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Whose side are they on? How the Department of Education Pounds Student Loan Borrowers – Alabama Consumer Debt Attorney Judson E Crump

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A new NCLC Report is out on the student loan collection process.  For those of you that don’t know already, debt collectors can be viciously greedy and completely unhelpful for people in debt.  Naturally, we expect credit card companies and other profit-motivated businesses to sell or refer their unpaid debts to vicious collectors.  That’s how they maximize the value of their unpaid accounts.

But the government?  Surely the taxpayer-funded public-interest side of the social contract isn’t going to feed its young people to the hounds?  Actually, yes they are.

–Here’s the Report–

 

And for those that are interested, here’s a related post from F* the Banks!

Midland Funding Lawsuit Defeated – Mobile, Alabama Attorney Judson E. Crump

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My client was sued by Midland Funding for a credit card account they said he once had with HSBC Bank Nevada, NA.  I answered the complaint for him and the case was set for trial.  The collection lawyer was there with a stack of documents they said proved their case.  I objected to them, and normally I succeed in getting their evidence kicked out.  But the judge let them into the record anyway.  It didn’t matter.

Went to Trial against Midland Funding and won, again.
Went to Trial against Midland Funding and won, again.

The judge considered their evidence, but found that it just wasn’t enough, so we won.  I’ve represented consumers sued by Midland Funding 4 times this year and beaten them 4 times.  Hopefully I can keep up this streak.

No lawyer can ever promise a victory in court or any result, for that matter.  But if you live in Alabama and you have received notice of a lawsuit by Midland Funding or Midland Credit Management, then you may want to give me a call.  251.272.9148.

Who is Harbin LLC? Who is Revenue Maximization Consultants? – Alabama Debt Defense Attorney Judson E Crump

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If you’ve recently received a letter or certified mail from a company called “Harbin, LLC” or “Revenue Maximization Consultants,” you may be facing a lawsuit by a debt buyer.

Who are they?

Harbin, LLC calls itself a “buyer of distressed receivables.” In other words, it is a debt buyer. They claim to purchase past-due accounts and then they try to collect them. Revenue Maximization Consultants is a related business.

If you have been sued by either Harbin or Revenue Maximization Consultants in Mobile County District Court, you need to speak to a lawyer right away.

Alabama Woman Sues Comerica Bank over Direct Express Debit Card Dispute – Alabama Consumer Credit Attorney Judson E Crump

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Last Thursday, we filed suit against Comerica Bank, issuer of the popular Direct Express Debit MasterCard, alleging that the bank failed to investigate purported errors, despite my client having disputed the errors both orally and in writing.  The allegations are summarized below:

The Direct Express card is a debit card that carries the funds of federal benefit recipients.  My client attempted to use hers at a local Triton ATM machine, but due to some sort of error, did not actually receive the money she requested.  But Comerica still deducted the money from her Direct Express account.  This caused her account to be wrongfully reduced by $500, which prevented her from being able to pay her bills and obtain her necessities for several weeks.

 

She disputed their accounting of her money by telephone, with no success.  Then she came to me and I wrote them a notice of error.

 

Under the Electronic Fund Transfers Act, the financial institution is required to investigate a notice of error within 10 days and inform you in writing of the results of their investigation.  If they don’t do that, they must provisionally credit your account for the disputed money and conduct a longer investigation, which can’t last longer than 45 days.

If a financial institution is found liable for violating a consumer’s dispute rights under EFTA, they can be held liable for three times the damage they’ve caused plus be forced to pay your court costs and attorney’s fees.

This is the first case I’ve filed under the EFTA, so I’m very interested to see how it plays out.

Have you lost money because your bank screwed up an ACH or Electronic Fund Transfer? – Alabama Consumer Credit Attorney Judson E. Crump

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I’m looking for people who have experienced problems with their creditors due to a failure of an electronic payment that was not their fault.  If you have an agreement to pay a debt via ACH (automated clearinghouse), debit card, phone check, direct withdrawal, or other electronic means and for some reason (like a computer glitch, malfunction, bank error, or other screwup), the money never went from your bank to the creditor, the creditor is supposed to give you time to try the transfer again or fix the problem before taking action against you.

If an electronic payment method fails, your creditors cannot take action against you until they have requested another payment method in writing.

So for instance, if you have a mortgage payment that comes out of your checking account each month, and one month your bank starts screwing up the payments, then the mortgage company cannot foreclose on you or charge you late fees until they have sent you a written request for another payment method.  Has this happened to you?  Have you been foreclosed on because of an ACH failure that wasn’t your fault?  If so, give me a call and tell me what happened.  I’m very interested in this aspect of the law and want to see if there are violations happening out there.

Or are you paying for a car via debit card each month, and after a bank malfunction, got a car repossessed?

If something like this has happened to you, give me a call at 251.272.9148.  I won’t charge you anything.  I just want to hear your story.

How to Stop Creditors from Drafting Money From your Bank Account – Alabama Consumer Credit Attorney Judson E Crump

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A Common Scenario – Trouble with ACH Drafts

Imagine: A few years ago, you got a loan or bought something on credit.  Rather than worry about having to remember to write and mail a check each month and risking late fees and repossessions if you forgot, you decided to let the payments come directly out of your bank account.  And the creditor, of course, was happy with that arrangement.  So sure enough, month after month, the creditor drafted $80 from your account, keeping you current.  But then one day, you realize that you can’t make the payment – you lost a job or had a tire blow out and the money simply isn’t there in the account.  There’s 5 days left before the draft is scheduled to occur.  What do you do?

You cancel the draft.  Isn’t that going to make the creditor mad?  Yes, if you cancel the draft, you may be breaching your contract with the dealer/creditor.  But if the money isn’t there, the breach is going to happen anyway, and on top of that, the draft will bounce and the bank and creditor will hit you with NSF fees.  So you cut your losses as quickly as possible.  Don’t allow a draft that you can’t cover.

Preauthorized ACH Transfers and the Electronic Funds Transfer Act

Now, if things go the way they’re supposed to, you call your bank, tell them that you withdraw authorization to draft a payment to the creditor, and the bank says “OK.”  And the money doesn’t draft and life goes on.

But what if the bank says you can’t?  Or if the creditor says you can’t?  It turns out, you have rights you may not know about.  ACH payments and most electronic payments are governed by the Electronic Funds Transfer Act (EFTA).  This includes debit card payments and ATM transactions as well.  It does NOT include online bill-pay where your bank writes a paper check for you and it is sent to the creditor.  Those are treated just like paper checks you’ve written yourself and are governed by the old fashioned UCC.

Preauthorized Transfers are electronic payment arrangements where you give a creditor preliminary authorization to take specified amounts of money out of your bank account at specified times.  Money in your bank account belongs to you, and the law gives you some pretty strong protections against other people taking it from you without judicial process.

1.  Preauthorized transfers must be authorized in writing.  You cannot call a credit card company or car dealer up and give them your account number and tell them “go ahead and draft.”  The authorization must be signed and must be written.  Note that an E-SIGN is good enough, but they still have to provide you with a downloadable copy of the draft authorization before they take a payment.

2.  They cannot require an ACH authorization as a condition for giving you a loan or selling you something on credit.  You have the right to send payments the old fashioned way if you want to.  If a creditor or car dealers says that they’ll only sell to or give you a certain interest rate you if you authorize an ACH, then they’re breaking the law.

3.  You have the right to cancel any preauthorized draft at any point up to 3 business days before the scheduled draft.  This is the most important right you have under the EFTA.  If you foresee that a draft will overdraw your account, then you have the right to cancel it at any time before 3 business days before the draft.  Here’s an example: You have an ACH payment scheduled to debit $150 from your account on Friday the 13th.  If you cancel the draft at 4:59 pm on Monday the 9th, then the draft CANNOT take place.  This right CANNOT be waived, so even if your contract says “You waive all rights to cancel this preauthorized transfer,” the bank MUST honor your request to cancel the transaction.  The creditor can kick and scream and throw a fit all they like, and that won’t change the fact that they simply cannot get the money.  Note that the authorization revocation must be sent to your checking account bank – NOT the creditor.

The best thing about this aspect of the EFTA is that your cancellation notice can be oral or in writing.  As always, writing is better, but if you call your bank or go there in person and tell them not to allow a certain draft to take place, then they must comply with your instructions.  However, they CAN require you to confirm an oral cancellation in writing within 14 days.  So if you call and cancel a draft by telephone, and they tell you that you must fill out a cancellation form and send it to them within 2 weeks, you do have to send it in.  If you don’t, they can allow the draft to proceed because you didn’t confirm the oral cancellation request in writing.

What if they Draft Anyway?

If they draft the money against your instructions anyway, then you have to write YOUR BANK (NOT the creditor or seller) a letter telling them “You allowed $150 to come out of my account without authorization.  Refund me the money immediately.”

You should send the letter as soon as you learn of the draft.  If you wait more than a couple of days after you’ve learned of their screwup, then you can be deemed to have waived your rights.  So send the letter immediately.

If they still refuse to fix it, then you can sue them for 3 times what you lost as a result.  15 U.S.C. 1693f(e).  And you can make them pay your attorney’s fees if you have to take them to court.

If you don’t learn of a draft until you see it on a billing statement, you have 60 days after the billing statement was sent to dispute it.  It must be in writing.

If you lose a debit card or PIN, then you must report the theft or loss to your bank within 2 days of learning of the loss.  Otherwise, you’ll be liable for the money stolen from your account as a result.

Debt Collector Pays Mobile, Alabama Woman to Settle FDCPA Lawsuit – Alabama Consumer Credit Attorney Judson E. Crump

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Back in October 2013, a Mobile woman came to me with a debt collection lawsuit brought against her by Portfolio Recovery Associates.  She was in dire straits and had no way to pay for a lawyer, but she also could not afford to lose 25% of her wages to a garnishment.  So I took her case pro bono.  I went to the District Court and after I appeared in the case, the collection attorney dismissed the lawsuit.  All was well, or so we thought.

Until my client called me saying that she’d received a phone call from Portfolio Recovery Associates seeking to collect on the debt.  That’s illegal, so I sued them in federal court on April 10, 2014.

The federal court did not make any findings that PRA had violated the law, and PRA did not admit to violating the law.  But they did agree to settle the case by paying my client $1,250 and paying my attorney’s fees separately, so my client got to walk away with $1,250 for her trouble.  She really needed the cash, too, because the same week she got her settlement, she got hit by a hit-and-run driver.

Debt Collectors pay my clients. Not the other way around.
Debt Collectors pay my clients. Not the other way around.

A debt collector cannot call you to collect a debt that’s been dismissed in court.

A debt collector cannot ask for money for a debt you’ve already paid or settled.

A debt collector cannot report a paid-off debt to a credit reporting agency as still being owed.

Like the rest of us, debt collectors must obey the law.  If they don’t, they must pay.  It’s quite simple.

If you’re getting harassed or troubled for debts you’ve settled, paid, beaten in court, or just don’t owe, you CAN do something about it.  And it can be worth your time, too.  Just ask my client.

My Bankruptcy Lawyer Sucks: What can I do about it? – Alabama Consumer Bankruptcy Attorney Judson E Crump

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Should I fire my bankruptcy lawyer?

So an unfortunate reality of life is that when you hire a professional to provide an expensive, specialized professional service, unless you or a really close friend or relative is part of that specialized profession, you have no idea if you’re getting a decent lawyer or a horrible one.  I, for instance, am not a doctor.  I cannot tell a good urologist from a bad one.  I have to rely on the reviews I see online, the recommendations of those doctors I do know, and what I hear from friends and family.

We’ve spent time on how to pick a bankruptcy lawyer.  But what about after you’ve already gone and done it – and picked a loser?  Is there anything you can do about it?  If so, what?

Well, this is not an easy place to be in, and your options are going to be limited by certain professional realities that discourage clients from switching lawyers too easily.  That said, you do have the right to be represented by counsel of your choosing and you CAN do something about it.

1.  Talk to your Lawyer first.  Give the guy the benefit of the doubt.  Maybe he just had a new child.  Maybe he had to fire a secretary for stealing.  Maybe he had the flu.  Most problems you have with your lawyer can and should be resolved with a phone call.

What if they don’t answer your phone call?  You should try at least three times and give at least a week or two for a response.  Not every problem can be addressed immediately – a thought-out answer is better than a hasty one, even if you must wait for it.  And you’re not the lawyer’s only client.

2.  Second, write your lawyer a letter.  Even if you can’t get a return phone call, you should not rush to find a new lawyer.  If you have left messages for two weeks and still can’t get a response, write a letter.  Not an email (to me, an email is about 1/3 of the way between a voicemail and a real paper letter).  Sit down and compose your thoughts.  Explain your concerns in a calm, friendly manner.  Remember, you are both on the same team, and he works for you.  Give him a week or two to respond.

3.  Write a letter to the bankruptcy court.  Writing a letter to the Court is a pretty serious step, so be sure that it is what you want to do before you do it.  But I put it here for a reason.  In most Chapter 13 cases, the attorney’s fees are paid very early on in the case, and if you do end up having to hire a second lawyer, you’ll have to either fork out money to pay a new lawyer or ask the court to disgorge your previous attorney’s fees.  Unless you live in a very large city with a relatively cutthroat bar, there are very few lawyers who will file a motion to disgorge fees from one of their colleagues.  So if you are going to make a move, it is better to do it sooner than later.  If all your lawyer did was meet you once and file a petition, you have a pretty good argument for asking the court to award 1/2 the total attorneys’ fees to your new counsel.

That said, if you have the income or cash on hand, you can just write off the fees your old lawyer got and agree to pay your new lawyer $1,000 or so from your future Chapter 13 payments.

Even if you don’t end up hiring a new lawyer, a letter to the court will definitely get your lawyer’s attention.  Lawyers HATE being called out in front of a judge.  Of course, some lawyers deserve it.  If your lawyer wishes to withdraw, the bankruptcy judge may not allow them to quit until you’ve found a new attorney.

4.  Talk to a second attorney (and maybe a third).  If you’ve decided that your first attorney is a hopeless case, it is best to make a fast and clean break.  Make appointments with at least one or two other lawyers in your area and meet with them.  Learn from your past mistake and look for a lawyer that doesn’t share the weaknesses or sloppiness that so upset you in your previous lawyer.  Ask all the questions you wish you’d have asked the first guy.  And most importantly – be humble and open to bad news.  Lawyers are immediately suspicious of any client who blames their problems on their lawyers.  Unless the lawyer you left was a total hack or somebody nobody’s ever heard of, you’re going to be presumed to be a problem client.  And nobody wants a problem client.  If you fired a previous attorney and embarrassed him in front of the judge for a minor issue, you’ll have trouble finding a new lawyer to take over your case.  Assuage the new lawyer’s fears.  Explain what efforts you put into resolving the problem peacefully, and why it was important enough to you to change.  Figure out what you’ll need to pay the new lawyer.  Ask if the new lawyer thinks your concerns were justified or overblown.

5. Write a termination letter to your old lawyer.  A lawyer should always be fired in writing.  Demand a refund of all unearned fees, and an accounting of all fees which the lawyer claims to have earned.  This should be written into the original retainer agreement.  Mine, for instance, has several benchmarks built into the attorney fee provision, such that a client who fires me (it has never happened, but one day it might) owes me less for a case that was just filed than one that has been confirmed and running for a year.  Don’t expect a detailed description of every single phone call or email that was made on your behalf, but at the very least, the fees should reasonably relate to the amount of work provided.  If your lawyer only met you for 30 minutes and then a paralegal did 4 hours of work putting your petition together, then you shouldn’t be paying more than $1,000.

6. If your previous lawyer’s conduct was really horrible, file a bar complaint.  This is a serious step.  Filing a bar complaint can create serious problems for a lawyer.  Even a frivolous bar complaint demands a response and potentially a time consuming and embarrassing hearing.  Bar complaints are only appropriate when your attorney has done something unethical, unfair, or grossly negligent.  For instance, if your mortgage company filed a motion for relief to foreclose on your house and your lawyer consents without even calling you to evaluate possible defense, that is negligence that could cost you a lot of money.  If your lawyer steals your money and doesn’t even try to do what he said he would, that is a problem.  In general, I would not file a bar complaint without first asking another lawyer in the same field if your previous lawyer’s conduct was truly a breach of professional duties.  Even if you are really disappointed with a particular outcome, it may not have been your lawyer’s fault.  Some cases are hopeless from the outset, and you may be too emotionally involved to realize that your case was a loser.  That said, I have personally seen a lot of crappy lawyering in bankruptcy court, and the repeat offenders need to be called to account for their actions.

$4,700 Auto Loan Lawsuit Dismissed – Alabama Consumer Credit Attorney Judson E. Crump

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Counterclaims under Truth in Lending Act Convinced Autovest to Dismiss their Case

Though there are countless ways to attack a collection lawsuit, most cases come down to a simple lack of evidence on the collector’s part.  But this case was a bit different.  My clients were sued by a debt buyer called Autovest, LLC.  As I’ve written before, Autovest is a Michigan company that buys charged off repossession deficiencies and sues consumers for the debts.  Auto loans are subject to a number of defenses and possible counterclaims because

a) repossessions are subject to lots of abuse by careless and rude repo men, giving potential counterclaims under the UCC Article 9 and

b)car dealers are so sloppy and errors in loan origination are very common.  This can give you counterclaims under the Truth in Lending Act.

Another Trial Vicotry in Mobile County, Alabama - Repo Deficiency Lawsuit Dismissed after TILA Counterclaims were raised by Collection Defense Attorney Judson Crump
Another Trial Victory in Mobile County, Alabama – Repossession Deficiency Lawsuit Dismissed after TILA Counterclaims were raised by Collection Defense Attorney Judson Crump

In this case, my clients were sued for an old car loan, and after looking over the dealer sale documents, I noticed some clear discrepancies and omissions on the TILA disclosures.  So in addition to filing my answer, I filed a counterclaim under Truth in Lending Act.

Rather than litigate all this, the collector just decided to waive their claims if we agreed to waive our counterclaims.

So we filed a joint stipulation of dismissal, and my clients are debt free.

Total savings: $4,707.

Cost of Chapter 13, Part 2: How Your Lawyer Calculates your Plan Payment – South Alabama Bankruptcy Lawyer Judson E. Crump

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Part 2 – How Your Lawyer Calculates Your Chapter 13 Plan Payment

 

So just how does the lawyer arrive at that number?  Now, as much as I love to warn people about the signs of a bad bankruptcy lawyer, there usually is no pressing need for the lawyer to explain to you how exactly your plan payment is calculated.  It can be quite complicated, really, and your time would be better spent discussing whether or not bankruptcy is your best option in the first place, or who is going to with the National Title in the first post-BCS College Football Playoff.

First, a disclaimer: every case is different and there are other factors that go into the monthly payment.  If you want to know what your bankruptcy should cost – then you need to talk to a good lawyer.  Or two.  Lawyers like to think that they’re special and that the calculation of a bankruptcy plan payment is some arcane craft that one can only comprehend after years of grueling training.  That, of course, is not true.  Most people don’t learn bankruptcy in law school, and even those that do spend most of their free time drinking beer and eating pizza at Mellow Mushroom or trying to romance hot undergrads.  The truth is that it takes about a week for a young bankruptcy lawyer to learn how to calculate a plan payment.  Less than that if they’re decent at math.

Basically, what your lawyer does is this:

 

Add up the amount of debt that must be paid: (Secured debt, Priority debt, and a percentage of unsecured debt) plus their attorney’s fees, and they come up with a subtotal.  Multiply the subtotal by the trustee’s fee, which is a fixed portion of every single monthly payment.  Then you have the total amount of money that must be paid into your plan.  Divide that number by the total number of payments, and bingo.  There’s your monthly payment amount.

Of course, determining what must be paid is the trick.  But it isn’t magic at all.

Here’s the math formula:

{[P + S(1+rn) + Ud]Ft}/n

Where:

P = Priority Debt
S = Secured Debt
r = Till Interest (usually around 5%)
U = Unsecured Debt
d = Unsecured pro rata dividend
Ft = Trustee’s Fee (usually between 5 and 10%)

and d (the number of pennies per dollar that your unsecured creditors receives is the greater of Ie/Ut or An/Ut

Where Ie is your excess disposable income based on the means test and An is your nonexempt asset value.

Simple, right?

Don’t get lost in the symbols.  When you use real facts, it is easy.

You have a 2007 Silverado worth $10,000, and you owe $10,000 on it.  You owe $5,000 of taxes.  You have $25,000 of unsecured debt, but unsecured debt is easy to deal with because it gets paid at anywhere between 0% and 100% of the amount owed, based on how much income and assets you have.  Most debtors have few nonexempt assets and no excess disposable income, so the unsecured guys get paid like 3% of their claims.  In this example, say the debtor also has $5,000 of nonexempt home equity.

So the calculation would go like this:

$10,000 (plus interest at 5%) = $11,320 of secured debt.  This must be paid in full.

$5,000 of taxes = $5,000 of priority debt.  This must be paid in full.

$25,000 of unsecured debt.  This is not paid in full, but only in proportion to the total value of your nonexempt assets or excess income over the next 5 years.  Unless your income is well above average for your family size, it will be your assets that drive the payment.  Here, debtor has $5,000 in nonexempt assets, so he pays $5,000 to unsecured creditors, whether he has $10,000 of unsecured debt or $10,000,000 of unsecured debt, they share the same $5,000 pie.

Attorney’s fee = $3,000 (standard in Southern District of Alabama circa 2014).  This must be paid in full.

Subtotal = $24,320.

Trustee’s fee here is 9%.  $24,320 x 1.09 = $26,509.  This is the total cost of Chapter 13.

$26,509/60 = $442.  This is the monthly payment for a 5 year (60 months) Chapter 13 bankruptcy case.

See, I told you it wasn’t impossible.  Now, it can be more complicated, and your situation is certainly going to differ from this hypothetical debtor, but the basic process is the same, and anyone can do it.

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