DEBTOR - CREDITOR LAW

Tom Hoffman

Fall, 1995

1. Elton's career as a rock star was in shambles. Rocketman Records obtained a judgment against Elton in Hennepin County, Minnesota for $83,000.00 on March 21, 1995. Knowing that he was unable to pay the judgment in full, Elton gave $12,000.00 to the "Daniel Charity," on March 8, 1995. Further, on January 13, 1995, Elton sold a valuable piano to Chapin for $20,000.00 and used the proceeds to pay down the mortgage on his homestead. Finally, Elton granted a security interest to Gilligan to encumbered Elton's $60,000.00 touring yacht in exchange for Gilligan's promise not to sue Elton for one year (Elton owes Gilligan $2,800.00). Discuss all possible claims Rocketman Records may have against any party arising out of these facts. (15 Points)

2. Simon owes Garfunkel $20,000.00 for the purchase of a Joe DiMaggio baseball card. However, because of recent financial problems Garfunkel decides to leave Minnesota and start a new life in New York City's Central Park. Garfunkel tells Mrs. Robinson that if she buys all of his worldly possessions for $40,000.00 he will be able to use that money to start his new life in New York City. However, Mrs. Robinson tells Simon of Garfunkel's plans. Simon has recently contacted you to discuss his options to collect the money Garfunkel owes to him. Discuss the alternatives Simon has to collect the obligation (include a brief discussion of any constitutional issues which are involved in prejudgment seizure situations.) (15 points)

3. Bette began her legal career working for a legal resource group for low income people in Minnesota. She decides to give a seminar on garnishments and summary executions. Bette consults with you to discuss whether or not low income individuals were receiving adequate notice of their exemption rights in garnishment and summary execution situations. Briefly describe to Bette the statutory procedures which provide exemption notices to a debtor during a garnishment or summary execution of a debtor's earnings or of a debtor's bank account. (10 points)

4. Bette also wants to know the advantages and disadvantages of using a summary execution procedure over a garnishment procedure in the state of Minnesota. Briefly discuss the advantages and disadvantages of using summary execution with her. (10 points)

5. Ringo decides that lie needs a new set of drums for his Lonely Hearts Club Band. Ringo decides to visit Paul, his local banker, at Winding Road Bank in St. Paul, Minnesota for a $12,000.00 loan to buy a unique set of drums from his friend John. Paul tells Ringo that he would "hold his hand" throughout the process, the loan would be no problem and Ringo should come back the next day to pick up the check. However, Paul's boss George never did like Ringo and therefore told Paul not to give the money to Ringo. Ringo did not receive the loan the next day from Paul. Also, Ringo did not have adequate time to make other arrangements to obtain other financing to buy the drums Consequently, Ringo had to cancel his concert at the Target Center. Discuss the claims Ringo may have against Winding Road Bank. (10 points)

6. Bruce was told by his Boss to call their "repo guy," and pick-up Madonna's car in Eagan, Minnesota because of a default in payments. After some research Bruce learned that Madonna always paid late and she always paid after the first collection letter was sent to her. Although the first collection letter was sent to her this time, Madonna only made a partial payment. Briefly discuss any other information Bruce might want to know before he advises his Boss and ultimately what his recommendation should be to his Boss. (10 points)

7. Whitney, a senior partner in your office, tells you that she heard that the Minnesota exemption statutes are a real problem "because of some constitutional issue." Briefly discuss this issue so you can correctly advise Whitney prior to her meeting with the client. (10 points)

8. Jimi, a recent graduate of a Minnesota law school, accepts a position at the Elvis Law Firm. Jimi agrees to represent Hound Dog Finance Company in the collection of their consumer loans. What general advice would you give to Jimi about his first demand letter to the defaulting customers of Hound Dog Finance Company? (10 points)

9. You represent Hootie, a paralegal who makes $2,000.00 per week. Hootie has had his wages garnished in Grand Rapids, Minnesota. How much should Hootie's employer withhold on an earnings garnishment? Show all relevant calculations. (10 points)