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Court of Appeals Protects Recurrent Retirement Plan Contributions from Post-Judgment Attachment

A recent, very debtor-friendly decision of the South Carolina Court of Appeals essentially put most routine retirement account contributions beyond the reach of creditors seeking to satisfy past judgments. The court made clear its strong stance toward protecting individuals’ retirement accounts and, for one of the first times, explicitly said that funds deposited into retirement accounts generally can’t be undone as fraudulent transfers.

The debtor in the case, First Citizens Bank v. Blue Ox, signed a confession of judgment after his LLC had defaulted on loan payments owed to its bank. After failing to pay the judgment, the debtor contributed money to his retirement accounts as well as a 529 college savings account. The bank contended that it could attach these post-judgment contributions because they were fraudulent transfers and therefore not subject to protections otherwise provided to retirement accounts under Sections 5-41-30(A)(13) and (14) of the South Carolina Homestead Exemption Act. Rejecting the bank’s claims (and reversing the lower court), the Court of Appeals ruled that Statute of Elizabeth, which generally prohibits fraudulent conveyances, did not apply because the movement of money did not transfer ownership from the debtor but rather converted the funds into protected assets that still belonged to him.

The Court of Appeals further noted that while there were several “badges of fraud” present, on balance there was no fraudulent intent because the “contributions were limited in amount, were not secretive in nature, and most tellingly, were in line with [the debtor’s] long-standing pattern of investing in his retirement – conduct that is encouraged by the very existence of [protections typically afforded to IRAs and 401(k) accounts under the Homestead Exemption Act].”

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Lessons from Equifax: Preventing and Responding to Cyberattacks on Your Business

The recent cyberattack on the credit reporting agency, Equifax, is being called one of the worst data breaches ever. The incident potentially compromised the personal information of 145 million Americans, including nearly half of South Carolina residents.

An industry report counts more than 1,000 data breaches last year at U.S. businesses and governmental agencies, a 40% increase over 2015. On average, a breach will cost a business $7 million, according to research.

A data breach is both a technical and legal problem. With so much at stake, what can businesses do to prepare for inevitable cyberattacks, limit their potential liability and protect their customers’ sensitive data?

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Businesses Collecting Purchased Debt Get Relief In Supreme Court Ruling

A June 12, 2017, U.S. Supreme Court ruling means businesses have less to worry about from regulations designed to protect consumers from abusive and deceptive practices when attempting to collect their own debts.

The Fair Debt Collection Practices Act (FDCPA) authorizes private lawsuits and weighty fines to deter the wayward practices of debt collectors. In the high court’s view, “debt collector” refers to a third-party servicer collecting debts on behalf of a creditor. A bank or other provider that originates a loan and tries to collect the debt itself is not a debt collector and therefore is not bound by the FDCPA.

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If Your Business Loan is in Trouble, You Can Prevent a Bad Situation from Getting Worse

A business owner with visions of growth doesn’t borrow money thinking he or she won’t be able to pay it back. Sometimes, though, dreams don’t go according to plan.

When loan payments are late or missed or stop altogether, a loan will go into default, meaning the borrower hasn’t met his or her obligations when it comes to the agreement to repay. As difficult as that may be for a business to face, the situation won’t just go away by ignoring it.

Most business loans involve real estate, but they may also be secured with equipment or inventory as collateral. Defaulting on a loan places those assets at risk of foreclosure or liquidation.

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Loan Servicers Must Continue to Follow Both Federal and State Rules in Foreclosures

Banks have now had two years of experience with the Dodd-Frank Act and the Consumer Financial Protection Bureau (CFPB), the agency that implements the parts of the law that apply to mortgage servicers.

The foreclosure crisis and accompanying recession are in the rearview mirror, but the stringent consumer protection rules attached to the law continue to set tight boundaries for how banks handle loss mitigation. Dodd-Frank was a response to a period when many mortgage servicers were unresponsive to consumers as a result of being overwhelmed by the volume of defaults. As a result, the law severely tightened protections for borrowers, requiring mortgage loan servicers to follow strict procedures and documentation in loss mitigation.

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Financial Institutions & Consumer Protection Laws: How to Hit a Moving Target

Since the federal Consumer Financial Protection Bureau opened its doors in 2011, banks, credit card companies, mortgage companies and other financial institutions realize that every business decision may be scrutinized.

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The Check’s in the Mail:  Unsecured Creditors’ Legal Options

Some creditors have it better than others. No one knows this more than an unsecured creditor who is dealing with a borrower in default. Unlike a secured creditor, who can repossess the collateral that was pledged in exchange for a loan, an unsecured creditor has limited options. The unsecured creditor can either attempt to negotiate a settlement with the debtor, or it can go through the courts to obtain a money judgment against the debtor.

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