I wanted to see if anyone had ideas or arguments of how current legislation may be violating the contracts clause of the constitution.

The clause in the constitution reads: "No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

There have been rulings and clarification that reframe the law under this test:
(from wiki)
"To determine whether state legislation is valid under the Contracts Clause, the following three part test applies:

(i) Does the state legislation substantially impair a party's rights under an existing contract? If it does not, the state legislation is not invalidated by the Contracts Clause. If it does, such impairment will be valid only if it:

(ii) Serves an important and legitimate public interest; and

(iii) Is a reasonable and narrowly tailored means of promoting that public interest."

I personally have been wondering for some time if this part of the constitution will enforce some necessary protection from legislation prohibiting collection attempts against contracts that no longer have judicial remedy available to them. If the out of stat legislation meets this litmus test, does the legislation still fall subject to the takings clause? Can anyone think of other actions by state or federal goverment that may be infringing upon the constitutional rights of creditors? All opinions wanted.

Edited: 10/15/2009 at 02:21 PM by naajdb

Listen naajdb, I know you know that your contract is full of holes and you will get burned again if you do not fix it, you are fully capable of winning the argument from both side but you need to study up on pre and after judicial ruling & remedies and states right for seizure laws .....

OK? I don't fully understand. Please explain a little more.

I'm also wondering if similar arguments can be made for excluding debt buyers from the FDCPA. Debt buyers were non existent in '78 when the legislation passed so the industry should enjoy the same protection as the original creditors. The dimunition of those contractal rights could be construed as an illegal taking.

Any test to void laws under the contracts clause will necessarily fall to an argument under exception ii above (public interest)

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Visit the Credit Terrorist Training Camp - http://www.debtorboards.com

A telephone in the hands of a collector is like a crowbar - it can be used to pry a mouth open wide enough to insert a foot.

Just because a law pre-dates an industry does not make that industry exempt from the effects of that law.

Maritime law pre-dates aviation by centuries, but aviation law is in most ways identical to maritime law.

If you raise the argument that FDCPA pre-dates the debt buying industry you are raising a very weak argument which will be met with "then when you organized that industry you should have known you would be subject to FDCPA, and since the law pre-dates the industry there cannot have been any "taking".

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Visit the Credit Terrorist Training Camp - http://www.debtorboards.com

A telephone in the hands of a collector is like a crowbar - it can be used to pry a mouth open wide enough to insert a foot.

My opinion = if you didn't want to enforce the contract within the first 4-6 years following the breach, then why in the hell would you want to go through the trouble to study the US Constitution to try to figure out a way to enforce the contract now?

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I'm all for consumer's rights, but you simply can't fix stupid. - Some Guy (5/4/09)

Actually, every one of my posts on this board have been uncalled for. - Spy Boy (8/2/07)

Edited: 10/17/2009 at 03:47 AM by TX Debt Atty

1.5 billion credit cards contracts to manage. A greater amount of contracts exists in telecom, checking and pdl. The legal system would not be equipped to handle enforcement of these contracts if each of the 1.5 million attorneys in the country represented nothing but creditors and the courts only heard contract claims from sun up to sun down.

And we wouldn't want to overburden our court system, would we? If not then the answer is simple - DON'T FILE SUIT IN THE FIRST PLACE. Or are you just looking for a way to get those judgments without overburdening the Courts (and allowing those pesky defendants their due process rights....)

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Visit the Credit Terrorist Training Camp - http://www.debtorboards.com

A telephone in the hands of a collector is like a crowbar - it can be used to pry a mouth open wide enough to insert a foot.

Not at all. The example was meant to encourage an honest evaluation of the facts.

Smarter men than I have felt that an expired sol does not invalidate a debt.

"In Quantock v. England, 4 Burr. 2628 (1770), which was an action by
the assignees of a bankrupt, Lord Mansfield said:
"It is settled 'that the statute of limitations does not destroy the debt'; it
only takes away the remedy. The debtor may either take advantage of the
statute of limitations, if the debt be older than the time limited for bringing
the action; or he may waive this advantage, and, in honesty, he ought not to
defend himself by such a plea. And the slightest word of acknowledgment will
take it out of the statute. Here the debtor himself has not objected; he has
submitted to the commission, and been examined under it. Therefore the
objection does not now lie in the mouth of a third person."
The other three judges concurred with the Chief justice. Such
has been the law in England ever since.
In Campbell v. Holt, 115 U. S. 620, 6 Sup. Ct. 209, 29 L. Ed. 483
(1885), the Supreme Court held that the statute of limitations does not,
after the prescribed period, destroy or discharge the debt. The debt
and the obligation to pay it remains, The debtor is simply permitted,
if he elects to do so, to plead the statute as a bar. The Legislature
could repeal the statute after the period had run and the bar had been
created, and then the creditor might sue and recover on his cause of
action, and the constitutional rights of the debtor would not be violated
by the legislation. The court, in its opinion written by Mr. Justice
Miller, said:
"We certainly do not understand that a right to defeat a just debt by the
statute of limitations is a vested right, so as to be beyond legislative power
in a proper case. * * . We can understand a right to enforce the pay-
ment of a lawful debt. The Constitution says that no state shall pass any law
impairing this obligation. But we do not understand the right to satisfy that
obligation by a protracted failure to pay. We can see no right which the
promisor has in the law which permits him to plead lapse of time, instead
of payment, which shall prevent the Legislature from repealing that law, be-
cause its effect is to make him fultlll his honest obligation."
The court pointed out that a distinction in this respect exists be-
tween statutes of limitation which bar an action to recover real or
personal property and those which bar the recovery of a debt. And in
Hulbert v. Clark, 128 N. Y. 295, 28 N. E. 638, 14 L. R. A. 59 (1891)
the New York Court of Appeals, through judge Earl, asserts, although
in a dictum, a like doctrine. A somewhat analogous question to that
arising in the instant case arose in New York before the Supreme
Court, General Term, Second Department, in Lawrence v. Harrington,
.48 Hun, 618, 1 N. Y. Supp. 577 (1888). In that case, after a debtor
had obtained his discharge in bankruptcy, he made a payment on cer-
tain promissory notes included in his discharge, and it was held that
both as against the bankrupt's discharge and the statute of limitations
, the old debt was restored, and a judgment obtained thereon was af-
flrmed.
[2] There can be no question, we think, but that the payment which
the bankrupt made was intended to apply upon the debt. The District
judge, differing therein from the referee, thought that as there was no
other debt between the parties, and as the bankrupt asked to have the
note applied to his credit, there could be no possible question that he
intended to make a part payment. That is the proper inference to be
drawn under the circumstances."

As long as telephone calls and letters are permitted on debts that are still within the statute of limitations, I can see no public interest being served in limiting these actions on debts that have no legal remedy left. To the contrary, phone calls and letters are the only remedy that the creditor has left on debts beyond sol. To remove these remedies harms a creditor and provides no relief to the public.

Somewhat of a moot point. If debt buyers are considered to be within the broad understanding of the definition of a debt collector in the FDCPA, the taking still didn't appear to exist at the time the FDCPA was passed. The act only set forth reasonable expectations that should not have diminished the value of a portfolio. The taking exists when the FDCPA is turned upon itself to be interpreted as stating that any action taken to recover a debt beyond the sol misrepresents the character, amount, or legal status of the debt. This section would render contracts beyond sol worthless and the question becomes can a taking occur if the creditor has no legal remedies against the portfolio left available?

If no taking can be found in that example, what about a situation where one debt buyer purchases a state specific out of stat portfolio from another debt buyer only to have legislation passed in that state that bans attempts to collect on the oos accounts? This would render the portfolio worthless. Would this void the sale for lack of consideration or constitute a taking?

So you think that after adding this year's worth of delinquencies, there will be less bad debt to litigate and that the creditors and courts will be in a better position to litigate all of the oustanding potential cases? I don't think so.

To adapt one of my granny's sayings, "[sue] or get off the pot!"

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I'm all for consumer's rights, but you simply can't fix stupid. - Some Guy (5/4/09)

Actually, every one of my posts on this board have been uncalled for. - Spy Boy (8/2/07)

Just a wild guess, but the FDCPA probably wasn't in effect at time those cases were heard.

Keep in mind, it does not violate state law in most jurisdictions to file suit on a time-barred debt. The limitations period is no more than an affirmative defense that must be raised or it is waived.

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...the FDCPA enlists the efforts of sophisticated consumers....as "private attorneys general" to aid their less sophisticated conterparts, who are unlikely themselves to bring suit under the Act, but who are assumed by the Act to benefit from the deterrent effect of civil actions brought by others.

Although some of the case law cited by the OP originate from the late 19th century, bear in mind that the US Constitution and the Bill of Rights were written and passed into law from 1787 to 1791. Can you cite case law that supersedes or invalidates the above referenced cases?

On another note:



Not so in states like Wisconsin and Mississippi where it is a violation to make an attempt to collect an out of statute debt, even if only placing calls and mailing letters:

"When the period within which an action may be commenced on a Wisconsin cause of action has expired, the right is extinguished along with the remedy." Wis. Stat. 8893.05.

"The completion of the period of limitation prescribed to bar any action shall defeat and extinguish the right as well as the remedy." Miss. Code Ann. 8 15-1 -3

If I am understanding NAAJDB's remarks correctly, both Wisconsin and Mississippi have violated the US Constitution in passing those laws. Let's excerpt from Article I, Section 10 , Clause 1 of the Constitution:

"No State shall .... pass any ...Law impairing the Obligation of Contracts.."

All dismissive commentary and sarcasm aside, it appears to me that the OP is making a very good point that is worthy of serious discussion and further investigation. I think the implications involved here are very broad and far-reaching.

E., you are very good at seeing both sides of an issue, even though you are a consumer advocate. Can you provide case law that either invalidates/supports the OP's points?

.

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"I know this might sound weird but I came to this web site because Derek is stalking my family" - 05/21/2008 by Jane (mentally deranged sister of convicted con-man James Tibor).

Those would seem to fit handily outside of "most jurisdictions".

Sue away :-)

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...the FDCPA enlists the efforts of sophisticated consumers....as "private attorneys general" to aid their less sophisticated conterparts, who are unlikely themselves to bring suit under the Act, but who are assumed by the Act to benefit from the deterrent effect of civil actions brought by others.

Some focus might go towards grandfathering existing loads rather than having them retroactively affected, especially given the quickening of the impetus for collections reform (FTC rountables, new fed agency).

Strained interpretations seem to suit you.

Let's look at a contract example:

Today, 11/04/09, Normie agrees to loan Derek 1K in exchange for his promise to repay said 1K on 12/1/09.

Quote any statute in WI or MS (or any state for that matter) that impairs any obligation of this contract. Certainly a 3 year statute of limitations for my filing suit to recover for your breach to repay the promissory note on 12/1 is not an impairment to any obligation of the contract.

You simply failed in performing your obligation; the law in no way impaired you from doing so. The SOL, for good reason, only sets a limit on the time allowed for my use of judicial remedy for recovery of your obligation subsequent to your breach.

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...the FDCPA enlists the efforts of sophisticated consumers....as "private attorneys general" to aid their less sophisticated conterparts, who are unlikely themselves to bring suit under the Act, but who are assumed by the Act to benefit from the deterrent effect of civil actions brought by others.


Edited: 11/04/2009 at 06:29 PM by E. Normis Debtor