Every once in a while, some regulator or another announces that it will henceforth be going after debt collectors with renewed vigor. This week, it’s a hodgepodge of federal and state regulators against abuses. In the case of California, at least, it may be because collectors went after the wrong person, state senator Lou Correa (D-Santa Ana):
Last year, Correa discovered his Senate paycheck was being garnisheed because of a $4,329 lien for the Sears debt. Brachfeld had obtained a default judgment in court, even though, Correa said, the lawsuit was never served on him and he knew nothing of the claim or the court hearing.
He later learned that the debt belonged to a Luis Correa from Santa Ana. The man had a different Social Security number, different address, even different first name — the senator is legally Jose Luis Correa.
Read Aggressive debt collection tactics are drawing federal scrutiny in the Los Angeles Times.
Debt settlement is basically debt collection by another name. Out of one side of their mouths, debt settlement companies promise creditors they will help them get paid. Out of the other side of their mouths, debt settlement companies promise consumers great “deals” to resolve their debts. In order to appear more effective (or trustworthy, maybe), many debt settlement companies go to great lengths to appear to be law firms, while putting WE ARE NOT YOUR LAWYER disclaimers in the small print to attempt to avoid violating unauthorized practice of law regulations.
At best, consumers spend a lot of money to get settlements they could easily have gotten themselves with a few phone calls. At worst—and far too often—consumers spend a lot of money and get nothing.
California collection agency Rumson, Bolling & Associates apparently threatened to do exactly that to a woman who was having difficulty paying for her daughter’s funeral. According to the collection agency’s lawyer:
When the evidence comes out, it will show that the firm invested a lot of resources in trying to comply with federal law, Pitet said, “and if there were violations, as the FTC alleges, they were done by employees against company policy.”
Collection agencies always come up with crap like that. Here’s what it reminds me of:
They know what their collectors are doing. If they don’t approve of it, they look the other way while they rake in the cash.
(Hat tip to Brad!)
The 9th Circuit US Court of Appeals recently found that “a literally true statement can still be misleading” and therefore a violation of the Fair Debt Collection Practices Act. Arrow Financial Services (a Sallie Mae Company) sent a consumer a letter stating that if Arrow were reporting the debt to a credit reporting agency, it might submit negative information to that credit agency. However, Arrow could not have submitted the underlying debt to any credit reporting agency.
Gonzales, the consumer in this case, sued because Arrow implied a threat of negative credit reporting when it did not have the right to report the debt in the first place. The 9th Circuit agreed.
This decision (PDF) suggests that debt collectors cannot simply use a form that says if and leave it up to consumers to determine whether they are subject to the negative side of the if. In the 9th Circuit, at least, debt collectors may not threaten—even conditionally—unless they actually do have the right to do what they are threatening to do.
(Thanks for the tip, Randall!)
Malcolm Ruthven is a bankruptcy attorney in the San Fransisco Bay Area, and now a member of the Caveat Emptor bankruptcy attorney directory. Malcolm is a solo practitioner, and deals with all his clients directly.
He is also passionate about what he does:
I like seeing the relief in the eyes and manner of my clients after they’ve taken the difficult steps they need to take toward a financial Fresh Start. It’s a privilege to be an important part of that process.
To contact Malcolm, visit his California bankruptcy attorney profile.
Mark Anderson is a consumer rights lawyer and blogger in California, and now a member of the Caveat Emptor lawyer directory. Mark has handled thousands of lemon law cases, as well as cases involving the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and class actions.
To contact Mark, visit his California consumer lawyer profile.
CARFAX ads make me want to scream. CARFAX will not give you the “real history” of a car. What a CARFAX report gives you is the reported history. There can be a big difference between the reported history and the actual history of a car. CARFAX just collects information reported to the various states’ motor vehicle departments. But each state has its own standard as to what information it collects and what that information means. Also, the manner in which accident information is recorded—if at all—varies widely.
“The thrust of the law is to require mortgage servicers to exhaust all avenues in order to contact borrowers and negotiate modified terms before foreclosing. It also provides limited protections for tenants affected by landlords’ foreclosures and imposes duties on foreclosing servicers to maintain properties.” California Foreclosure Law Passed | Consumer Law & Policy
Some scammers in California were caught telling groups of Spanish-speaking homeowners in foreclosure that they could transfer their homes to the federal government for $10,000. The scammers are in jail, and the police are trying to find the money. Foreclosure scammers busted in San Diego | California Debt Blog