assets to heirs or devisees.  In the absence of a properly executed Will, that decedent is determined to have died intestate, and heirs will need to be made known to the court so they may be issued letters of administration. The court will then take charge of the estate.

In a Will, as a testator you have great discretion to distribute your property in any way you see appropriate with only a few exceptions. You may not restrict a devisee’s right marry, or restrict any other rights of the devisees’ that is considered a fundamental right of that individual. You may not cause the administration of your Will to lead to the commission of a crime. You may not use your Will to perpetuate a recognized form of discrimination. You may not control how future generations inherit the property (called the Rule Against Perpetuities). You may, however, disinherit anyone you choose; give all, or any portion, of your estate to any individual or organization you deem fit; or make any other disposition of your estate assets you could have done while you were alive. However, it is important to consider that if you intend to include any provision or distribution that others may consider a rash or questionable decision, during the execution of the Will, you should take steps to protect the Will against challenges by your future heirs for undue influence by a third party, or lack of capacity at the time the Will was executed. You will also want to take extra precautions if the PR or other party charged with administering the Will also inherits under it.

Once the Will is executed properly and stored in a manner that it will be found and administered to your satisfaction, there is no more work that need be done. That will remain true until such time as you wish to amend your Will with a Codicil or repudiate that Will with another Will or it is revoked by qualifying intended physical acts. Several originals should be made of your Last Will and Testament. One should be kept in your possession, kept in the care of your attorney, and kept by the PR. Extra copies should be kept in a safe place just in case any or all of the originals are lost or destroyed over the years.

Because you do not know if it will be necessary at the time of your death it is certainly recommended that you have a Will in place to make sure that your wishes are abide by.

As intimated above, there are way to take certain property out of the probate estate which can either lessen the amount of the estate probated, or avoid probate altogether. The benefits of avoiding probate is that the administration of the estate can be done much efficiently and timely which will likely result in lower costs to the estate and leave more for the designated heirs or devisees. Below are just a few ways to remove property from a probate estate:

1.      Transfer-on-Death. Property designated as transfer on death (TOD) will automatically pass to the person or fund named in the TOD deed. The most common example of this are TOD deeds for a home. Removing a home from the estate may bring the total amount of the value of the estate below your particular State’s minimum for requiring probate procedures. In Indiana that small estate threshold is $50,000.00. If removing the home from the estate will bring the value of all other would-be probate assets of the estate below $50,000.00, then the estate will not need to be probated, and may pass by way of affidavit.

2.      Trust. Property held by a trust legally does not belong to the individual who funded the trust, and thus may pass outside of probate. It is not possible to sufficiently describe all types of trusts available in a blog post, but I will touch on some of the highlights.

A.     Totten Trust. A Totten Trust is simply a bank account owned by the Settlor during her life and transferred to the named beneficiary after the Settlor’s death.

B.     Revocable Trust. A trust granted to the benefit of an individual/s and possibly also the Settlor herself which is funded by money or property the Settlor contributed and may be revoked by the Settlor during her lifetime.

C.     Irrevocable Trust. Much like a revocable trust but may not be revoked, and thus is no longer considered the property of the Settlor after its execution.

D.     Special Needs, Educational or other such Trusts. Specific types of trusts that are intended to benefit a particular aspect of the beneficiaries’ life. In the case of an educational trust, the trustee is tasked with using the body of the trust only for the educational needs of the beneficiary, but the trustee will most likely have a large degree of discretion when it comes to how to determine if it is used for that purpose.

Trusts are an enormous part of estate planning, and far too varied to do an exhaustive and descriptive list here. At later dates each type of trust will be discussed at greater length.

3.      Jointly held property.  Property held by joint tenants with rights of survivorship will automatically pass to the other joint tenant upon the death of the other owner. There are four requirement necessary in order to legally be considered joint tenants. They are: unity of time (interest must be acquired by both tenants at the same time), unity of title (the interests held by the co-owners must arise out of the same document), unity of interest (both tenants must have the same interest in the property), and unity of possession (both tenants must have the right to possess the whole property.) For example, in their parents’ will Jane and John were devised a home as joint tenants with rights of survivorship. When John dies, Jane’s rights of survivorship kick in automatically and vest ownership of the whole property in her name.

 

4.      Tenants by the Entirety. This type of ownership is the ownership of title by a husband and wife in which both have the right to the entire property, and, upon the death of one, the other automatically is designated full title ownership (right of survivorship). Unlike a joint tenancy with rights of survivorship, there is not the strict requirement of the four unities. However, the husband and wife relationship is required here. For example: this time John and Jane are married. They own their home together by their entirety (their marriage). Just like with joint tenants, once John dies, Jane takes ownership of the whole property immediately upon John’s death.

·        Slight caveat. During life, joint tenants as well as tenants by the entirety have a duty to the other tenants not to encumber the property with a mortgage or attempt to sell the property without the other’s knowledge and consent. It will either prove fatal to the sale, or more likely it will destroy the tenancy relationship and create a tenancy in common.

 

5.      Tenants in Common. This is not a method to avoid probate, but it is closely related in with the previous ownership types that I want to address it to. Tenants in common hold an undivided percentage interest in a property. Back to John and Jane. John and Jane are devised a piece of property as tenants in common. They now each hold an undivided one-half interest in that property, meaning that either of them can secure a mortgage, sell, or otherwise encumber one-half of the value of the property. If John were to sell his interest, the buyer would hold an undivided one-half interest in the property along with Jane. If John were to die, his heirs or devisees would own his one-half interest,.

 

Advanced Healthcare Directive. This is an important part of estate planning which is unrelated to financial matters and deals with medical decisions. Also known as a living will, or medical proxy, or medical directive, an Advanced Healthcare Directive (AHCD) is a legal document which provides written instructions to communicate the care and treatment you want should you no longer be able to make health care decisions. This notarized document should name a person, or series of persons who will make healthcare decisions on your behalf if you are no longer able to communicate your wishes or give consent to medical procedures. In this document you will not only name who you would like to make such decisions on your behalf, but you will also give that person a directive as to what you want your overall care to be and specific procedures which should be implemented or bypassed. For example, John names Jane as his healthcare officer who will act on his behalf. After suffering from a serious stroke, John is no longer communicative. In the Advanced Healthcare Directive John specified that he wishes not to receive any life-saving care, receive care enough to maintain life unless there are no chances of recovery, life sustaining care until brain death, or anything else that he may direct. Jane may then give consent to medical procedures she thinks are consistent with what John may have wanted. In the event that decisions and care regarding your personal and medical matters need to be addressed are beyond the power you designated to your agent in this document, the courts will choose a guardian of the person (discussed below). 

 

Durable Power of Attorney. A power of attorney (POA) for finances is a document which allows you to designate a person or series of persons the power to act on your behalf regarding financial decisions and to take any action you permit in that document care for and to manage your financial affairs. Generally, an executed durable power of attorney is in effect both when you are cognizant incapacitated. For example, you may execute a power of attorney in which your child can have power over certain assets of yours because they are better at finances. However, a specific type of durable power of attorney called a springing power of attorney may be executed instead if you desire the POA to cover more narrow circumstances. A springing power of attorney only comes into effect when certain conditions are met. Often, the event is incapacity.  However, the ‘springing’ event can be narrowly tailored to meet your individual expectations. For example, a person in the military may create a springing power of attorney to handle their financial matters while deployed oversees. Like the Advance Healthcare Directive the document is notarized and should be granted the same weight as if the Principal himself were making the decisions. In the event that decisions and care regarding your financial matters need to be addressed are beyond the power your designated to your agent in this document, the courts will choose a guardian of the estate (discussed below).  

 

Guardian of the Estate. There are numerous types of guardianships. For the purposes of this post, I will only speak of guardianships that can be planned for in advance as part of an estate plan. Upon incapacity, in the absence of both a thorough and well executed Advance Healthcare Directive and Durable Power of Attorney, a guardian will be appointed by the courts to make medical decisions and to take care of the incapacitated persons’ property. These duties can be separated in which case there will be a designated guardian of the person, and a designated guardian of the estate. These duties may also be combined in which one person covers both the person and estate. All decisions of the guardian/s will be overseen by the courts. In Indiana guardianships are overseen by the probate court, and the guardian(s) are responsible for reporting to the court on a regular basis, be that monthly, quarterly, semi-annually, etc, or however the court instructs. Having a court designate these responsibilities is typically time-consuming and expensive and often does not result in decisions you would have made had you the opportunity to decide yourself.

 

This is just a general overview of what you should expect to discuss when you speak with an attorney about your estate planning. It is never an easy topic to consider, but the alternative is to possibly cause unwanted conflict between family members or decisions to be made contrary to what you ultimately intended. Thorough discussions with your attorney so that she is aware of the specifics about your personal and financial wishes during your life and after your death, together you will be able to execute an estate plan which is narrowly tailored to accomplish your individual desires. Having a well thought out, well planned, and well executed estate plan will ensure that to the greatest extent, you are able to control how you, and your effects, are treated after your incapacity.

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions regarding your estate, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege. The author is licensed to practice in the state of Indiana. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, client or otherwise, should act or refrain from acting on the basis of any content included herein.

 

Links: 

http://www.dailyfinance.com/2013/10/13/picking-your-executor-estate-planning-last-will-and-testament/

http://money.cnn.com/magazines/moneymag/money101/lesson21/index5.htm

http://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/living_wills_health_care_proxies_advance_health_care_directives.html

 

Debt collection: How to collect money owed, how to protect against abuse.

DEBT COLLECTION

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions about a debt, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege.

 

When one thinks of debt collection it often comes to mind in the form of getting a letter in the mail from a ‘collection agency’ that threatens all manner of horrible consequences if a debt is not paid from a credit card one may have had in the past and simply forgot about. That certainly is a scenario that is common enough, but what I want to highlight in this blog entry are the outliers and more insidious aspects of debt collection for both the debtor and the creditor.

Creditors

First I will speak about the creditor’s side of the equation. Creditors, for the purpose of this entry, are any party that is at least arguably owed a debt, either by being the original creditor, an assignee of the debt by the original creditor, or a third party debt buyer. There are a lot of pit falls a creditor may stumble upon unless she is careful to avoid them. An original creditor may try to collect its own debts in its own name and will not be considered a debt collector under the Fair Debt Collection Practices Act, 15 USC 1692 et. seq. (FDCPA). A debt collector under the FDCPA is any person or institution that regularly collects the debts of another. Notice the word ‘regularly.’ That is not there by mistake. As an attorney, I have a number of clients for whom I regularly represent their interests in all manner of legal services. If at some time one of those clients is owed money from a debtor, I can collect that debt on my client’s behalf and still not subject to the FDCPA because that is not a regular function of my practice, it is incidental to the regular operation of my business. There are, however, a number of firms and other businesses that do regularly collect the debts of a third party and, therefore, would constitute debt collectors under the FDCPA.

Debt collection law firms are all over the place and spend a lot of time in courthouses trying to collect the various debts that are owed to their clients. Examples of their clients include credit card companies, homeowner associations, hospitals, city and county governments, and even some State departments of revenue. I will not go into the requirements of the FDCPA for attorneys subject to the FDCPA simply because the requirements of that Act should be known to collections firms and there is nothing I can say here that will aid those firms.

As for third party debt buyers that buy the written off, or charged off, debt of other debt buyers or the original creditors should take note of the Requirements of the FDCPA. In an attempt to collect a debt, a debt collector may only contact the debtor, the debtor’s attorney, the credit reporting agencies, the creditor, its attorney, or the collector’s attorney. Notice that family members, employers, social organizations, and the like are not on that list. A collector may seek specific permission from a court of competent jurisdiction over the debtor to contact those other third parties, but may do so only once with restrictions as to the content of those communications. More than one communication with those third parties is a violation of the FDCPA unless there is good reason to believe that that third party has new information or has asked for further communications from the collector.

Prohibited Acts. A debt collector, in collecting a debt, may not harass, oppress, or abuse any person. Specifically, a debt collector may not use or threaten to use violence or other criminal means to harm the physical person, reputation, or property of any person; use obscene, profane, or other language that abuses the hearer or reader, publish a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 603(f) or 604(3) of the FDCPA; advertise a debt for sale to coerce payment; annoy, abuse, or harass persons by repeatedly calling their telephone number or allowing their telephone to ring continually, make telephone calls without properly identifying himself or herself, except as allowed to obtain location information.

A debt collector, in collecting a debt, may not use any false, deceptive, or misleading representation. Specifically, a debt collector may not falsely represent or imply that he or she is vouched for, bonded by, or affiliated with the United States or any state, including the use of any badge, uniform, or similar identification; falsely represent the character, amount, or legal status of the debt, or of any services rendered, or compensation he or she may receive for collecting the debt; falsely represent or imply that he or she is an attorney or that communications are from an attorney; threaten to take any action that is not legal or intended to be taken; falsely represent or imply that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person, unless such action is lawful and intended by the debt collector or creditor; falsely represent or imply that the sale, referral or other transfer of the debt will cause the consumer to lose a claim or a defense to payment, or become subject to any practice prohibited by the FDCPA; falsely represent or imply that the consumer committed a crime or other conduct to disgrace the consumer; communicate, or threaten to communicate, false credit information or information that should be known to be false, including not identifying disputed debts as such; use or distribute written communications made to look like or falsely represent documents authorized, issued, or approved by any court, official, or agency of the United States or any state if the appearance or wording would give a false impression of the document’s source, authorization, or approval; use any false representation or deceptive means to collect or attempt to collect a debt or to obtain information about a consumer; fail to disclose in the initial written communication with the consumer, and the initial oral communication if it precedes the initial written communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose. In addition, the debt collector must disclose in subsequent communications that the communication is from a debt collector. (These disclosures do not apply to a formal pleading made in connection with a legal action); falsely represent or imply that accounts have been sold to innocent purchasers for value; falsely represent or imply that documents are legal process; use any name other than the true name of the debt collector’s business, company, or organization; falsely represent or imply that documents are not legal-process forms or do not require action by the consumer; or falsely represent or imply that the debt collector operates or is employed by a consumer reporting agency. * Source: http://www.federalreserve.gov/boarddocs/supmanual/cch/fairdebt.pdf

Now, although individuals and institutions that are not covered by the FDCPA and don’t necessarily have to comply with the law, it is a good idea to use those as a benchmark so you have it in mind if you may, at some point in the future, be considered a debt collector under the statute. And, it’s just best practices. Each individual state may have a similar law, the goal of which is to protect consumers. No state law may violate the preemption principal in federal jurisprudence, but each state may go further than the requirements of the FDCPA by setting out stricter requirements of debt collectors in that state.

A business which has outstanding debts owed is well advised to seek out reputable counsel to try to collect those debts. A collection lawyer well versed in the area of collections and defense of collections will be best able to advise and prosecute such an action, and thus will more successful in securing the obligation owed to such a business.

 

Debtors

            Over the last few years, the debt collection and debt buying industry has grown by leaps and bounds. After the collapse of the world economy in September of 2008, when the subprime mortgage market and similar Wall Street gambling toppled the financial structure of the country, people found themselves jobless, unable to pay their mortgages, car payments, and all manner of other bills. Let’s start with an example: Sam Booker lives in a suburb of Chicago called Winnetka. He worked on the Board of Trade and made a decent living. Once the market crashed, as a mid-level manager, Sam was laid off with no prospects of returning to his job because there seemed to be no end in sight as one bank after another was folding. He went home to a terrified family, not knowing how they were going to keep their house payments up, as well as the other bills. For a time they relied on savings, but that quickly dried up. They made cuts to their family budget, but that only did so much. Finally there was nothing left. Default noticed a pile up for the various loans, credit cards, and bills they had. As the saying goes, “you can’t get blood from a turnip.” Because of the huge amounts of default going on all over the country, Sam’s credit card company simply didn’t have the ability to try to collect on all of the accounts it had, so it charged off the debt, and sold the account to a third party debt buyer (debt buyer A) for twenty cents on the dollar. Sam Booker and his family had to move out of their house because their home mortgage was foreclosed and moved in with Sam’s brother in Lansing Illinois. That third party debt buyer for Sam’s credit card debt was provided with a spread sheet with Sam’s name and address, what he owed to the credit card company, and maybe a contact number. Debt buyer A attempted to use that information to find Sam so he could send letters offering to “settle” the debt for fifty cents on the dollar, but could not find him. So after a few months, debt buyer A sold the debt for five cents on the dollar to debt buyer B. Debt buyer B found a Sam Booker in Fort Wayne Indiana and sent him letters saying that debt buyer B will “settle” the debt for twenty cents on the dollar. It was a good deal for debt buyer B which bought the debt for five cents on the dollar. And, when Sam Booker of Fort Wayne didn’t respond to the letters, debt buyer B assumed the debt is valid. Since Fort Wayne Sam Booker didn’t respond to the letters, debt buyer B filed a claim in small claims court in Fort Wayne. Sam Booker of Fort Wayne never had a credit card with debt buyer B, A, or the original creditor.

            This scenario has played itself out all over the country in the last half dozen years. Sam Booker of Fort Wayne Indiana now has a problem. He knows he doesn’t owe this money to anyone, even if it is for twenty cents on the dollar. He has no idea who the other Sam Booker is and can’t formulate an argument against debt buyer B other than, “I have no idea why I’m being sued for a credit card debt, from an agency I’ve never heard of, for a credit card I’ve never had.”

            An uncontested debt will be presumed valid and owing, so it is important that, even if this Sam Booker of Fort Wayne cannot hire an attorney, he go to the court and recognize at least one thing; it is not incumbent upon him to prove he doesn’t owe the debt. The burden of proof is always going to be on the Plaintiff to prove validity of the debt.

In Indiana, Trial Rule 9.2 requires that when an action is taken based on a written document, here a credit card application, such a written instrument must be attached to the pleading, or an affidavit from a party with knowledge of the obligation filed in its place. Third party debt buyers routinely try to get around this rule by providing an affidavit of indebtedness sworn to by an employee of the debt buyer which says something along the lines of, “I am an employee of debt buyer; I have personal knowledge of the practices of how we acquire debts; or I also have knowledge of the debt in this case,” or some such similar evasive statement. The point of the rule is to make sure that the Sam Booker who is being sued is the same Sam Booker who took on the debt in issue. If that cannot be proven the case should be dismissed.

If the original credit application is provided, it should show that the Sam Booker who is being sued is not the correct Sam Booker.

Indiana Trial Rule 11 requires a signatory to an affidavit i.e. the affiant, to swear to the statement in the affidavit. The affiant swears that the representations made in the affidavit are true, and that they are based on the personal knowledge of the affiant. An affiant employed by debt buyer B simply cannot know the business practices, and the account specifics of Sam Booker’s account with the original creditor unless that affiant has followed that particular account from the credit card company, to debt buyer A, and then to debt buyer B.

There was a similar problem with affiants failing the general requirements of Rule 11 in the mortgage foreclosure debacle from about 2008 through the present. Many mortgage lenders have tried to fix these problems, but when a problem is systemic, it is difficult to completely fix all of them. I will speak more about the history of the mortgage crisis in a later blog entry.

The example of my fictional characters Sam Booker formerly of Winnetka, and Sam Booker of Fort Wayne is simply on example of how debt collection can go awry. There are many problems in the debt collection industry, and people are well advised to seek out an attorney if sued or contacted by a debt collector, even if it is for a debt that you once owed sometime in the past. The Statute of limitations (SOL) on written contracts in Indiana is ten years, for oral contracts the SOL is six years, promissory notes is ten years, and the SOL for open accounts, including credit cards is six years.

Debtors should also pay attention to the list of prohibited acts (above) by debt collectors under the FDCPA. Violations of the act can come with statutory damages in the amount of $1000.00 per individual, actual damages suffered by the debtor, and attorney’s fees and court costs accrued by the debtor.

There is also an income threshold for debtors. Below such a threshold a person is considered “judgment proof.” With exemptions for certain property up to a certain value, and with income lower than $154.50 per week, a person is judgment proof. Also, if a person’s sole income is from social security or another means based income is not collectible. A person sued who only has means based income must show the court the deposits made to the individual coming from an agency such as the Social Security Agency.

The relationship between creditors, collectors, and debtors is a tenuous one. When a person falls on hard times it is hard enough to make ends meet let alone pay for debts accrued in the past. Know what you can do, and seek legal help. In Indiana there is a pro bono commission set up by the State Bar Association that I will link to below. You are not going to go to jail for not paying a debt, but be careful not to agree to pay an amount you cannot afford while having that payment reduced to a judgment. Failure to follow a court order can lead to a body attachment (i.e. warrant) to get you into court again. And also, even if you go through the whole case and a judgment is rendered against you a judgment creditor can only take so much of your “disposable income.” Expect from time to time, as often as every three months you can be back in court to be examined by the plaintiff’s lawyer about new income or assets.

An individual who has been contacted by a creditor, or collections attorney, should seek out an attorney who is knowledgeable of collections and how to defend against collections, especially those accounts that are unknown to the individual, or that may be passed the statute of limitations.

 

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific questions regarding a debt, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege. The author is licensed to practice in the state of Indiana. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, client or otherwise, should act or refrain from acting on the basis of any content included herein.

 

Links:  

http://www.federalreserve.gov/boarddocs/supmanual/cch/fairdebt.pdf

 

Defamation: He should not have said, she should not have said

DEFAMATION

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific instances of defamation, be it libel or slander, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege.

 

Defamation, also known as libel and slander, is only becoming more prevalent with the advent and ever growing presence of social media. For our purposes, libel and slander will both fall under the umbrella term of defamation.

In short defamation is a false statement said about a particular individual or organization that is said or published to a third party and damages the reputation of that individual or organization in a quantifiable manner. I will break down that last sentence below.

1.      A false statement. A false statement is one that is meant to be purported as true. Satire, opinion, and true statements of fact are not included. For example, back in 1983 the adult magazine “Hustler” printed a full page parody advertisement targeting the conservative pastor Jerry Falwell in which the ad made statements about Falwell’s first sexual experience to be an incestual one involving his mother. For simplicity purposes, I will just say that the Supreme Court held that, as a public figure, Falwell had a heightened standard to meet when it comes to false statements made in public and that the advertisement was intended and understood to be a parody. Thus, Falwell could not collect money damages because the statement, though false, was not meant to be read as true. On the other hand, a private individual, i.e. one that is not a public figure, has a heightened expectation that someone would not publish false statements about them. So, say you are on a social media platform and you notice that someone you know has said something about you that is false. The only thing you have to ask yourself is, “would the people who see this think it is true?” and if so that would meet the first criteria of a false statement. Now on the second criteria.

 

2.      Said about a particular individual or organization. This would seem to be self-explanatory, but it’s not always that simple. Obviously, if an individual is named in the statement, then that would be about that person. But say the post simply said “my co-worker is stealing from my employer.” Whether or not that is being said about an identifiable individual is subject to the circumstances. Do you work in a large retail store like Walmart or Meijer, or do you work at a small shoe store with four employees, two of whom are the owners of the shop? Or perhaps a statement that said, “my cousin who is a nurse in Indiana,” and that person only has one cousin who is a nurse in the State of Indiana. There are countless ways a person may be identified.

As for an organization, a business can be defamed. Recently some companies are taking people to task for posting negative reviews on sites such as Yelp. And that is perfectly legitimate so long as the statements are false (see above), and such a statement could harm the company’s reputation. A factual, negative review, or an opinion about the products or services are not defamatory because an opinion is almost always identifiable as such, and true statements of fact are by definition not false.

3.      Publication to a third party. For the purposes of defamation “publication” can be any means by which a third party receives the false information. Publication can be a post on a social media platform, simply telling another person, sending it in email to another person, publication in a newspaper or on television, sign language or other gestures, putting it up on a billboard, skywriting, or pretty much anything you can think of, so long as it is intentionally made known to a third party, can be determined to be a publication.

4.      Damaging to one’s reputation. This may be the most controversial criteria in defamation. And this is where we get to determine if it is defamation per se, or defamation per quod.

 

Defamation per se, is something said about the subject (i.e. the defamed person) that (a) accuses them of the commission of a crime, (b) alleging that the person has a foul or loathsome disease (read sexually transmitted disease), (c) adversely reflecting on a person’s fitness to conduct their business or trade, or (d) imputes serious sexual misconduct. In each of those four instances it is not necessary to prove that the defamatory statement has caused special damages, it is assumed that the publication of such a statement to a third party is enough to recover against the would-be defendant.

 

Defamation per quod, is something said about the subject that is not defamatory in one of the above four instances, but when heard in context, or with consideration of extrinsic evidence, causes injury to the reputation of the individual. This will mean that a Plaintiff in a defamation per quod case will have to prove that there have been real world damages to the defamed individual.

 

5.      Damages. In the case of defamation per se it is generally held, at least in Indiana (for other jurisdictions please consult that state’s law and/or competent counsel licensed in that jurisdiction), actual damages are not required to be pled. A strong recommendation to the savvy is to always try to allege actual damages to avoid an improperly dismissed case. Indiana is one of the few states left that will not require proof of actual damages, but again, it’s a good idea to do so.

 

As for defamation per quod one must show actual damages. As discussed above, defamation per quod are false statements made that do not, on their own, prove defamatory. For example, you miss a week of work because you were sick in bed with the flu. Someone tells your boss that they saw you singing “twist and shout” on a float during a parade going through your city just like in Ferris Bueller’s Day Off. That person knows that it is a false statement because it was not you singing the song, but that it was in fact Tom Petty singing, a likeness to whom you bear no resemblance in person or voice. However, on the basis of that co-worker’s statement to your boss, you are fired. You have now suffered actual damages based on the false statement published to another person about you that is not defamation per se. You then have to plead and prove that that statement made to your boss was at least a cause of your losing your job, and that it was reasonable to suspect that such a statement made to your boss would result in some negative employment action.

 

            The above analysis will function as a general overview of the concept of a defamation in the State of Indiana, at least from the perspective of a plaintiff. There are defenses to defamation that should be considered if someone has threatened legal action for defamation, and plaintiffs too should consider these defenses before making such a threat.

1.      Truth. Truth always has been and always will be a fool proof defense to a claim for defamation.

2.      Parody or satire. So long as a reasonable person would consider the statement to be parody or satire, it is a viable and strong defense to a claim for defamation. For examples of this think of television shows such as The Daily Show on Comedy Central, Saturday Night Live, and the aforementioned Hustler Magazine article the link to the Supreme Court opinion for which is linked below.

3.      Public Figure. A person who is a public figure has a much lower expectation privacy and as such is much more open to targeting by false statements. For this we have to consider the Actual-malice standard made famous by the case of New York Times v. Sullivan, and my favorite public figure case Gertz v. Robert Welsh Inc. (links below). The Actual-malice standard means that in order for a statement to be defamatory it has to be made with “knowing or reckless disregard for the truth.”

4.      Matter of public concern. This too will apply the actual-malice standard.

5.      Privilege. There are two types of privilege; “Absolute Privilege,” where even if there is actual malice a statement cannot be the basis of a suit. Examples of absolute privilege are statements made in court (though this may give rise to other claims such as malicious prosecution or perjury), statements made in a session of the legislature, statements made between spouses, or statements made during political speeches or debates. The other privilege is “Qualified Privilege.” Qualified Privilege are mostly situational privileges, such as a reporter about a matter of public concern, statements in governmental reports or by lower government officials, statements made in self-defense or in the defense of others. This is not an exhaustive list of privileges, but is only intended for informational purposes.

6.      Opinion. Statements made that are the opinion of the person making the statement are not intended as statements of fact and therefore cannot be false statements of fact.

7.      Statements made in good faith. So long as statements are made in good faith with a reasonable belief that they are true is a defense to some instances of defamation.

8.      Mitigation. While not a complete defense in all cases, mitigation of damages is a way to lessen the exposure to liability, or in the case of a news publication a retraction can eliminate damages, and thus can open the plaintiff up to a dismissal.

 

Nothing in this blog post constitutes legal advice. It is posted merely for informational purposes only. For specific instances of defamation, be it libel or slander, the reader is encouraged to seek private legal counsel to whom all of the facts may be divulged. Nothing here gives rise to an attorney-client relationship or privilege.

 

Links:

Hustler Magazine, Inc. v. Falwell, 485 U.S. 46 (1988). https://supreme.justia.com/cases/federal/us/485/46/case.html

New York Times Co. v. Sullivan, 376 U.S. 254 (1964). https://supreme.justia.com/cases/federal/us/376/254/case.html

Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974). https://supreme.justia.com/cases/federal/us/418/323/case.html

See also, Indiana Coe § 34-15-1-1 et. seq. 

DIVORCE: A LOVE STORY

           The dissolution of a marriage, or divorce, is not usually an easy decision to make, and the process of divorce does not make it easier. In Indiana an action for dissolution of marriage can take anywhere from 60 days, the statutory minimum amount of time a dissolution action can take, or can literally go on for the rest of your life. This post is intended to discuss divorce, the process, and the potential results.

            When people are contemplating divorce many times they also want to consider legal separation. We only recommend a legal separation if the parties have a religious objection to an actual petition for divorce. The reasons for that vary, but the main one, is that with a legal separation there is an annual requirement that each party continue with the separation by going to court to basically re-up for the separation. Meaning that every year, the parties have to be in a room together to renew their desire to stay legally separated. This can put a hindrance on getting on with life, be it moving to a new city or state, getting remarried, even dating. But if the parties agree to these restrictions, again, usually for strongly held religious beliefs, it is an option, just one that is rarely recommended.

            So, if you don’t have particularly strong religious objections to divorce the process begins with a meeting with a lawyer. At this meeting the lawyer will ask questions that are very personal in nature about children, finances, living arrangements, etc. That is so when there is a hearing or an agreement she will not have to keep calling for a bunch of details later. That information is kept safe, and the attorney client privilege assures that it will only be known to the attorney and maybe a staff member that is also bound by the attorney client privilege.

            Now you’re ready to start the court process. That begins with a petition for dissolution that will have to be signed by the party who is filing the petition. The party’s signature “verifies” the petition, and holds the petitioner liable for the truth of the statements in the petition. Once the petition is on file with the court you and your spouse are legally separated! See, it’s already made a part of the process, so a separate action for a legal separation is doubly unnecessary.

            The petition, along with a summons will be served on the non-petitioning party, called the respondent in dissolution cases informing that person that they have been sued for divorce, the time and place of the first hearing, that failing to participate in the divorce process can be detrimental to their cause, and that if there is any need for a cross-petition that it can be filed with the same court.

            If you have children a provisional hearing will be set for as short as a couple weeks from the date the petition is filed. That hearing may be waived if the parties agree to provisional orders. Provisional orders are meant to maintain the status quo as far as bills, possession of property, and to provide for the children, including setting up a child support and parenting time (visitation) agreement. In my mind the most attractive reason for doing a divorce petition rather than legal separation is that there is no need to renew every year, and you can live under provisional orders for the rest of your life if you just like being legally separated.

            But say you are sure that you want a full divorce after the 60 day statutory minimum waiting period. There are some intermediary steps that need to be taken or you can’t finish the process. The first is the financial disclosure form. This is a lengthy form that must be completed by each party that attempts to ascertain everything knowable about each party’s finances, and did you notice I said ‘must?’ If one party refuses to complete the form the court can impose sanctions on that party in the form of a dollar amount or by a default judgment in favor of the other party. The second item that must be taken care of if there are children of the marriage is a seminar for parents who are divorcing. This seminar is a onetime class that will discuss the methods of dealing with the divorce within the family and with the children. At the conclusion of the seminar you will be given a certificate of completion that will be filed with the court when your divorce is finalized.

            Then, when all that is done you can do one of several things; first you may want to try mediation. Mediation is a process where the parties come together with an uninterested third person who is certified by the State Bar as a mediator to try to get the parties to come to an agreement and avoid a final hearing. Secondly, if there are no disputed items in regard to property distribution, debt distribution, child support, or parenting time, you may be able to come to an agreement without the aid of a mediator. In either instance, when the 60 waiting period is up, and both parties agree that there are no disputed issues, you may file a waiver of the final hearing along with a written agreement on all issues, and you will be divorced. If there is disagreement about any of those issues however you will have to move the court to hold a final hearing. At that hearing both parties will be sworn in and asked questions regarding the disputed items, the judge may also ask some questions, and in the end the judge will issue a ruling in the form of a final decree that will be the order of the court dissolving the marriage.

            Unfortunately you may not be finished with the court system after that. If there is an order of child support and parenting time, and either party fails to live by the order of the court, at any time in the future until the children are emancipated at age 19, either party can hold the other to abide by the terms of the court order through a contempt motion (called a Rule to Show Cause Motion in Indiana).

            Another reason the parties may find themselves back in court after a final decree is if there is a significant change in circumstances for either party that should result in a modification of the final decree, such as loss of a job resulting in a 20%, or greater, disparity in income, a party’s relocation to a residence greater than 100 miles away, or a remarriage by either party, especially if there are subsequent born children to that new marriage.

            This is intended as a general overview of the divorce process in Indiana. Each case is unique in its facts and circumstances, so chances are if you go through a divorce some of the information provided here will be a bit different for you. This should not be used as legal advice, or as a guide to anyone contemplating divorce as a self represented party

Criminal Record Expungement

In July of 2013 Indiana law changed with regard to expungment of criminal records. In March of 2014 that law was amended. Below is a brief synopsis reflecting those changes, and this amends my earlier blog post on this topic.

When you commit a crime and are caught, prosecuted, convicted, and serve your sentence, your sentence doesn't end there. People convicted of crimes have a much harder time, especially in a down economy, of finding work. And the reason for that is simple, on the application you have to disclose if you have a criminal record. Given the choice, employers are more likely to hire the person who doesn't have a criminal record. Also, if you fail to disclose a criminal record, that is grounds for termination, and you will likely not receive unemployment.

Between fiscal years 2000 and 2010, Indiana's prison population increased by 47%. In 2010 Indiana had the highest growth rate for its prison population out of all 50 states. And the number one predictor of recidivism is employment, or lack thereof.

In July of 2013 the law in Indiana on sealing arrest records and expunging convictions was changed, making it easier for people who made mistakes in the past clear their criminal history from most databases searchable by employers doing background checks. It also allows one to mark their job applications as if there never was a criminal record without the potential for losing that job, for that reason, in the future.

Here's an overview of the new law:

Sealing arrest records (meaning there was no conviction or the charge was vacated).

There is no filing fee. Must wait one year after finalized vacated order is entered (if vacated) or after arrest (if not convicted). The records are sealed from: Department of Corrections files, Court files, Bureau of Motor Vehicles, any agency that provided treatment under a court order, and State Police Department files.

Expungement of misdemeanors (and class D felonies converted to A misdemeanors before July 1, 2014, and Level 6 felonies reduced to misdemeanors after June 30, 2014).

There is a $161.00 filing fee (newly waivable if you qualify for a fee waiver). Must wait 5 years after completion of the sentence, during which time no other conviction is entered. No current charges pending. Have a valid driver's license. The person must have paid all fines, fees, and court costs, including any restitution ordered. 

The records are expunged from' Court files, Department of Corrections files, Bureau of Motor Vehicles, any service agency that provided treatment under court order.

The most common misdemeanors that are expunged are: Battery, Criminal Mischief, Criminal Trespass, Disorderly Conduct, Operating While Intoxicated, Possession of Marijuana, Providing Alcohol or Tobacco to a Minor, Public Indecency, Unlicensed Possession of a Handgun.

Expungement of Felonies (not reduced to A misdemeanors).

There is a $161.00 filing fee (newly waivable if you qualify for fee waiver). The person must wait 8 years after the date of conviction, or three years after the completion of the sentence, whichever is later, during which time no other conviction is entered against the person. No current charges pending. Must have a valid driver's license. Must have paid all fines, court costs, fees, and restitution ordered by the court.

The records are expunged from: Court files, Department of Corrections files, Bureau of Motor Vehicles, any service agency that provided treatment under a court order.

The most common D felonies expunged are: Criminal Confinement, Counterfeiting, Fraud, Money Laundering, Neglect, Possession of a Controlled Substance, Stalking, Theft, Arson, Burglary, Dealing a Controlled Substance, Forgery, and Robbery. 

Expungement for other felonies. 

There is a $161.00 filing fee (newly waivable if you qualify for fee waiver). Must wait 10 years after the date of conviction or 5 years after completion of the sentence, whichever is later, during which time no other conviction is entered against the person. No current charges pending. Must have a valid driver's license. Must have paid all fines, fees, court costs, and restitution ordered by the court.

This is for crimes such as: Elected official convicted of an offense while serving the official's term or as a candidate for public office, and a person convicted of a felony that resulted in serious bodily injury to another person. 

It doesn't apply to: a sex, or violent offender, a person convicted of official misconduct, a person convicted of homicide or sexual trafficking, or other sex crimes.

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A word of warning to the wise. Criminal record expungement is only available once in a person's life. If a criminal record is expunged for an individual and there is a later arrest and conviction, further expungement of that record is not available. Given that, an individual who seeks to have his or her record expunged should consider the action wisely, but take full advantage when eligible. 

People in central Indiana with past criminal records should call us to talk about your options, and how erasing your criminal record can help you.