Judson E. Crump, PC

Don’t sign a waiver when you retrieve your belongings from a repossessed automobile. – Alabama Consumer Credit Attorney Judson E Crump

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If you have had a vehicle repossessed recently and the repo man or towing company refuses to let you access your vehicle, they have to give you your property back.  This means they must either mail it to you or give you a chance to come and get it.  But what if they want to impose conditions on your getting your property back?  What if they want you to sign a waiver or release?

Don’t do it.

Imagine if I came into your house and took your wallet.  You come to me and try to get it back, and rather than just handing it over, I say: “OK sure, you can have your wallet, but only if you sign this release where you promise not to sue me for theft or if I’ve damaged anything.”  Would you sign it?  Or would you think I was crazy?

You’d think I was crazy.  Because it is crazy to steal someone’s property and then demand a signed release as a condition for returning something that you never had any right to take in the first place!

Yet this happens all the time.  Consider the case of Underwood v. First Alabama Bank of Huntsville. 453 So.2d 742 (Ala. Civ. App. 1983).

There, a man’s vehicle was repossessed after he quit making payments.  That’s fine.  But he had some valuable property in the car that they had taken as well.  He came to get it, but before they gave it back, they had him sign a waiver of his right to notice of disposition of collateral.  What does that mean?  Basically, if someone repossesses your car, they have to dispose of it in a commercially reasonable manner.  They can’t just trash it or let it sit collecting rust for years.  They have a duty to get a decent price for it when they sell it.  If they sell it for more than you owe, then they have to write you a check for the surplus.  If they sell it for less than you owe, they have to either forgive the deficiency or give you a complete and detailed itemization of the charges.

In the Underwood case, the bank had him sign away his right to know what was going on with his car.  That means that when the sold it, he had no idea where or to whom.  Which means that he was unable to attend the auction or anything else to possibly recover the car or have a friend bid at auction for him.  Worse, when he was liable for a deficiency, he never got a list of the charges to ensure that he wasn’t being charged for bogus amounts.  Normally, if a bank fails to send you a notice of disposition before and after the sale, they have to either forfeit their right to collect anything from you or pay a stiff penalty of the finance charge plus 10% of the sale price.

But the bank had him waive his notice rights.  He didn’t have to, but he didn’t know that he had a right to get his stuff back without signing a waiver.  So he got screwed.  Don’t let that happen to you.

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.

A Microcosm of the Congressional Dysfunction Created by Industry Lobbyists – Two Letters to the CFPB

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Last year, the Consumer Financial Protection Bureau decided to finally get around to regulating sketchy car dealers and other non-bank arrangers of consumer financing.

Why?  Because as everyone who deals with auto dealers and their financing partners knows, car dealers very often conceal important facts from the people they deal with.  In this particular case, the CFPB was concerned with the way that dealers will hike up interest rates or other finance charges for borrowers who seem unsophisticated or ignorant, and lie about it.  Here’s a great and common example: you go to a dealership and find a car you like.  You’ve run your credit before, so you believe that you can be approved for about $18,000 of financing at 12% APR.  After hours at the dealership going through paperwork and waiting while they make phone calls and work on computers, they present you with paperwork.  But to your surprise, the price is $19,000 and the APR is 18%.  You say “That seems a bit high!”

“That was all the bank would approve.  We checked with 6 different finance companies, and that was the best deal we could find you.”

Of course, this is a lie.  The truth is that they are trying to direct you to the finance company that provides the best deal for them – the one that will pay them the most for the contract.  And since they pay more for contracts with higher rates relative to the creditworthiness of the buyer, they’re steering you to possibly the worst deal of the 6 companies, and they could have found you a 13% APR.

There is nothing illegal about making a profit.  There is nothing wrong with not telling a buyer how much they paid for the car they’re selling you.  That’s part of the deal.  But there is something wrong with lying to people.  When they say: “This is the best deal we could find” that should be the truth.  If they want to profit, they should do it like the rest of us by buying things at a low value and selling them at a high value.  So the CFPB wants to require them to be more honest.

Naturally, they don’t want to be more honest because that means they’ll be forced to – GASP! – give people fair deals!  So they called their lobbyists in Washington and had them pester our Congressional representatives to try and stop the CFPB from helping out working folks.  What happened?

13 House Democrats signed a letter demanding that the CFPB provide copies of all data used in determining that sketchy car dealers were lying to people about getting kickbacks from finance companies.  Here is their letter:

Even though their tone is nice, they still should be ashamed for obstructing a long-overdue effort to provide working people some relief from dishonest car dealers.
Page 1.  Even though their tone is nice, they still should be ashamed for obstructing a long-overdue effort to provide working people some relief from dishonest car dealers.

Page 2. There are 13 signatures in all.

Page 2. There are 13 signatures in all.

 

 

 

By contrast, here are the letters from the Republicans.

Note how the CFPB's proposal to forbid dealers from concealing the amount of kickbacks they're getting from finance companies is characterized as "restricting consumer choice." This is how your party gets a reputation for hating poor people.
Page 1. Note how the CFPB’s proposal to forbid dealers from concealing the amount of kickbacks they’re getting from finance companies is characterized as “restricting consumer choice.”
There are 35 signatures in all.
Page 2. There are 35 signatures in all.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obviously, the Republican response was more pro-business and anti-consumer.  No surprise there.  And the way the Republican letter linguistically distorted the facts by using words like “control” and “restricting consumer choice” indicates that the letterw as probably written directly by the auto dealer lobbyists, not the Representatives themselves.  That shows you just how much these 35 particular Congressmen are deeply in the pockets of the industry.

But the Democrat response is just as bad.  Why?  Because it shouldn’t have been written in the first place.  There’s a reason only 6.5% of House Democrats signed on.  Republicans make no secret of favoring businesses over people.  It’s their raison d’etre.

Whose side are they on?

 

This is how the Debt Collection Industry Works.

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Great article by the New York Times.  Even though consumer lawyers like me have been saying the same thing for years, putting it into the NYT will make more people understand what they need to know about the modern debt collection industry.

 

http://www.nytimes.com/interactive/2014/08/15/magazine/bad-paper-debt-collector.html?hp&action=click&pgtype=Homepage&version=HpSum&module=second-column-region&region=top-news&WT.nav=top-news&_r=1

Credit Card Aggression Ratings 2014: Which Credit Cards are the Most Aggressive when you miss payments? Which are the most lenient? – Alabama Consumer Credit Attorney Judson E Crump

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How you can expect to be treated if you fall behind on a credit card bill varies widely depending on what company you’re dealing with.  I cannot claim to have dealt professionally with every company out there, but I have encountered enough to know what to expect with most of them.  Here they are, organized in ascending aggression (meaning that the nicest ones are at the top, meanest ones are at the bottom).

 

1.  Capital One.  Aggression Rating: 10 out of 10.  

Capital One Bank sues the hell out of its customers.
“What’s in your wallet?” Not a dime if your misfortunes ever put you behind with Cap One.

I have literally seen Capital One sue a customer who had paid them religiously for years exactly three months after she fell behind on her payments.  Not only did they sue her right out of the gate, but they hit her with lengthy discovery requests and basically boxed her in and left her no choice but garnishment or bankruptcy.  If you aren’t rich enough to be immune to, say, an accident that leaves you hurt for 6 months of no income, you may want to avoid them.

 

2.  Discover Bank, Issuer of Discover Card.  9 out of 10.

Discover is the only credit card company I have personally seen file an appeal when they lost a collection lawsuit.  They almost never refer their accounts to debt collectors.  They are definitely of the “sue first, ask questions later” mindset; so much so that they make personal injury attorneys look like timid lambs.  That isn’t to say that you can’t work out a deal after you’ve been sued – if you’re uncollectable, then their collection lawyer may be able to settle with you.  But don’t expect any kindness at the outset.

"IT PAYS TO DISCOVER" that you may as well file bankruptcy if you can't pay them off.
“IT PAYS TO DISCOVER” that you may as well file bankruptcy if you can’t pay them off.

 

 

3.  American Express.  7 out of 10.

Amex is also of the “sue first, ask questions later” mindset, but they seem to be a bit less attached to their lower-value accounts.  For some reason, I don’t see many small claims suits from them, possibly because they work to make payment arrangements with people.  Honestly haven’t had many chances to tangle with them in court as of yet.

 

Next Page: The more lenient credit card companies.

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Why is Capital One Being Such an Ass? – Alabama Consumer Credit Attorney Judson E Crump

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You may have heard the recent news about how Capital One is changing its credit card terms of service to add a very controversial provision that the credit card company can “contact you at your home and at your place of employment,” and can do so in any way they choose, including making a personal visit.  Naturally, the idea of some stranger showing up at your door asking for money horrified people and has caused Capital One to rethink what is obviously a ridiculous contract provision.

Needless to say, Capital One’s image suffered a pretty hard hit when the news broke, and I’m sure they’ll receive less credit applications during the next few months than they otherwise would have, which means that they’ll make less money during the next few years because they’ll have few customers to lend to and collect interest and fees from.  So it begs the question: why?  The bank later assured us all that “Capital One does not visit our cardholders, nor do we send debt collectors to their homes or work.”  Well if you don’t ever use this particularly contractual provision – one that has cost you millions of dollars in lost customers – why would you put it in your contract?

I don’t pretend to understand why banks do everything they do, but I do have enough experience dealing with them to form two theories on this one:

1.  Their debt buyers want the language in their because it makes them scarier to people who are in default.  If you’ve never been in serious financial trouble, you may not really understand this because you’re accustomed to thinking of credit card companies as people you send money to each month to pay for purchases you made the month before.  But when you get really behind on your payments, you see a different side of a credit card company: collections.  Most of the money that credit card companies make comes from people who aren’t in good financial shape.  That’s why AmEx charges annual fees on all their rich-people credit cards.  Banks don’t make money off people who just pay everything on time.  Look at the fees you get from a minimum payment borrower, though: 17.99% interest, late fees, over-the-limit fees, cash advance fees, etc.  And once you’ve fallen below the surface of collectability, you move into even less pleasant territory: debt buyers and collection agencies.  These people buy your unpaid account for about $.06 per dollar.  Yes, that’s right.  6 cents per dollar.  That’s an industry average, and it is the price third party bill collectors pay Capital One for the privilege of hounding you for whatever they can convince you to pay.

The bad debt business is a huge industry – they were purchasing just over $100 Billion in bad debt per year before the bubble popped in 2008.  Debt buyers make their money by scaring you into paying you more than you should.  But they’re not allowed to lie, so in order to be as scary as possible without breaking the law, they want a contract that gives them the right to make all sorts of outrageous claims.  And if Capital One can sell its bad debt for 8 cents a dollar instead of 6, they’re making millions of dollars extra from their nearly worthless accounts.  So they have every incentive to make their contractual terms as abusive and ridiculous as possible.

2.  Nobody reads the contract.  The funniest thing about the outrageous “new” contract terms is that they’re not even new.  Credit card contracts have had stuff like this in them for years, and nobody even noticed.  As a consumer credit attorney, I was honestly shocked that some major news outlets actually gave the story some air time, because it wasn’t really news to me.  I actually have had a Capital One credit card and I didn’t read the contract.  I just assumed it had the same junk that every other credit card contract has: no rights for the consumer except those mandated by federal and state law, an arbitration clause, a class action waiver, and terms governed by the home state of the issuing bank.

If, while reading your credit card contract, your computer warranty, or your automobile sales contract, you find a particular contractual provision that looks like it is designed to help you and not the person selling or lending to you, you can bet that it is mandated by federal law.  A great example is the $50 Maximum Liability for Fraudulent Purchases paragraph in every credit card contract.  Read yours and you’ll see it say something like “If someone steals your credit card and makes purchases with your Card, Citi will hold you liable for no more than $50 for such purchases.”  Wow, you think.  What good customer service.  And you’re wrong.  That particular bit is required by the Fair Credit Billing Act and the Fair and Accurate Credit Transactions Act.  The bank doesn’t have a choice.

The unfortunate reality of life in the United States is that if you don’t like being forced into horrible contract terms, you’re going to have to start bartering and living off the land, because pretty much everything you buy is bought under terms that give you no rights whatsoever.

Judson’s Guide to Debt Collection Rights, Part IV: Validation and Vindication – Alabama Consumer Credit Attorney Judson E Crump

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The Fourth Right: Validation

If you’ve ever gotten a collection letter, you’ve seen the following language:

Under the Fair Debt Collection Practices Act, which is federal law, we are required to notify you of the
following information and rights you have:
You have thirty (30) days from the day you receive this letter to dispute all or part of the debt. If you
notify us in writing that all or part of the debt is disputed, we will provide you with a verification of
the debt by mail. Unless you dispute all or part of the debt in writing within this period of time, we
will assume the debt is valid.
If the creditor named above is differentfrom the original creditor on this debt, we will provide you
with the name and address of the original creditor by mail if you request this in writing within thirty
(30) days from the date you receive this letter.
This is an attempt to collect a debt by a debt collector and any information we obtain will be used for

that purpose.

 

What does that mean?  It means that if you have any suspicion whatsoever that you don’t owe that exact debt collector that exact amount of money on that exact account, then you should demand some sort of proof that these people have the right to be bothering you about some money.  It is one of those things that, because it comes from a corporation that is trying to be intimidating, we just don’t really see it for what it is.  But pretend for a moment that, instead of getting a letter from PRA Receivables Management, Inc. on behalf of CitiFinancial, it was a letter from some guy named Tom Smith, claiming to be collecting for your friend Buddy.  You know that you borrowed some money from Buddy a while back, but you weren’t able to pay, so he eventually gave up on asking you for money.  Then one day some guy named Tom Smith comes up to you as you are walking into work.

“You owe me $21,000.”  He says.

“Uhh,” you say, “No I don’t.  I don’t even know who you are.  Get the $%&* out of my way before I call the cops.”

“Yes you do.  You owe Buddy some money and Buddy told me I can have it if I can get it from you.”

“You must be joking.  Even if I do owe Buddy money, that’s between Buddy and me.  You’re insane if you think I’m just going to hand $21,000 over to some random guy.”

Tom: “OK, well how about $10,000.  That’s a good deal.  $10,000 for $21,000.”

You: “How do I know you’re not a scam artist?  If I gave you $10,000, how do I know that Buddy won’t come after me for the money later?”

Tom: “You just have to trust me.”

You: “Screw you.  If I ever see you again, I’m calling the cops.  Seriously.”

 

That is how debt collection would work if it was done between real people.  But, as we modern Americans have been conditioned to just expect crazy talk from faceless corporations, we somehow accept the exact same behavior.  Somehow the fact that it is utterly ludicrous just doesn’t register the way it would if we were looking at a real person.  So the Fair Debt Collection Practices Act has section 1692g.

15 U.S.C. 1692g states that if Tom is trying to get you to pay him the money you owe Buddy, then you have the right to demand some sort of proof.  What sort of proof, exactly?  Well, the courts disagree, but typically it means you can demand at least something from Buddy saying “This guy is legit; you can pay him and I’ll never come after you for the money again.”

So what do you do to exercise this right?  Just send a letter.  Tell them who you are, that “pursuant to 15 U.S.C. 1692g, I demand proof” that you have the right to collect every penny that you’re asking me for.  And tell them that until you see such proof, you’re not even going to pick up the phone.

And you can do exactly that.  By law, they are not allowed to continue collecting from you until they provide you with validation of the debt.  This means that all the phone calls, emails, texts, and letters must stop until they’ve given you something in writing.  The only catch is this: you have to do it within 30 days of first hearing from them.  So don’t waste time!  This is a powerful tool for stopping harassing phone calls dead in their tracks – without even having to hire a lawyer.  If they do call you before you receive that proof, they’ve violated the FDCPA and you need to call an FDCPA lawyer.

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