Law & Politics

Federal Government Turns Into Massive Zombie Debt Collector

Three years ago, Congress added this sentence to the farm bill:

Notwithstanding any other provision of law, regulation, or administrative limitation, no limitation on the period within which an offset may be initiated or taken pursuant to this section shall be effective.

What that sentence did was remove the statute of limitation on debts owed to the federal government. As a result, according to the Washington Post, the Treasury Department is intercepting hundreds of thousands of tax returns this year, to collect on very old debts, some going back to the 1960s. So far, it has collected something like $75 million using this tactic.

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Confidentiality Agreements Are Not “Standard”

Today’s outrageous social media story concerns Patrick Snay, who settled a lawsuit against his former employer for $80,000. The settlement agreement contained a confidentiality clause that he apparently violated by telling his daughter that “he’d settled and was happy with the results,” and that his daughter apparently violated when she posted this on Facebook:

Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”

Gulliver, the defendant, saw the posting, refused to pay the settlement due to the breach of the agreement, and now the whole thing is front-page news.

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Bankruptcy Reform Plugged the Relief Valve

cork

Bankruptcy is sort of a relief valve for the economy. When financial pressure (debt) builds up to a certain point, the relief valve opens and people use bankruptcy to discharge their debt. Then, they go back to being consumers and the economy can return to a healthy state. There are other relief valves, of course, but bankruptcy is really the only one available to consumers. Bailouts are for too-big-to-fail banks, not the little guy.

If consumers cannot declare bankruptcy, they cannot go back to being consumers. That means the pressure stays high and the economy has trouble returning to a healthy state.

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Minnesota Schools Take Away School Lunches, Too

Two weeks ago, it was big news when a Salt Lake City school took lunches away from students when their card was declined at the register. (Students at many schools use a card to buy lunches, and parents are responsible for depositing money to the student’s lunch card account through the school’s website.)

It turns out that many Minnesota schools do the same thing. According to the StarTribune:

 A majority of public school districts in this state deny hot lunch — or any lunch at all in some cases — to children who can’t pay for them. Some schools take the meals from students in the lunch line and dump them in the trash when the computer shows a deficit in their lunch accounts.

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Here’s What Income Inequality in the US Looks Like, in One Image

From the Pew Research Center:

incomeinequality

Pretty striking. Can we all agree this is a problem, even if we can’t all agree on the solution?

Sherrod Brown’s Recommendations for Improving the FDCPA

From insideARM, the recommendations include:

  • Require that debt collectors, whether primary creditors or third party collectors, hold all relevant documentation before issuing their first debt collection notice to the consumer.
  • Require that information on prior collection attempts travel with the debt.
  • Prohibit the sale of unverifiable debts.
  • Eliminate the sale or collection of time-barred debt.
  • Issue updated guidance for consumer dispute procedures reflecting the new technological possibilities for documented consumer disputes.

How Monitoring Your Kids on Instagram Could Land You in Jail

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Instagram is apparently the teen and tween social network of choice. That means parents who want to do the responsible thing and monitor their children’s Instagram accounts may be tempted to demand that their children “hand over the keys” to their accounts. But accessing your child’s Instagram account is — technically, at least — a violation of federal law.

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Midland Funding Robo-Signing Class Action Settlement Struck Down

Under the terms of the settlement reached in several class actions against Midland Funding for its (apparently past) practice of employing robo-signers to execute affidavits for debt buyer lawsuits, each class member would receive under $20 — and that’s it. The Sixth Circuit rightly decided this was unfair (pdf).

Unfortunately, the Sixth Circuit seemed to think the settlement was unfair primarily because the named plaintiffs (i.e., those whose names actually appeared on the complaints) would receive $8,000 plus the elimination of their debts. The class members who opted into the settlement just got $17.38 each, and still owed their debts:

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Elizabeth Warren Comes Out Swinging at Banking Regulators

While there are a lot of people you can blame for the state of the US economy, government regulators are at the top of the list. So it’s satisfying that someone has finally taken them to task. Elizabeth Warren, finally on the Senate Banking Committee where she belongs, had some hard questions for banking regulators yesterday, specifically on why they are happy to accept pennies on the dollar to settle claims against banks.

What she got in response was a lot of hemming and hawing by the spineless regulators in question, none of whom seemed to know the last time anyone took a bank to trial.

I’m a little concerned that too big to fail has become too big for trial.

At Senate Hearing, Warren Comes Out Swinging” (NYT) (via Reddit)

Put Free Credit Scores on Congress’s Agenda

free-credit-score

Right now, you have a right to a free credit report, but not a free credit score. That’s annoying, because the score is what really matters whenever you apply for credit. Consumer Union wants to make it easier for consumers to get their score, and is putting in motion a grass-roots campaign to put free credit scores on Congress’s agenda.

So contact your representatives, and let them know you want a free credit score. Here’s where you can find out how to contact them:

(via cleveland.com)

(image: http://www.flickr.com/photos/a_ninjamonkey/3448476109/)