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See A Credit Card Charge That You Don’t Recognize? How to Deal with It. – Alabama Consumer Credit Lawyer Judson E. Crump

September 14, 2015 by Attorney Judson E Crump Leave a Comment

You should review your credit card statement every month. If you see charges that you do not recognize, here is what to do.

Identity theft is becoming more common than ever. It seems that every few weeks, another massive security breach is revealed on the news. And identity theft can start in a lot of ways. From a digital security breach by Russian hackers to an old-fashioned thief digging up an old credit card statement from your garbage to an angry ex-wife spending money using stolen credit cards. Regardless of how it happens, a telltale sign is the existence of bogus charges on your credit card or debit card.

Maybe you’ve seen TV commercials where credit card companies advertise their “Zero liability for unauthorized purchases” policies. This always makes me laugh, because it is a super clever attempt by the credit card companies to seem generous. And here’s why it is bullshit: they have to do that.

If you see a charge on your billing statement that you didn’t make, then you can simply write a letter to the credit card company disputing the charge. And once you provide them with written notice that you didn’t make the charge, you cannot be held liable for more than $50. By federal law. So even if an ID thief spends $2,500 on your card, the bank can’t charge you more than $50.

Furthermore, if you decide not to pay the disputed amount, the bank can’t sue you for it. Because the Truth in Lending Act requires that in any action to enforce a credit card liability, the issuer of the card is the one who must prove that the charges sued for were actually made by the person being sued. 15 U.S.C. Sec. 1643(b).

So if you do see an amount that you don’t recognize on your bill, here is what you do.

First, you flip your credit card statement over and look for the “correspondence address” or “billing dispute address.” If the issuing bank has an address for disputes that is different from the payment address (and they usually do), then you MUST send any dispute to the designated address.

Second, you send a letter to that address describing briefly your dispute. You don’t need to give them the history of your credit card or the reason why the charge is bogus. You just need to tell them that you didn’t make the charge and that you aren’t going to pay for it. Your letter must include the account number, your name and address, and a precise description of the charge you dispute.

They must respond within 30 days. They’re supposed to conduct an investigation and figure out if you really didn’t make the charges. If they conclude that you didn’t make the charges, they have to let you off the hook for the charges. If they conclude that you did make the charges, then they must send you documentation that they’re right and you’re wrong.

If they don’t comply with these rules, then they cannot charge you for the disputed amount or any finance charges thereon.

The Lone Justice Ruling for the People: Scalia? – Alabama Consumer Credit Attorney Judson E. Crump

November 11, 2014 by Attorney Judson E Crump Leave a Comment

Koons Buick Pontiac GMC v. Nigh – 543 U.S. 50 (2004). Proof that Judges aren’t just partisans.

The U.S. Supreme Court now has 5 “Republicans” and 4 “Democrats.” Since I get my knowledge of the world from the TV Channels or internet news sites that disagree with me the least, I know this to mean that if an abortion case goes before the Court, 5 justices will rule against abortion and 4 will vote for it. And that in a suit between a large, moneyed corporation and an individual seeking to exercise his federal rights, there will be 5 votes for the corporation and 4 votes for the human.

No, that isn’t how it works. A great example is the 2004 case of Koons Buick Pontiac GMC v. Nigh.

Bradley Nigh bought a car from Koons Buick. Unfortunately for everyone involved, the dealer inflated the sales price of the vehicle with a bogus charge for a “Silencer,” whatever that is. Nigh found a lawyer who had heard of the Truth in Lending Act, and sued the dealer in Virginia federal Court. The jury returned a verdict that the dealer had violated the Truth in Lending Act, and therefore the plaintiff was entitled to a statutory damage award of twice the finance charge, which ended up being about $25,000. It was a high interest loan.

First, a note on statutory damages. These are a lot like punitive damages, in that they’re authorized to penalize a violation of the law. But unlike punitive damages, they are typically limited to a small amount of money. The Fair Debt Collection Practices Act, for instance, has statutory penalty of $1,000. This means that if a debt collector or collection firm violates that statute, then even if the plaintiff can only show $10 of actual loss, they can get an award of $1010, because of the statutory penalty. This provides an incentive to follow the law, since we can’t put corporations in jail.

The Truth in Lending Act (or, TILA, as we call it), has a “sliding scale” statutory penalty, which is twice the finance charge, but with a cap depending on the nature of the transaction. Prior to the 1990s, TILA had a $1,000 cap on statutory damages in car loan cases. But in 1995, Congress amended TILA to add a higher $2,000 cap for real estate loans. However, the way they rewrote the statute that year deleted the reference to a $1,000 cap on auto loans, and only left that cap on the subsection referring to auto leases.

Go and read TILA right now. 15 U.S.C. 1640. It’s as plain as day. The statute contains no specific limit on statutory damages for car loans.

But Koons’ lawyers thought that despite the clear language, they should get off the hook because it was Congress’ mistake to delete the $1,000 limit. Yes, the statute no longer stated that the $1,000 limit applied, but since there was no evidence that Congress meant to change that part of the law, the Court should implement Congress’ intent, and not the language of the statute.

Naturally, Nigh’s lawyer disagreed. What Congress writes is the law. If they make an error, they can fix it by enacting an amendment to the legislation. Who are the courts to overturn clear and unambiguous statements whenever the Court thinks it “doesn’t look right?”

To me this case was a shockingly easy one. The statute says what the statute says. That should be the end of it. But 8 of the Supremes disagreed, saying that the car dealers get a freebie on this one because they thought Congress made an accidental error.

Who was the lone dissenter? Antonin Scalia. Not a guy known for his sympathy for the poor and the ripped off. But there he is, dissenting to uphold a $24,000 statutory damages verdict for the plaintiff, while the 4 “liberals” were playing at judicial corporate welfare.

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

September 22, 2014 by Attorney Judson E Crump Leave a Comment

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.

How to Avoid Getting Defrauded by a Mortgage Company – Alabama Consumer Credit Attorney Judson E Crump

June 9, 2014 by Attorney Judson E Crump Leave a Comment

Sometimes mortgage servicers charge people money they don’t owe. Yea, it happens. Sometimes it happens by mistake. Despite being huge, well-funded, and advised by hundreds of different corporate lawyers, mortgage servicers can and do screw up sometimes. They may apply a payment to the wrong account. They may charge you for flood insurance when you don’t live in a FEMA-defined flood plain. They may apply a payment after the grace period, when in fact you sent it to them well before the grace period.

So how do you prevent that from happening in the first place?

1. Use online bill pay. This hugely convenient service (nowadays provided by almost every depository bank) allows you to keep years of records of payments made without having to keep giant folders full of paper somewhere in your home. If there is ever a dispute about when a check was cashed by a bank, you have the proof right at your fingertips. It also allows you to track when payments were sent.

2. Keep Notes. If you pay by writing your own checks, just keep notes of when they were sent. A lot of problems begin with the mortgage company not crediting you on time. For instance, you mail a check to Nationstar Mortgage on May 3rd, you know that the US Postal Service takes an average of 3 days to carry an envelope to Iowa, where the mortgage servicer’s lockbox is. It should be there by May 7th at the latest. But they don’t credit you until May 15th, after the 10 day grace period. That is a problem. Lenders and mortgage servicers are required to promptly credit you for payments made. If they don’t, they’re breaking the law.

3. Shop for your own insurance. Most mortgage loans have escrow accounts attached to them that provide for the payment of taxes and insurance on the property. If you let your insurance lapse or fail to obtain your own insurance, the mortgage company can place their own insurance, called “Force-placed insurance.” This is always a ripoff because it costs you more than your own insurance would and it gives you less coverage. Why? Because the mortgage companies keep the extra money. If you find your own insurance from a licensed agent in Alabama, then the mortgage company has to accept it if it provides adequate coverage. They have no choice but to pay the insurance you choose.

4. Don’t take their word for it. Sometimes a lender will place bogus fees and charges on top of your loan. You may get a statement that has a “property preservation fee” or a “miscellaneous corporate advance fee.” The mortgage contract does allow for a few reasonably necessary expenses to protect the property and their legal rights, but the keywords are REASONABLE and NECESSARY. You have a right to know what they’re charging you for. If you see something that looks suspicious, write them a letter disputing that you owe the charge and demanding an explanation for what it is. They have to tell you.

Send your Mortgage Servicer a Qualified Written Request in Alabama – Alabama Consumer Credit Attorney Judson E Crump

May 30, 2014 by Attorney Judson E Crump 4 Comments

How do you fix a problem you’re having with your mortgage company? Most of the time, you can do it without hiring a lawyer or going to court.

But if you try to get it done with a quick phone call, you’ll probably just get that familiar message: “We’re experiencing unusually high call volume. Please hold for the next available operator.” And you hold and hold and the Indian kid that finally answers the phone is an overworked, underpaid peon who has no authority to do anything more than repeat what his computer tells him about your account.

So you write a letter. But not just any letter. A special kind of letter, one that your mortgage servicer is required by law to acknowledge within 5 days. You write a Qualified Written Request.

If you search the internet for an example of a Qualified Written Request (QWR), you are likely to find a lot of documents that claim to be QWRs, but really are not. Why? Because most of the “QWRs” out there are just blanket requests for information, demanding all sorts of loan documents and other things. Mortgage servicers have no obligation to respond to a request that doesn’t “state the reasons for the belief of the borrower that the account is in error.” Walker v. Equity 1 Lenders Group (S.D. Cal. 2009).

Here is what makes a QWR a QWR:

1. You specify particular errors or omissions that you believe to exist with the account. For instance, you may believe that you were wrongfully assessed $15 “property preservation fees” for 3 months. You need to state that fact in your letter.

2. QWR response requirements only apply to servicers, not the originator or the holder of the mortgage. This is usually the people who send you a statement every month. If you receive regular statements, look on the back of the statement for a Qualified Written Requests address. This may be different from the regular correspondence address and the payment address. If you don’t send it to that address, you may not be able to hold them liable for failing to respond.

3. Demand specific information. DO NOT send a gigantic list of requests for documents. The new CFPB regulations 1024.35 specifically exempt servicers from liability in response to an overbroad request. You can request documents, but they must relate to your dispute. For instance, if you are disputing the servicer’s right to charge you force-placed flood insurance, then you can rightfully request:

Proof that the policy was paid for;
The identity of the insurer;
The provision in the mortgage and note that allows them to charge you such fees;
Declarations pages and other documents relating to the insurance policy;
Flood zone certification.

If your only problem is that they’re charging you bogus flood insurance, that does not give you the right to demand a copy of the appraisal used when you bought the house back in 2007.

4. Demand specific corrective action. This should be obvious, but it is something that a lot of people fail to do because they’re more concerned with getting documents and hoping to find a technical violation they use against their lender. The purpose of the QWR and the Notice of Error is to help you and the bank correct mistakes without having to go to court. If you don’t tell them what you want fixed, you can’t hold them liable for failing to fix it! So if they’ve assessed you $45 of bogus “property inspections,” you need to demand that they credit you for that $45, plus any interest or other fees that arose from your not having paid that amount. You also can request that they fix any mention of such account on your credit report.

HERE is a sample QWR that demands information relating to insurance and property inspection fees. Sample QWR

NOTE: There are two exceptions to the rules that a QWR relate to a specific dispute. Even if there is no evidence of a mortgage company doing anything wrong, you always have the right to know a) who owns your mortgage and b) what is the payoff amount. The Dodd-Frank Amendments to TILA allow you to request the identity of the holder of your mortgage note at any time and without being charged a fee. 15 U.S.C. 1641(f).

In Alabama, your QWR should mention that you demand a payoff statement pursuant to Ala. Code Sec. 35-10-91. Alabama law provides a specific right to know the payoff amount for your loan.

The QWR can be a very useful tool for fixing account errors and learning why you have been charged amounts you may not legitimately owe, but it must be used judiciously and done properly. If a bank refuses to acknowledge your QWR within 5 days or correct/explain the mistake with 30, then they are liable to you for any damages you sustain as a result. You can do this.

How to read Truth in Lending Act disclosures for an Auto Loan. – Alabama Consumer Credit Attorney Judson E Crump

March 28, 2014 by Attorney Judson E Crump 2 Comments

I’ve written before about how the federal Truth in Lending Act is basically useless in helping people make wise financial decisions. But don’t take that to mean that I don’t like TILA. I like it just fine. It helps my clients fight back against collection lawsuits and mortgage fraud. It makes me money. But it is only useful in certain circumstances – particularly, when there is a charge that should have been disclosed as a finance charge but wasn’t.

So how do you know if you have a Truth in Lending violation? First, I’ll go right out and say there’s a 99.99% chance that the math calculations are correct. These things are done by computers and personally, I’ve never seen one that was just plain off. Unlike car dealers and mortgage brokers, computers are inherently honest. So the false statements you’re looking for are not in the numbers, but in the inputs that generate the numbers.

TILA requires any charge that is ‘incidental to the extension of credit” to be disclosed as a finance charge. In other words, any penny that you pay that you wouldn’t be paying if you were buying the same thing with cash is a finance charge, and has to be disclosed as such. So if you’re paying a “doc fee” that is $100 higher than a “doc fee” that was charged to your friend who bought from the same dealership a week ago, then that is a $100 finance charge that they have to add to the disclosure.

So here is what you do. We’ll use the standard auto loan contract as an example.

First, look at the numbers and make sure they’re right. They probably are, but it doesn’t hurt to check.

Then, move on to the area where 90% of all TILA violations occur: the “Itemization of the amount financed.” Here is where the dealer (or lender or mortgage company or whatever) explains how they arrived at their finance charge.

1. The sale price: is it right? Is it what you agreed on or is it different.

NOTE: IF THE CASH PRICE GOES UP AFTER THEY CHECK YOUR CREDIT, YOU NEED TO CALL A LAWYER. That’s a dead giveaway for a hidden finance charge and you need to sue them within a year of signing the paperwork.’

2. Down Payment/Trade-In: Is it what you agreed on?

3. Items paid to others on your behalf: Did the money actually go to those people? If you have negative equity on a previous car loan, is the balance correct?

4. Government & Recording Fees. Make sure they’re accurate. Sometimes they’ll overcharge, particularly if you’re out of state.

5. Doc Fees. Is it more than the limit in your state? In Alabama, there is no limit on doc fees, and they are a major source of profit for car dealers. Just what the hell is a doc fee anyway? It’s basically a dealer profit markup. It allows them to say “we got the car from the manufacturer for the same price we’re selling it to you!” But because they are just “cheese” for the dealers, they are easy to abuse. A smart dealership has a pre-printed doc fee on every single contract. Because if a doc fee is higher for you when you buy in credit than it is for the average cash buyer, that is a finance charge! If your doc fee is more than $600, you should check it out.

6. Service Contracts, GAP Insurance, and Credit Insurance. These are all ripoffs, by the way. Especially credit insurance and GAP insurance. The good thing about them is that they can never be required for the purchase of a vehicle. If a car salesman tells you that your price will be higher if you don’t get insurance or some other crap, then he is lying and breaking the law. The contract you sign with them, in fact, is required to say that you’re not required to buy them and that they are completely OPTIONAL. Don’t let them make you sign it. If you sign it, you’re stuck with a bad product and you’ve basically given away $2,000 to the dealer. If you see them included in your loan paperwork, ask them to rewrite the loan paperwork and delete that bullshit. If they refuse to do so or say they can’t pull out your phone and record the statement so we can sue them later.

So What do you do if you find a Truth in Lending Act violation? TILA violations entitle you to sue the dealer for actual damages, statutory damages of $1,000, plus attorney’s fees. The statute of limitations is only 1 year, so you better review your contract as soon as you can to uncover any disclosures. I cannot speak for any other TILA lawyers, but I charge $50 to review auto loan contracts and credit that amount back to clients who hire me to file lawsuits for TILA violations. I take these cases on a contingency fee basis, meaning that I pay the costs of litigation and only collect a fee if we win money. Usually, you end up in arbitration, which is worse if you have a good story of really dishonest and abusive dealing, but it doesn’t mean you automatically lose.

If you do have a case, you need to hire a lawyer because the statute gives you attorney’s fees anyway. If you’re going pro se, you can’t claim that class of damages from the dealer so they’ll offer you less to settle. But if you do decide to go it alone, be sure to read the Truth in Lending Act and Reg. Z. 12 CFR 1024.

How to Answer a Collection Lawsuit in Alabama – Alabama Consumer Credit Attorney Judson E Crump

March 26, 2014 by Attorney Judson E Crump 4 Comments

When you’ve been served with a lawsuit, the most important thing is to take action immediately. Answer it before the deadline. How do you answer? It’s really simple: you just write down your response to the lawsuit on a piece of paper and take it to the clerk of court. They receive it and enter it into their records, and then the Court will read it and depending on what your answer says, either enter a judgment against you or set the case for hearing.

Drafting the Answer.

Most of the time, this is pretty easy. If you disagree with any of the allegations or just want to have your day in court, you can write a “general denial,” which basically says “This is your case: prove it.” A general denial looks like this:

“I deny all material allegations and demand strict proof thereof.”

Federal court cases require more specificity, but luckily 95% of all collection suits are filed in state court, so the Alabama Rules of Civil Procedure govern the process. And under the Alabama Rules of Civil Procedure, you can just enter a general denial and that will set the case for trial.

So even if you don’t think you have a defense, you can file a general denial and that will get your case set for a court hearing. Maybe they’ll give you a good settlement offer. Maybe they won’t show up with any proof. Maybe they won’t show up at all.

Defenses & Counterclaims. If you do have defenses, the answer is the time to present them. In fact, any defense that you don’t put in your answer can be lost forever. So here is where you may need some legal help. Is the debt to old? The statute of limitations may bar the lawsuit. Here are the most common statutes of limitations for collection suits:

Contract (including credit card cases where they have a signed contract): 6 years

Credit Card (if they have proof of written statements mailed to you): 6 years

Credit Card (without a copy of the contract or written billing statements): 3 years

Auto Loan: 4 years

If they do have a copy of the contract, look at the contract for governing jurisdiction. Some contracts may say “this contract is governed by the law of Georgia.” If so, the GA statute of limitations could give you a defense.

Statutes of limitations run from the date of the alleged breach, which typically means the last time you made a payment. If you last made a payment on a car note in March 2010, and they sue you on or after April 2014, then they lose. Period. Even if you owe $500,000, they still lose. Furthermore, a lawsuit filed by a debt collector after the statute has run is a violation of the Fair Debt Collection Practices Act (FDCPA), and you are the one who can go after them for money.

There may be counterclaims as well. Have they violated the Truth in Lending Act? The Fair Debt Collection Practices Act? The Fair Credit Reporting Act? The Alabama DeceptiveTrade Practices Act?

Here is an answer I recently filed for a client where I saw a potential TILA violation:

Answer with TILA Counterclaim in Auto Loan Deficiency Case

Feel free to adapt it to your own ends. It’s public record anyway.

If you think you may have counterclaims against creditors, debt collectors, or mortgage companies who are suing you, then you need to speak with an attorney who can help you. Not a bankruptcy attorney, a real consumer rights attorney who will actually defend you and not just file a bankruptcy and pretend that you have no other rights.

So get out there and fight back! If you have a collection lawsuit story to tell, let me know.