Legal Issues For Debt Elimination

All loans, claims and liabilities are negotiable. Even after suit is filed, or after judgment, the uncertainty of collection creates opportunities for negotiating, compromising, discounting and settling claims. Additionally legal issues for debt elimination also create uncertainty and inherent risk in enforcement. These risks and the time value of money work in favor of debtors, because all logical creditors realize cash today is worth more than a promise of future performance. Many legal issues for debt elimination are created by federal statures, such as the Equal Credit Opportunity Act, Truth In Lending Act disclosure requirements, and the Fair Credit Collection Practices Act. State usury laws are also quite complex, and many common lender practices for assessing late charges test a razor's edge for legal compliance.

Settlement legal issues for debt elimination

Settlements are the result of both parties compromising expectations. Most often, a bare legal right must be discounted by the cost of enforcement. Attorney fees, costs and expenses quickly rise to stunning heights if pressed to jury determination. In practice, potential legal issues for debt elimination are virtually unlimited, so that a large debt may remain in litigation for years and accrue only the judicial rate of interest, which in effect, is similar to a 6% loan, plus attorney fees. Large businesses use litigation as a source of capital and loans for this reason, when legal issues for debt elimination justify attorney cost. As a result, future settlements of valid claims in litigation are often far less than actual liability, because of the risk and cost required for collection.

Bankruptcy legal issues for debt elimination

After October 17, 2005, new bankruptcy laws and reform requirements (the Bankruptcy Abuse Prevention and Consumer Protection Act) creates many highly controversial new requirements for debtors in bankruptcy. These new laws are currently under attack for a wide assortment of constitutional violations. Legal issues for debt elimination under the new Bankruptcy Code amendments are causing widespread concern among liberals and conservatives alike, debtors and creditors, and constitutional scholars of every stripe. Anyone considering the settlement of claims for discounted value should be aware that potential involvement in bankruptcy litigation today strikes fear in the hearts of most creditors. Why? Many consumer protection groups are actively seeking test cases to press upon the U.S. Supreme Court, State Supreme Courts, and intermediate courts of appeal, to raise constitutional violations and force judicial determination of what many consider to be unauthorized legislative actions.