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As Rialto unfair debt collection lawyers, we were pleased to see a consumer-friendly ruling from a federal appeals court saying that the Fair Debt Collection Practices Act applies to some communications by loan servicers. The decision in Gburek v. Litton Loan Servicing LP (PDF) came from the Seventh U.S. Circuit Court of Appeals, which hears appeals of lower court rulings in the Midwest. Camille Gburek sued her mortgage servicer, Litton Loan Servicing, for hiring a third party, Titanium Solutions, to communicate with her about her mortgage debt. She alleged that Litton violated the FDCPA by telling Titanium about her debt; by contacting her despite knowing she was represented by an attorney; and by using deceptive means (hiring Titanium) to obtain her personal information.

Gburek, a northern Illinois resident, was in default on her mortgage when Litton contacted her to discuss it. This initial letter asked her for a variety of financial information and invited her to contact the company to discuss alternatives to foreclosure. The bottom of that letter contained a standard disclaimer that the letter was an attempt to collect on a debt and that Litton was a debt collector. A few days later, Gburek received a letter from Titanium, a company that facilitates communications between homeowners in default and loan servicers. That letter also asked Gburek to send a lot of financial information to Litton, but it contained language specifically saying Titanium is not a debt collector and cannot accept payments.

Gburek sued. In trial court, Litton moved to dismiss the case, saying the two letters were not covered by the FDCPA because they were not sent "in connection with the collection of any debt" as the law requires. The trial court granted that motion, saying the FDCPA did not apply because the letters did not explicitly demand payment of a debt. Gburek appealed.

On appeal, the Seventh Circuit disagreed. The issue was whether the letters to Gburek were made in connection with the collection of her debts. There's no hard and fast rule for testing this, the court wrote, but past Seventh Circuit cases showed that a demand for payment is not necessary for a communication to be considered an attempt to collect a debt. Other factors to consider include the relationship between the parties and the purpose and context of the communication. Applying these, the court found that both Litton's letter and Titanium's were communications from debt collectors, as were the communications between the two companies. In all three cases, content and context make it clear that the communications were attempts to further debt collection. In this case, the court noted, Gburek was seeking only to survive a motion to dismiss, which is a relatively low bar. The decision does not make a judgment on the underlying FDCPA claims.

As Chino abusive debt collection attorneys, we appreciate the court's ruling on this matter. Although the case does not directly affect our clients here in California, because we fall under a different federal appeals court's jurisdiction, it does set a precedent that our own courts may look to if the issue comes up here. Unfortunately, that is a distinct possibility in California, where unemployment and real estate prices have conspired to keep mortgage defaults high. Illegal debt collection attempts are not uncommon in better times, but with the economic downturn, they have also been increasing. As a result, we would be disappointed but not surprised to see aggressive, illegal debt collection tactics in the mortgage arena as well. This ruling helps show that these tactics are just as illegal from loan servicers as they are from conventional collection agencies.

Continue reading "Federal Appeals Court Rules Fair Debt Collection Practices Act Covers Mortgage Letter" »

As San Bernardino unfair debt collection attorneys, we were pleased to see an article highlighting the problem of debt collectors adding false information to victims' credit reports. On Aug. 8, the Washington Post reported that the practice, nicknamed "debt tagging," has become increasingly common as the economy has worsened and made it hard for people to pay their debts. Rather than go after people who genuinely owe debts, however, the newspaper said "debt taggers" go after people who happen to have the same name or same phone number, even though this is illegal under the Fair Debt Collection Practices Act and Fair Credit Reporting Act, as well as numerous state laws. To fix the problem and stop the harassment, consumers must spend hours on the phone or even sue the debt collector. The Federal Trade Commission, which enforces federal debt collection laws, also recently won a $1 million judgment against a collection agency called Credit Bureau Collection Services for "debt tagging."

The article starts with the story of Michael L. Hughes, who ignored months of phone calls that he thought were a scam until he took the trouble to listen to one. Then, he discovered that they were actually collection calls -- to collect on a debt owed by Michael B. Hughes, a different person. The credit report for Michael L. Hughes incorrectly showed the debt belonging to Michael B. Hughes, but the debt collectors didn't care -- they just wanted money. It wasn't until Hughes hired an identity theft repair company that he cleared his credit report. Another victim of mistaken identity sued the debt collector harassing him, only to have the harassment start up by a different collection agency. The original creditor has responsibility for making sure the information on the debt is accurate, the article noted, but as debts are sold and re-sold, information decreases or gets confused.

Our Garden Grove debt collection harassment lawyers believe that's true, but we would add that debt collectors don't really care whether the information is accurate or not. Like all businesses, they are in business to make money, and some of them have found that it's just as lucrative to harass the wrong people as it is to harass the right people. They can do this because very few Americans understand their legal rights well. We all have the right under the FDCPA to challenge debt collectors to prove that the debt is valid, but many people don't realize this, or choose not to try because they believe it's hopeless. In fact, if you can prove the debt is not yours, you can stop the harassment -- or, if the debt collector won't stop calling, take them to court. You can also take collection agencies to court for a variety of other legal violations, including harassment, threats, profanity and providing information on the debt to the wrong people.

Continue reading "Washington Post Reports on Inaccurate Credit Reporting by Debt Collectors" »

Our Yucaipa unfair debt collection lawyers were interested to note a legal settlement involving a collection agency accused of illegal, anti-consumer practices. The Buffalo News reported July 28 about a settlement reached between the state of New York and a company in the area, Lewis Hastie Receivables of Hamburg, N.Y. State Attorney General Andrew Cuomo had accused LHR of violating the Fair Debt Collection Practices Act and a similar New York state law with harassment and intimidation that included multiple phone calls at work as well as failure to investigate disputed debts. The company will pay $125,000 in penalties and costs and has agreed to reform its business practices.

According to Cuomo's office, LHR was accused of making multiple phone calls in the same day to some victims, including calls to victims' workplaces made after they were told that the employer does not allow this type of call. It also allegedly tried to recover debts from several people who did not owe any debt, and in one instance, three times the cost of the original debt. One woman in Oswego received 16 calls in a day about her husband's 10-year-old debt. The debt collector told her, incorrectly and illegally, that if she refused to pay, she would be arrested, her wages would be garnished, her car would be repossessed and a lien would be placed on her home. Another victim was an Iraq war veteran who was deployed overseas when the contract was signed for the debt at issue. He provided proof, but the calls kept coming.

The article notes that Cuomo's office has made abuses by debt collectors in New York state a priority, and our Pomona debt collection harassment attorneys are glad to hear it. The abuses listed in the article are flagrant violations of the laws -- multiple violations in cases like the Oswego woman's -- but a certain kind of collection agency routinely breaks those laws because it believes breaking the law works. All too often, they're right -- these illegal tactics scare consumers into believing they must pay up now. Before they have time to think about whether and what they might truly owe, they have sent checks or authorized the crooked debt collector to pull money from their accounts. This is easy money for the debt collector, but it is an illegal and exploitive practice victimizing consumers who may not understand their rights.

Continue reading "Buffalo-Area Company Settles Debt Collection Violations Case With State Prosecutors" »

As Corona debt collector harassment attorneys, we were interested but not surprised to read an article about a Florida man who sued after repeated legal violations by debt collectors. Hernando Today reported July 21 on a lawsuit by Anthony Zoda of central Florida, who sued Hudson Valley Collection Agency after a series of actions he alleges violated the Fair Debt Collection Practices Act and Florida's Consumer Protection Practices Act. Zoda does not dispute the debt he owed, which was a car loan for a Range Rover, on whose payments he later fell behind. But he was surprised by the lengths to which the collection agency went, including calling about once an hour over a 36-hour period and contacting family members in other states.

Zoda got behind on payments after his work truck needed repairs and other financial problems. He was still hoping to work something out with the bank that had the loan, Wachovia, when he got a call informing him that the debt had been sold to Hudson Valley. Over the next weeks, he says he logged about three dozen calls in a 36-hour period, including calls very late at night. When she reached Zoda, she told him he would be arrested for stealing the Range Rover if he didn't pay -- a legal impossibility. During one call, the debt collector told Zoda that she had seen lists of his friends and family through his MySpace page. Shortly afterward, Zoda got calls from his mother, his stepfather and two friends saying the collection agency had called to repeat the false threat of arrest. He also said the caller badmouthed his mother for failing to lend Zoda the money to repay the debt. The Range Rover was eventually repossessed, but Zoda is now suing Hudson Valley in Orlando federal court for $1,500 in damages.

The article didn't specifically note this, but our Cypress unfair debt collection lawyers counted three to four violations of the Fair Debt Collection Practices Act described in the article, in addition to any violations of the Florida statute. It is illegal for debt collectors to call after 9 p.m., your time; to threaten legally impossible actions; to call repeatedly or continuously; and to contact anyone other than the debtor, any spouse or any attorney. Unfortunately, this is not unusual -- debt collectors routinely break these and other parts of the law, because they know it works. They have also gotten especially aggressive recently thanks to the bad economy, which makes it harder than usual for many people to make ends meet and have enough left over to pay debts. As a result, the FTC recently reported a 50% increase in complaints about debt collectors between 2008 and 2009.

Continue reading "Florida Man Sues Debt Collectors for Harassment, Calls to Family and False Threats" »

As Chino unfair debt collection attorneys, we were pleased to see a recent New York Times article about an anti-consumer practice by collection agencies. The July 13 article said courts around the U.S. are seeing a marked increase in debt collection lawsuits. In a bad economy, this may not be so surprising. But according to the article, many debt collection law firms are filing those lawsuits almost automatically, using software that sends letters, summonses and other notices without the need for a human being to pay close attention. As a result, one New York firm files about 5,700 cases per lawyer every year. Critics believe this allows cases to be filed incorrectly, resulting in unjust judgments that legally compel people to pay debts they don't owe.

Debt collection lawsuits are always likely to go up in a bad economy, one collection attorney noted in the article, because more people aren't able to pay their bills. But judges, legislators and the Federal Trade Commission have complained about the high volume of cases, particularly of cases that are cannot be substantiated if the defendant challenges them. The FTC called the legal system for collecting debts "broken" the day before the article, and North Carolina passed a law last fall requiring extra documentation for a debt collection suit. In New York, some courts are demanding this on a case-by-case basis, whenever debtors challenge the claim. One judge in the article dismissed a case brought by the 5,700-case-per-lawyer firm, after its attorney could not prove it was suing the right person. That firm has also been sued for trying to collect a debt that has already been paid.

The trouble, as the article notes, is that most people who are sued by debt collectors don't show up to court. In some cases, the collection agency intentionally evades legal requirements for notifying the defendant. But in many others, the defendant does not show up because he or she believes the case is hopeless or already decided. As Fullerton abusive debt collection lawyers, we strongly advise readers not to do this. If you don't show up for a lawsuit, the debt collector wins by default -- and it's rare to get another chance to defend yourself. Even if it's a debt you don't really owe, you will likely have your wages or property garnished to pay it. You can sue debt collectors for attempting to collect on an illegal debt or collecting in an illegal way, but the chances are good that you will face a lot of financial strain and personal stress before succeeding.

Continue reading "Courts See Flood of Debt Collection Lawsuits Prepared Automatically by Software" »

As Redlands unfair debt collection attorneys, we were disappointed to see a recent article about debt collector harassment of a woman whose credit card was stolen. The Home News Tribune of East Brunswick, N.J. ran an article July 6 about Linda Wright of South River, N.J., who was held responsible for $15,000 in debt on a credit card that her adult children stole. Despite a police report and a probation sentence for the perpetrators, Bank of America told Wright that she was being held responsible for the charges, then turned the debt over to a debt collector when she couldn't pay. Only a call from a reporter convinced the debt collector and the bank to take a second look at the situation, the article said.

Wright, 54, left her credit card in a dresser drawer when she moved away from home temporarily to care for a sick uncle. She left her daughter, 28-year-old Lisa Wright, to pay the bills -- not using the credit card. Instead, the article said, Lisa Wright and her brother, 31-year-old Isaac Wright, ran up $13,000 in debt for food, cab rides, cash withdrawals, cell phone bills and entertainment. Meanwhile, the elder Wright was away from home and knew nothing about it until she received a phone call at work from Bank of America. Wright had to call the police on her children, who were eventually convicted of fraud and put on probation. But despite the fact that she explained the situation many times, Wright says, Bank of America rejected the fraud claim, saying she "provided access to [her] account and/or account information" to her children.

Wright says the bank placed 200 to 300 phone calls at the flower shop where she works over a period of about four months, then turned the debt over to a debt collector working with a Nebraska law firm. Wright says she called that law firm, but it didn't help. In fact, she says, the law firm ignored her request that it not call her at work, a violation of the Fair Debt Collection Practices Act. She eventually quit the job, in part because of the phone calls, and says her credit was ruined. It wasn't until a late June phone call from the Home News Tribune that the debt collector agreed to drop its pursuit of Wright. The same afternoon that the newspaper called, Wright called the debt collector and was told that her account would be "zeroed out"; Bank of America later confirmed this.

Our Riverside County debt collection harassment attorneys are glad Wright's situation has been cleared up, but we're disturbed that it took a phone call from a reporter -- with an implicit threat of negative publicity -- to achieve that. A police report saying that a credit card has been stolen is one of the clearest ways to prove that the cardholder has been defrauded. That the victim happens to be the perpetrators' mother does not mean the police report is lying; it means this woman's trust has been violated by her own children. Ruining her credit and making her legally responsible for the fraud injures her yet again, and it's difficult to think of any motive other than profit. In addition, the article suggests that the debt collector violated at least one provision of the Fair Debt Collection Practices Act with the repeated calls to Wright's workplace. As the article notes, it's difficult to pursue a FDCPA lawsuit -- but it's one of the few ways to enforce your legal rights when you don't have a government agency or a newspaper on your side.

Continue reading "Debt Collectors Harass New Jersey Woman About Debt From Stolen Credit Card" »

Under the federal Fair Debt Collection Practices Act, one of the numerous restrictions on debt collectors' behavior is a prohibition against misrepresenting themselves as attorneys. So our Chino Hills unfair debt collection lawyers were pleased to see an article from the Legal Intelligencer June 18 about a court decision penalizing a law firm that used its letterhead to try to collect a debt, even though no attorney had reviewed the case and no lawsuit was contemplated. The ruling came from a federal magistrate judge in the Middle District of Pennsylvania, in a case involving attempts to collect on home loan debt after the borrower fell behind on payments. In ruling, Magistrate Judge Andrew Smyser granted summary judgment to the borrower, meaning that borrower won without a trial.

The plaintiff was Darwin Lesher, who went into default on a home equity loan from Washington Mutual. He received two collection letters from the Law Office of Mitchell N. Kay. Both were on law firm letterhead, and both contained language saying no attorney at the firm had reviewed Lesher's account. Lesher sued, saying the law firm letterhead was misleading because it implied a threat of litigation not contemplated and that a lawyer was on the case. An attorney for Kay argued that the letter was not misleading under 2005's Greco v. Trauner Cohen & Thomas, a Second U.S. Circuit Court of Appeals decision saying law firm letterhead is not misleading if it contains a statement saying no attorney has reviewed the account. But Smyser rejected that ruing in favor of a ruling from the Third Circuit, which covers Pennsylvania. Rosenau v. Unifund Corp. said a letter is deceptive if the least sophisticated debtor can find more than one meaning in it -- which Smyser ruled was the case here.

As Westminster abusive debt collection attorneys, we strongly agree. Legal letterhead communicates that the letter is from an attorney, which communicates a threat of litigation. In our experience, most people outside the legal industry don't realize that some attorneys act as debt collectors without using their legal skills. As Smyser said, an unsophisticated debtor would be likely to assume that a law firm is an organization made up of lawyers doing legal work. Including a line saying otherwise in the body of the letter is certainly better than nothing, but it still has the potential to mislead people who are sent into a panic by the letterhead before they even get that far. Collection agencies know this, which is why they try tactics like this to get around the clear prohibition in the FDCPA against misrepresenting themselves as attorneys.

Continue reading "Pennsylvania Court Rules Law Firm Letterhead Misleading Under FDCPA" »

Our Corona debt collection harassment lawyers wrote recently about a New Mexico man who is suing a debt collector for alleged threats to blow up his house. On the heels of that story came a June 1 article from ABC News about another egregious violation of the law and basic decency by a debt collector. Allen Jones of Lewisville, Texas sued Advanced Call Center Technologies for making multiple collections calls to him that used profanity, at least one racial slur and racially charged language. The debt in question was under $200, Jones said. After a trial in state court, a jury found that ACT had violated a state fair debt collections law and awarded Jones $1.5 million in damages. A lawyer for ACT said this was not the standard practice and that the two employees involved no longer work at the company.

Jones has eight of the calls recorded to voice mail. In them, the caller uses the "n-word" and several types of profanity. ABC News plays the voice mails in its video report:

One of his attorneys said it was the worse case he'd ever seen and that jurors might not have believed it if it hadn't been recorded. In addition to the profanity and racial language, the messages allegedly included a sexual comment about Jones's wife. The calls came as early as 6 a.m. and as late as 11 p.m., both of which are outside the times federal law allows debt collection calls to be made. Jones said he had actually paid the credit card debt ACT was calling about and said so to the callers, but this didn't stop the harassment. In addition to the $1.5 million, the jury awarded him $50,000 for mental anguish and $143,000 in attorney fees.

As Placentia debt collection abuse attorneys, we see plenty of stories about abusive debt collection tactics. But, as the attorney for Jones said, the alleged actions in this story go beyond even the normal abuses and deceptive tactics used by collection agencies. Jones sued under a Texas state consumer protection law, but all of the alleged actions described in the article violate the federal Fair Debt Collection Practices Act as well. That law forbids calls that use abusive or profane language; threats; and calls outside of the hours of 8 a.m. to 9 p.m. in the debtor's time zone. It also forbids communicating after a request for validation of the debt, which Jones may or may not have requested. Failure to follow the FDCPA makes debt collectors like ACT vulnerable to a federal lawsuit, in which victims can win up to $1,000 plus attorney fees. Jones won a great deal more in state court, suggesting that the jury in that case sought to punish ACT and set an example for other collection agencies using illegal tactics.

Continue reading "Texas Man Wins $1.5 Million from Debt Collector That Used Obscenities and Racial Slurs" »

Our Rancho Cucamonga abusive debt collection attorneys frequently tell clients that you cannot be arrested for failing to pay a debt in the United States. While this is technically true, a recent article in the Minneapolis Star-Tribune shows that some debt collectors are finding ways around it. According to the June 9 article, debtors in some states are being arrested and thrown into jail for contempt of court after they miss court hearings or court-ordered payments of their debts. The practice is under the radar, the article said, but uses government resources and money to enforce private debts as well as costing debtors money and sending them to jail, sometimes with no warning and over very small debts.

The practice is not followed in every state, the article said, and some law enforcement agencies don't have the funds to make arrests in non-criminal cases. But when they do, it can come as a shock to people who didn't realize their unpaid debts could land them in jail. The article tells the story of a woman who was jailed overnight for missing a court hearing related to a $6,200 credit card debt. Like many debtors, she ignored the notices she received because she had no history with the debt collection company and assumed it was a mistake or a scam. Another woman was jailed for a $250 credit card debt that led to a lawsuit that she says she was not notified about. In some cases, courts order debtors imprisoned indefinitely until they come up with a payment (difficult when you're in jail). Consumer advocates say the practice also penalizes those who have the least, who are more likely to miss payments and also more likely to be financially harmed by bail and impound fees.

As Garden Grove debt collection harassment lawyers, we don't even know where to start explaining what's wrong with this practice. Federal debtors' prisons were abolished in the 1830s, and most states followed suit in that era. Thanks to a 1970s Supreme Court ruling, it is unconstitutional to jail someone only for a debt; in fact, the state constitutions of Tennessee and Oklahoma forbid the practice. These people are being jailed for violating a court order, not for debt, but that's a technicality. In addition, jail for nonpayment is essentially jailing someone for being too poor to pay. As the article points out, the practice of putting debtors in jail makes the court system an arm of the private debt collection company, inappropriately spending taxpayer money to do the work of private industry. The arrests sometimes stem from disputed debts or unethical behavior by debt collectors, like failing to properly serve court papers for a lawsuit, so they can be unfair. And perhaps most importantly, jailing debtors is a violation of their rights and dignity.

Continue reading "More States Are Jailing Debtors for Contempt of Court Related to Debt Payments" »

Our San Bernardino debt collection harassment attorneys see a lot of reports about bad behavior by debt collectors. But even so, we were surprised to see an article about a man who is suing a phone company for threatening to blow up his house. A May 27 article from ABC News tells the story of Al Burrows, 45, who says a Verizon Wireless representative threatened to blow up his "[expletive] house" over a $308 debt Burrows owed on an account he had opened for his stepson. The threat upset Burrows and his wife so much that they eventually moved away from the house in Las Cruces, NM and into another state that the article did not name.

Burrows and his attorney told ABC that Burrows already knew about the debt when he got the call. In fact, Burrows said, he had already worked out a payment plan with Verizon. The second caller even acknowledged that the payment plan existed, the article said. Nonetheless, Burrows played a tape for the TV reporter of a woman who demanded immediate payment or, as she said, "I am gonna blow your [expletive] house up." His wife was so shaken that Burrows asked his brother to visit so his wife wouldn't be alone while Burrows was at work. Eventually, they left the state. Burrows also says he called Verizon to complain, but was not believed and has received no apology. His lawsuit seeks unspecified financial damages.

As Westminster unfair debt collection lawyers, we're interested to see that this alleged abuse came directly from the original creditor rather than a third-party debt collector. As a rule, third-party collection agencies are more likely to be abusive, in part because the debt has already been written off by the time they get involved. By contrast, a company like Verizon has an interest in collecting in a way that leaves the door open for future relationships. Possibly for this reason, the federal Fair Debt Collection Practices Act does not apply to original creditors -- and neither do many state laws, including New Mexico's version of the Act. That means Burrows is probably claiming that Verizon's behavior violated another law, including state laws about personal injuries. If the FDCPA did apply, however, the use of obscenity and threats would be a clear violation, as these are among the many unfair actions prohibited by the law.

Continue reading "Customer Sues Verizon for Alleged Threat to Blow Up House Over Unpaid $308 Bill" »

As Corona consumer bankruptcy attorneys, we were interested to see a recent piece on bankruptcy statistics from the Orange County Register's On Small Business blog. According to the May 18 post, statistics from the U.S. Bankruptcy Court put California among the states with the most people filing for bankruptcy per resident. The numbers track the 12 months ending at the end of this past March, during which time there were a record number of bankruptcy filings. Our state ranked eighth out of the top ten states, with 6.15 filings for every 1,000 residents. Not surprisingly for the nation's most populous state, California also had the largest sheer number of filings of any state.

The bankruptcy filing numbers include both individual and business filings, of all types. The state with the highest per-resident number of bankruptcy filings was one of our next-door neighbors, Nevada. It had 11.7 bankruptcy filings for every 1,000 residents. No other Western state was among the top 10. Tennessee, Georgia, Indiana and Alabama rounded out the top five, from most to least filings. Nationwide, the last year's data showed the highest number of filings since the year the bankruptcy reform law went into effect, with 1.47 million consumer filings and 61,148 business filings. Total filings rose 27% over the previous 12 months (those ending March 31, 2009). The biggest jump was a 65% increase in Chapter 12 bankruptcies over the 2008-2009 filings, which are for family farms and fishermen. But Chapter 7 consumer bankruptcies increased by 30% and Chapter 13 filings increased by 12%.

This news matches what our Cerritos personal bankruptcy lawyers have learned about bankruptcy filings from other sources in the past few months. Observers from places like the American Bankruptcy Institute predicted that last year would be a record one for post-reform personal bankruptcy filings, and some expect this year's filings to exceed that record. Analysts have also noted that the increase among consumers is largely in Chapter 7 "liquidation" bankruptcies, which means more filers are coming to bankruptcy without the substantial income that would push them into Chapter 13 bankruptcies instead. That is, Americans who file for bankruptcy are getting poorer, or at least tend to have less income than those who filed a few years ago. Not surprisingly, observers blame this partly on the bad economy and its high unemployment rates.

Continue reading "California Ranks Eighth in Top Ten States With the Most Filings for Bankruptcy" »

Our Yucaipa unfair debt collection lawyers were interested to note a federal class action against an allegedly crooked debt collector. According to the Roanoke Times and Courthouse News Service, a Virginia man has filed a proposed class action lawsuit against three related debt collection companies for multiple violations of the Fair Debt Collection Practices Act. Johnny Quesenberry alleges that Asset Acceptance Capital Corp., Asset Acceptance LLC and Genesis Financial Solutions are misleading consumers into reactivating old debt, allowing the debt collectors to restart collection efforts on debts that were previously uncollectable because of their age or because they had already been discharged by bankruptcy.

Quesenberry's claim says the companies run a scam by offering credit cards or debt arbitration programs. They tell consumers that if they sign up for these programs or the Pearl Card Gold MasterCard, any debt they transfer to the program or card will be uncollectable. In fact, the agreement for the programs does allow collection actions. Furthermore, putting old debts on the card or into the program restarts the statute of limitations on the debt, which means debt that was previously too old or settled in another way can become active again. In this way, the companies can collect on debt that consumers don't actually owe. Quesenberry requested an injunction against the companies to stop this behavior, as well as unspecified financial damages and attorney fees. He proposes to include among the plaintiffs every Virginian who received such an offer.

As Colton abusive debt collection attorneys, we wish Quesenberry and his co-plaintiffs luck. This type of scam -- if his allegations are true -- takes advantage of consumers who don't understand how statutes of limitations on debt work. A statute of limitations is an expiration date, after which someone can no longer be sued. In the case of consumer debt, the consumer can no longer be successfully sued to collect a debt after the state's statute of limitations runs out. Collection agencies are free to request payment, but because they have no means of enforcement, consumers can ignore those requests. Unfortunately, if consumers do make another payment or take any other action with the account, even a promise to pay, they can restart the statute of limitations, meaning debt collectors are free to sue them. That's exactly what the Asset Acceptance companies are allegedly doing with this scheme -- enticing consumers with uncollectable dent into making it collectable again, ironically by promising them it will be uncollectable.

Continue reading "Proposed Class Action Lawsuit Claims Debt Collectors Mislead About Credit Card Offers" »

Our San Bernardino abusive debt collection attorneys were interested to see a recent article about a collection agency that has come under fire in Minnesota for a second time. According to a May 2 article from the Minneapolis Star-Tribune, Minnesota Attorney General Lori Swanson has asked Afni, Inc., an Illinois debt buyer, to cease all collection efforts in Minnesota until it can identify which debts it bought from phone company Qwest are valid. The request, which affects about 100,000 accounts at Afni, comes in response to a "significant amount" of complaints, Swanson's office said. The complaints included charges that Afni is collecting on "zombie debts" that Qwest has already written off because they had been paid or the debtor was incorrectly identified.

That's what Travis Welk, a 30-year-old Minneapolis man, says happened to him. Welk told the newspaper he was contacted by Afni about debt that he was already told he didn't owe -- eight years ago. The debt apparently stems from a call Welk made in 2001 to price Internet service. He didn't commit to buying it, but Qwest sent him a modem anyway and began charging monthly fees. He returned the modem right away and explained the mistake, but the bills didn't stop and eventually went into collections. After negotiating with a previous bill collector, Welk received a letter in 2002 saying the account was "paid in full"; he says that company told him the collection effort was an error. This year, he got a letter from Afni about the same debt. He said he was frustrated that he'd spent so much time correcting someone else's mistake.

Swanson's office noted that the statute of limitations on debt is six years in Minnesota -- meaning debtors can't be sued after that -- and that debt collectors may not report debts to credit agencies after seven years have expired. That means the debt Afni was trying to collect from Welk is "zombie debt" that the company was trying to resurrect after the end of its natural life. As Carson debt collection harassment lawyers, we've seen many cases like these in the course of our work, in which collection agencies try to collect on a debt the consumers no longer legally owe -- if they ever owed it at all. This strategy relies on consumers to not understand their rights and instead react out of fear. If it is done with the knowledge that the debt is invalid, it is a violation of the Fair Debt Collection Practices Act. If it is a mistake, the debt collector still must verify the debt on request, or it violates the FDCPA.

Continue reading "Minnesota Attorney General Takes Action to Stop Collection of 'Zombie Debt'" »

As Los Angeles County unfair debt collection attorneys, we were interested to see a recent article about efforts to fight collection agencies here in California. The New York Times and SFPublicPress.org reported April 22 that a group of public interest lawyers in the San Francisco Bay Area is working together to help consumers fight off lawsuits by collection industry lawyers. These attorneys believe bringing unpaid debts to court at all is a misuse of the court system, particularly at a time when the courts are already clogged by high caseloads and a state-mandated shutdown. And when debt collectors sue, the advocates say, they rely on debtors to not respond, allowing them to get a court order taking wages or property without the debtor's consent.

The attorneys' efforts are focused on stopping default judgments. In lawsuits brought by debt collection lawyers, many people don't show up because they don't understand how to respond, are afraid or ashamed or truly didn't get notification. The court usually decides for the party that did show up, so the debt collector wins by default and can then get a court order garnishing wages or bank accounts. Sometimes, the debtor doesn't know anything is wrong until the money disappears. The public interest attorneys in the article believe debt collectors intentionally seek default judgments, and they are working to fight back. First, they help defend low-income people in these lawsuits, allowing defendants who owe nothing to get the claim dismissed. Then, they sue the debt collector for any violation of the Fair Debt Collection Practices Act, turning the tables and allowing clients to collect money of their own.

We're delighted to see that an organized group is helping consumers fight back. As the article notes, debt collection lawsuits have increased dramatically in California in the past three years, and between 70% and 95% of consumers never respond to those suits. As Fountain Valley debt collection abuse lawyers, we've heard many reasons for not responding to notice that a lawsuit is filed, including shame, fear and feelings that there's no real chance to dispute the case. In fact, going to court is vital, because failing to respond can get your money or property taken away by court order, even if you never owed the debt to begin with. With the help of an experienced attorney, you may be able to prove your case and win the lawsuit, which obliges the debt collector to leave you alone. If appropriate, you can then go after the debt collector for any violations of federal or California consumer protection laws.

Continue reading "Bay Area Attorneys Pool Resources to Fight Debt Collectors' Use of Lawsuits" »

As Chino Hills unfair debt collection attorneys, we were disappointed to see a federal appeals court ruling that removes liability from debt collectors who incorrectly garnish debtors' bank accounts. InsideARM reported April 20 that the appeals court ruled in favor of a collections law firm in Lee v. Javitch, Block & Rathbone LLP, No. 08-4485, (6th. Cir. April 13, 2010). The law firm, Javitch, had already won a default judgment against Norma Lee when it filed for a non-wage garnishment of her bank account. In order to do that, it had to sign an affidavit stating it had a reasonable basis to believe the bank had property of Lee's that was not exempt from garnishment under federal or Ohio state law. Unfortunately for Javitch, it turned out that Lee's bank account consisted only of Social Security disability payments, which are exempt from garnishment.

Lee proved this and had the money returned, then sued Javitch. The law firm did not have a reasonable basis to believe the account was not exempt, the claim said, and thus it had violated the Fair Debt Collection Practices Act. A federal jury in Ohio agreed with her and awarded $49,603 in damages, plus attorney fees. Javitch appealed, arguing that it did have a reasonable basis. On appeal, the dispute centered on whether Javitch should have further investigated the situation by subpoenaing Lee's bank records after the judgment was final. Javitch called an expert who argued that this was not at all the industry standard, and that some law firms didn't even believe it was legal. Lee called no witnesses to dispute this, and the Sixth Circuit concluded on the basis of this "unanimous testimony" that Javitch did have a reasonable basis to sign the affidavit.

This ruling is disappointing for our Azusa debt collection abuse lawyers, because it allows debt collection law firms to proceed with a garnishment before verifying that they are legally entitled to that money. In this case, Norma Lee racked up nearly $200 in bank fees due to bounced checks and was unable to access any of her Social Security disability payments until she got a court order returning the money. At trial, she claimed the stress from this situation affected her health, which was already poor because of a surgical complication that limited her use of one arm. Someone in this situation can't afford to have money disappear from a bank account, which is precisely why Social Security is exempt from garnishment. The Sixth Circuit's decision allows debt collectors to create many more Norma Lees, all of whom would have to go to court to regain the money that was always rightfully theirs.

Continue reading "Sixth Circuit Rules Debt Collectors May Garnish Bank Accounts Without Subpoenaing Bank Records" »