StayViolation.Com

Attorneys General Say Debt Collectors Inspire The Most Complaints

Now of course that is not surprising.  Especially in states like Texas where garnishment is difficult or impossible, I would assume that debt collectors are the motivation for most people filing bankruptcy.  Not for the fact that debt is owed and unpaid, but because of the harsh and repeated tactics the debtors are trying to avoid.

According to HuffPo's reporting, according to the National Association of Attorneys General (NAAG), more complaints were filed last year against debt collectors than any other industry.  This was unchanged from the same survey conducted in 2007.  Further, "Debt collectors generate more complaints than any other industry," according to the Federal Trade Commission's Web site.  In a February report on the industry, the FTC cited "major problems" and "recognized that certain debt collection litigation and arbitration practices appear to raise substantial consumer protection issues."

It should be no secret that most debt collectors serve no real purpose other than that of harassment.  Sometimes it is subtle but, as indicated in this article, much of the time it is not.  More importantly, from a bankruptcy standpoint, debt collectors do not know how, or do not care, to shut down the machine of collect activity just because a bankruptcy is filed.  You see this all of the time.  The bankruptcy is filed, the case and the existence of the stay is noticed out, but the inappropriate actions continue.  Often these inappropriate actions continue even when placed on notice to stop violating the stay by the bankruptcy attorneys.

Why is this so?

Most likely for the same reason that debt collectors represent the largest number of complaints to the various AGs and the FTC.  They do not make money if they are not stepping over the line.

Another way to look at it is that these are generally large organizations with people working in undesirable jobs.  It takes a lot of effort and manpower to get the collection machine moving.  And, as collectors will argue, all they hear are hard luck stories or reasons why they should not be calling.  So, they are trained to ignore these issues and continue on.  This often gets them in trouble both inside and outside of the bankruptcy context.

New York Shuts Down Collection Agency Run By Felons

As reported by the AP and The Houston Chronicle, the State of New York shut down a Buffalo, New York company run by felons.  The company operated under a number of names, including Final Claims Asset Locators, and it was run by a former drug dealer named Tobias Boylan that goes by the moniker, "Bags of Money".  The company was terrifying people into paying money by stating that the police were being sent over to their house then to throw them in jail.  In one recorded phone call the collector was heard saying, “Make sure you have somewhere for your kids to go. Lock up your house. Get some clean clothes, because you’re not coming home anytime soon."

This is obviously an interesting public interest story, but whether run by felons or more reputable sorts, the truth of the matter is that collection agencies are constantly engaging in this type of strange innuendo that is intended to deceive the person with whom they are dealing.  There should also be a concern about the propriety of companies that provide the business to these collectors.

5 Myths Of Bankruptcy

New York News did filed this report debunking 5 Myths of Bankruptcy.  Let us listen in -

New Credit Card Law Will Also Restrict FreeCreditReport.Com - Style Ads

We have all seen the TV spots of companies, and especially FreeCreditReport.Com, advertising FREE credit reports.  I have always wondered how they can afford to saturate the TV airwaves for a free service.

Well, the new credit card reform bill signed into law by President Obama will not just try to put a stop to several unfair practices of the credit card industry -- it also targets misleading advertisements for phony "free" credit reports.

The law calls for the Federal Trade Commission to issue new rules that will force free credit report advertisers to inform consumers that the only place for a free credit report is AnnualCreditReport.Com.  And, TV and radio ads will also be required to include the statement: "This is not the free credit report provided for by Federal law."

Under the Bush administration, the FTC repeatedly fined the folks behind FreeCreditReport.Com for deceptive advertising, since you only get the "free" report after enrolling in a $15-a-month credit monitoring program. But the fines amounted to mere wrist-slaps.

The Mortgage Fraud Industry

No, the U.S. Senate did not believe that consumers and ordinary people deserved any mortgage relief, but it gave hundreds of billions of dollars to the mortgage industry.  Mortgage modification was denied to the bankrupt consumer to protect an industry where fraud was so pervasive that it deserves not to be called the mortgage industry but the mortgage fraud industry.  Watch and share this video.

The New Frontier In Debt Collection - Harassing The Dead's Next Of Kin To Pay What They Do Not Owe

If I have said it once, I have said it a thousand times.  There is no reason, no reason what so ever, for people to deal with, trust, or even communicate with a debt collector.  This is especially true for relative and loved ones that are grieving.  There is really no reason whatsoever for debt collectors to even exist.  This does not mean that people should ignore the calls of the actual creditors, but in this day and age of selling bad debt, this does not much exist.

So, what is the problem this time?

The New York Times, reports on one collection company called DCM Services that seeks to collect past due and defaulted debt from THE DEAD.

We use to joke in the old days that death often represented the ultimate discharge of one's debts.  This was especially true if the deceased did not have any real assets.  No longer.  Now you have a collection service that will try to harass your next of kin, such as your children and your widow, and probably at a time when they least need such treatment.

Intervening in a probate matter in which there are assets, other than the home, is one thing, but this is only a small part of what this company, and other collectors, do.

The problem is that the people contacted by DCM and other collectors often have no legal obligation to pay the debt, but they are pressured or convinced in some way to do it.

According to the NYT article, new hires at DCM, for example, train for three weeks in what the company calls “empathic active listening,” which mixes the comforting air of a funeral director with the nonjudgmental tones of a friend to convince people who have no liability to pay the debt.  The goal is to play improperly on sympathies and emotions of the person, whether there is an estate of the deceased to pay the debt or not.

I loved this response from the article as to the fact these people do not owe the debt. Scott Weltman of Weltman, Weinberg & Reis, a Cleveland law firm that performs deceased collections, says that if family members ask, “we definitely tell them” they have no legal obligation to pay. “But is it disclosed upfront — ‘Mr. Smith, you definitely don’t owe the money’? It’s not that blunt.”

DCM started as a law firm, which means, I suppose, that it now just a collection agency.  What is frightening is that it now employs 180 people, many directly involved in collecting debts from people who do not owe them.

How bad is this practice on collectors.  DCM admits in the article that not everyone has the temperament to place such calls and they lose 50% of those it hires to do so in the first 90 days.  Of course, you might say as easily that those that quit have a conscience.

And do not think the manipulation stops with the calls.  DCM started a Web site called MyWayForward.com to provide the bereaved with information and tools.  Obviously to gain the sympathies and trust of families struggling already with the death to pay debts they do not owe.

The collectors for the company are trained in the five stages of grief, which might sound like a good thing, except it is obviously used not to necessarily be of assistance to those grieving, but to solicit the payment of the bills of the dead from those likely not responsible.

I think all bankruptcy attorneys need to be on the lookout for people that have been taken advantage of in this regard.

10th Circuits Adopts Objective-Coercion Principle In Discharge Injunction Violations

The United States Court of Appeals, Tenth Circuit opened the door to the Objective-Coercion Principle in discharge injunction violations.  In doing so, however, it distinguished the facts of the case at hand and ruled against the debtors because neither the Bankruptcy Court findings, nor the Debtor's testimony met the guidelines set out by the 10th Circuit.

In the case In re Paul, Circuit Judge Stephen H. Anderson issued the opinion that states that the Objective-Coercion Principle "operates as an overarching exception" to the rule that actions that do not directly violate the 11 U.S.C. §524 discharge injunction may still be a violation of §524(a)(2) if it can be shown that a "creditor acted in such a way as to 'coerce' or "harass' the debtor improperly so as to theoretically force them to pay a discharged debt.

The 10th Circuit, therefore, adopts the theory first established by the 1st Circuit Court of Appeals in its decision In re Pratt in 2006, except that the 10th Circuit did not find that the facts before it in In re Paul met the standard set.

Former NFL Star Michael Vick Files For Bankruptcy Protection

On July 8, 2008, Michael Vick, the former NFL quarterback who is serving a 23-month prison term for plotting to run an interstate dogfighting ring, filed for Chapter 11 reorganization according to Bloomberg News.  Vick cited debts of $10 million to $50 million in Chapter 11 papers filed yesterday in U.S. Bankruptcy Court in Newport News, Virginia. He listed assets valued at between $10 million and $50 million.

It is reported that Vick's hope is that by filing bankruptcy that he can, after the conclusion of the bankruptcy case, rebuild his life on a personal and spiritual level, resurrect his image as a public figure, and resolve matters with the NFL such that he can resume his career,'' Vick's lawyers said in the bankruptcy filing.

Vick, 28, the No. 1 pick in the National Football League's 2001 college draft and a three-time Pro Bowl choice with the Atlanta Falcons, was indefinitely suspended by the league when he agreed to enter his August 2007 felony plea. He is due to be released from the U.S. penitentiary in Leavenworth, Kansas, in about a year, according to court papers.

A federal judge in December gave Vick less than half the maximum penalty for his role in buying, training and killing dogs while funding gambling on fights held on his property in Surry County, Virginia. He also received three years probation.

Vick pleaded guilty to conspiracy to travel in interstate commerce in aid of unlawful activities and to sponsor a dog in an animal-fighting venture. He publicly apologized for his actions and said he would stand against animal cruelty.

His creditors include The Atlanta Falcons, which are owed $3.75 million for a pro rated signing bonus according to the filing. Other of the largest unsecured creditors listed include Joel Enterprises Inc., owed $4.5 million for breach of contract, and Royal Bank of Canada, owed $2.5 million for a real-estate loan.

Bush's Hoovervilles