Due Process: Consumer-Soldier Versus Creditor in the Prejudgment Arena

• Author: Captain James C. Gleason
• Pages: 04

1. Introductions

   Soldiers comprise what is perhaps the largest single group of consumers in the United States today. Fundamental to the marale of the soldier is his abilitv to purchase. possers own. and enjov consumer goods. Also fund&ental to the roldier's'morale is the a&dabditv of legal assistance when he is confronted with legal problems involbing his property.

   One situation that significantly threatens the soldier's continued enjoi-ment of his consumer moods is the disputed default. The businesscreditor alleges that the &umer-soldier is in default of his legal obligations. and initiates action designed to culminate in a final judk ment. Xumerous l e d devices-prejudgment altematires-are available far the creditoFto employ in order to protect his interest Tis-%. vis the consumer. lmong these alternatiies that may be used are attachment, self-help repossession. replevin (judicial repossession), liens and garnishment.

   Traditionally, slight consideration has been giren to the impact that the use of these detices has upon the consumer. In reality. pmperty essential to the r-eq survival of a consumer may be taken or made useless for a sienificant length of time before the legal rights of the consumer anb the creditor are finally adjudicated. Further, both the consumer mho is m default of his iegal obligations and the consumer who is norm default may be subjected to the same depnvatmns. Several facts suggest that the impact of application of prejudgment alternatives in a dispute involring a soldier mav be more severe than similar application to a civilian consumer. Typhly. the soldier

   -Tha ~11cle \jar adapted from I thew presented to The Judge Adrocare GenrraYi School. VS Army, Charloaerrdle. Vq>nln, rhile the iurhor v i s a member oi the Trenw-Second Advanced Course. The opmioni and concIu~~oo~ presented herem me rhore oi the avrhor and do not necesiardy ~epreienr rhe ensof The Judge Adrocite GmeraYr Schwl 01 m? orher go\ernmenral aginc)

   '* JAGC. US Arm,, Lmgarian Diiwan. Office oi The Judge Adrocare Gen-eral. BS. 1966, United Stares \i~lmry Acidemi. J.0 19.3. Cniieriiry of \lervland. \limber of the Bars of \farihnd, US Court of \lilirnr) Appedr ind rhe U S Supreme coun.

   IS no more than a translent temparardv residing in a prisdicrion. He has neither famil!- nor business contacts m the area.

   The dierent conflict between the enormous power vested m the business creditor and the potential impact of usme this power upon the consumer has been the caralrst for numerouschdienees to preIudgnient alternati~es in ~~cent~vears.

   The result has been a "due process an akenmm" favorable ro'the CORSULIICI. The purpore of this article is tno-folz: (1, to ascertain the erolring slate of preludgmenr law bv analrzing traditional alternatives in light of the recent due procei; r e i a h n , and (?, to determine the adequacr- of the legal asslstmcc available to the consumer-soldier in a disputed defaulr by analyzing the proeram m thc conte,~of eiolving preludement

   laW

   The importance of prejudpenr alternatives to the creditor and to the consumer can best be undermod b!- a realization of where the) fit into the legal process. Section I1 of this article will be devoted to ths i u b p .

   The simnlficance of [he recent challenges to preiudgmenr law can be graspFd vhen placed side-by-side with a derailed analysis of the traditional Iia-. A separate section, Section 111. wll treat the rradirional preludpitnt de, ices using hvporhet~cal cases in) olimg cow rmner-sold& The iu\tapoimon drecenr challenges and traditional lm n.dl be completed in Section I\-. The hypothetical cases nor onl!- dlustrate facers of the rraditionnl Ian, but also proiide a basis far teitiii~ the adequacy of the militarv legal ass~stance available to the caniukr-soldier in disputed defadrs. The concluding section a.dl e~amine the question of adequacy. Ideally. the traditional Ian.. the rccent challeneei. and the adequacv of ~iiilirary legal assstance \ ~ ~ u l d receive un&d treatment. Hov & er, the complexit!- of limes and the requirement for derail necesiitate reparation of the material into a trilog!- of sccmv

   Prejudgment law 1s basicall!- state law Obimusly. it varies. sometimes iubstantiallv, from lurisdiction to lunsdiction. It is. therefore. useful to ielecr [he Ian of one prindmm as a basis or foundation for analyrli. The author has chosen \lar!-land for this purpose

   11. COLLLCTIOS OF CL.AI\IS I S DEFhCLT CASU There are a myriad of legal alternitires m adable to the business creditor for the &llecrion Gf ha claims in consumer default cases Prior to considering the remedies that are arailable. two threshold querrmx must be addressed. Flrsr. 1s the credir transaction one in

   DUE PROCESS AND THE CONSUMER-SOLDIER

   which the parties created a security interest in the goads>' For in a "secured transaction," the business creditor is the beneficiary of specific remedies in addition to those traditionally available in consumer default cases. Second, what action, inaction or behavior bv the consumer constitutes a defaulr in a particular instance? The'answer to this second question is vitallv important, especially in a "secured rIansactmn." Consumer defaht is a requisite far application of the additional remedies afforded by the Unifom Commercial Code? The Code, however, does not define "default." a It does provide that a security agreement is effective according to its terms between the par tie^.^ At first glance, the absence of definition, coupled with the proviso that the parties may agree to their ann terms, seems to offer desrred flexibility in bargaining. Of coune, it also assumes relatively equal barpaining power in both parties. a questionable assumption in the modern consumer-business creditor marketplace. The predictable outcome ai this arrangement 1s that business creditors have great latitude in defining default in their form security agreements. Consequently, only in an extremely rare transaction will "nonpayment" of the debt be the single evenr constituting consumer default! BraadIy stated, the legal alternatives available to the business creditor are negotiation, proceeding to judgment, and self-help repossession.

   1. SEGOTlATlOS

      In an). transaction, secured or unsecured, the business creditor may attempr negotiation as an initial effon to realize a debt owed to him.B For a variety of reasons-expense, rime, community relations-it would be unrealistic to conclude that a buslness creditor will invariably resort to litigation to effect debt repayment. In numerous cases, negotiation with the individual consumers will prove to be successful. The business creditor may alter the payment schedule in return for a commitment by the consumer to voluntarily make the new payments. Thus, it may be advantageous to negotiate uirh a consumer who is financially overextended. If the negotiation involves

      a secured transmion. a sectlemenr can b? achieved bv nlodhng thi

      basic sccurir!- agreemenr to conform u-irh the n& rems.'

      8. PROCEEDI.\-G TO JCDG I1E.L-T!Then negotiation fails or is rejected 6s a \-iable alternmie. the business credmr nust consider wherher or nut to proceed co ludpmen1 on his clam i parr? inidred in an unsecured transaction Ihds

      Imle choice in the matter. His right to collect on his claim must he established by reducmg the claim to a judgment or decree The business creditor in an unsecured tiansacnon. unlike his counterpart in a secured rransdction. 1s unable to resort tu self-help repassercion Forced to resort to iitiganun. the lau prorider him wrh a substantial arsenal of prejudgment alternariics intended to protect his claime There dremarii.e; are presumably an outgrowth of the recognition that litigation IS time consuniiw and that propertr niav be dissipated ~n the interim berueen defadand judgment ' of these p e - iudpent alternatnes haie been. or currently are, under judicial at-rack.'"

      In most cases. a secured business creditor \rill not reson to Imgatmn II hen negormon ids The L-nifomi Crirnniercial Code author-mi him IO proceed to judgment. and there are cases vhere 11 a d d clearli be to lhis advanrage to do s i L

      For c\ample. a buiinw creditor a h o foresees d future need to reach rhe assets of a cons~mer. in

      addition to rhe collateral. do so only if he obraini 2 iudgment on his claim. IVhen the collateral lias bcen destroyed. or when It has rubstmiall! declined in value. the bumeii creditor \I ould find it necessary to reach the consumer's assets Another reaiun for a bosiness creditor to proceed against [he collateral is to aroid Iirigating additional questions related to the collateral B! seeking a ludpenr on his claim. rhe creditor must mlv wnie thc exisrence of rhe debr

      DUE PROCESS AYD THE CONSUMER.SOLDIER

   3. SELF-HELP REPOSSESSlOh'

      The most widely used practice arailable to the secured business creditor 1s taking possession of the callareral after a contractual default." The sole precondition that must be satisfied befare the busi-ness creditor avails himself of this remedy is contractual default by the consumer. This precondition 1s often easily shown since the default clauses in the securitv agreement are usuallv sufficiently broad to encompass a wide rang; of action. inaction 0; other behavior by the consumer.1J Upon determining that contractual default has occurred, the secured business creditor is authorized by the Uniform Commercial Code to invoke the nonpdicial remedy referred to as "self-help" repoisession of the collateral. Cnder th'is remedy, he is not req'iired to notify the consumer. He is, however, required to exercise some vigilance when actually retaking possession of the property since he must avoid committing a "breach of the peace.""

      Once...