Archive for November, 2010

You Are Ordered to Appear in Court on a Debt

Thursday, November 11th, 2010

Imagine a sheriff’s deputy coming to your home or workplace, asking for you, and handing you a legal document that summons you to appear in a courtroom on a debt collection lawsuit for a hearing or deposition. You show up at the building at the appointed time, enter the courtroom, and are sworn in by the bailiff. Then the judge or someone else asks you questions about a debt you did not pay and why you have not settled it. You provide your credit card number or sign over title to a vehicle, so that they can settle the debt, then you leave.

It’s all true, except that the sheriff’s deputy, the bailiff, the judge, and others involved are all employed by a debt collection agency, not the government. The courtroom was a mock courtroom in office facilities rented by the same debt collection agency. This happened recently to hundreds of consumers in Erie, Pennsylvania, according to charges brought by the Pennsylvania Attorney General.

The news story and video are at this Pittsburgh News site:

http://www.thepittsburghchannel.com/r/25569199/detail.html

Yet another low for debt collectors trying to collect credit card debts in a tight economy. Who could have expected that they could go any lower than the automated phone calls that debt collectors place day and night to consumers, the calls about the debt to family members and friends, and the over-the-top harassing calls from debt collectors based outside of the United States? But, they managed a new low!

This conduct violates several provisions of the Fair Debt Collection Practices Act and may also violate laws against impersonating an officer or a government official. Don’t let this happen to you. Any document or calls to collect an unpaid debt should be carefully vetted using reliable websites or direct contact with a consumer attorney, with expertise in defending debt collection lawsuits and credit card lawsuits. And, don’t waive your rights. Ask for written verification of the debt in writing, as stated in letter 1.1 at www.StopCollectionHarassment.com .

Robert Stempler

Settle credit card debts yourself: It’s better than loading up the moving truck

Thursday, November 11th, 2010

In this era of tight consumer credit and mortgage lending criteria, getting financing for a home is nearly impossible. For the same reasons, selling one’s home can take months or years and require considerable price reductions to accomplish.

That is why I found financial author Suze Orman’s article in November, 2010 “The Costco Connection” magazine (www.Costco.com) somewhat naive. A reader asked Ms. Orman what he and his wife should to do about a home “appraised” at $470,000 with a mortgage of $147,000 and too much credit card debt to handle. The reader had applied to refinance their home, but the bank refused.

Ms. Orman’s response: sell the family home and pay off all credit card debts. I have a different suggestion for this reader and others in a similar bind, while our economy continues to falter.

There was a time from about 2002 to 2007 when the housing market was taking off and mortgage loans were being offered to anyone with a job and some savings, who wanted to buy into the American dream of home ownership. After the crash, in 2008, all major lending institutions put the brakes on home ownership, as they saw property values plummet and unemployment soar.

Ms. Orman’s advice is unrealistic for today’s tight-money environment. The reader and his wife will probably end up giving away their home, to get it sold reasonably soon. How much would remain after satisfying their debts is not clear.

Had the reader asked a debt collection defense lawyer such as me what to do, I would have reviewed with them all possible options, but I would have focused them on trying to negotiate all their debts for a discounted amount, starting with not paying the credit cards for a while. This will result in settlement offers from the credit card bank for a discounted amount. Yes, it will hurt your credit scores for several years, but at least you would keep your home and no longer have the credit card debts hanging over you.

Many people may consider this a very aggressive strategy. It requires that you be patient, carefully saving every dollar to be able to accept the settlements when offered, and a backup plan (that is, “Plan B”), if there are one or more credit card lawsuits if you cannot settle. Plan B is to defend any lawsuits using a debt collection attorney with considerable experience defending these cases. Perhaps you will win such lawsuit with the lawyer or perhaps you can accept a settlement offer that is affordable, negotiated by the lawyer.

Robert Stempler