Enforcement problems of German creditors and banks against US citizens

Gerd A. Zimmermann, Zimmermann Nielsen & Colleagues, Arizona – California – Germany (www.usgermanlawyers.com) Sebastian Schechinger, Law Firm Dr. Johannes Fiala, Munich (www.fiala.de)
I. Thematic introduction
The difficulties encountered by German credit institutions in the USA in enforcing legally valid titles have not changed in the last ten years. Due to a lack of knowledge of American laws and customs, German creditors lose millions every year. These losses could easily be reduced by imposing some additional conditions on lending to clients with current or potential US relationships. The aim here is to present simple and clear prerequisites that allow enforcement proceedings to be carried out successfully in the USA.
II. enforcement at a glance
Of particular practical importance is enforcement against the debtor’s claims; enforcement against property can be very costly and often offers poor prospects of success. Accordingly, the income from work or social benefits received by the debtor is often the subject of enforcement. An enforcement order can result not only from a judgment, but also, for example, from settlements, enforcement orders or an enforceable deed. In this way, the bank saves itself a possibly lengthy and cost-intensive court procedure with an uncertain outcome. If a title exists, it must still be provided with a judicial enforcement clause. After service of this enforceable copy on the debtor, enforcement may commence. In the case of debt enforcement, this is effected by means of an attachment and transfer order.
III. foreclosure problems of German banks
1. no credit card, loan or mortgage will be issued in the USA without a credit check based on credit reports. Credit reports not only list current and past payments of the debtor, but also summarize creditworthiness in an easy-to-understand number: the “credit score.” The credit score not only determines whether you get a loan at all (no mortgage under 620), but also the terms, especially the interest rate, of the loan. So a borrower with credit score 620 pays more for his mortgage than a borrower with credit score 750. The granting of credit on the basis of statistical creditworthiness checks is less interesting in this context than the data that can be found in a credit report. From previous employers, all known home addresses, to current installment contracts, everything is listed that can be remotely associated with credit checks. In order to be able to view the credit report, the customer’s written permission is required, which is typically worded as follows:
The undersigned first name, Name, SS: xxx. xx. xxxx at (current address) and his/her last place of living in the US at (complete address) permits XY Bank from time to time to access the credit report .The XY Bank may uses third parties to provide this service.
Date: signature : Print Name :
It seems reasonable to leave this statement in the original English text, since American credit bureaus, agencies, and courts do not have qualified personnel who can review the legality or appropriateness of translations.
The cost of a combined report from the three major agencies is less than US $70.00.
The importance of the credit report cannot be overstated. The Credit Report makes it extremely easy to locate a debtor and to enforce execution against his assets, if any. To request this report, the financing institution can contact the following US companies directly (via the Internet): http://creditreport.com/index.asp?src=google&kwd=credit+report+e&gclid=CKWizpjmhYgCFQNBGAodzl3FGQ (credit report.com) https://qspace.iplace.com/cobrands/850/home12.asp?sc=6588Gex1 (Experian) http://www.truecredit.com/entry/freeTrialEntry.jsp?bn=24&kw=1030&cb=offer5&loc=1609&gclid=CPXA6vjmhYgCFRpcYQodKjUKGQ (transunion – true credit)
In the larger commercial area, a report should be obtained from Dun & Bradstreet, which costs between $120.00 and $500.00 depending on the scope.
To give you a better idea, here is an example of an excerpt from a credit report:
(Please see pdf-file; for technical reasons a reprint is not necessary).
(2) The Social Security Number shall be a combination of numbers in the following format: 111-11-1111. The SS# is not only the tax number, but is traded in the USA as an identity card substitute. No transaction of significance will be conducted without identification by Social Security Number. Privacy regulations give customers the option of providing their driver’s license number or other information instead of the overly sensitive SS#. However, very few consumers make use of this option.
3. it is also common practice to keep a copy of the driver’s license on file. Since there are no identity cards, the driving licence has a substitute function. It is not issued by a federal agency, but by one of the 51 states. This outflow of federalism is channelled by the fact that at least the photo, address, date of birth and the issuing office as well as an identification number are printed on the card, which is the size of a cheque card. The seals as well as the arrangement of the data varies from state to state.
4. sometimes American creditors take statements on file that allow you to obtain copies of tax returns directly from the Internal Revenue Service. In most cases, due to lack of personnel, this is not used, so the function of this paper is limited to proving credit fraud.
Since each state has enacted different legal bases for the enforcement of foreign judgments against its citizens, it will only be noted here that foreign titles must be recognized, by the federal courts. Further information can be found at www.usgermanlawyers.com .
Practical tips
In summary, whether for the issuance of new loans or existing loans, the documents include:
– social security number – copy of US driver’s license – credit report
In the event of judicial enforcement, the following are required
– Copies of the above-mentioned documents – German title with apostille – Certified translation of the title
Court costs are usually no more than $120.00. In the case of prosecution by collection agencies, their success-dependent remuneration is calculated on a pro rata basis in the amount of 35 – 50 % of the amount of the fee. Lawyers charge the applicable hourly rate, which in some cases can be significantly cheaper than hiring a collection agency.
(BankPraktiker 10/2007, 497)

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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