There are a lot of Scam Debt Collectors out there.  How do you tell the real ones from the scammers, though?  Here’s a quick guide.

Debt collectors can be scary.  Really scary.  They can call you all the time, send you frightening letters, report your delinquencies on your credit reports, and even take you to court.  But there are lots of things they can’t do.  They can’t lie to you.  They can’t threaten to sue you when they either have no right to sue or intention of suing.  They can’t use harassing or offensive language.  They can’t tell other people about your financial woes.  And here’s one important thing they have to do: within 5 days of first making contact with you, they have to send you a written letter explaining who they are and why they’re pestering you.  When it comes to distinguishing scams from real debt collectors, this is the most important provision of the Fair Debt Collection Practices Act (or FDCPA).

Why?  Because the scammers never follow this part of the law.  Never.  Here’s a common scenario: out of the blue, you get a phone call from some stranger saying that you’ve got a big unpaid bill that must be taken care of now.  If you don’t pay up, they say, they’ll send the cops, serve papers on you, garnish your paycheck, or put a lien on your property.  Scary stuff, right?  So you ask what they’re collecting and for some proof, and they verify your name and address, maybe even your social security number or account number.  Now you’re even more scared because they seem to know so much about you.  If they know that much, they have to be legitimate, right?  WRONG.

In today’s world of mass data breaches, Dark Web ID Thieves, and election-warping Russian hackers, getting your personal information is easier than ever.  If you’ve ever had an account with any company that’s been hacked, a scammer can buy your personal information off the Dark Web for a few bucks per account.  But that doesn’t make them legit.  On the contrary, it makes them criminals.

Fortunately, there’s a very simple test to determine whether or not a debt collector is real or scam: do they have a physical address in the United States of America?  If so, they’re probably a real debt collector (but who may still be breaking the law).  If not, they’re a scam.  It is literally that simple.

Let me repeat that: if a debt collector refuses to give you their address, they are a scam.  Period.

How do you go about finding their address?  Offer to send a money order.  Real debt collectors love accepting money orders at their place of business or payment address.  Scams don’t have a payment address because they’re afraid of getting shut down by law enforcement.  If you offer to send them real money, a real debt collector will gladly tell you where to send it.  Scammers, however, will only make excuses like “we can only take a debit card or Western Union,” or “it’s too late, the payment has to be made over the phone.”  Legitimate debt collectors don’t do that.  Trust me.  If a debt collection scam refuses to give you a real address, you know they are fake, and you can tell them that.  There’s nothing they can do to you.  Furthermore, you should go ahead and report them to the CFPB or your state attorney general’s office.  The people in power need to know that this is going on, and they need to hear from you so it is a priority to protect all the consumers out there who are getting scammed.

So please, please, please: if you know anyone who’s dealing with a collection scammer, tell them not to pay them anything.  You aren’t getting anything for your money, and you’re just donating to criminals.  These scams are pervasive nowadays, and it breaks my heart to hear about how many honest working Americans are getting fooled by these criminals.

Someone owes you money.  After months of haggling and waiting for them to pay up, you hear that they’ve filed bankruptcy.  Chapter 7.  How are you going to get paid now?

Answer: You probably won’t.

Yeah, I know that isn’t what you wanted to hear, but that’s the truth.  The vast majority of bankruptcy cases involve little to no distribution to unsecured creditors.  “Unsecured” means that the debt isn’t secured by any collateral.  In other words, there isn’t a particular piece of property that you can take if they don’t pay you.  There’s just a regular old unpaid debt.  Secured creditors get treated differently depending on what happens to their collateral, but unsecured, non priority creditors don’t have much recourse when a debtor has filed bankruptcy.

“But that’s not fair!” you say, “This is a legitimate debt!”

Yes, and so are all the other debts that are drowning the debtor.  The purpose of bankruptcy isn’t to make sure that you get paid.  It’s to recognize that you can’t get blood from a turnip, and rather than require the debtor to spend his entire remaining life trying to pay you (and everyone else) back, we let the debtor use this legal process to get a fresh start.

To prevent debtors from abusing the system, it has a lot of limits.  If the debtor has lots of property, he’ll lose it in order to get you paid.  If the debtor has too much income, he’ll be forced to file Chapter 13 instead of Chapter 7 in order to get you paid.  If the debtor is hiding assets or lies to the bankruptcy court, he can be prosecuted and thrown in jail.  If he had assets but tried to get rid of them before he filed bankruptcy, those assets can be yanked back and sold to get you paid.  And once he’s filed, he can’t file Chapter 7 again for another 8 years.

So if you have a friend, customer, or business associate that owes you money, you may want to consider working out a compromise settlement.  Because if he qualifies for Chapter 7, he may just leave you with nothing.

Finally, note that every bankruptcy case and every debtor is different.  There are a lot of factors that go into whether someone will file bankruptcy, what chapter they’ll file under, and how they’ll treat their creditors once they’re in bankruptcy.  The first thing you need to do if someone who owes you files bankruptcy is talk to a knowledgeable bankruptcy lawyer who can advise you as to your rights.

In 2012, Credit Acceptance Corporation took a Default Judgment Against My Client for $8,177.

She knew nothing about it, however, until one day in the middle of 2017, when her boss told her that 25% of her upcoming paycheck was going to be garnished!  She looked at the writ of garnishment and saw that it came from a judgment that had been entered against her by Credit Acceptance back in 2012.  Looking into the court records, it turns out that they had sued her for an old car note that she thought had been paid.  The car was repossessed and sold, and she hadn’t heard a word from Credit Accpeptance since.

And because she had paid a lot of money for the car, she figured that the value of the car was at least as much as what she owed them for it.  She was, unfortunately, wrong.  As is too often the case, when her car was repossessed, the creditor appears to have sold it for a mere fraction of its real market value and leaving her with a big bill.  So they had apparently sued her.

But they never notified her of the lawsuit.

Instead, they sent a process server to her uncle’s house.  Her cousin answered the door and introduced herself.  The process server handed the cousin the paperwork and left.  Based on his report, Credit Acceptance told the Court that they had properly notified my client of the lawsuit.

They were wrong.  Rule 4 of the Alabama Rules of Civil Procedure says that you have to serve someone with notice of a lawsuit personally or by delivering it to their residence.  In this case, Credit Acceptance had done neither.  But the court had no idea of the truth, so when Credit Acceptance filed a Motion for a Default Judgment against my client, the judge granted it.  That is how a judgment can be entered against you without you knowing it.

Luckily, she came to me and we were able to gather the proof that we needed to show that she had not, in fact, been living at her uncle’s house at the time she was allegedly served with the court papers.  I filed a motion to vacate the default judgment, and we provided copies of her utility bills at her real address to show that she had really been living somewhere else and hadn’t received her papers.

We went to court and we won.  The judge granted our motion.  The default judgment was set aside, and because the judgment was void, the garnishment had to stop.

You can see a copy of the order here: Order Vacating Default – Credit Acceptance 2017

This was an important win for our client because a judgment can be reported against  you for 10 years.  If you vacate the judgment, it can no longer be reported against you.  Note that vacating a default does not automatically deal with the underlying lawsuit or debt: it gets the judgment off your record and gets you a trial, where you have the chance to defend yourself from the collector’s allegations.  But it is a big win because it takes any garnishment off your back, which saves you a lot of money while you’re waiting for your trial – money you can use to settle the case, prepare for bankruptcy, or simply survive.  If you get a default vacated, it may not automatically come off your credit record – it is always advisable to submit a written credit report dispute to the credit reporting agencies to make sure that they don’t report the debt against you.

NOTE: The facts of this case can be confirmed by Alabama state court records in Case No. 02-DV-2011-92563.

My Client was sued by NCLST for over $180,000 of Student Loans.  We got the cases dismissed.

National Collegiate Student Loan Trust filed 4 separate lawsuits against my client in the Circuit Court of Washington County, Alabama.  They alleged that my client was liable for 4 separate student loan promissory notes.

As an assignee, NCLST had the burden of proving not only that the debt itself and the amount of it was accurate, but also that they had the chain of title proving their right to collect the debt.

The loans were also private, meaning that the normal contract statute of limitations applied.

We challenged their standing and proof.  The collector ultimately agreed to dismiss all four cases.  This resulted in a massive amount of savings for our client.

The dismissal orders can be found here:

Order-Dismissed – 54 Order-Dismissed – 51 Order-Dismissed – 53 Order-Dismissed – 52

If you or someone you know has been sued by NCLST, call the law office of Judson E. Crump to discuss your options for dealing with this debt.  The consultation is free, and our fees are reasonable.  251.272.9148.

$19,333.52 Judgment Awarded Against the Law Offices of Paul A. Herman

Back in 2013, our client faced insurmountable credit card debt incurred paying for medical expenses when her child broke a limb.  Like many honest people who don’t want to file bankruptcy, she was contacted by a debt settlement company that promised to “resolve” her delinquent accounts.  But this debt settlement company was more than a garden-variety debt settlement company.  This outfit was a real law firm, operated by a real lawyer.

One of the many promises made by this company was that if the client was sued by a debt collector or creditor, they would defend her against any such lawsuit.  My client paid $7,500 to this outfit, and trusted them to resolve her problems.

Well, sure enough, she got sued by one of her creditors.  And guess what?  The debt settlement lawyer didn’t defend her, nor did he find anyone else to defend her.  She ended up having to refinance her mortgage and sacrifice thousands of dollars of home equity to settle the credit card lawsuit.

She was furious and hurt, so she called me.  We sued the law office and its principal, Paul A. Herman, a Boca Raton, Florida lawyer for breach of fiduciary duty and legal malpractice.  After months of litigation, the Circuit Court of Mobile County awarded our client a judgment for $19,333.52 plus court costs.

The court found her actual financial loss to be $3,583.38, awarded emotional distress damages of $10,750.14, and $5,000 in punitive damages.

A copy of the order can be found here: Judgment: Phillips v. Herman.

Student Loans are one of the biggest financial burdens facing young people today.

And it isn’t just young people.  In fact, some of the worst student loan practices involve middle-aged and older people who are trying to get education to re-train for a new career.  If you’ve fallen behind on your student loans, you may eventually face a lawsuit by an entity called “National Collegiate Student Loan Trust.”  Who are they?

National Collegiate Student Loan Trust, or “NCLST” is, as the name implies, a trust that holds massive pools of student loans.  Think of it as a company that buys lots and lots of student loan accounts and then tries to collect them.  It’s a lot like the debt buyers that you may see if you have some old unpaid credit card bills.

Some of these bills can be really big – tens of thousands of dollars – so getting a lawsuit from NCLST can be very alarming.  But don’t lose hope.  This can actually be a good thing.

Why?  Well, one of the biggest problems with student loans is that you can’t discharge them in bankruptcy, and because of this, they are notoriously difficult to settle for less than the amount owed.

But when they sue you, they have to prove their case.  They have the burden of proof.  And the nature of their business – aggregating thousands of accounts and transferring them from lender to trust, and possibly from trust to trust several times – makes it possible for your lawyer – if he’s a good one – to pick apart their case for mistakes, missing evidence, or defenses that you may not know about.  This can make it possible for you to negotiate a favorable settlement, or even potentially dismiss the case outright.

So if you’ve been sued by National Collegiate Student Loan Trust in Alabama, feel free to call me or another local debt defense attorney to evaluate your options for dealing with these debts.

“If I file bankruptcy, will I lose my job?”

A lot of people worry about the impact that a bankruptcy filing can have on their employment prospects.  Certainly, having a bankruptcy on your record is never a good thing.  But can you lose your job over it?

As it happens, Section 525 of the Bankruptcy Code deals specifically with this issue.  It says that

“No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt—

(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or

(3)has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

If I get another call from (207) 213-1127, I’m suing you.

I got a phone call from a number of never heard of. The number was from a 207 area code and the complete number was 207-213-1127.  I picked it up, thinking, which of my clients got a Maine phone number and called my cell phone?

But a robot voice answered me, to tell me that ADT was offering a free security system if I’d just put their sign in my yard.

I was sitting at my desk working on a complaint about filing a fraud lawsuit and I’m one of those people who really need to concentrate on one task at a time that the way my brain works so when I get these phone calls on my cell phone and screws up my whole flow and I hate this stuff. The craziest thing about this is that I am a lawyer who represents people in FDCPA lawsuits and TCP a lawsuits over harassing phone calls. You would think that they would avoid people like me.  So this is just fair warning ADT: I’m keeping track of your phone calls if it happens again I’m gonna take you to court.

I don’t care if I only get $500.  EVERYBODY HATES TELEMARKETING CALLS.  I can’t believe that this is still considered a valid marketing strategy.

If you’re getting calls from these folks, feel free to join me.

Seriously, has anyone ever gotten anything good from a telemarketer?  Ever?  I’d be shocked.  I seriously doubt I’m the only one getting these.

‘Pension Funding’ or ‘Pension Advance’ Companies can be dangerous to deal with.

My client (we’ll call him “JF”) was a hard working U.S. Navy veteran.  When his wife’s sickness put him into a spot of financial trouble a couple of years ago, he found an advertisement from a company called “Future Income Payments, LLC” who promised quick cash in return for a future stream of his VA pension.

He signed the deal and pursuant to their contract, gave them access to his bank account to draft the payments thereafter.

He came into my office to ask me to review this transaction, and we found that this wasn’t a normal loan.  It was a unique financial product called a “pension advance” or “pension funding” contract.

It was labeled a “Purchase and Sale Agreement” and was littered with language that deliberately avoided the use of works like “loan” or “credit” or “debt.”  The reason?  Because they hoped to avoid the laws that real banks and lending institutions have to follow. No interest rate was listed anywhere on the contract, but if you did the math, it was clear that the effective rate of interest was over 156% APR!

Naturally, that sort of interest rate causes most people to gasp, and maybe they hope to avoid sticker shock by trying to act like this is not truly a loan, but something else.

We filed suit against them under the Truth in Lending Act and Electronic Fund Transfers Act, but we reached a settlement before the Court issued any ruling as to the legality of these financial products.

The Consumer Financial Protection Bureau has filed lawsuits against this sort of business in the past, but it appears that these pension advance companies are still doing business.

If you live in Alabama and have questions about a pension advance loan, call us today at 251.272.9148.