Illinois Consumer Law Blog

How to Deal With Debt Collectors

ABC News reports recently that 'Allegations of abusive practices by the private debt collection industry drove complaints to the Federal Trade Commission to record highs last year, a new report reveals.'

This report is no surprise to the millions of Americans who are harassed by debt collectors on a daily basis.

While this ABC report is largely bad news. If you are a consumer being abused by debt collectors then I have good news for you today. You can fight back against this harassment. You have the right to bring a federal lawsuit for money damages against abusive debt collectors.

The Fair Debt Collection Practices Act, known as the FDCPA, provides debtors with right to sue debt collectors in federal court for abusive, unfair and deceptive collection practices. You can recover up to $1000 in statutory damages against the debt collector. Statutory damages are similar to a fine. If the debt collector causes you emotional distress or wrongfully deprives you of money or causes a wrongful denial of credit you can recover more than $1000. When you win your case the debt collector also has to pay your attorney's fees and costs.

If a debt collector is sending you letters or calling you, you should contact a consumer lawyer.

Consumer protection lawyer Sonya A. Smith-Valentine has posted on her outstanding website some tips for consumers dealing with debt collectors. She recommends the following tips.

1.  Save copies of all letters and notices from collection agencies.

2.  Save all telephone and voice mail messages from bill collectors.

3.  Take notes of your conversations with the debt collector, including the date, time, telephone number, and name of the collector.

4.  Send a dispute and verification letter to the debt collector by certified mail, return receipt requested.

These are great tips from a great consumer advocate. Make sure to save this information and share your story with a consumer protection lawyer. You can share your story with me. I will help you or refer you to a consumer protection lawyer or agency that can help you.

Mark T. Lavery

www.laverylawfirm.com

Credit Card Dependence - Today's Consumer Challenge

Credit card debt is becoming one of the most significant financial problems in the U.S.

CNN reported on Friday,

“Americans are drowning in debt. Consumers have racked up more than $2.2 trillion in purchases and cash advances on major credit cards in just the last year. And it's become a habit for them to spend more than they have. The overall credit card debt grew by 315 percent from 1989 to 2006, according to public policy research firm Demos.”

American's increasing indebtedness to credit card companies threatens to destroy financial freedom for millions of Americans. Americans need to stop their dependence upon credit cards. Many American families are in danger of owing their souls to the credit card company.

Tennessee Ernie Ford popularized the song “Sixteen Tons” in 1955. This song tells the tale of a coal miner's lament;

"You load sixteen tons, what do you get? 
Another day older and deeper in debt. 
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store.”

The coal miner was trapped in a debt spiral that kept him trapped in the mine, working hard and risking his life just to pay his debts. Many Americans should heed the lesson of “Sixteen Tons” and free themselves as soon as possible from the credit card trap.

My great-grandfather worked in a mine in Montana.  My great-grandmother saw the death and danger of the mines, accidents and Black Lung disease, and left with the kids for Chicago.  My great-grandfather missing his wife and family, escaped the mines and left for Chicago to meet them.  He got a fresh start and was able to raise a family of children who went on to get college educations, start careers and build families.  The sons of my great-grandfather were not trapped in the life of the mines. He got a chance to free his soul from the mines and the company store.   

Chapter 7 bankruptcy used to provide an escape valve from overwhelming credit card debts for many people. However, as a result of the credit card companies successful effort to limit the protections traditionally provided by bankruptcy, a Chapter 7 clean slate is no longer an option for most working Americans.

Do not get trapped by credit card companies. Learn about your rights. Learn how you can negotiate with credit card companies. One of the best ways to learn is to meet with a consumer protection lawyer. Consumer have new options today to deal with credit card debt. Bankruptcy remains an option for some. Others may be helped by credit counseling or dent settlement programs. If you are retired or disabled, you may be able to effectively protect your assets and therefore become “judgment proof” from credit card debt lawsuits. Before, you decide which option is best for you. Contact a consumer lawyer to learn about your rights.

Arbitration – Just Say No!

The Philadelphia Enquirer reported today some news I expected years ago. The healthcare industry is turning to mandatory arbitration as a way to insure themselves from having to compensate people that they hurt. Stacy Burling reported in her article, “Arbitration a growing trend in healthcare” that while arbitration in healthcare contracts does not appear widespread, it is “common on the West Coast, and legal experts say it is spreading nationally.”

Mandatory arbitration is one of the tools used by predatory lenders to rip off consumers. Payday lenders, tax refund loan operations, auto finance companies and mortgage brokers have notoriously used mandatory arbitration clauses to force consumers that they defrauded out of court and into a private dispute resolution system that relies on their business to operate.

Who are these arbitrators? I represented an elderly veteran who had his finance rebate ripped-off by an auto dealer. He lost thousands of dollars and did not realize it until after he signed the contract. Unfortunately, he signed an arbitration agreement.

He was a fighter and pursued his claim in the private arbitration forum. Who was the arbitrator? A corporate lawyer whose law firm represents some of the largest auto dealers in America as well as the local auto dealer trade association. The auto sales person admitted that the consumer was offered the rebate. But the finance manager testified that my client rejected the rebate. The client testified this was false. You can guess who won.

The corporate lawyer “arbitrator” ruled that he believed the story that my client turned down the rebate. Does that make any common sense? Why would anyone turn down a rebate? The car dealer had no paperwork to prove that my client turned down the rebate. The car sales person admitted the rebate was offered. My client stated he asked for and expected the rebate. But the arbitrator sided with the predatory finance manager nonsensical story.

Obviously this arbitrator knew who buttered his bread and the bread of his law firm. If he would have decided for the consumer, the auto dealer, who is a member of the local auto trade association, might tell other members of the trade association that the arbitrator will rule for consumers. Car dealers often have vindictive personalities. As revenge, the trade association may take their legal business elsewhere.

Not all arbitrators are as intimately involved in representing the interests of the unfair businesses. Many arbitrators are fair-minded neutral individuals interested in resolving disputes. However, predatory lenders and unfair businesses are not interested in utilizing their services. The prefer to utilize arbitrators and arbitration forums where the deck is stacked in their favor. Paul Bland, a leading expert on arbitration and regular contributor to the Public Citizen Consumer Law & Policy Blog, has testified before Congress that “private arbitration companies are under great pressure to devise systems that favor the corporate repeat players who draft the arbitration clauses... For example arbitrators who rule against corporations and in favor of individuals are often blackballed from serving as arbitrators in future cases.”

It is important for consumers to educate themselves about arbitration. Before you sign a contract, see if it includes an arbitration clause. If it does, demand that the arbitration clause be excluded. If the lender or business refuses to exclude the arbitration clause, take your business elsewhere.

I recommend consumers to “Just say No” to pre-dispute mandatory arbitration. When you sign an arbitration agreement you give up your constitutional rights. You lose your right to a jury trial. You lose rights to access the courts to appeal a bad decision. Instead, you may get your case decided by a bought-and-paid-for “arbitrator”. Arbitration may be an appropriate way to resolve some disputes. But you should never have to agree to resolve a dispute through arbitration on a take-it or-leave-it basis before a dispute arises. If arbitration is appropriate when a dispute arises, then the parties can agree to arbitrate the dispute after it occurs.

Mark T. Lavery

Consumer Protection Lawyer

www.laverylawfirm.com

mark@laverylawfirm.com

The Do-Not-Call List and TCPA can protect your consumer rights

 

The Associated Press reported in an article by JIm Abrams, that Congress has passed legislation extending the "Do-Not-Call" list. Abrams wrote;

Politicians have finally found an issue they all can agree on: Telemarketers calling at dinnertime are a scourge that must be repulsed. Congress on Wednesday sent to President Bush two bills that would make permanent a program to protect consumers from unwanted phone calls from telemarketers. Its hallmark is the national "do not call" list.

Congress seems unable to provide protection from predatory lending but at least Congress has passed some protection for consumers' privacy. This law will continue to provide consumers with protection from invasions of privacy by telemarketers.  If you have not already signed up for the Do-Not-Call list, go to the FTC's website for information on what you need to do.

Under the TCPA, a consumer has a right to file a lawsuit and recover $500 for each call that violates the TCPA. The TCPA can also be used in conjunction with the Fair Debt Collection Practices Act in some situations. 

Generally, the TCPA does not apply to debt collectors making collection calls to debtors. However, if you are subjected to calls from a debt collector and you are not the debtor, you may file a lawsuit against the debt collector under the Fair Debt Collection Practices Act (FDCPA) and the TCPA.

This right was recently recognized by Judge Legrome D. Davis in a case called Watson v. NCO Group, Inc.  NCO Group is a debt collector that uses automated prerecorded collection calls.  In this case, Mr. Watson alleged he was getting hundreds of calls from NCO Group after he got a new phone number. Mr. Watson claimed he owed no debt to NCO Group, Inc.  Mr. Watson filed suit under both the FDCPA and TCPA.

David Israel, defense lawyer for NCO, argued that the TCPA should not apply to debt collectors.  Judge Davis rejected the argument made by David Israel. The judge ruled that Mr. Watson had a right to sue NCO Group Inc under the TCPA for $500 for each call.  Judge Davis wrote;

[The] Court is convinced that a non-debtor's rights are in fact violated when he is subjected to repeated annoying and abusive debt collection calls that he remains powerless to stop.

Judge Davis' ruling was based upon his interpretation that collection calls to non-debtors violate the privacy rights provided by the TCPA. 

So what can you do if you receive "wrong number" calls from debt collectors?

1. Sign up for the Do-Not-Call registry.

2. Save the calls captured by your voice mail or answering machine.

3. Contact a consumer lawyer.

It is not unlikely that you may receive calls from debt collectors even when you are not a debtor.  More and more frequently, debt collectors are using automated dialer and recorded message players (ADRMPs).  The increased use of ADRMPs means that folks who get a new phone number, formerly  held by a person with debts, may be subjected to hundreds of automated collection calls. For more information on this emerging collection practice, check out Jessica M. Gulash's Note "The Use of Auto-Dialers and Pre-Recorded Messages by Debt Collectors" in the Journal of Technology Law & Policy.

Even if you are a debtor, you may be able to sue a debt collector under the FDCPA for using an ADRMP. As detailed by Ms. Gulash, many courts are recognizing that use of ADRMPs can violate the FDCPA.

If you have been subjected to debt collection phone calls. Share your story.  I will help you or refer you to a fellow consumer lawyer or consumer agency who can help.

Mark T. Lavery

Which Credit Problem Solution Is Best for You?

Everyday on television, we see ads targeted to consumers with credit problems. It might be a bankruptcy lawyer touting his ability to "save" your home.  Maybe its Paul Michael Glaser, of Starsky & Hutch fame, promoting credit counseling services.  Or you may have been watching cable late at night when a debt settlement company's ad comes on.

Bankruptcy, credit counseling and debt settlement are three main services directed toward people with credit problems.  Bankruptcy, credit counseling and debt settlement are what I refer to as the "Big Three" of consumer credit services.  But there is a fourth option -- consumer protection lawyers.  You probably will not see a TV ad from a consumer protection lawyers. Most consumer protection lawyers do not engage in mass marketing.  Yet every year, consumer protection lawyers help thousands of consumers solve their credit problems without using bankruptcy, credit counseling or debt settlement.

Bankruptcy, credit counseling and debt settlement can all provide value to consumers with credit problems. But before you decide to se one of these services, you should probably call a consumer protection lawyer first.  Many consumer lawyers are willing to provide you with an initial phone or e-mail consultation for free.  A knowledgeable and experienced consumer protection lawyer will be able to tell your about your consumer rights and whether you may have a claim for money damages against a predatory lender, debt collector or consumer reporting agency. A good consumer protection lawyer may also be able to provide you with foreclosure defense or defend you against a credit card company lawsuit.

If you have a credit problem or struggle with debt. Share your story with me.  If I can help you I will. If I cannot help you then I will refer you to a fellow consumer lawyer or consumer agency who can.  Take action today.  Learn about your consumer rights and options from a consumer protection lawyer before you decide to spend your hard earned money on bankruptcy, credit counseling or a debt settlement program.

Mark T. Lavery 

Corporate lawyers are prepared for the "subprime storm" but are you?

Yesterday, the Kansas City Star, had a feature by Dan Margolies reporting on law firms' preparations to weather the "subprime storm".  Margolies wrote,

The subprime mortgage debacle and resulting credit crunch have slammed the U.S. economy, and the legal world is gearing up to deal with the fallout.

Law firms, it turns out, are well positioned to weather the coming economic storms. Because lawyers are invariably involved on both sides of the transactional fence, they tend to benefit whether the economy is up or down.

As Margolies points out, corporate lawyers who helped put together "subprime" securitization trusts have lost work.  But those same corporate lawyers are now working on restructuring debts for corporations due to the credit crunch.   

The corporations and their lawyers are preparing to weather the "subprime storm". Are you?  Are you in danger of foreclosure due to a "subprime" mortgage?  Are you fearful of the repoman because you cannot pay your predatory auto loan?  Are high-interest monthly credit card payments dominating your household monthly budget?

A consumer lawyer can help you attack the predatory lender and their cronies before they get you.  Due the the Bankruptcy Reform Act, your bankruptcy options are not as strong as they used to be. As recently reported in the Alabama Consumer Law Blog in a post on February 2, 2008.

Filing bankruptcy normally hurts your credit score and in particular when creditors refuse to follow the law accurately reorting your accounts that have been disharged.  Sometimes there is no alternative but to file bankruptcy but other times the best option to deal with abusive collection agencies is simply to sue them. That's what we do - we sue debt collectors who break the law.

As these consumer lawyers explain, a consumer lawyer can sue the debt collector who is harassing you, can sue the credit reporting agency who is damaging your credit and can sue the predatory lender who decvied you in the first place. 

Some people are turning to credit counseling and debt settlement programs as an alternative to bankruptcy.  But the vast majority of credit counseling and debt settlement programs do not have lawyers who are prepared to sue your creditors.

Bankruptcy,credit counseling, debt settlement and credit repair programs may work for some people.  But before you make the choice to take those options, talk to a consumer lawyer.  Most consumer lawyers will provide you with a free consultation and let you know if you can strike first and sue your credit card company, mortgage servicer, auto finance company, a debt collector or credit reporting agency.   

The corporations have lawyers to help them deal with the economic recession caused by the "subprime" economic disaster.  Do you have a consumer lawyer to help you?  Before you pay that next bill to a predatory lender; before you file bankruptcy; before you go to credit counseling; before you enroll in a debt settlement or debt negotiation program; before you seek "credit repair"; call a consumer lawyer to learn about your rights.  You have consumers rights.  You can fight back against predatory lenders, their debt collectors and the consumer reporting agencies.

I am a consumer lawyer. I have helped hundreds of consumers sue creditors, debt collectors and credit reporting agencies. I want to help more consumers fight against predatory lending.  Share your story.  Tell me about your credit problems. I will help if I can. If not, I will refer you to a fellow consumer advocate or consumer agency that can help you.

Mark T. Lavery

A Message to American Credit Consumers

For the past eight years, I have been in the courtroom trenches fighting for consumers against the scourge of predatory lending.  Over six years ago, a good consumer law friend and I were amazed at the rapid "securitization" and marketing of "subprime lending" investment products to institutional investors. We knew firsthand that these "subprime" loans were largely underwritten based upon fraudulent information provided by mortgage brokers who were incentivized to be greedy and dishonest by the major mortgage companies. We saw these “subprime” securitization trusts as financial "houses of cards" that would crumble with the potential to cripple the U.S. economy and financial markets. 

We tried to convince judges that these mortgages were shams.  But federal "pre-emption" of traditional state usury laws prevented us from advancing most of our legal theories.  Nevertheless, we fought hard and helped numerous families save their homes from foreclosure through aggressive advocacy.

Just last week, as I watched Congress scramble to pass legislation to dole out small checks to Americans in a vain attempt to "cure" the "subprime disaster"-induced recession, I called my old consumer law friend.  I asked him if he remembered the conversation we had at an old favorite Mexican restaurant, where we collectively surmised that this “subprime” securitization boded poorly for the economic future of the U.S. 

He too recalled our predictions, made years ago, that have now come true. But he reminded me that we never gave up the fight.  While the “subprime” bubble slowly started to burst, we were there defending people against predatory mortgage foreclosures, we took on the "bottom-feeding" subprime debt-buyers' illegal collection tactics, we fought against the auto industry's embrace of predatory lending scams, we helped consumers restore accuracy to credit reports filled with lies reported by aggressive creditors and verified by uncaring consumer reporting agencies.

But during the last eight years, the politicians and judges made our jobs as consumer lawyers harder.  Mandatory arbitration has prevented many clients from ever getting a day in court.  Instead, they were forced into the "private arbitration" system controlled by corporate lawyers and their corporate clients. As Courts ruled that state predatory lending laws were pre-empted by federal law, federal law that severely limited consumer remedies, Congress stood by and did nothing while the subprime securitization machine gobbled up quick profits from consumers' purses and pockets and convinced institutional investors, our banks, our pension funds, our insurance companies, to bear the risk of their subprime scams.   

Many of the subprime securitization kings saw their houses of cards crumbling a few years ago.  But they had already extracted their fortunes.  One of the premier subprime kings, Roland Arnall of Ameriquest, closed shop in 2005 after making billions and was rewarded by President Bush with a nomination as Ambassador to the Netherlands. The Democratic-controlled Congress confirmed his nomination despite knowledge of his predatory loan practices.

Now two years after Arnall's confirmation as U.S. Ambassador, we all know that the consequences of the subprime kings' extraction of billions from the U.S. credit economy are recession and economic ruin for millions of American families.

What will we do with this knowledge, we will continue to stand by and let predatory lenders take away our constitutional rights to a jury, we will continue to let corporations enagage in predatory lending practices that were known as "loan-sharking" during our parents' generation, we will stand by as credit card banks, student loan companies and payday lenders rob the economic future of our generation and our children's generation? 

We have another choice.  We can fight back.  We can stand up.  We can stop predatory lending in America.  The predatory lenders have destroyed the meager economic growth that occurred during the Bush years.  Now is the time to hold predatory lenders accountable for their past sins. Now is the time to stop predatory lending practices from continuing into the future.

I have made my choice.  I am here to continue the fight.  I am here to continue to help consumers take on predatory lenders, their collection agents, and their complicit consumer reporting agency friends.

If you are a victim of predatory lending, you need to stand up.  You need not be ashamed.  You were taught that using credit was good; that using credit was part of the American dream. You were lied to and deceived by powerful, persuasive, wealthy corporate interests. The media - TV, radio and even the Internet - was harnessed to convince you that "subprime" predatory loans were there to help you - not to hurt you.  Your politicians and judges did little to protect you from the credit reality that is now the American Nightmare.

Be not afraid. A new day is here.  A new opportunity has arisen from the ashes of the predatory "subprime" burning of our economy.  We can now fight back and eradicate predatory lending.  We have a strong American tradition against usury and predatory lending. Predatory lending is a phenomenon of this generation.  If we stand up together, we can restore our traditional American values. A tradition of fair lending, fair debt collection and fair credit reporting. The value of a fair deal.

Before you pay the next bill to a predatory credit card bank, mortgage servicer, auto finance company or payday lender that you cannot even afford to pay; before you go to file bankruptcy; learn about your consumer rights.  Learn how a true consumer-protection lawyer can help you.

Today is a new day.  Today is the day you can restore your credit, free your self from predatory lending practices that have damaged you economically, stop the debt collectors from harassing you.  Contact me. Share your story. If I can help, I will.  If I cannot help, I will refer you to a fellow consumer advocate or agency that is there to help you.  You are not alone. Together, we can change. Together we can fight. Together, we will win! 

Mark T. Lavery