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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.

Woman And Her Belongings Removed From Her Home After WAMU Mistakenly Auctioned

Nobody but nobody likes their mortgage servicing company.  The stories of bureaucratic SNAFUs, rude people who will not listen when told they are making a mistake, and complete arrogance that they can darn well do what they want leads often to some horrific mistakes.  This occurs both inside and outside bankruptcy.

NBC Miami reports of such an incident involving a Anna Ramirez when Washington Mutual (which is now part of Chase) auctioned off her $260,000.00 home for $87,000.00 and then, without any warning whatsoever, showed up with Miami-Dade police officers and removed her, her husband, her daughter, her grandchildren and tossed of their belongings from the house on the front yard.  The family was given just three hours to get themselves out of the house, and their belongings off the front lawn.

The problem with the auction and the eviction?

Anna Ramirez was not behind on her house payments, the house was not in foreclosure, the house was not for sale, there was no foreclosure letter, no entry and detainer notice, or nothing else to warn them.

The mortgage company obviously blames the Miami-Dade Clerk's office for the mistake, which was eventually reversed by a Miami-Dade judge who allowed the family to return to their home,  But, it is hard to see how the matter should have been placed with the Miami-Dade authorities by WAMU in the first place.

The Ramirez family had lived in their home for three years and only recently refinanced the home with the bank.

This situation actually occurs all of the time in a Chapter 13 context.  A foreclosure is posted, a bankruptcy is then filed, notice goes out, and whether notice is ignored, not received or some other mishap occurs, the foreclosure process does not stop.

Most of the time the mishap does not escalate to this level as only the foreclosure has to be reversed.  But, the situation is illustrative of fear that is associated when mortgage companies are allowed to run rampant irregardless of the bankruptcy filing.  Maybe the homeowners are not evicted as we have in the case at hand, in the long run, but the fear still exists.  This results in mental anguish.

And, it is also important to note that my firm has handled a number of stay violations in which, by the time the case is referred, the debtors have already been evicted and their belonging removed to the front yard.

Bankruptcy attorneys and debtors need to remember to always be vigilant, proactive and timely as to bankruptcy notice.  Maybe it does not stop the willful conduct, but it at least gives the debtor a cause of action and possibility of recovery for a willful violation of the stay when it does occur.

Stephen Baldwin Files For Bankruptcy

Oh the Baldwin boys.  But, what Stephen Baldwin's bankruptcy filing demonstrates is that bankruptcy is a legitimate option for those facing financial problems.  It does not matter if you are rich, famous, poor or infamous.  There should be no reason to apologize for dealing with your difficulties in an organized and responsible manner.

As most know, 43 year-old Stephen Baldwin is an actor is the brother of Emmy winner and "30 Rock" star Alec Baldwin.  He has appeared in films including "The Usual Suspects" in 1995 as well as more recently in U.S. celebrity and reality television shows.

Baldwin filed for Chapter 11 bankruptcy in New York stating that he is millions in debt.  He claims owes more than $2.3 million and owns a New York property valued at only $1.1 million. His wife, Kennya Baldwin, also is named in the document.  He claims he owes about $1.2 million on two mortgages on the property, meaning like many Americas he is serious under water or upside down on his home.  He also owes more than $1 million in taxes, and he also has credit card debt.

ARE YOU INTERESTED IN POSSIBLY JOINING ME IN A THIRD WAVE SUMMIT OR SABBATICAL TO JAPAN NEXT SUMMER? PLEASE LET ME KNOW!

Did you know the Biblical Sabbath is the origin for the present-day practice of “the weekend”, meaning Saturday and Sunday in which most do not have work scheduled, or where, like me, your work schedule is more relaxed.  It comes from the Hebrew Shabbat meaning literally a “ceasing” in work.  It is meant to be a hiatus.  Also from this comes the concept of sabbatical, which is an extended version, which traditionally lasted a year.  But, in recent time sabbatical has come to mean any extended absence in one’s career in order to achieve something.

Many times what we want to achieve away from work is just a better understanding of things.  We just want to get away and experience new and much different surroundings.  To open up our minds to new possibilities.  To avoid the mental restrictions and constraints under which we live from day to day.

There is just something about being away for a while, and I do not mean simply near a computer or cell phone in a different location.  I mean out of pocket and mysteriously away from the action long enough to consider other things and other factors that might positively impact our lives.  To get away to someplace you might not otherwise go on your own.

So, although I have not made any plans, I would like your input on what I am thinking.

I am thinking about ditching it all for a week next summer, leaving the country for a more foreign culture, in an effort to see how the rest of the world lives and works — literally.

I am thinking about a Third Wave conference, or really more of an un-conference of sorts (a sabbatical if you will) wherein we legal professionals (lawyers, assistants, law students, techies, consultants, bloggers and the like) can commune and discuss with each other the concepts, the benefits and the nuts and bolts of the Third Wave Practice of Law, including the home-based practice, the virtual law firm, the niche practice of law, cheap tech, marketing and growing a non-traditional law practice, and collaboration, just to name areas.  While, at the same time, getting our minds clear and our horizons adjusted and calibrated properly, by experiencing a different culture, a different environment, seeing the sights, and studying really comparative law or legal practices.  How does the law differ in different places of the World?

CLE would be great, and with some planning there is no reason why this could not be added or achieved so as to kill two birds with one stone.  This might also add some tax incentive to the trip.

Get away from the kids, the pets, and the pressures of the home and office for a week.  Leave the cell phone and the email behind.  Travel and experience and share and learn in a group of like minded law professionals.

I am thinking that maybe we can plan a trip together to Japan thinking that what will change our perspective culturally will assist us in changing our perspective about the practice of law in our country, and allow us to more fully understand what is truly possible.

It also goes to better understanding and appreciation of the concept of work-life balance or blending.

Japan, it would seem, would offer us that difference, enjoyment and entertainment we all want.  And, with its mass transit, it could very well offer us something reasonably affordable.

My daughter, Mary, knows the county well, has worked there, has a degree in Japanese and is fluent.  Many in Japan speak English as well.  She could be our guide, and in that she will have finished her third year of law school by that time, she fits in our criteria and has our interest at heart.

I would hope that along with seeing the traditional sights, that we could arrange to visit a Japanese law school, a law firm and government offices to get a perspective how how things differ and not.

I understand that it is a lot to consider, but I would like to be able to gauge the interest out there for such a trip next summer.  There is no reason to go to the effort over the next year if there is not enough serious interest.

So, here is what I would ask of you.  If you would be interest in attending such a retreat and learning experience next summer (alone or with your significant other), please email me and let me know.  I want to start by compiling a list of possible participants that want to understand more about the Third Wave practice of law and other cultures.  I am looking for both newbies and those who would have the capability and would care to share your expertise with everyone about related matters, such as law firm tech, blogging, marketing, networking, collaborating, niching a practice, working from home, unbundled legal services or the like.  Obviously, there is no obligation at this point and no money to put down for the trip, but I would like to have a list of people who would be greatly interest.

Email me at -

chuck@chucknewton.net

And, give me your contact information and any ideas that you might have for such a trip.

Other bloggers and social media types, please help me spread the word to other legal professionals.  Your assistance would be greatly appreciated.

If we get enough interest, we will start planning and organizing something more formal for your review.

Many times what we want to achieve away from work is just a better understanding of things.  We just want to get away and experience new and much different surroundings.  To open up our minds to new possibilities.  To avoid the mental restrictions and constraints under which we live from day to day.

There is just something about being away for a while, and I do not mean simply near a computer or cell phone in a different location.  I mean out of pocket and mysteriously away from the action long enough to consider other things and other factors that might positively impact our lives.  To get away to someplace you might not otherwise go on your own.

So, although I have not made any plans, I would like your input on what I am thinking.

I am thinking about ditching it all for a week next summer, leaving the country for a more foreign culture, in an effort to see how the rest of the world lives and works — literally.

I am thinking about a Third Wave conference, or really more of an un-conference of sorts (a sabbatical if you will) wherein we legal professionals (lawyers, assistants, law students, techies, consultants, bloggers and the like) can commune and discuss with each other the concepts, the benefits and the nuts and bolts of the Third Wave Practice of Law, including the home-based practice, the virtual law firm, the niche practice of law, cheap tech, marketing and growing a non-traditional law practice, and collaboration, just to name areas.  While, at the same time, getting our minds clear and our horizons adjusted and calibrated properly, by experiencing a different culture, a different environment, seeing the sights, and studying really comparative law or legal practices.  How does the law differ in different places of the World?

CLE would be great, and with some planning there is no reason why this could not be added or achieved so as to kill two birds with one stone.  This might also add some tax incentive to the trip.

Get away from the kids, the pets, and the pressures of the home and office for a week.  Leave the cell phone and the email behind.  Travel and experience and share and learn in a group of like minded law professionals.

I am thinking that maybe we can plan a trip together to Japan thinking that what will change our perspective culturally will assist us in changing our perspective about the practice of law in our country, and allow us to more fully understand what is truly possible.

It also goes to better understanding and appreciation of the concept of work-life balance or blending.

Japan, it would seem, would offer us that difference, enjoyment and entertainment we all want.  And, with its mass transit, it could very well offer us something reasonably affordable.

My daughter, Mary, knows the county well, has worked there, has a degree in Japanese and is fluent.  Many in Japan speak English as well.  She could be our guide, and in that she will have finished her third year of law school by that time, she fits in our criteria and has our interest at heart.

I would hope that along with seeing the traditional sights, that we could arrange to visit a Japanese law school, a law firm and government offices to get a perspective how how things differ and not.

I understand that it is a lot to consider, but I would like to be able to gauge the interest out there for such a trip next summer.  There is no reason to go to the effort over the next year if there is not enough serious interest.

So, here is what I would ask of you.  If you would be interest in attending such a retreat and learning experience next summer (alone or with your significant other), please email me and let me know.  I want to start by compiling a list of possible participants that want to understand more about the Third Wave practice of law and other cultures.  I am looking for both newbies and those who would have the capability and would care to share your expertise with everyone about related matters, such as law firm tech, blogging, marketing, networking, collaborating, niching a practice, working from home, unbundled legal services or the like.  Obviously, there is no obligation at this point and no money to put down for the trip, but I would like to have a list of people who would be greatly interest.

Email me at -

chuck@chucknewton.net

And, give me your contact information and any ideas that you might have for such a trip.

Other bloggers and social media types, please help me spread the word to other legal professionals.  Your assistance would be greatly appreciated.

If we get enough interest, we will start planning and organizing something more formal for your review.

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.

It Is Time We Curb Bank Overdraft Fee Abuse

It has reached the point of embarrassment, that is for everybody but the banks.  I am talking, of course, about the sky high and rapidly increasing overdraft fees charged.

Now, three Democratic lawmakers have asked the Federal Reserve to curb charges that banks levy on customers when they make a purchase with a debit card and overdraw an account. The fees can mount up quickly and cost consumers more than their actual purchases.  Known as "overdraft protection," and consumers often don't even know that they have the unasked-for convenience until the charges appear on their accounts.

House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.), along with Rep. Carolyn Maloney (D-N.Y.) and Rep. Luis Gutierrez (D-Ill.), sent a letter to Federal Reserve Chairman Ben Bernanke asking the Fed to strengthen planned regulation of overdrafts.

"Overdraft abuses related to debit card purchases and ATM withdrawals are particularly egregious for at least two reasons," the lawmakers wrote. "First, overdraft fees triggered by these transactions, which could easily be denied at the terminal, often take consumers completely by surprise. Second, an overdraft fee charged on a typical debit card purchase is vastly disproportionate to the amount of the overdraft itself."  The lawmakers want the Federal Reserve to require institutions to obtain the written consent of their customers before enrolling them in overdraft protection.

Overdraft charges represent one of the biggest slices of the short-term unsecured credit market.  It is bigger than credit card over-the-limit penalties, and much bigger than payday loans, bringing in $34.7 billion in revenue for banks and credit unions in 2008, compared with $7.3 billion for payday lenders.

Payday loans are often vilified for their high costs, and they're illegal in 15 states. The annualized percentage rate (APR) of interest on a typical payday loan is 400 percent or more, according to the Consumer Federation of America. But that's nothing compared with the overdrafts the lawmakers are targeting.  The Federal Deposit Insurance Corporation released a survey in January 2008 that broke down the average cost of overdraft fees to consumers and found that a typical $27 overdraft repaid in two weeks incurred an APR of 3,520 percent.

Just how bad is it when the banks and credit unions are charging more in terms of interest than are payday lenders?

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.

Online Payday Loan Companies Are Loan Sharks That Trap People In Debt And Then Disappear

Not enough, maybe, but at least Congress has started to do something about the deceptive credit card industry.  Now it is time for it to tackle an ever growing menace known as the payday loan industry and especially the online payday loan industry.

If you are interested, Huffpo has a post on the subject, we review here, and the site is looking for your horror stories as well.  You can email those payday horror stories to Huffpo at this email address -

submissions+debt@huffingtonpost.com

What Huffpo reported was that the online payday lending industry group, Online Lenders Alliance, wrapped up a 3-day conference near the White House, where they pandered to senators and congressmen from both parties.  Or, maybe, the pandering was the other way around.

Regardless, the purpose of the OLA is to weed out the bad apples of the industry by requiring its members, none of which are listed on its website, to comply with good business practices.  But, you know, good business practices do not always represent moral or even consumer friendly practices.  You can be a loan shark and still account for your profits appropriately.  Also, not many payday lenders promote themselves as being part of the OLA.

What is obvious, however, is that online payday loans are becoming more of the norm. Online payday loan lenders loaned (?) approximately $7.1 billion in volume for 2008 according to one estimate.

Consumer advocates sent a letter to members of Congress urging them to ignore the conference and implement a cap on interest rates.  There point was that online payday loans are layering a whole other set of risks on top of a product that is set to fail by its basic structure.

As quoted in the article, Dale Pittman, a consumer protection lawyer who represents victims of debt collection harassment and abuse in Petersburg, Va., has some experience tracking online lenders. He said, "It's hard as hell to find these people ... You can't communicate with them and tell them what they're doing is illegal." Thirty-five states have enacted interest caps that effectively ban payday lending, but Virginia isn't one of them and so online payday loan lenders are avoiding these caps.  Pittman tried to track down several online lenders on behalf of a client who was drowning in debt after taking out multiple payday loans over the course of a year. None of the lenders had a license, as far as Pittman could tell, so all the loans were illegal.  He also could not find but one of the lenders.

The same problem is occurring in a bankruptcy setting.  Whether or not it is an automatic stay or discharge injunction violation to submit an actual check for payment on an account which was issued before the filing of the bankruptcy, most of these lenders no longer accept actual negotiable instruments.  Not only do these payday sharks ding  bank accounts all of the time, but if they recover money that money will likely have to be returned if any turnover adversary is filed.  But, try to find the company.  The bank statements are not much help.  Usually the trail is so difficult to uncover and the potential recovery is small enough that most bankruptcy attorneys do not believe it is worth their time, especially if they cannot recover attorneys fees if no stay violation is found.  The debtor in bankruptcy, however, is made to suffer.

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.

U.S. Senate Votes Down Bankruptcy Mortgage Bill

It really is a sad day for those facing foreclosure in this country.  Strangely, it is probably not good news for the mortgage industry either that must now foreclose millions of homes and sell them at bargain basement prices.  Worse of all, it is bad news for the housing market in that everyone will probably see their home prices reduced further.

The Senate has defeated legislation that would have let hundreds of thousands of debt-ridden homeowners seek mortgage relief in bankruptcy court.

President Barack Obama had said the bill was important to saving the economy and promised to push for its passage. But facing stiff opposition from banks, Obama did little to lean on lawmakers who worried it might spike interest rates.

The bill would have allowed bankruptcy judges to rewrite a person’s mortgage terms, if a bank refused to offer better terms based on income and home value. Only 45 senators voted in favor of the bill, with 51 senators opposed.