Alabama Consumer Law Blog

The Wall Street Journal has posted an article about a bizarre case of a dead woman's name appearing on thousands of affidavits by one of the country's largest debt collection companies.

Ms. Martha Kunkle died in 1995 yet her signature has miraculously appeared on many debt collection documents for Portfolio Recovery Associates Inc. After being sued for fraud in 2008, Portfolio Recovery Associates then decided that any documentation with Ms. Kunkle's name had "defects" and was invalid when being used to collect on debts.

Last July, though, lawyers for Portfolio Recovery Associates sought a court judgment in a lawsuit against a Seattle woman for $2,892.10 in credit-card debt and interest that she allegedly owed. It was a cookie-cutter case, except for one thing: To vouch for the debt's validity, the Norfolk, Va., company included an affidavit signed by Martha Kunkle.

The spokeswoman said the document was "inadvertently used by our outside counsel" because of "human error," adding that the suit was dropped later "upon review of the case."

The company said Ms. Kunkle's name isn't on any other affidavits submitted to judges since early 2008 by Portfolio Recovery Associates or outside lawyers who handle most of its debt-collection cases.

Regulators cite Ms. Kunkle's name being used as evidence of falsifying affidavits and haphazard documentation that seem to be an epidemic in the debt collection industry. Some judges say that robo-signing, where affidavits are signed without anyone actually looking at the case, is much more common in debt collection than in foreclosures. The FTC has advised state regulators to require disclosure of more documentation from debt collectors to ensure that the paperwork they have is reliable and accurate.

Large debt collection companies, like Portfolio Recovery Associates, often buy delinquent accounts in bulk quantities. Sometimes very little information is available about the debt, usually it's just a person's name and the amount owed. When bought in bulk with little background information, it's easy for debt collection companies to just go with the information they have and begin collecting as many debts as they can, even if the information is wrong.

In 2008, Judy Montoya, an employee at Portfolio Recovery Associates, testified in a debt-collection suit filed by the company that its "legal specialists" sign as many as 200 affidavits a day. The company's spokeswoman said such employees sign an average of 100 affidavits a day and are guided by "a very rigorous set of policies and procedures." Ms. Montoya couldn't be reached to comment.

Portfolio Recovery Associates has since said that any affidavits bearing Ms. Kunkle's signature are unreliable and shouldn't be used to collect debts, but even so, this instance is just another example of the chaos that surrounds the debt collection industry.

If you have had problems with debt collectors, or have been harassed by one, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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The Arizona Bankruptcy Lawyer Blog has posted an article that discusses how bankruptcy could negatively impact your retirement savings. Retirement accounts are usually left alone by creditors, whether you're filing bankruptcy or not.

Here are some tips to help you avoid damaging your retirement if you file for bankruptcy:

1. Don't take out a loan against the retirement account. This happens a lot because people will do most anything to avoid filing for bankruptcy. However, taking out a loan against your retirement savings should definitely not be one of those things. Before you do this, it's very important that you consult with a bankruptcy attorney.

2. Don't withdraw money from your retirement savings to live off of. Withdrawing money opens the account to being accessible by creditors when it otherwise wouldn't be. Again, be sure you talk to an attorney before withdrawing money from your retirement savings.

3. Never use the account as loan collateral. Using it as collateral will keep the account from being protected.

Before you decide to file for bankruptcy, it's imperative that you consult with an attorney. If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

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The Arizona Bankruptcy Lawyer Blog has posted an article that discusses what you should be aware of if you're considering "repairing" your credit score. You actually can repair your credit score, but you have to hire someone or a company to do it.

Before you hire someone to repair your credit score, keep the following in mind:

1. If a credit repair company says they can remove all the negative marks from your credit report then they are selling the "proverbial bridge." Credit reporting bureaus are required to remove correct or even negative information after a 7 to 10 years has passed (10 years for bankruptcy, 7 years for credit). However, they're not required to remove correct information without a reason. Sometimes the credit repair company's removal of information on your credit report simply causes the credit bureau to add it to your account again once they realize it's been taken off.

2. You should never let a credit repair company talk you into creating a new identity to start with fresh credit. Not only is it illegal, but it also doesn't work. The debt can still be traced to you and you'll still have to pay for it.

3. Credit repair companies are legally prohibited from charging you upfront fees.

If a credit repair company is offering a deal that seems too good to be true, then it probably is. Before you hire someone to repair your credit, you should consult with an experienced attorney in this field to make sure this is the best option for you.

If you have had problems with credit reporting errors and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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The Minneapolis St. Paul Business Journal has posted an article about how Allied Interstate Inc. is having to pay $1.75 million to settle a lawsuit filed under the Federal Trade Commission. Allied is one of the largest debt collection companies in Minnesota and this suit is the second largest penalty given by the FTC in a debt collection case.

The lawsuit alleges that Allied repeatedly made mistakes when contacting consumers to collect on debts, such as calling the wrong person or trying to collect a wrong amount. Allied allegedly continued its error-laden collection tactics even after consumers disputed the debts, which appears to have gone unverified by Allied.

“Debt collectors had better make sure their information is accurate, or they could end up paying a big penalty,” David Vladeck, director of the FTC’s Bureau of Consumer Protection, said in a statement. “There is no excuse for trying to collect debt from someone if you can’t confirm that they actually owe it.”

The lawsuit also alleges that Allied made inappropriate phone calls to consumers when collecting on debts and used tactics such as harassment, abrasive language, calling repeatedly for long stretches of time, and illegally contacting third parties without the consumer's consent or permission from court.

This isn't the first time Allied has been caught using these types of collection practices. In 2005, Allied settled with the Minnesota Attorney General's office and agreed to stop calling the wrong people when collecting on debts and reimburse the people who were affected by their negligence.

The FTC is designed to protect consumers from this type of illegal debt collection, and we see cases like this one regularly. If you have had problems with debt collectors, or have been harassed by one, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Our friend Denise Richardson of givemebackmycredit.com has posted an article about how those serving in our military and their families can be more vulnerable to becoming victims of identity theft.

A recent study from West Point professor Lt. Col. Gregory Conti found that military personnel who are deployed overseas are more likely not to keep an eye on their accounts, whether it be from lack of time or lack of resources. The military also uses Social Security Numbers for basically everything from important paperwork to trivial things like buying food at the grocery store on base.

The military is taking steps to reduce its dependence on using SSNs. Every time it is required to be used by military personnel in everyday use is currently being evaluated and is expected to be cut in half. For instance, starting this spring, SSNs will no longer be put on military IDs.

Here are some tips for servicemen and women and their families to use to prevent becoming victims of identity theft.

-Don't share your SSN unless it's required. Don't risk being charged with insubordination by any means, but you could at least ask what your SSN will be used for each time you're asked for it.

-Never give out personal information over the internet or phone.

Thieves may be looking for details to corroborate information they already have or to fill in gaps in their knowledge. When someone asks you to provide your mother's maiden name or the city in which you were born, how do you know they are matching that to information you've provided or whether they are entering it into a database of their own, to be used against you and your bank account? You don't.

-Don't use easy or obvious passwords. Using a variation of your birthday for a password can leave you exceptionally vulnerable. Using the same password for multiple accounts can also be devastating. You should use different passwords for each account and change them regularly to thwart identity thieves.

If you have had problems with identity theft and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Our friend Denise Richardson of givemebackmycredit.com has posted an article that discusses the huge percentage of student loans that defaulted last year. The national default rate on student loans was about 7% last year, credit cards defaulted at 8.8% and mortgages were defaulting at 9%. That 7% of defaulted student loans equals to roughly $876 billion, which is actually more than what national consumers owe on their credit cards.

The financial experts in the US are least worried about the rise in the student loan default rate. They are of the opinion that the student borrowers just can't ignore the huge amount of student loan debt level with such a huge amount of educational loans.

Student debt reached $880 billion by the end of the summer in 2010, and that number is estimated to raise $2800 every second. The lack of gainful employment opportunties is also causing recent graduates to default on their student loans. The government is trying to help the situation by trying to increase job opportunities for students.

Here is some advice from financial experts for students who have taken out loans to finance their college education.

-Seek Federal Aid. If you owe a lot from federal educational loans be sure to apply for federal student debt consolidation loans. One of the benefits of that type of loan is that it helps student borrowers repay their federal loans by setting up easy monthly payments.

- Look for scholarship entries. Most scholarship money is claimed by students, but every year millions of scholarship dollars still go unclaimed. Looking at all your scholarship options is an easy way to obtain easy and free money.

-Don't rely too much on private student loans. Financial advisors usually advise students to steer clear of private student loans because of the high, unfixed interest rates. Payments you make tend to go toward interest and very little goes toward the actual loan.

-Use a student budget calculator. A budgeting calculator can help you set up a budget tailored to your needs, lessening the chance that you will default on it. You can also change your budget every year, which is much more practical than following the same budget even after your needs have changed.

-Make the minimum monthly payments. The easiest way to protect yourself from destroying your credit score and financial future is to make the minimum monthly payment for your student loan. Even if it doesn't feel like it's doing any good, it's saving your credit score.

If you have had problems with debt collectors, or have been harassed by one, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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The Bankruptcy Law Network has posted an article that discusses how a foreclosure sale can impact the way you file your taxes with the IRS. The best option for homeowners facing the prospect of foreclosure may be to file bankruptcy, even if the only debt they have is from a mortgage. Bankruptcy "shields" the homeowner from the taxes that follow a debt cancellation. The debt forgiveness offered by bankruptcy is an exception that doesn't treat canceled debt as income.

Here’s how the tax law works: if the mortgage balance as of the foreclosure is $500,000 and the value of the house is only $350,000, the foreclosure results in $150,000 of debt that the (former) home owner no longer owes. A 1099 is issued and tax law treats the $150,000 just as if the debtor had gotten a check for $150,000. The borrower’s taxable income is increased by $150,000.

A tax law was enacted a few years ago to keep homeowners' foreclosure sale from counting as income. If the debt was original and purchase money loan, no phantom income was applied to the foreclosure. But this doesn't apply to refinancing or investment properties.

Insolvency is one way to not have to include a canceled debt as income. Bankruptcy is another option. However, according to the IRS, the debt that is forgiven through bankruptcy doesn't cancel taxable income. It can come as a surprise to homeowners who are already upset over losing a home when they owe taxes for money, that they never even saw, from a foreclosure sale.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

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Our friend Denise Richardson of givembackmycredit.com has posted an interesting article about how you can avoid internet scams and various other acts of fraud that are used by con artists posing as internet daters. The tips she lists come from Ms. Casey Jones, creator of Women Against Con Men (WAC-M). WAC-M was created to encourage individuals to fight back against being victimized by repeat serial con men.

Online dating sites are continuing to grow in popularity, but it's important to remember that just because you're being honest about yourself, it doesn't necessarily mean the other person is. Here are some basic guidelines of things to avoid and to do when using online dating websites.

1. Don't over share! There's no need to put personal information such as your phone number, IM screename, work location, or a link to your Facebook profile. You can provide those details to the person after you've met face to face and have an idea of their character. It's a good idea to steer clear of anyone who presses you for personal information while you're chatting online and haven't met.

2. Set up an email account that will only be used for online dating. An advantage is that it will be easier for you to keep up with emails and they won't get mixed in with work or other personal emails.

3. If you decide to meet face to face, make sure you schedule it for a public place in the daytime. Don't allow anyone to pick you up from your home until you've been out with them a few times and are comfortable with them.

4. Asking someone for a recent photo might sound shallow, but it's a very good idea. If they hold back a picture then they might not be being truthful on their profile.

5. A phone conversation should always come before a face to face meeting, but you should still be careful about it. Don't give them a home or work phone number, use a cell phone instead. You can also learn a lot about someone by the way they speak.

6. Be aware, and beware. Because the online dating field offers so many opportunities for frauds, scams, and cons, you can't let your guard down for a minute. Watch out for these red flags:

• Unwillingness to exchange photographs.
• Fake display pictures (like celebrity photographs)
• No display pictures at all
• Blank or extremely vague "About Me" and other descriptive sections on the profile.

Predators and con artists abound on all kinds of social networking sites, but if you follow the above tips then you can avoid being taken advantage of by one of them.

If you have had problems with fraud, feel free to contact us through our website or by calling 205-879-2447.

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The Wall Street Journal has posted an article that discusses how even a small medical bill can lower your credit score and can even keep you from refinancing your home.

Cristina Lourosa-Ricardo, writer of the article, uses the example of Jeanne White. Ms. White found out in October that she had two doctor bills for $11 each that had caused her credit score to fall from 757 to 680. The bills had been turned over to a debt collection agency and made refinancing much more expensive than she had originally planned for. Worse still, the bills were issued in error.

"I was told I'd have to pay $14,000 in closing costs to get a 5.5% interest rate," Ms. White says, substantially more than she would have paid with a higher credit score.

Ms. White isn't the only example of this. Many consumers with steady jobs and good loan-to-value ratios have found it difficult to refinance due to medical billing errors knocking their credit scores down. 14 million Americans have errors on their credit reports from medical billing errors. The billing errors can go unnoticed for many years and can cause refinancing closing costs to be impossibly expensive or cause the borrower not to be approved for refinancing at all.

The Medical Debt Relief Act was passed by the House and is currently in the Senate and will give to help homeowners with medical debt problems by removing "settled medical debt from credit reports after 45 days, instead of the customary seven years."

Consumers can protect themselves by routinely checking their credit score and keeping an eye out for medical bills that are issued in error.

If you have had problems with debt collectors, or have been harassed by one, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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The Michigan Collection Law Blog has posted an article about the lesser known debt collection method of seizing a safe deposit box. Debt collectors can obtain safe deposit boxes pretty easily.

Gary Nitzkin, writer of the article, says that first the collector must get the bank to admit that it has a safe deposit box under the debtor's name. Then a Writ of Seizure must be obtained, which will send the court officer to the bank branch. The court officer must have a copy of the Writ of Seizure and a copy of the garnishment disclosure- which confiscated money from the debtor's bank accounts- and/or a copy of the bank's statement of admission that the debtor has a safe deposit box there.

Next the court officer must seize the safe deposit box, which the bank really doesn't like. The bank's natural reaction is to protect the consumer's assets. Having a court officer show up at a bank wanting to take someone's safe deposit box is upsetting and confusing for bank personnel, so it's likely that the bank's attorney will want to talk to the court officer. The easiest thing for both parties to do is cooperate- the court officer doesn't need to threaten the bank employees and the Writ of Seizure allows the court officer to legally seize the safe deposit box.

Opening a safe deposit box usually requires 2 keys- one held by the bank and the other by the debtor. The bank can use their key to unlock part of the box, but the bank won't have a copy of the debtor's key so it cannot be opened entirely. The court officer will then call in a locksmith who will have to drill out the box's lock. One person from the bank's personnel should be present at all times when the safe deposit box is being drilled open and the contents are being examined. The court officer should never be left alone with it so there can't be any inventory discrepancies later. An inventory sheet should be created and a bank employee should sign it along with the court officer. A copy of the inventory sheet should be left with the bank and the court officer should take the original.

If you have had problems with debt collectors, or have been harassed by one, and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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The Birmingham Bankruptcy Blog has posted a helpful article that lists 10 things you need to know about your bankruptcy court hearing.

1. Don't expect to be seeing a judge. Instead, a "Bankruptcy Trustee" will ask you a few simple questions at the hearing. Actually, if you file Chapter 7 bankruptcy, it's likely that you'll never see a judge.

2. Your bankruptcy hearing lawyer will be at the hearing with you the whole time to guide you through and make sure everything runs smoothly.

3. You should only be at court for about an hour. Most of that hour will be spent waiting for your hearing, which will only last for a few minutes.

4. Matthew A. Dunaway, writer of the article, assures that "no one is going to be rude or mean to you."

5. It's unlikely that your creditors will be at the hearing. It's possible that a secured creditor could show up to see if you want to reaffirm the debt or not.

6. "Travel light" as you'll have to walk through metal detectors.

7. Be sure to bring a picture ID.

8. Don't bring any guns, knives, etc. or anything else that could potentially be used as a weapon...even a nail file.

9. Dress normally. There's no need to be dressed up like the hearing is a formal event, but it's not a party either.

10. One of the most important things you can do is relax. If you've been honest with your bankruptcy attorney then everything should run smoothly and without any problems or surprises.

If you have further questions or concerns about bankruptcy, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

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The Arizona Bankruptcy Lawyer Blog has posted an article about the Credit Card Accountability Act that President Obama signed back in May 2009. The Act changes several credit card stipulations, and might even save people with serious credit card debt from bankruptcy, as suggested by Michael S. Anderson, writer of the article.

Here are a few of the changes:

- Credit card companies cannot charge a penalty fee that is more than the amount associated with the violation.

- Penalty fees are required to be "reasonable and proportional to the omission or violation".

- Late fees or fees for other violations can't be more than $25, unless it's a repeated violation or it costs the credit card company more than $25 to handle the problem.

- Credit card companies are barred from charging inactivity fees on gift cards and gift cards must be valid for 5 years.

- "Credit card companies must show the consequences of negative actions, including the release of periodic statements concerning the time it would take to pay off the balance and the total cost."

- Contracts and terms of conditions must be written "clear in language."

- Terms and conditions can't change for the first year.

- Promotions must be clearly and plainly disclosed.

- "Consumers must not approve transactions that would place balances over limit instead of incurring an over limit penalty."

- Fees would be restricted on bad or low limit credit cards.

These changes could certainly benefit consumers struggling with credit card debt and considering bankruptcy.

If you have had credit card or bankruptcy issues and have questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Associated Press has posted an article about a new development in Arizona that allows nonprofit groups to snag foreclosed houses- for free or a discount rate- before banks.

Nonprofits like the group Rebuilding Together get the houses for very low cost and then do renovations or repairs and then sell the homes in an effort to stabilize Phoenix neighborhoods with several vacant homes that were foreclosed on by banks.

"It's an unfortunate situation, and that's why we really take a conscious effort to work with our partners to ensure that we can have some good stories at the end of this unfortunate equation," O'Donnell said. "Through these programs, we put what I call this protective umbrella over these affordable homes so that first-come first-served nonprofits can get access to them to ensure they get turned back into the hands of the community."

The government announced in September as many as 100,000 foreclosed houses will join the nonprofits' programs to restore neighborhoods through renovating houses, which then ups the home's value. The program started in 2008 and so far about $7 million has been spent on it.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

You can join our Facebook Fan Page - Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.

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