Shaunc

Does corporate collection still require validation?

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I closed down a corporation(did not renew with the state of Florida) back in 2003. I now have a CA attorney contacting me and saying that I am not covered by the corporate protection law and I am liable personally.

I have asked them to DV the debt, but they are telling me because it was originally a ciommercial debt they dont have to DV.

I dont believe there is any money due to them and with out a DV, how would I know?

Any help would be awesome.

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The purpose of the obligation at origin determines applicability of the FDCPA. If it was a business debt, it cannot be converted to a personal obligation for purposes of the FDCPA. The FDCPA only covers debts that were for personal, household purposes. So even though they might be coming after you personally, their collection efforts would not be governed by the FDCPA.

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thanks for the info. There is always such a wealth of knowledge on this board. Is there a law that does govern this type of collection?

What about the Statue of limitations in this case?

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Don't assume that the CA has recourse against you just because he says that he does! I'd ask a lawyer on that one. If someone comes after me on some debt from one of my old corporations, I would think at least twice before paying the bill personally.

Remeber - CA's lie....Always.

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What about the Statue of limitations in this case?

Florida statutes make no distinction between a corporate or individual agreement. Therefore, the same SOL applies.

My guess is somewhere along the line you made a personal guarantee for the debt, making you personally liable without their need to pierce the corporate veil.

If not, you would have defenses to their claim for a purely corporate obligation.

Divemedic would know more about any protection Florida's state consumer protection statutes might afford.

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There is one case out there where a couple sold the assets of a business and retained the empty corporate shell, and a creditor became so harassing that the court said the creditor's behavior converted the business debt into consumer debt covered under the FDCPA. This would be the exception that proves the rule.

As for shutting down a corporation, the proper way is not to simply allow the Secretary of State to dissolve it. The proper way is to net out its assets and liabilities before dissolution such that creditors are taken care of before there is any distribution to shareholders. If there's not enough to go around for creditors, either they voluntarily accept less, creating a "composition of creditors", or state law is used to create an assignment for the benefit of creditors under chapter 727 (state law bankruptcy), or the federal bankruptcy laws are invoked. Then, assuming none of the shareholders wants to continue, a plan of dissolution is adopted and articles of dissolution are filed with the state.

http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=Ch0727/ch0727.htm

Otherwise, the shareholders of the corporation remain personally liable for anything they receive from the corporation as it liquidates. If they received nothing and there is no personal guarantee, however, the creditor has no claim against them simply by virtue of their having invested in the company.

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There is one case out there where a couple sold the assets of a business and retained the empty corporate shell, and a creditor became so harassing that the court said the creditor's behavior converted the business debt into consumer debt covered under the FDCPA. .

flacorps, do you have the case cite? I'm aware of 2 anomolous rulings on the issue, but both involved sole proprietorships rather than a corporation.

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flacorps, do you have the case cite? I'm aware of 2 anomolous rulings on the issue, but both involved sole proprietorships rather than a corporation.

I've got the whole case somewhere but I'm drawing a blank at the moment. Do either of the cases you have involve a feed store or have a definitely rural setting/aspect to them?

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I haven't found the case online or in my archives, but a correspondent mentioned it to me once and I did find what he said (I'm pretty sure I've read the actual case and it's not chimerical, I just haven't found it yet):

I read a case out of some backwater hick town mid-america where man/wife had a feed store. Huge mounting debt, they sell it but keep the debt and never pay it off.

A commercial CA calls the feed store, new owner says to call old owner. The only info the CA had was a home number. CA calls former owner, repeatedly.

Former ower sues CA for non-license, harassment, and several other FDCPA violations.

The up shot is, since the CA called the former owners house it became a consumer issue.

Ring any bells?

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I have to admit, without seeing that ruling I don't agree with it. Seems to fly in the face of the plain language in the definitions section.

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Wow...as usual when it comes to all things legal, simple isn't in the mix.

It looks to me like the jist of this was the OC (or CA) was trying to have the case dismissed because they said the FDCPA didn't apply. The judge said yes it did once they started calling the people at home. (This is further confused by the fact that the debt may have been in the business' name, but the software involved was actually purchased for personal use.)

So...do we know how this turned out?

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So...do we know how this turned out?

The parties settled; it would never have held on appeal.

I think the Appeals court holding in Slenk best summarizes Moore:

Slenk asserts that even if the Credit Union Loan was origi-

nally commercial in nature, Transworld transformed the loan

into a consumer debt by contacting him at home. Slenk is mis-

taken. Slenk bases his argument on the case of Moore v. Prin-

cipal Credit Corp., 1998 WL 378387, at *2 (N.D. Miss.

1998), in which the court held, "f the plaintiffs were not

`consumers' at the time of the purchase, then certainly they

became `consumers' for purposes of the Act once the tele-

phone calls to their home began."

The logic in Moore is anti-thetical to the tenets of the FDCPA. As one court noted in

rejecting the holding in Moore, "if a communication to the

debtor's home converted any commercial debt into an obliga-

tion under the FDCPA, it would be tantamount to an amend-

ment of the clear intent of Congress." Holman v. West Valley

Collection Services, Inc., 60 F. Supp. 2d 935, 936-37 (D.

Minn. 1999). We, too, refuse to ignore Congress's intent by

defining a consumer debt in accordance with the actions of

the debt collector, rather than the true nature of the debt. See

15 U.S.C. S1692a(5). Accordingly, we decline Slenk's invita-

tion to adopt the questionable precedent established in Moore.

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As much as I may not like it, I agree with the appeals court holding. You can't just write things into the statute like that. That's the role of the legislature.

I'd be all for an amendment that added personal guarantees on small business (I'm sure the IRS has some good definition that can be used) debts to the definition of debt in the FDCPA.

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So...my gibberish to english translator says..

Slenk was WRONG when he said that a commerical debt became covered by the FDCPA when the CA called his house. And, even though Slenk based his agruments on Moore...Moore was also WRONG when he asserted the same thing. All because you can't convert a business debt to a consumer debt because of the action of the CA...because that is NOT what congress intended.

Right?

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Mississippi is a plaintiff's lawyer's dream state (meaning the lawyer who takes the little guy's case on contingency). Probably second only to the Virgin Islands and only a little behind Florida if you're talking Miami.

Courts there will bend and twist laws in ways other courts will not so that the little guy gets a break. Not so much because they care about the little guy but because they have a powerful network of plaintiffs' lawyers, so who knows what's going on ... from not wanting to be on the outs with the big guys at the country club on up to actual bribery.

Shepards' citator is going to show this case as "questioned" ... but the court wasn't reviewing a judgment in favor of the debtor, they were ruling on whether the debtor's claim could withstand a motion to dismiss, which is a different standard. Probably the debtor could not prove that the debt was "consumer debt" ... and the court simply spoke loosely in suggesting that the "conversion" had taken place ... the court likely meant that such a thing could be proven, since the latter is all that the court could actually hold.

If a court actually ruled that the conversion had taken place, would it stand up on appeal? It would depend on whether you had an "activist" judge or a "conservative" judge. The conservative judge would slap the ruling down, but an activist judge might say (just as the Moore court said) that the intent of the statute is to protect families and that once harassment begins at home the statute kicks in.

Just because something is questioned doesn't mean it won't ultimately triumph (even if it's "wrong"). And we shouldn't be afraid to take advantage of something like that (or at least assert it), even if it tramples some cherished legal principle (for every cherished legal principle, there's a cherished counter-principle--that's what legal deconstructionists are talking about when their scholarship looks to find out what's actually going on in the courts). Which is why traditional legal scholars hate the deconstructionists.

http://en.wikipedia.org/wiki/Critical_legal_studies

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So, once again calling upon my gibberish to english translator, the gist of this converstaion is...

In general, any debt incurred in connection with a "business" is probably NOT covered by the FDCPA, even those for which we are hassled at home and which appear on our personal credit reports as the result of our personal gurantee. However, having said that, we should still invoke the protections afforded us by the FDCPA when contacted by a CA or JDB because its still up to the courts to decide and the courts don't have a clue either.

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Thanks to everyone who posted on this thread.

I have DV the CA as this so called debt is 4 yrs old and I don’t know if it is a legitimate debt.

The claim is from a trash collector who claims he was not paid for removing trash on a job, I fired a contractor on that job and any trash removal was the fired contractor’s responsibility. He may have fraudulently signed or contracted on the corporation’s behalf.

The CA will not give me more than a print out showing the amount owed. The CA says they don’t have to provide any more than that as the are not governed by the FDCPA as it is a commercial debt.

What now?

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