Buying Paper With Recourse: Lender Can Demand Protection

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David A. Szwak
Posts: 1974
Joined: Thu Jul 13, 2006 11:19 pm

Buying Paper With Recourse: Lender Can Demand Protection

Post by David A. Szwak »

Financing agencies that buy consumer paper from merchants should have little trouble demanding protection when they receive the assignment. The creditor faced with the loss of the holder in due course defense against the victimized consumer has a variety of acceptable options, for example, buy the commercial paper with some type of recourse, or protect against losses by raising the interest rate or purchase insurance. Scott v. Mayflower Home Imp. Corp., 363 N.J.Super. 145, 831 A.2d 564 [N.J. Super. L. 2001].
David Szwak
Chairman, Consumer Protection Section, Louisiana State Bar Association
Bodenheimer, Jones & Szwak
509 Market Street, 7th Floor
Mid South Tower
Shreveport, Louisiana 71101
318-221-6444
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