Judson E. Crump, PC

Autovest, LLC Collection Suit Defeated on Statute of Limitations – Alabama Consumer Rights Attorney Judson E Crump

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Autovest, LLC Sued my client for a deficiency balance owed after her car was repossessed.  We beat the lawsuit by showing that the suit was illegal due to the passage of the Statute of Limitations.

My client had in fact owed money to Wells Fargo Financial Acceptance for a 2007 Dodge Magnum she had purchased back in April 2007.  But as often happens, the car broke down and when the dealer wouldn’t fix it, my client had to find new transportation.  She couldn’t afford to pay both, so she stopped paying in May 2009 and the car was repossessed in May 2010.  For 4 years, nothing happened.

Then, in June 2014, my client received a summons from some company called Autovest, LLC, relating to a lawsuit in the Circuit Court of Mobile County, Alabama.  She had never heard of Autovest, and had no idea who they were.  She certainly had never entered into any contract with Autovest.  So who are they?

Autovest is a debt buyer located at 26261 Evergreen Rd, Suite 390 Southfield, MI 48076.  They purchase charged off accounts from creditors who no longer wish to collect them.  In this case, they claimed that Wells Fargo Financial Acceptance had assigned my client’s auto sale contract to Autovest, and that by virtue of the assignment, they had the right to sue my client.

She came to my office and naturally she was very upset.  After all, they were asking the court to force her to pay them almost $10,000 and she had no idea what to do about it.  But when showed me the paperwork, I saw an immediate problem: they were too late.

See, if someone owes you money, you cannot wait forever to take them to court.  The law places a time limit on every lawsuit.  It’s called the Statute of Limitations.  For most contracts in Alabama, the statute of limitations is 6 years.  But on a contract for the sale of goods, we have a different rule: the statute of limitations is 4 years.  Why?  Because sales for goods are subject to a special rule in the Uniform Commercial Code: Article 2, Section 725.

A vehicle sale contract – even one where the car purchase was financed over a 60 month installment contract, is still a contract for the sale of goods.  And in this case, the collector waited until more than 4 years after my client’s last payment to sue her.  In fact, they waited longer than 4 years after the car was repossessed.  This was undisputed.

Well, you can’t do that.  The law is clear.  If you want to sue on an retail installment sales agreement, you better do it in 4 years.  The court agreed with me.

See:

Court Order Granting Summary Judgment to Consumer Defendant who was sued after the 4 years allowed by UCC Article 2 had passed.
Court Order Granting Summary Judgment to Consumer Defendant who was sued after the 4 years allowed by UCC Article 2 had passed.

Can you Keep your House if you file bankruptcy? – Alabama Bankruptcy Lawyer Judson E Crump

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Can you keep your house if you file bankruptcy in Alabama?

Sometimes.  Yes, that’s a disappointingly lawyerish answer and I hate that for you.  I really do.  Because i love straight answers as much as anyone else, and if you’re considering filing bankruptcy then things are probably not great in your life right now and the one thing you do need from a lawyer is a little bit of certainty.  So what is the deal?

First, what sort of bankruptcy are you talking about?  The kind where you get rid of everything but the bare necessities and come out fresh like a newborn baby?  (Chapter 7).

Or the kind where you make payments for up to 5 years, but you get to keep most all of your stuff?  (Chapter 13.)

In Chapter 7 bankruptcy, the amount of assets you get to keep depends on the law of your state.  Some states like Florida have laws that are very generous to people in financial trouble.  Other states, like Alabama, have laws that are very harsh on people in financial trouble.  Here, we have a $5,000 homestead exemption.  That means that you can keep your creditors from ever touching your home — if it is worth less than $5,000.

But who on Earth lives in a home worth less than $5,000?  A lot of people, really.  Because most people nowadays don’t own their homes.  A bank owns their homes and most people, even those whose names are on their deeds, are virtually renting.  See, if your home is worth $100,000, and the bank’s mortgage lien is $97,000, then your home is not a $100,000 asset, but a $3,000 asset.

So in Chapter 7, you can generally keep your home if you have less than $5,000 of equity.  And generally you need to be current on the mortgage.  And you’ll have to keep making those payments.  And you may have to reaffirm the debt.  NOTE: if you’re married and you and your spouse are both on the deed (not the Note, but the deed – this is a distinction that matters), then you each get a $5,000 exemption that you can combine into one awesome $10,000 exemption, so you can protect twice as much equity. Yay!

What happens if you have more equity than Alabama’s 1940 exemption statute allows?

Well, in Chapter 7, you have two options: 1.  Surrender the property to the Trustee.  Or 2: pay the amount of non-exempt equity to the Trustee from some other source of funds.  Like borrowing from family after the bankruptcy is filed or using exempt money (like a 401k, which gets special federal protection and isn’t subject to Alabama’s crappy exemption statute).

The Chapter 7 trustee’s job is to gather up all your valuable stuff and sell it for the benefit of your creditors.  He’ll do that if you have anything worth taking that isn’t specifically protected.

So can you lose your home by filing bankruptcy?  Absolutely.  It doesn’t always happen, and everybody seems to know somebody who filed bankruptcy and got to keep everything.

Now what about Chapter 13?

A thirteen gives you more flexibility than a seven, and you’re allowed to keep more assets.  The trade-off is that you’re stuck making payments to the bankruptcy court for years to come.  And Chapter 13 can really limit your financial freedom.

But, if you do have a little bit of equity, Chapter 13 lets you pay that off over time instead of just losing it outright.  So in essence, you’re telling your creditors: “You know that $5,000 of home equity that you’ll theoretically get if I filed Chapter 7 and liquidated everything?  Why don’t I pay you that amount over the next three years instead?”

And that’s basically what you can do.  Chapter 13 has its drawbacks, to be sure.  Your debts aren’t discharged until you finish paying, and if you don’t finish paying, then they basically pop right back up in your face.  And you have very limited financial freedom.  And the attorney’s fees are higher, and your credit takes longer to rebuild.  I’m making it sound great, right?

But for some people, its the right move.  In all honesty.

Alabama’s Exemption Statute – Why so stingy? – Alabama Debtor’s Lawyer Judson E Crump

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DID YOU KNOW? Alabama (No Longer) has the weakest exemption statute in the country.

This is a correction to a previous article I wrote, which has been made necessary by a positive change in Alabama law.

In January of 2015, I wrote the following article about Alabama’s exemption statute:

“What’s an exemption statute?

Say you get sued for a credit card bill.  Or a medical bill.  You either fail to answer the complaint or you lose a trial, and the court enters a judgment against you for $10,000.  What can that creditor now take from you to get it?  Wages can be garnished.  But what if you have no wages?  They can zap your bank account, but there is a limit: you are allowed to claim up to $3,000 of your property as exempt from execution.  This means they can’t take it.  You have to file a document with the court called a Claim of Exemption to ensure that this specific item of property (the bank account) is protected.  But once you do that, they’ll have to look elsewhere to satisfy a judgment.

The law that allows you to protect a chosen $3,000 of personal property is called the exemption statute.  Ours is found at Alabama Code Section 6-10-1, et seq.  

Our exemption statute was written in 1876.  It was part of the Alabama Constitution, really.  Article XIV of the Alabama Constitution of 1876 provided that “the personal property of any resident of this state to the value of one thousand dollars, to be selected by such resident, shall be exempted from sale on execution, or other final process of any court…”

So back in 1876, Alabama citizens could protect $1,000 of personal property from their creditors.  What is that today?  $21,000.  Yet our exemption statute today allows us to protect only $3,000.  So during the past 138 years, our protections for people in financial trouble have dropped to 1/7th (that’s 14.2%) of what we gave struggling working folks back in 1876.  We like to think that legal rights and government regulation have only increased since 1876.  Not so, my dear friends.

Similarly, the homestead exemption was $2,000.  In today’s money, that is $43,000.  Today it is $5,000.  So the past 138 years has been even worse for people trying to protect their homes.  Their protections have gone down to less than 1/8 of what they were back in the days of Jim Crow.

I hereby call on the legislature to pass a law that automatically updates the state’s exemption statutes each time the Crimson Tide wins a national championship, such that for every crystal football (or historical equivalent) added to the collection in Tuscaloosa, the amount of exempt personal and real property increases by $1,000.  If this policy were enacted in 1900, the citizens of this fair state would enjoy not the bullshit $3,000 and $5,000 (personalty and realty, respectively) exemptions that now drive them into penury, but $15,000 of personal property and $15,000 of homestead exemptions.  This would put us about right in the middle of the pack nationwide as far as debtor-friendliness goes.  And it would be attributable to the Bear and Saint Nick.  Roll Tide.”

To my shock and delight, the Alabama Legislature has changed the law.  On June 11, 2015, Governor Bentley signed Ala. Act No. 2015-484, which raised the homestead exemption to $15,000, and the personalty exemption to $7,500.  Even better, the law now requires these amounts to be adjusted for inflation every three years.  This improves the protections that our laws provide to struggling working folks.  Now, Alabama debtors have protections that are similar to those in the rest of the country.

At this point, I wonder something: the legislature re-wrote the exemption statute in June 2015 – five months after I published my article.  Coincidence?  Probably.  I’m 99% sure that no member of the Alabama legislature cares what I think.  But I’m happy for all of our working folks nonetheless.  A few years ago, I’d have never believed Robert Bentley would do anything for the poor.  Turns out, I was wrong on that.  Thank God.

Medical Bills are the Biggest Drag on US Consumer Credit Scores – Alabama Consumer Credit Lawyer Judson E Crump

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“If you have a bill in collections that is dragging down your credit score, chances are high that it’s medical.”

So says a recent Washington Post article about the US Consumer Financial Protection Bureau’s recent study of medical bill collections.

The study found that over half of the delinquent accounts that are reported against US citizens’ credit reports were medical bills.  And there were a LOT of people – about 15 million – whose only delinquent account on their credit report was a medical bill.

Medical bills are often hard to prove.  Very often, there is no written contract.  The provider may have not submitted the bill to insurance properly or timely, and therefore lost the right to collect from insurance and instead just decides to try to collect directly from the patient.

And a short visit to a single hospital can spawn a dozen separate bills – one from the hospital, one from each lab that handled your blood, one from each doctor who either saw you or your X-rays, one from a pharmacy, and God knows what else.  You may have never encountered these people and have no idea who they are, but they’re still asking you for money.

And if you ask for verification of the amount allegedly owed, you may not ever get any information.  The whole process is very mechanical and there’s often little to no human involvement in the collection process.

So what do you do if you have strange or inflated medical bills showing up in your credit report?

First, you should contact the medical provider and ask for an itemization of the bill.  How much are they charging you and why?  Will they give you a discount for what your insurer won’t cover?

Second, you should send a written dispute to the credit reporting agencies.  Tell them how much you legitimately owe and ask them to report nothing more than that.

Third, NEVER pay money just to get something off your credit report. A LOT of collection agencies report bogus amounts just to coerce you into paying.  If you owe a hospital $60, a collector may report that you owe $100, just because they’re betting that you’ll pay them the full amount to clean up your credit records.  Don’t fall for this.

Fourth, don’t be afraid to challenge them if they’re asking you for an unreasonable amount.  If they were to take you to court, they’d have to prove that the charges were reasonable and medically necessary. If they inflate the ‘price’ of services to compensate for discounts they provide to insurers, then they can’t just force you to pay whatever they want to put on some bill.

Credit Acceptance Judgment Vacated for Fraud upon the Court – Alabama Consumer Finance Attorney Judson E. Crump

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Default Judgment Vacated for Fraud & Misrepresentation

 

 

This case was a particularly important one, in my opinion.  I’ve written before about cases where I was able to reverse a default judgment after it had been entered because the Defendant was never served with the complaint.  That is by far the most common way to reverse a default.  But not the only way.

My client bought a car in 2007.  It had a 24% APR and she reliably made her payments for about four years.  Then the car broke down and since it was sold to her “AS IS – No Warranty,” she had to pay for the repairs out of pocket.  The repairs would have cost $4,000.  The car wasn’t even worth that much.  So she gave it back to the finance company – Credit Acceptance Corp.

Three years go by.  She gets sued by Credit Acceptance – they say the balance on the loan is $11,071.61.  She calls the collection lawyer to try and make payment arrangements, but they wouldn’t accept any offer she could afford.

So she didn’t answer within the 30 days allowed by Alabama law.  Credit Acceptance moves for a default judgment.  They knew that they were in the superior position – my client hadn’t defended herself, so they were going to get a judgment without having to really prove their case.  That’s how default judgments work.

But when the judgment was entered, it was not for the $11,071 she’d been sued for, but for over $19,000!  How?  They had asked for interest at 24% APR beginning January 1, 2012.

But the car hadn’t even been sold at a post-repo auction until July 2013!  You can’t calculate a deficiency balance until you have sold the car.  It just isn’t possible.

So how did a judgment get entered that was so obviously wrong?  Because Credit Acceptance had one of their employees file a false affidavit with the court.  Their affidavit stated that the amount owed on New Year’s Day 2012 was $11,071.61, when in fact that was the highest amount the debt could have been in July of 2013!  So that is 19 months of interest (at 24% interest!) that they had no right to claim, yet in a sworn affidavit, they were seeking.  In other words, Credit Acceptance blatantly lied to the court to try to steal over $4,200 from my client.

I filed a motion to set this judgment aside, and it was granted.  Even the collection lawyer, to his credit, realized that something was way off with the affidavit.

What Happens When You Hire Freedom Debt Relief – Alabama Consumer Credit Attorney Judson E Crump

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Freedom Debt Relief Credit Counseling Customer Stuck with Big Judgment in Alabama Credit Card Lawsuit

Freedom Debt Relief advertises itself as a way to avoid Chapter 7 or Chapter 13 Bankruptcy by negotiating discounted debt settlements for people with lots of credit cards, medical bills, personal loans, or other unsecured debt.  Like all debt settlement companies, they aren’t attorneys, and they cannot do anything you can’t do for yourself.  Here’s a very typical, but unfortunately real example of what happens when you trust your finances to a debt settlement outfit like Freedom Debt Relief.

In the District Court of Mobile County, Thomas B— was sued for $3,873.38 by Capital One.  Case No. 02-DV-2014-902455.  After he was served with the summons and complaint, he sent a response to the credit card lawyer.  He said:

“In order to avoid bankruptcy, I turned to Freedom Debt Relief for credit counseling and debt payment direction.  We have given them our power of attorney to deal with all of our creditors…please have all documents and correspondence going forward passed through them.”

The poor guy.  He had apparently signed up with Freedom Debt Relief, who promises that

“Once you enroll in the Freedom’s Program, we become your credit advocate, working solely on your behalf.”

https://www.freedomdebtrelief.com/how-it-works

So Thomas naturally assumed that when one of his creditors decided NOT to work with Freedom Debt Relief, but instead to sue him, he simply trusted that his “credit advocate” would step in and help him.

Unfortunately, that is not what happened.  Since Freedom Debt Relief is not a law firm, they couldn’t step in and help.  So a few weeks after being served with the lawsuit, the Court entered a judgment against Thomas B— – for $3,873.38 plus court costs!  This is all a matter of public record, and the truth is there for all to see.

So not only did Freedom Debt Relief fail to help this man, he ended up with a judgment against him for the full amount of the alleged debt!  As a public record, the judgment can stay on his credit for up to 10 years, unlike most accounts which are limited to 7 years under the Fair Credit Reporting Act.

If Mr. B— had only hired a real lawyer to help him, he would not have had to face his collection lawsuit alone.  He would have had real advice and real representation.  But we lawyers don’t have the advertising budgets of big nationwide corporations like Freedom Debt Relief.  Hopefully others will learn from his experience.

If you are thinking about hiring Freedom Debt Relief or any other debt settlement company: think long and hard before you sign up with them!  They cannot do anything you can’t do.  They may be working for the credit card companies.  Your creditors are NOT obligated to deal with them instead of you.  They can’t do a thing to protect you if your creditors decide to take you to court.

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.

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.

$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.

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