Creditors' Rights
& Collections

What are Creditors' Rights and Collections?

Creditors’ rights and collections are broad terms that refer to the representation of financial institutions, businesses, and individuals who are owed money by companies or people that either cannot or will not pay the money they owe.  This type of practice touches multiple areas such as foreclosures and post-foreclosure deficiency lawsuits, bankruptcy, repossessions, special assets, distressed loan workouts such as forbearances, and collection measures including post-judgment discovery, judgment liens, wage garnishments, and levies on accounts.  

Matters Steve's Firm Handles

  • Commercial and Residential Foreclosures
  • Post-Foreclosure Deficiency Actions
  • Distressed loan workouts and restructurings, including forebearances, modifications, and extensions
  • Collection and enforcement of unsecured and secured loans, including repossessions of vehicles and equipment when they are secured by either Certificates of Title or UCC perfected security interests
  • Collection of commercial contract based payments and debts
  • Post-judgment collection efforts, including garnishments, bank account levies, judgment recordation, and subpoenas duces tecum and depositions in aid of execution
  • Drafting and filing of motions with courts to extend existing judgments and recording Orders extending existing judgments for additional ten-year period in appropriate Register of Deeds’ offices if existing judgments previously recorded

Protection of Post-Foreclosure Deficiency Judgments

A commercial foreclosure that Steve handled as a Substitute Trustee in 2010 made it all the way to the Tennessee Supreme Court in May of 2020.  Once the foreclosure was complete, he filed a lawsuit against the borrowers for the differences between what the collateral properties sold for at foreclosure and the balances owed on the loans, which are known as deficiencies.  Tennessee law generally requires a secured creditor to file a post-foreclosure deficiency lawsuit within two (2) years of the foreclosure sale date.  There are some statutory exceptions that may toll this two year period.  Steve successfully obtained judgments for the full deficiencies against the borrowers and recorded the judgments in the Register of Deeds’ office for two different counties in 2013 because judgments remain valid ten (10) years under Tennessee law.  The buyers of the property affected by the deed omission, their bank, and the trustee of the deed of trust (collectively the “Petitioners”), sued Steve’s client and another bank on the ground that the quitclaim deed from which the borrower wife was omitted should be reformed.  After a one day bench trial, the trial court agreed with the position of Steve’s client that reformation was not an appropriate remedy because there was no mutual mistake of the parties to the quitclaim deed from which the borrower wife was omitted.  What followed, as discussed below, were appeals by Petitioners to both the Tennessee Court of Appeals and the Tennessee Supreme Court.

On appeal, Petitioners argued that the trial court erred by ruling that the quitclaim deed could not be reformed to add the borrower wife as a party due to mutual mistake.  Steve presented in-person oral argument on his client’s behalf that reformation is only appropriate where the parties to the instrument made a mutual mistake, so borrower wife could not be added as a party after the fact.   In a unanimous opinion, the Court of Appeals upheld the trial court’s judgment in favor of Steve’s client. 

By May of 2020, the COVID-19 pandemic was in Tennessee, which led the Tennessee Supreme Court to enter a series of orders that affected how courts operated.  One substantive change was moving oral arguments in appellate cases from in-person to online using Zoom video conference technology, which so many of us have become familiar with over the past couple of years.  Steve was privileged to present oral argument on his client’s behalf on the first day that oral arguments were heard online by the Tennessee Supreme Court in its long history, which you may watch below in the video.  In a unanimous opinion, the Tennessee Supreme Court upheld the judgments of both the trial court and the Court of Appeals when it ruled that reformation would work to the detriment of Steve’s client by effectively extinguishing the recorded judgments when the Petitioners had constructive notice of borrower wife’s interest in the property.      

Zoom Oral Argument in Tennessee Supreme Court

Other Representative Cases

Hilton v. First Tennessee Bank National Association, 2:04-CV-184 (U.S. Dist. Ct. E.D. Tenn. 2004) – During Practice with Previous Law Firm

Obtained dismissal with prejudice of lawsuit via Motion for Summary Judgment on borrower’s allegations that bank violated permanent bankruptcy stay, Fair Debt Collection Practices Act (“FDCPA”), Fair Credit Reporting Act (“FCRA”), and Tennessee Consumer Protection Act (“TCPA”) when it contacted her for the sole purpose of repossessing collateral.

In re Payne, et ux. v. First Community Bank, et al., 523 B.R. 560 (U.S. Bank. Ct. E.D. Tenn. 2014) – During Practice with Previous Law Firm