California Bankruptcy Attorney Blog

Thanks to the bad economy, our Buena Park debt collection abuse attorneys have seen a sharp increase in customer complaints about unfair debt collection practices. So perhaps it's not surprising that more and more reports are surfacing about debt collectors stepping over the line from aggressive into illegal. That was the case in a Sept. 29 article from television station WLTX about a Florida lawsuit alleging actual threats of violence from a debt collector for a check cashing company. Jeff Gordon of Jacksonville, Florida sued Jacksonville Check Cashers over its employee's threats to "f--- [him] up" and threats against his wife.

Gordon does not dispute that he bounced a check at the business (a debt he has since paid), but says the reaction from an employee believed to be Horace Swafford Jr. was illegal and disproportionate. According to the article, an employee called "Mickey" left three recorded messages on the Gordons' answering machine. In addition to the obscene threat against Gordon himself, which was repeated, the tape also caught Mickey's promise to find Debra Gordon and another promise that "you're not going to know when I'm coming." Swafford, who goes by the name Mickey, later showed up outside the Gordons' home and wouldn't leave, prompting Debra Gordon to call the police. Both the Gordons' debt collection attorney and a Florida prosecutor the station contacted said the messages violated multiple laws.

The station posted an online video that included the threatening messages:

As Corona collection agency abuse lawyers, we believe this conduct is not only a violation of consumer protection laws, but also a potential violation of criminal laws. Whether the matter is appropriate for prosecution is up to Florida state's attorneys. But regardless of whether there is a criminal case, victims of this kind of severe overreaching by debt collectors may still hold them responsible for their actions with a lawsuit under the federal Fair Debt Collection Practices Act or similar laws at the state level. In addition to penalizing debt collectors for their unfair and abusive practices, these lawsuits can also recover the costs the harassment caused, such as the cost of time off work, and reasonable court costs and attorney fees.

Continue reading "Check Cashing Company Sued After Customer Records Threats of Violence From Debt Collector " »

As San Diego County debt collection abuse lawyers, we were pleased to see that the state government of Maryland has struck back against a Southern California company accused of harassing its citizens. According to a Sept. 21 article in the San Diego Union-Tribune, Maryland is suing San Diego's Encore Capital, a collection agency, and affiliates including Midland Credit Management. The state alleges that Encore violated Maryland fair debt collection laws by suing victims after the statute of limitations on their debts had expired -- including some debts that dated back to the early 1980s. The state acted after receiving more than 60 complaints since 2001 about Encore, which buys bad debts from credit card companies and other creditors and attempts to collect on them.

A Sept. 17 story by Baltimore's WBAL elaborated further on the allegations. The television station started with the story of Edith Brown, a retired woman in suburban Baltimore who says Encore called her about a debt dating back to 1982 -- 27 years ago. State law forbids collection agencies from trying to collect debt more than three years old. It also forbids them from filing lawsuits knowing that they have no legal right to collect. Maryland state regulators say Encore and its affiliates have also failed to validate the debts they tried to collect and operated in the state without valid business licenses. If the state wins its suit, the collection agency faces a fine of up to $40,000. Two individual consumers in Maryland are also suing an Encore affiliate for $10 million under the federal Fair Debt Collection Practices Act.

In the article, Brown advises other consumers to be wary of debt collectors' claims and insist on proof of the debt owed before they pay anything. As Riverside fair debt collection attorneys, we can confirm that this is not just a smart idea -- it is every American's right under the Fair Debt Collection Practices Act. Under the law, consumers may send a written request to verify or dispute the debt within 30 days of receiving notice of the collection attempt. After receiving it, agencies may not continue calling until they send the requested information. The law also forbids many other harassing and deceptive practices by debt collectors, including threats of legal action the debt collector can't legally take; repeated or continuous calls; calling at work after a request not to; and using abusive or profane language. As in Maryland, many states have similar or even more pro-consumer laws, including California.

Continue reading "State of Maryland Sues San Diego Collection Agency for Violations of Consumer Protection Laws" »

Our Redlands loan modification attorneys were very interested to see a new study on a popular tool for homeowners seeking a loan modification: foreclosure mediation programs. According to a Sept. 23 Reuters article on the report, fourteen states (up from ten in January) have established mediation programs to help homeowners in court for a foreclosure work out alternatives with their lenders. In most cases, the expected outcome is a change to the terms of the loan or another new arrangement -- in essence, a loan modification. Unfortunately, mediations have not been working, according to the report by the National Consumer Law Center (PDF), a nonprofit consumer-rights organization.

The NCLC reviewed 25 foreclosure mediation programs in all 14 states, speaking to court officials, attorneys and others who work with the programs. It found no data suggesting that these programs have produced a significant number of loan modifications that will be sustainable for the long term. Perhaps more importantly, the center criticized foreclosure mediation programs as toothless, saying they "routinely fail to impose significant obligations on mortgage servicers." For example, the servicers are not required to prove they have the right to foreclose in the first place, or analyze all of the loan modification options available. With few rules for servicers to follow and poor enforcement of the rules that do exist, the report said, servicers have too much control over the outcome, allowing them to block substantial modifications.

The report recommended that states fix their systems by moving away from voluntary compliance and imposing mandatory rules, including a requirement for certification that the lender has made good-faith efforts to modify a loan before foreclosure can proceed. As Anaheim loan modification lawyers, we strongly agree. As the report notes, we have months of evidence to show that loan servicers are not negotiating loan modifications in good faith. Over and over, they have failed to effectively communicate with borrowers, illegally denied loan modifications and offered modifications that wouldn't help borrowers stay current. Under those circumstances, we agree that the time for relying on voluntary compliance is over. Without the "stick" of regulation -- and perhaps, as the study recommends, mortgage cramdowns in bankruptcy -- we do not expect to see improvements.

Continue reading "Study Finds Foreclosure Mediation Programs Fail Because They Lack Lender Accountability" »

Our Orange County debt collection abuse lawyers have recently seen a sharp increase in the number of complaints we receive about unfair and illegal practices by debt collectors. So we were glad to see a Sept. 17 article in Forbes magazine that advises consumers about how to fight back by understanding their rights. The federal Fair Debt Collection Practices Act is very specific about the procedures collection agencies must follow to legally collect a debt, the article said. And if they violate any of the law's provisions, no matter how small, consumers may sue them under the FDCPA, potentially turning the tables to make the debt collector into the debtor.

The article starts with the story of Liz Nero, who successfully sued a debt collector that left out part of a legally required notice when it contacted her. Under the FDCPA, debt collectors must notify consumers that they have a right to contest the debt in writing within 30 days of receiving written notice of the debt collection attempt. Nero's notice was missing the words "in writing." That might sound like a trivial matter, but without that language, Nero might have been led to believe she could legally make that request over the phone. Because debtors lose the right to demand verification after 30 days, this little omission could have effectively denied Nero her right to contest a debt collection effort, even if it had been a case of mistaken identity. Instead, Nero sued and won $500 in damages, plus nearly $3,000 in attorney and court costs.

This is far from the only violation of the FDCPA that could allow a debtor to sue. In fact, Nero's attorney said she sees two other violations much more frequently: failure to tell debtors that their accounts are accruing interest, and threats of legal actions the collection agencies cannot take, such as wage garnishment. As Carson debt collection abuse lawyers, we frequently hear these complaints and others about debt collectors. As the article says, any violation of the FDCPA can form the basis of a lawsuit, even seemingly trivial matters like a lack of local licensing. To make sure all of your rights are being respected by debt collectors, it's important to know those rights; save all communications with the debt collector, including recording phone calls if possible; and consult an attorney as soon as possible if you believe your rights may have been violated.

Continue reading "Understanding Rights Under Federal Law Can Stop Debt Collection Harassment, Report Says" »

As Riverside loan modification lawyers, we know Riverside County and the Inland Empire generally have been hit especially hard by the foreclosure crisis. That's why we were pleased to see a Sept. 16 press release from the city of Riverside announcing that it has secured a large line of credit as part of its "neighborhood stabilization" program. The program uses federal stimulus package funding and now, this line of credit, to buy and rehabilitate foreclosed and abandoned homes, then sells or rents them to lower-income households and first-time home buyers. With the new line of credit, the release said, the amount of money available for the program will nearly triple, allowing the city to acquire more properties in more areas.

That's important, because Riverside has been badly affected by the foreclosure crisis. According to the release, nearly 4.5% of the city's housing units went into foreclosure between July 1 of 2007 and May 13 of this year. When those properties sit vacant and un-maintained for months, they look bad, attract crime and lower property values for their neighbors -- worsening the real estate market and sometimes triggering more foreclosures. The federal Neighborhood Stabilization Program funding was supposed to fight this by allowing cities to buy foreclosed homes and repurpose them as low-income housing. Unfortunately, cities ready to buy properties found that they were routinely out-competed by private buyers who were willing to pay cash and didn't have a long escrow or government approval requirements. The new line of credit may give the city more flexibility in making its bids.

Our Corona loan modification attorneys support the goals of this program, which could ultimately bolster real estate values if successful. While it is heartening that buyers are snapping up foreclosed real estate faster than predicted, reports say many of those buyers are real estate investors, some of whom will turn properties into rental housing. Rentals are an important part of affordable housing, but it won't help the real estate market or create the sense of ownership and community the authors of the program were after. That's why we hope the line of credit for the city of Riverside is effective at helping it compete with buyers in the next round of foreclosed properties.

Continue reading "City of Riverside Secures More Funding for Anti Blight Program Buying Foreclosed Homes" »

As Garden Grove fair debt collection lawyers, we frequently read about cases of debt collectors who step over the line. But a Florida case covered by Tampa television station WSTP on Sept. 16 had an interesting twist: allegations that harassment by debt collectors worsened a man's heart condition, causing his early death. According to the article Dianne McLeod is suing the debt collector over the death of her husband, Stanley McLeod, after a prolonged period of ten to 12 phone calls a day. Her attorney says the unkind and harassing calls kept Stanley McLeod's blood pressure and stress levels high, ultimately contributing to his death.

Heart problems were the beginning of Stanley McLeod's trouble as well. He suffered a massive heart attack that his wife said hurt his health so much that he had to stop working. As a result, he fell behind on his mortgage payments, even though Dianne McLeod was still working. Then the calls began. The couple saved answering machine tapes of some of the calls, allowing them to share one call where a debt collector sarcastically suggests that Stanley McLeod "get his act together" and use the medical helicopter that saved his life to drop off the past-due payment. Dianne McLeod said her husband would get very red in the face and short of breath during these calls, suggesting cardiovascular distress in someone already facing health problems.

The station made a longer report available by video:

McLeod is suing under a Florida statute that prohibits debt collectors from "willfully communicat[ing] with the debtor or any member of her or his family with such frequency as can reasonably be expected to harass the debtor or her or his family[.]" However, she and every other American is also entitled to sue under the federal Fair Debt Collection Practices Act, which has similar anti-harassment provisions and many other provisions intended to protect debtors from deceptive, abusive or otherwise unfair behavior by debt collectors. They also allow victims of these illegal practices to collect financial damages for any harm the debt collectors caused -- which, in this case, allegedly includes a wrongful, avoidable death.

Continue reading "Florida Woman Sues Debt Collectors, Alleging Harassment Caused Husband's Fatal Heart Attack" »

As San Bernardino County loan modification attorneys, we deal regularly with mortgage lenders and servicers guilty of anti-consumer and even illegal behavior. Nonetheless, we were still surprised to see a series of reports in the Los Angeles Times about a Wells Fargo executive who allegedly moved her family into a bank-owned home in the exclusive beachfront Malibu Colony neighborhood and used it to throw a party, while potential buyers were denied a chance to make their bids. According to this Sept. 15 article from the Times, Cheronda Guyton was fired from her position as senior vice president for foreclosed commercial properties after the allegations emerged.

The home in dispute was once owned by Linda and Lawrence Elins, victims of disgraced investment advisor Bernard Madoff. According to a real estate agent, the couple signed over the Malibu Colony home to satisfy a debt they couldn't pay because of their losses in Madoff's Ponzi scheme. Neighbors and real estate agents expected the house to go on the market right away, but it was never listed for sale and offers brought by real estate agents were rebuffed by Wells Fargo. However, neighbors said, Guyton and her family moved in shortly after the bank took ownership. Employees of the community association said Guyton was issued a neighborhood parking pass, and a check on the license plate of a car parked at the home found that it was registered to Guyton. Furthermore, neighbors said she threw a lavish party at the home in late August, with guests who arrived by yacht.

A statement issued Monday by the bank said Guyton was fired for violating rules about using bank property for personal use. We believe this was a necessary and appropriate move, given Guyton's alleged misconduct. However, as Long Beach loan modification lawyers, we can't help connecting this scandal to bad behavior by Wells Fargo in another area -- loan modifications. We have written here before that Wells had modified just 6% of eligible loans under the Making Home Affordable program as of August. That may not be considered a scandal, but it represents shattered dreams and financial despair for far more homeowners. Wells is a big organization, but if it can support or ignore Guyton's ethically challenged behavior, it's hard not to wonder if the same culture may be responsible for misleading and dismissing homeowners desperate to avoid foreclosure.

Continue reading "Wells Fargo Executive Fired After Reports That She Used REO Home for Personal Purposes" »

Our Costa Mesa fair debt collection attorneys were disappointed, but not surprised, to read a recent account of the activities of a debt collection agency overseas. The Los Angeles Times on Sept. 15 profiled a debt collector that's located in Islamabad, Pakistan, even though it works with Americans. The focus of the article is on the fact that overseas call centers now include debt collectors, and are particularly busy right now because of the bad U.S. economy. However, the information in the article that stood out to us was the multiple examples of call center employees blatantly breaking the Fair Debt Collection Practices Act, the federal law that is supposed to protect debtors.

The article starts by describing a call to a woman in Texas who the caller says owes $11,000. After she rebuffs the caller and hangs up, the company locates her relatives, neighbors and co-workers, leaving messages that they are trying to reach her. This is illegal under the FDCPA, which says debt collectors may not tell anyone about a debt other than the debtor and any spouse or attorney he or she may have. Also illegal was a question asked in another call: "How would you like to go back to jail?" Debt collectors may not threaten any legal action they do not intend to take or cannot take -- and nobody in America is sent to prison for debt alone. The article also says these callers sue debtors for up to three times the amount actually owed, which may also be illegal, depending on the circumstances.

The article does not mention that any this behavior is illegal, or mention debtors' rights at all except in passing. As Oceanside debt collection abuse attorneys, we are disappointed at this wasted opportunity to remind Americans of their legal rights. While foreign collection agencies may be more aggressive because it's harder to successfully sue them, U.S.-based debt collectors routinely violate consumers' rights as well. They get away with it in many cases because people don't realize that they have those rights, and can report the illegal behavior to federal and state regulators or sue in a court of law. As a result, thousands of Americans are needlessly harassed, scared or pay debts they didn't truly owe.

Continue reading "Some Overseas Collection Agencies Routinely Violate US Consumer Protection Laws" »

Our Santa Ana loan modification attorneys were disappointed early in this year when Congress failed to pass legislation allowing bankruptcy judges to "cram down," or reduce the principal, on primary-home mortgages. So we were pleased to see that the idea may soon be revived, at least according to a Sept. 10 HousingWire report about House Financial Services Committee chair Barney Frank. The Massachusetts Democrat said Sept. 9 that he was disappointed by the sluggishness of mortgage lenders in responding to the overwhelming demand for loan modifications under the federal Making Home Affordable foreclosure prevention plan. If servicers and lenders don't increase the number of modifications, Frank said he may try again to pass cramdown legislation.

Currently, bankruptcy judges may reduce the principal owed on every other kind of debt but mortgages on a primary home. Mortgages on second homes, cars, boats and other property are all eligible for cramdowns, and indeed, primary-home mortgages were eligible for cramdowns until a legal change in 1978. Proponents believe allowing cramdowns in Chapter 13 (reorganization) bankruptcies would help reduce foreclosures, by giving lenders an incentive to work out a loan modification with homeowners who could afford to pay off their loans, with some adjustments. Because so many banks' efforts to modify loans without that incentive have been decidedly lackluster, Frank said, he may once again introduce cramdown legislation.

"The best lobbyists we have for getting bankruptcy legislation passed are the servicers who are not doing a very good job of modifying mortgages," Frank said at a House subcommittee hearing. "And if they do not improve their performance, then they improve the chances of that legislation."

Political pundits believe Frank would have a tough time getting the bill passed. But as Temecula loan modification attorneys and bankruptcy attorneys, we wish him luck. Despite modest improvements in the month of August, lenders have not shown much willingness to modify loans without a sharp stick to go along with the carrots offered by Making Home Affordable. As we have written here many times before, evidence suggests that loan servicers and lenders believe making loan modifications would cost them money. In many cases, allowing the property to go into foreclosure would cost even more money, especially in the current real estate market -- but these losses are easy to hide in the financial reports that go out to Wall Street. As a result, lenders have chosen to bait and switch homeowners, offering them loan modifications and then ignoring calls or stringing them along for months without granting any actual help.

Continue reading "Congressman Threatens to Revisit Bankruptcy Cramdowns if Loan Modifications Do Not Increase" »

As San Bernardino loan modification attorneys, we were already cautious about the chances of a rapid recovery for the housing market. Judging by a Sept. 8 article in the New York Times, we may be right to be pessimistic. The Times covered the problem of "exotic" loans whose interest rates are expected to reset in the next year, particularly the interest-only mortgage loans that were once so popular here in Southern California. In those loans, homeowners pay nothing but interest for the first five, seven or 10 years of the loan. When that period is over, the payment increases by as much as 75% to include the principal.

The article focuses on the Moller family of La Mesa. Edward and Maria Moller bought their home for $460,000 in 2005; it is currently worth $310,000. Like a lot of homeowners with interest-only loans, they expected the housing market to stay strong, allowing them to build enough equity to refinance or sell -- but then the market crashed. Now, the schoolteacher couple expects payments to jump 20% when they reset in 2013. If the market doesn't recover, Edward Moller said, they may not be able to hold on to their home. According to the Times, $71 billion in interest-only loans will reset in the next year; by mid-2011, that figure will be $400 billion. Experts believe the resulting higher payments could trigger a wave of foreclosures with each reset, slowing or stopping any recovery in home prices.

The article goes on to point out that lenders have not been at all helpful to homeowners who know they will face this problem in a few years, flat-out telling one homeowner that he had no options at all. As Escondido loan modification attorneys, we are not at all surprised. We have represented numerous homeowners in loan modifications and related lawsuits over the past nine months, and over and over, these clients tell us their banks refused to help. Banks have incorrectly told our clients that they don't qualify for help; lost paperwork several times; started foreclosures despite a pending loan modification; or simply never answered borrowers' phone calls. Frequently, it's not until the clients come to us for help and we initiate legal action that lenders finally take action.

Continue reading "Resets of Interest Rates on Exotic Loans Expected to Cause Another Wave of Foreclosures" »

Complaints to the Ohio Attorney General's office about unscrupulous debt collectors are on track to top 3,000, the Columbus Dispatch reported Sept. 6. According to Ohio Attorney General Richard Cordray, complaints from Ohioans about abusive and harassing phone calls had reached 2,067 as of August 31 -- almost as many as the 2,123 received in all of 2007 -- and were expected to reach an all-time high by the end of the year. Cordray blamed the bad economy for the rise in consumer complaints, saying debt collection abuses have increased as fewer people are able to pay off their debts on time. However, he said a great deal of the conduct complained about is illegal under the federal Fair Debt Collection Practices Act and Ohio's Consumer Sales Practices Act.

The Dispatch said Shelly Curtner complained after receiving repeated calls about a debt owed by a woman named Marlene. Marlene lived in her apartment building more than a year ago, she said, and debt collectors are illegally calling Curtner and many of her neighbors about the debt. Another interviewee, William Persi, filed complaints about repeated "robocalls" about someone else's debt. After Persi contacted the company and spoke to a live human being, the calls stopped for a short time, then picked right up again. Cordray said his office has received complaints about illegal harassment, verbal abuse and insults, failure to verify debts, trying to collect debts not owed and making unauthorized withdrawals from bank accounts. He has already sued one collection agency, National Enterprise Systems, over some of these practices.

Our San Bernardino fair debt collection attorneys have also seen a sharp increase in clients with complaints about illegal debt collection practices. Here in California, both the Fair Debt Collection Practices Act and a state law called the Rosenthal Fair Debt Collection Practices Act give consumers the right to be free of harassment, threats and other unethical and dishonest debt collection methods. Among other things, debt collectors may not use deception to collect the debt; use foul language or other verbal abuse; call before 8 a.m. or after 9 p.m., your time; call repeatedly or continuously; or contact anyone but your attorney or your spouse about the debt. When they break these and other rules, you may sue -- but because very few people know their rights in this area, too many legal violations go unpunished.

Continue reading "Ohio Attorney General Says Complaints About Debt Collection Abuse May Reach Record Levels in 2009" »

As Irvine bankruptcy attorneys who work closely with homeowners struggling to get responses from their banks, we were delighted to see one lender's executive questioned under oath about his company's practices. The New York Times reported Sept. 3 that Bobbi Giguere, a suburban Phoenix homeowner, was allowed to question the senior vice president of Wells Fargo Home Mortgage Servicing in court. U.S. Bankruptcy Court judge Randolph J. Haines summoned Joseph Ohayon to explain under oath why the company never responded to her multiple requests for a loan modification.

Giguere, 41, is divorcing a husband who no longer pays any part of the mortgage. She has also lost her job and now subsists on unemployment and other state aid. She submitted loan modification paperwork months ago, only to be told that the bank had lost it -- twice. Altogether, she submitted the paperwork three times and never got a response. At trial, Ohayon, the Wells Fargo executive, testified that Giguere had never sent a financial worksheet the bank required. But on cross-examination, Giguere pulled out a letter from Wells Fargo proving that it had never requested any such worksheet, which Ohayon conceded. He testified that the bank had decided in March that Giguere did not qualify for a loan modification under the federal Making Home Affordable plan, but didn't tell her until this hearing.

According to the Times, Haines and other bankruptcy judges are increasingly frustrated by mortgage servicers' apparent incompetence at communication and record-keeping, which eventually drives some mortgage holders into bankruptcy court. Our Pomona bankruptcy lawyers are pleased to see that judges are just as frustrated as attorneys and clients by this situation. Like bankruptcy attorneys, judges are on the front lines of the foreclosure crisis; they have a firsthand view of how this bad behavior by banks can devastate ordinary families' finances. Without a clear answer, homeowners may get deep into credit card debt, waste money on a fraudulent loan modification company or declare bankruptcy and ruin their credit for years. All companies should practice clear communication and other good business practices, but banks owe those to customers whose financial futures are at stake.

Continue reading "Judge Summons Mortgage Lending Executive to Answer Under Oath to Homeowner in Bankruptcy" »

As Azusa loan modification attorneys, we were disgusted but not surprised recently to see evidence that some mortgage lenders are willing to break the law to evict renters whose landlords have gone into foreclosure. An Aug. 28 blog post on ForeclosureBuzz.org, written by an employee of the nonprofit Texas RioGrande Legal Aid, says that at least some renters have received a letter that appears to evict them because of the landlord's foreclosure. The only trouble for the lender is that this is illegal under a new federal law, the Protecting Tenants at Foreclosure Act of 2009. Under that law, tenants have the right to 90 days' notice or more before they're evicted, unless the new owner wants to live in the home.

A letter (PDF) posted by the ForeclosureBuzz blog suggests otherwise. The author scanned in an actual letter sent by a law firm to a home in an Austin, Texas suburb. The letter demands that the tenants vacate within three days of receiving the notice. If they do not, it says, the law firm that sent the letter will sue the tenant for eviction within 10 days. These provisions are in addition to large type appearing on the cover page warning tenants that the law firm is a debt collector, and that any information the tenant provides will be used to collect that debt. The letter does eventually mention the tenants' rights under the Protecting Tenants at Foreclosure Act, but only near the end and in small type. Furthermore, it falsely says tenants must show evidence of their tenancy within 10 days of receiving the notice or face a lawsuit for eviction.

Of course, people who buy properties at auction don't necessarily know whether the people occupying the homes are tenants or the foreclosed owners themselves. But as the ForeclosureBuzz blogger points out, letters like these should clearly spell out that tenants and former owners have different rights. As things stand, our Rosemead loan modification attorneys believe this letter may have been intentionally designed to trick renters into vacating the property. The average non-lawyer is simply not equipped to sort through the legalese, contradictory information and small type that appears in this letter. Someone without the patience or legal knowledge to correctly interpret the letter could easily be panicked into spending unnecessary time and money avoiding the threat of an eviction that would not be legal.

Continue reading "Mortgage Lenders Trying to Trick Renters of Foreclosed Homes With Illegal Eviction Notices" »

Thanks to the bad economy, people in Michigan and across the country are increasingly being victimized by unfair and abusive debt collectors, the Detroit Free Press reported Aug. 28. According to the article, the economic downturn is spurring more violations of the Fair Debt Collection Practices Act, a federal law protecting consumers from unfair, deceptive and abusive behavior by debt collectors. The Federal Trade Commission -- the government agency in charge of enforcing the FDCPA -- saw a 19% jump in the rate of complaints about debt collectors in the first six months of 2008. In fact, it said it regularly gets more complaints about debt collectors than about any other profession. The agency testified before Congress in February to request more "teeth" for the FDCPA.

The article tells the stories of several Michiganders who successfully sued debt collectors for violating their rights under the FDCPA. They include Jessica Wilson, 21, who lost her job and couldn't pay a $500 hospital bill for treating a broken ankle. Wilson endured multiple phone calls from debt collectors every day and said a debt collector told her, incorrectly and illegally, that he would have her arrested if she didn't pay $200 by the end of that day. Another woman, 30-year-old Paula Newland, was laid off from her factory job and missed two $60 car payments. In retaliation, a debt collector illegally called her friends, family, neighbors and landlord to tell them she was missing her payments, threatened to camp out on her lawn and put information about the debt on her MySpace page.

As FDCPA litigation attorneys in Anaheim, we hear horror stories like these from nearly every client who comes to us about debt collectors. The FDCPA provides multiple protections for consumers, including restrictions on how debt collectors may legally try to collect debts as well as mandates for identifying themselves properly, verifying the debt and more. Unfortunately, the FTC simply doesn't have the resources to enforce the law -- and consumers don't always know their rights. Debt collection agencies know that, and in fact rely on it to protect them from the consequences of their own law-breaking. Frequently, it's not until consumers consult a Riverside fair debt collection lawyer that they realize they are entitled to reasonable treatment from debt collectors -- and financial damages from those who break the law.

Continue reading "Complaints About Debt Collectors' Illegal Practices Skyrocket in Michigan and Around the U.S." »

State attorneys general say complaints about debt collectors were the most common complaints they heard in 2008, the National Association of Attorneys General said Aug. 31 in a press release. The group is composed of the top prosecutor for each state (such as Attorney General Jerry Brown here in California); their agencies are also in charge of enforcing consumer protection laws in their states. In a survey of members, NAAG found that consumers' most common complaint in 2008 was again about debt collectors, continuing a trend from 2007's survey. In what NAAG called a sign of the times, complaints about credit cards and predatory mortgage lending made the top ten for the first time.

The release comes on the heels of news that debt collection lawsuits are skyrocketing. According to an Aug. 14 article on Credit.com, a Web site about consumer credit issues, the number of lawsuits filed under two major federal consumer credit protection laws are on track to set a new record, with more than 8,500 lawsuits predicted by the end of 2009. One of the laws in question is the Fair Credit Reporting Act, which specifies how credit reporting companies may share consumer credit information and resolve disputes. The other is the Fair Debt Collection Practices Act, which strictly regulates how debt collection agencies may collect debts. Both laws allow consumers to sue over violations of their requirements, making them powerful consumer protection laws.

Our Irvine fair debt collection attorneys have also seen a sharp increase in the number of clients coming to us about violations of the Fair Debt Collection Practices Act. We believe the bad economy is part of the reason -- because it drives bad behavior by collection agencies. When times are tough, fewer people can afford to pay off their debts, and debt collectors respond by getting even more aggressive. Unfortunately for them, the FDCPA bans a variety of aggressive debt collection practices, including continuous phone calls; threats to imprison or bankrupt the victim; abusive or profane language; and attempts to embarrass victims in front of neighbors or co-workers.

Continue reading "Illegal Actions by Debt Collectors Top List of Consumer Complaints to State Regulators" »

As Fontana debt settlement attorneys, we were pleased by recent news that one of the nation's largest banks will drop its mandatory binding arbitration requirement for customers with credit card, bank accounts and certain types of loans. According to the Associated Press, Bank of America dropped its binding arbitration clause from contracts with customers. The move most likely means that the bank will face more lawsuits, because the binding arbitration requirement meant their right to sue was waived. Under it, all disputes had to be heard by arbitrators, who are a bit like private-sector judges.

A Bank of America spokeswoman said the bank made the change after hearing from customers. However, the Associated Press said, the move came after two major groups of arbitrators stopped hearing consumer credit disputes. One of those groups, the National Arbitration Forum, did so after being sued by Minnesota Attorney General Lori Swanson for its ties to credit card companies and collection agencies, which Swanson said was unfair and deceptive to consumers. Congress is also considering banning mandatory binding arbitration clauses in credit card contracts. One expert interviewed in the article said Bank of America's decision was likely caused by these developments.

Mandatory binding arbitration has long been criticized by consumer advocates as unfair and anti-consumer. Arbitrators are supposed to be neutral, but because they often have professional ties to clients, are paid by the large companies involved in their cases, or both, consumer advocates say the deck is typically stacked against consumers. Furthermore, consumers must typically agree to arbitration and sign away their right to sue in the courts as a condition of signing up for a product or service. Some courts have declared this practice "unconscionable" and invalidated the agreements. Nonetheless, Bank of America's decision is good news for consumers. As Ventura debt settlement lawyers, we strongly prefer that credit card companies have access to the courts from the beginning, rather than having to fight an expensive legal battle just for a chance at suing in a fair and open court.

Continue reading "Bank of America Drops Mandatory Arbitration Requirement for Credit Card Customers" »