07 July 2011
In two weeks, we will celebrate the one year anniversary of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Despite the enormous opposition from the financial industry, Congress passed this landmark legislation that represents a victory for all American consumers. NACA’s Legislative Unit is dedicating the month of July’s blog posts to celebrating the anniversary of this important law.
Perhaps the most significant provision of the Dodd-Frank Act is the one that creates the Consumer Financial Protection Bureau (CFPB). Now consumers have a single agency whose job it is to guard against unscrupulous, unfair, deceptive and abusive practices.
While the CFPB officially opens for business on July 21, 2011, the agency has been working for months to improve and simplify the type of information consumers get from financial institutions so that they can make an informed decision on financial products like a credit card application or a mortgage form. It is also working diligently to put systems in place and to hire qualified people to run the agency.
Yet one very important position has not been filled since the law’s enactment a year ago – the CFPB director. One would think the person that first came up with the idea of a consumer financial agency and who passionately fought for consumers’ rights as the head of the Congressional Panel on TARP would make the most sense to nominate for the position. If that were the case then Professor Elizabeth Warren would have been nominated as the CFPB’s director months ago. Last September, President Obama named Professor Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB, but he has yet to nominate her as the director.
Instead the banking lobby continues to fight hard to prevent the appointment of Warren. The opposition is not only coming from industry representatives but equally as hard from the GOP on the Hill. Forty-four out of forty-seven Senate Republicans signed a letter sent to President Obama announcing that they neither want Professor Warren, nor will they agree to the appointment of any director without significantly changing the powers, structure and funding mechanisms for the CFPB. At this point it seems the best chance for Warren or any director to run the CFPB is if President Obama makes a recess appointment, and Senate and House Republicans have vowed to try to stop that as well.
The Senate remained in pro forma session this week, instead of adjourning for the July 4th recess. The Senate did not officially adjourn for the Memorial Day recess either. The House must approve a Senate recess of more than three days. While this is usually not a controversial procedure, Republicans in the House and Senate have asked for House Speaker John Boehner (R-Ohio) to refuse to approve a Senate recess, which potentially blocks President Obama from making recess appointments. However, the Constitution gives the president the power to adjourn either chamber in the case of disagreement between them. Yet, Democrats seem reluctant to use that power. It appears the Democrats are resigned to avoid a partisan procedural fight over the issue. The failure to adjourn leaves the question of what is to come for the August recess.
Meanwhile in the absence of a director, the CFPB’s full authority is on hold regarding the oversight of payday lenders, mortgage brokers, private student lenders and other types of financial predators that for years have been targeting consumers and military personnel as well as their families.
The mission of the CFPB is too important to continue to be delayed by the partisan power struggle overshadowing the debate over a director.
Click here to sign an Americans for Financial Reform petition urging President Obama to nominate Warren to lead the CFPB, and the Senate to confirm her.
Ellen M. Taverna
Legislative Associate, National Association of Consumer Advocates (NACA)
NACA's mission shall be to promote justice for all consumers by maintaining a forum for communication, networking, and information sharing among consumer advocates across the country, particularly regarding legal issues, and by serving as a voice for its members and consumers in the ongoing struggle to curb unfair or abusive business practices that affect consumers.
Thursday, July 7, 2011
Tuesday, July 5, 2011
So How Are We Going To Solve This Housing Crisis?
05 July 2011
A day doesn’t pass without a friend, neighbor, reporter, Congressional or regulatory staffer asking me – so –what are we going to solve the housing crisis? Sometimes, if I’m particularly angry at the banks that day, I first offer a glib, “I’m just a consumer advocate – why don’t you just ask the financial and legal ‘geniuses’ who created this mess what we should be doing” response - but then I realize – much to my disappointment, that that is exactly what the administration and Congress seem to be doing! And in many ways, that’s the reason why we remain in the housing morass we’re in – we’re doing what’s best for the banks, but not what’s best for average American homeowners and investors.
Unfortunately, there are no magic bullets that are immediately going to restore a vibrant housing market. This crisis has been long time coming and it’s going to take awhile before we have a real housing recovery. There are however, some fundamental realities that we will all need to come to grips with if we really want to move our nation forward:
Ira Rheingold
A day doesn’t pass without a friend, neighbor, reporter, Congressional or regulatory staffer asking me – so –what are we going to solve the housing crisis? Sometimes, if I’m particularly angry at the banks that day, I first offer a glib, “I’m just a consumer advocate – why don’t you just ask the financial and legal ‘geniuses’ who created this mess what we should be doing” response - but then I realize – much to my disappointment, that that is exactly what the administration and Congress seem to be doing! And in many ways, that’s the reason why we remain in the housing morass we’re in – we’re doing what’s best for the banks, but not what’s best for average American homeowners and investors.
Unfortunately, there are no magic bullets that are immediately going to restore a vibrant housing market. This crisis has been long time coming and it’s going to take awhile before we have a real housing recovery. There are however, some fundamental realities that we will all need to come to grips with if we really want to move our nation forward:
- Housing prices and values have to reflect what people can actually afford. The housing values that we saw in the run up to the collapse were almost all illusory. I’m no economist, but when people’s income remains static or actually drops (because of lower wages and the rising costs of healthcare, pension contributions and education), and housing prices nonetheless continue to significantly rise, something has got to give – and that’s what unfortunately happened! Prices won’t rise again until we have a real increase in families’ income and assets.
- Foreclosures damage homeowners, their neighbors and investors (apparently the only people who aren’t harmed are the big bank servicers).
- The foreclosures we are seeing today are different from the foreclosures we saw a year or two ago. What once was a crisis driven by predatory, unsustainable loans, is now a crisis being driven by under and unemployment.
- Mandate that servicers evaluate homeowners and offer loan modifications in any instance when this option is advantageous to the homeowner, community and investor. This decision making process must be transparent and appealable to a neutral party.
- Require principal reduction in every instance where this will lead to a sustainable modification. This means that when a servicer is also the owner of a second lien – they need to get out of the way, and take a significant reduction on their typically unsecured lien.
- Force servicers to complete this process before they properly proceed to take a foreclosure action.
- Expand programs for unemployed homeowners. The Dodd-Frank mandated EHLP program is a good start (now that it is FINALLY getting off the ground), but more programs like this need to be funded. Additionally, Fannie and Freddie and HAMP servicers must offer much longer forbearance agreements to reflect the reality of today’s unemployment.
Ira Rheingold
Executive Director, National Association of Consumer Advocates (NACA)
Wednesday, June 29, 2011
Walmart: Too Big To Sue, Too Big to Fail. Corporate America Makes it Look Easy
29 June 2011
The decision by America’s highest court, which struck down a gender discrimination lawsuit brought against Walmart by 1.6 million female employees, was sadly no great surprise. In fact, it’s right out of the big business handbook, where week after week Chief Justice Roberts zealously advocates for the rich against the poor; just as a young freshman Senator from Illinois predicted at Justice Roberts’ confirmation hearings.
“… when I examined Judge Roberts' record and history of public service, it is my personal estimation that he has far more often used his formidable skills on behalf of the strong in opposition to the weak.”
Coming out of TARP and the 2008 financial meltdown, the concept of “too big to fail” became popular. No matter how reckless Citigroup or JPMorgan Chase behaved, the government would not allow them to fail. Similarly, it seems, the high court will not allow lawsuits to proceed against the biggest and most powerful market participants. When given the choice, it is the employee or consumer that is left without redress; meanwhile the more powerful market participants (Walmart, Citigroup, AIG, and General Motors, just to name a few) seem to get the benefit of the doubt. “Heads I win, tails I win too.”
To be sure, the legal analysis by the Supreme Court in Dukes v. Walmart seems plausible and the case certainly had difficult legal and factual hurdles to surmount. Significantly, how can there be “common issues” when the class includes thousands of stores throughout the country, each run by a manager with broad discretion? But time and again the consumer or the employee seems to be handed the short end of the stick.
For the employer, the corporation, the strong—the Roberts Court time and again finds a way to rule in their favor. The same is not true for consumers and your average Joe. And the landscape ahead unfortunately remains bleak. With the recent decision in Concepcion and now the Walmart holding, no doubt a lot of meritorious cases—with real victims—will be lost, and lawyers will think twice about investing millions of dollars in those tough cases just in the gray area of doubt. But alas, the pendulum will swing back and “in the long run,” as John Maynard Keynes often said, we will find equilibrium. But with Justices Roberts, Alito and Thomas in their fifties it may take a generation before the tide turns and the Court again becomes an unbiased arbiter of fairness.
Steven Berk
Berk Law PLLC
http://www.thecorporateobserver.com
The decision by America’s highest court, which struck down a gender discrimination lawsuit brought against Walmart by 1.6 million female employees, was sadly no great surprise. In fact, it’s right out of the big business handbook, where week after week Chief Justice Roberts zealously advocates for the rich against the poor; just as a young freshman Senator from Illinois predicted at Justice Roberts’ confirmation hearings.
“… when I examined Judge Roberts' record and history of public service, it is my personal estimation that he has far more often used his formidable skills on behalf of the strong in opposition to the weak.”
Coming out of TARP and the 2008 financial meltdown, the concept of “too big to fail” became popular. No matter how reckless Citigroup or JPMorgan Chase behaved, the government would not allow them to fail. Similarly, it seems, the high court will not allow lawsuits to proceed against the biggest and most powerful market participants. When given the choice, it is the employee or consumer that is left without redress; meanwhile the more powerful market participants (Walmart, Citigroup, AIG, and General Motors, just to name a few) seem to get the benefit of the doubt. “Heads I win, tails I win too.”
To be sure, the legal analysis by the Supreme Court in Dukes v. Walmart seems plausible and the case certainly had difficult legal and factual hurdles to surmount. Significantly, how can there be “common issues” when the class includes thousands of stores throughout the country, each run by a manager with broad discretion? But time and again the consumer or the employee seems to be handed the short end of the stick.
For the employer, the corporation, the strong—the Roberts Court time and again finds a way to rule in their favor. The same is not true for consumers and your average Joe. And the landscape ahead unfortunately remains bleak. With the recent decision in Concepcion and now the Walmart holding, no doubt a lot of meritorious cases—with real victims—will be lost, and lawyers will think twice about investing millions of dollars in those tough cases just in the gray area of doubt. But alas, the pendulum will swing back and “in the long run,” as John Maynard Keynes often said, we will find equilibrium. But with Justices Roberts, Alito and Thomas in their fifties it may take a generation before the tide turns and the Court again becomes an unbiased arbiter of fairness.
Steven Berk
Berk Law PLLC
http://www.thecorporateobserver.com
Tuesday, June 28, 2011
Who’s In The Consumer’s Corner?
28 June 2011
Have you applied for a job online, tried to purchase a new cell phone, obtained cable service, or checked your credit score online lately? Have you applied for a car loan or health care coverage? If you have, chances are you could not obtain the service, product or job without first signing off on a lot of fine print filled with impenetrable text decipherable only to PhDs. More and more of everyday American life is controlled by contracts that must be signed in order to receive a product or service. What’s the big deal? Isn’t this the cost of doing business? Some of these clauses are not inherently problematic. Though largely glossed over by consumers who quickly ‘click through’ in agreement; some assert that these contracts help to make consumer transactions and the handling of any disputes more efficient.
Consumers, however, need to take a closer look. Embedded in the fine print is a sustained attack upon consumer rights and access to justice. Before a service, product or job is ever acquired, consumers or individuals must agree to mandatory arbitration to settle all employment, civil rights and consumer disputes. Arbitration is a private system without any legal protections. There is no public review of decisions to ensure the arbitrator got it right. Further, corporations write the clauses, which typically state who the arbitrator will be, under what rules the arbitration will take place, the state the arbitration will occur in, and the payment terms for the arbitration. Individuals have no say in the process and, because these clauses are in the majority of contracts, a person has no choice but to acquiesce or forgo the product, service, or job altogether. This ‘forced arbitration’ means giving up the most fundamental legal protection: the right to equal justice under the law.
The recent Supreme Court decision, AT&T Mobility vs. Concepcion, has further weakened consumers’ ability to defend against corporate malfeasance. Concepcion has significantly restricted consumer and employee access to justice where these clauses are concerned. By a 5-4 vote, the high court ruled that corporations can ban class actions where there is an arbitration clause in the contract. In other words, a company can isolate itself from court challenge with an arbitration clause in any contract. Potentially, as a result of Concepcion, corporations will effectively be immune from a class action suit. This case represents a win for corporations and a devastating loss to the everyday American.
With the deck so clearly stacked in favor of corporations, who is in the consumer’s corner?
In addition to working with Members of Congress to increase awareness on this issue, NACA has been leading a coalition called the Fair Arbitration Now (FAN) coalition. For the past few years, NACA and its allies have been urging Congress to intervene and restore the balance in consumer transactions through introduction and passage of the Arbitration Fairness Act HR. 1873 and S. 987. The Arbitration Fairness Act will make any pre-dispute arbitration agreement invalid or unenforceable if it requires arbitration of an employment, consumer, or civil rights dispute.
This Wednesday, June 29, 2011, the Senate Judiciary Committee will hold a hearing which will shed more light on this issue and examine important questions. How will Concepcion impact the everyday American, workers and consumers in particular? How can the balance between individuals and corporations be restored? The Senate Judiciary Committee hearing is entitled: "Barriers to Justice and Accountability: How the Supreme Court’s Recent Rulings Will Affect Corporate Behavior". Readers should tune into the hearing – via CSPAN – or try to attend if present locally.
Call your Senator and Representative now and find out whether they are in your corner! Ask them to co-sponsor the Arbitration Fairness Act of 2011. Ask Senate Judiciary Committee Members to attend this important hearing. To contact your member of Congress, you can use the U.S. Capitol Switchboard at (202) 224-3121 and ask for your Senator’s and/or Representative's office.
Have you applied for a job online, tried to purchase a new cell phone, obtained cable service, or checked your credit score online lately? Have you applied for a car loan or health care coverage? If you have, chances are you could not obtain the service, product or job without first signing off on a lot of fine print filled with impenetrable text decipherable only to PhDs. More and more of everyday American life is controlled by contracts that must be signed in order to receive a product or service. What’s the big deal? Isn’t this the cost of doing business? Some of these clauses are not inherently problematic. Though largely glossed over by consumers who quickly ‘click through’ in agreement; some assert that these contracts help to make consumer transactions and the handling of any disputes more efficient.
Consumers, however, need to take a closer look. Embedded in the fine print is a sustained attack upon consumer rights and access to justice. Before a service, product or job is ever acquired, consumers or individuals must agree to mandatory arbitration to settle all employment, civil rights and consumer disputes. Arbitration is a private system without any legal protections. There is no public review of decisions to ensure the arbitrator got it right. Further, corporations write the clauses, which typically state who the arbitrator will be, under what rules the arbitration will take place, the state the arbitration will occur in, and the payment terms for the arbitration. Individuals have no say in the process and, because these clauses are in the majority of contracts, a person has no choice but to acquiesce or forgo the product, service, or job altogether. This ‘forced arbitration’ means giving up the most fundamental legal protection: the right to equal justice under the law.
The recent Supreme Court decision, AT&T Mobility vs. Concepcion, has further weakened consumers’ ability to defend against corporate malfeasance. Concepcion has significantly restricted consumer and employee access to justice where these clauses are concerned. By a 5-4 vote, the high court ruled that corporations can ban class actions where there is an arbitration clause in the contract. In other words, a company can isolate itself from court challenge with an arbitration clause in any contract. Potentially, as a result of Concepcion, corporations will effectively be immune from a class action suit. This case represents a win for corporations and a devastating loss to the everyday American.
With the deck so clearly stacked in favor of corporations, who is in the consumer’s corner?
In addition to working with Members of Congress to increase awareness on this issue, NACA has been leading a coalition called the Fair Arbitration Now (FAN) coalition. For the past few years, NACA and its allies have been urging Congress to intervene and restore the balance in consumer transactions through introduction and passage of the Arbitration Fairness Act HR. 1873 and S. 987. The Arbitration Fairness Act will make any pre-dispute arbitration agreement invalid or unenforceable if it requires arbitration of an employment, consumer, or civil rights dispute.
This Wednesday, June 29, 2011, the Senate Judiciary Committee will hold a hearing which will shed more light on this issue and examine important questions. How will Concepcion impact the everyday American, workers and consumers in particular? How can the balance between individuals and corporations be restored? The Senate Judiciary Committee hearing is entitled: "Barriers to Justice and Accountability: How the Supreme Court’s Recent Rulings Will Affect Corporate Behavior". Readers should tune into the hearing – via CSPAN – or try to attend if present locally.
Call your Senator and Representative now and find out whether they are in your corner! Ask them to co-sponsor the Arbitration Fairness Act of 2011. Ask Senate Judiciary Committee Members to attend this important hearing. To contact your member of Congress, you can use the U.S. Capitol Switchboard at (202) 224-3121 and ask for your Senator’s and/or Representative's office.
Delicia Reynolds
Legislative Director, National Association of Consumer Advocates (NACA)
Tuesday, June 21, 2011
HUD Program Targets Help For Unemployed Homeowners
21 June 2011
The growing foreclosure crisis continues to rise as high unemployment rates force homeowners dire financial strits. Unemployment is now seen as a major cause of foreclosures; yet, the Administration's housing programs struggle to provide much needed relief to unemployed homeowner.
Last July, the Dodd-Frank Wall Street Reform and Consumer Protection Act provided $1 billion to the U.S. Department of Housing and Urban Development (HUD) to implement the Emergency Homeowners’ Loan Program (EHLP). The program offers loan relief and assistance for up to 24 months to struggling homeowners who are at risk of foreclosure. It is designed to provide mortgage payment relief to homeowners who have experienced a significant reduction in income of at least 15 percent due to involuntary unemployment, underemployment, or a medical condition. HUD anticipates the program to reach up to 30,000 distressed borrowers in 27 states and Puerto Rico with an average loan of roughly $35,000. NeighborWorks America is in charge of administering the program along with the five states that operate programs which are substantially similar to EHLP including Connecticut, Delaware, Idaho, Maryland and Pennsylvania.
Though the program was announced last fall, it has been significantly delayed; up until yesterday near ten months later, for example, applications were only being accepted in the five substantially similar states listed above. The Neighborworks programs were delayed because of various implementation challenges. Yesterday, Neighborworks finally announced that the EHLP pre-application process has begun. NeighborWorks posted the forms and information to apply for EHLP along with the recipients of the EHLP household allocations and program grant funds on its website located here.
While it is significant progress that the processing for pre-applications has started, NACA and other consumer and housing advocates worry that the strict eligibility requirements and the complexity of the program design will further delay the program, and that all of the EHLP funds will not be committed before the end of the program on September 30, 2011. For instance, placing barriers in front of potential EHLP participants such as high minimum monthly payments or eligibility restrictions for those that are facing bankruptcy or delinquent on student loans will only contribute to the inability of HUD to disburse the appropriate funds before the September deadline. In addition, little marketing has been done for this program and thus not many homeowners are aware that this program exists. HUD will need to immediately implement strategic marketing to homeowners with radio, TV or print media in order to make the most of this EHLP funding while it's available.
The Making Home Affordable Programs were allocated approximately $50 billion in early 2009 to deal with foreclosure; to date only $1.85 billion of these critical funds have been spent to help homeowners. We do not want to see HUD make the same mistake with EHLP as HAMP and the other Making Home Affordable programs. HUD needs to take EHLP by the reigns to simplify program implementation and get the word out quickly to homeowners.
Ellen M. Taverna
Legislative Associate, National Association of Consumer Advocates (NACA)
The growing foreclosure crisis continues to rise as high unemployment rates force homeowners dire financial strits. Unemployment is now seen as a major cause of foreclosures; yet, the Administration's housing programs struggle to provide much needed relief to unemployed homeowner.
Last July, the Dodd-Frank Wall Street Reform and Consumer Protection Act provided $1 billion to the U.S. Department of Housing and Urban Development (HUD) to implement the Emergency Homeowners’ Loan Program (EHLP). The program offers loan relief and assistance for up to 24 months to struggling homeowners who are at risk of foreclosure. It is designed to provide mortgage payment relief to homeowners who have experienced a significant reduction in income of at least 15 percent due to involuntary unemployment, underemployment, or a medical condition. HUD anticipates the program to reach up to 30,000 distressed borrowers in 27 states and Puerto Rico with an average loan of roughly $35,000. NeighborWorks America is in charge of administering the program along with the five states that operate programs which are substantially similar to EHLP including Connecticut, Delaware, Idaho, Maryland and Pennsylvania.
Though the program was announced last fall, it has been significantly delayed; up until yesterday near ten months later, for example, applications were only being accepted in the five substantially similar states listed above. The Neighborworks programs were delayed because of various implementation challenges. Yesterday, Neighborworks finally announced that the EHLP pre-application process has begun. NeighborWorks posted the forms and information to apply for EHLP along with the recipients of the EHLP household allocations and program grant funds on its website located here.
While it is significant progress that the processing for pre-applications has started, NACA and other consumer and housing advocates worry that the strict eligibility requirements and the complexity of the program design will further delay the program, and that all of the EHLP funds will not be committed before the end of the program on September 30, 2011. For instance, placing barriers in front of potential EHLP participants such as high minimum monthly payments or eligibility restrictions for those that are facing bankruptcy or delinquent on student loans will only contribute to the inability of HUD to disburse the appropriate funds before the September deadline. In addition, little marketing has been done for this program and thus not many homeowners are aware that this program exists. HUD will need to immediately implement strategic marketing to homeowners with radio, TV or print media in order to make the most of this EHLP funding while it's available.
The Making Home Affordable Programs were allocated approximately $50 billion in early 2009 to deal with foreclosure; to date only $1.85 billion of these critical funds have been spent to help homeowners. We do not want to see HUD make the same mistake with EHLP as HAMP and the other Making Home Affordable programs. HUD needs to take EHLP by the reigns to simplify program implementation and get the word out quickly to homeowners.
Ellen M. Taverna
Legislative Associate, National Association of Consumer Advocates (NACA)
Wednesday, June 15, 2011
Quick Car Buying Tips
15 June 2011
- Before you visit the dealer, line up good financing with a bank or credit unit.
- Before you negotiate the price of a new car, check for price information at http://www.edmunds.com/; for a used car, check the value at http://www.kbb.com/ .
- Never tell the dealer how much you are willing to spend per month; instead, negotiate a fair cash price for the car.
- Negotiate the price of the new car first, before the dealer evaluates how much you'll get for your trade-in. Keep negotiations separate and beware of monthly car note that hides the price of the new car and what you are getting for the trade-in
- For used cars, get an independent, expert vehicle inspection before you buy
- Check the vehicle's Vehicle ID Number (VIN) at http://www.vehiclehistory.gov/ ; other vehicle history reports may be unreliable.
- Test drive the vehicle and examine it closely for signs of prior damage.
Tuesday, June 14, 2011
Why You're Getting Debt Collection Calls For Other People, And What To Do About It
14 June 2011
Let's say you've just come home from a long day at work. Dinner's in the oven and you're working through a particularly difficult math problem with one of your children. Life's just chugging along, the way it should be.
The phone rings and your child answers it. "There's a guy who says you owe them money," the little one calls out to you as you stir the pasta.
Mr. Collector comes out of the gate roaring, so to speak. A demand is made for money you don't have, on a debt you don't owe, to a creditor you've never dealt with. You mentally scroll through your monthly bills and can't figure out what this guy is talking about. You politely inform him that you don't owe any money, but he's insistent.
He reads your name back to you, and you confirm that he's on the line with the right person. Again, you deny you owe the money.
Mr. Collector then informs you that he'll have to kick this up a notch, and that he'll be continuing collection efforts against you.
Dismayed, you tell him not to call again before hanging up.
That's just the beginning of a series of phone calls and letters that leaves you anxious and confused.
What's the deal?
With over 307 million people in the United States there's a good chance that you share a name with at least one other person. Add to that the fact that so many people are in over their heads debt-wise, and it's not a leap of logic to presume that someone who shares your name may be past due on a debt.
There's also the identity theft problem that's running rampant.
Identity theft was the top consumer complaint lodged with the Federal Trade Commission in 2010 with 250,854 such cases. That doesn't include people who handled their cases privately or through lawyers. So there's also a chance that you've been the victim of identity theft.
Either way, there are a few steps you need to take in order to get your life back on track.
Send A Cease And Desist Letter. Under the Fair Debt Collection Practices Act, a debt collector can contact you by phone or letter unless you tell him or her to stop. Most people don't know that the only way to invoke that right is to make a demand in writing.
My best tip is to send your letter by certified mail, return receipt requested and keep a copy of the letter for your files. In addition, fax a copy of the letter to the debt collection agency immediately.
Once the letter is received, calls must stop.
Demand Verification. The Fair Debt Collection Practices Act also gives you the right to demand verification of the debt in question, including a copy of the application that was signed when the account was opened. You'll want to look at that application carefully to check out the signature; if it's not yours then there's a tip-off that it isn't your debt. Once again, send your letter by certified mail, return receipt requested and keep a copy of the letter for your files. In addition, fax a copy of the letter to the debt collection agency immediately.
If It's Not Your Debt, Dispute It. If it's not your debt, send a dispute to the collection agency in writing. Once received, the calls must stop (if they haven't already). In addition, the debt collection agency has to update the way they report the bill on your credit report (if they are doing so) to note that you're disputing the debt. Again, send your letter by certified mail, return receipt requested and keep a copy of the letter for your files. In addition, fax a copy of the letter to the debt collection agency just to be sure.
Get Copies Of Your Credit Reports. You want to get copies of your credit reports from all three major credit reporting agencies - Experian, Equifax and TransUnion. One isn't good enough because they don't all have the same data all the time. If the debt is showing up on your credit report and it isn't yours then you're going to want to demand an investigation using the Fair Credit Reporting Act. You can also insert a statement on your credit reports to alert other possible creditors about the problem.
In Case Of Identity Theft, Take Action Immediately. In the 1955 Woody Woodpecker cartoon Bunco Busters the narrator says, "If Woody had gone straight to the police, this would never have happened." This message is important if you think you've been the victim of identity theft. You want to go to the police and file a report to document your claim, and do so quickly. You also want to put a fraud alert on your credit reports and file a complaint with the Federal Trade Commission. These steps will help document your claim, give you extra ammunition if you need it, and help prevent further theft.
These steps will help lay the groundwork for you to work through your rights and protect yourself. Your lawyer (because doing this without professional help is about as smart as undertaking brain surgery with a pocket knife and a hand held mirror) is going to want to have as much of this information as possible to help you untangle the unfortunate and all-too-common mess that arises when the wrong people are the subject of collection efforts.
Image credit: MrsMinifig/Flickr
Jay S. Fleischman is a lawyer who helps victims of unfair debt collection
Let's say you've just come home from a long day at work. Dinner's in the oven and you're working through a particularly difficult math problem with one of your children. Life's just chugging along, the way it should be.
The phone rings and your child answers it. "There's a guy who says you owe them money," the little one calls out to you as you stir the pasta.
Mr. Collector comes out of the gate roaring, so to speak. A demand is made for money you don't have, on a debt you don't owe, to a creditor you've never dealt with. You mentally scroll through your monthly bills and can't figure out what this guy is talking about. You politely inform him that you don't owe any money, but he's insistent.
He reads your name back to you, and you confirm that he's on the line with the right person. Again, you deny you owe the money.
Mr. Collector then informs you that he'll have to kick this up a notch, and that he'll be continuing collection efforts against you.
Dismayed, you tell him not to call again before hanging up.
That's just the beginning of a series of phone calls and letters that leaves you anxious and confused.
What's the deal?
With over 307 million people in the United States there's a good chance that you share a name with at least one other person. Add to that the fact that so many people are in over their heads debt-wise, and it's not a leap of logic to presume that someone who shares your name may be past due on a debt.
There's also the identity theft problem that's running rampant.
Identity theft was the top consumer complaint lodged with the Federal Trade Commission in 2010 with 250,854 such cases. That doesn't include people who handled their cases privately or through lawyers. So there's also a chance that you've been the victim of identity theft.
Either way, there are a few steps you need to take in order to get your life back on track.
Send A Cease And Desist Letter. Under the Fair Debt Collection Practices Act, a debt collector can contact you by phone or letter unless you tell him or her to stop. Most people don't know that the only way to invoke that right is to make a demand in writing.
My best tip is to send your letter by certified mail, return receipt requested and keep a copy of the letter for your files. In addition, fax a copy of the letter to the debt collection agency immediately.
Once the letter is received, calls must stop.
Demand Verification. The Fair Debt Collection Practices Act also gives you the right to demand verification of the debt in question, including a copy of the application that was signed when the account was opened. You'll want to look at that application carefully to check out the signature; if it's not yours then there's a tip-off that it isn't your debt. Once again, send your letter by certified mail, return receipt requested and keep a copy of the letter for your files. In addition, fax a copy of the letter to the debt collection agency immediately.
If It's Not Your Debt, Dispute It. If it's not your debt, send a dispute to the collection agency in writing. Once received, the calls must stop (if they haven't already). In addition, the debt collection agency has to update the way they report the bill on your credit report (if they are doing so) to note that you're disputing the debt. Again, send your letter by certified mail, return receipt requested and keep a copy of the letter for your files. In addition, fax a copy of the letter to the debt collection agency just to be sure.
Get Copies Of Your Credit Reports. You want to get copies of your credit reports from all three major credit reporting agencies - Experian, Equifax and TransUnion. One isn't good enough because they don't all have the same data all the time. If the debt is showing up on your credit report and it isn't yours then you're going to want to demand an investigation using the Fair Credit Reporting Act. You can also insert a statement on your credit reports to alert other possible creditors about the problem.
In Case Of Identity Theft, Take Action Immediately. In the 1955 Woody Woodpecker cartoon Bunco Busters the narrator says, "If Woody had gone straight to the police, this would never have happened." This message is important if you think you've been the victim of identity theft. You want to go to the police and file a report to document your claim, and do so quickly. You also want to put a fraud alert on your credit reports and file a complaint with the Federal Trade Commission. These steps will help document your claim, give you extra ammunition if you need it, and help prevent further theft.
These steps will help lay the groundwork for you to work through your rights and protect yourself. Your lawyer (because doing this without professional help is about as smart as undertaking brain surgery with a pocket knife and a hand held mirror) is going to want to have as much of this information as possible to help you untangle the unfortunate and all-too-common mess that arises when the wrong people are the subject of collection efforts.
Image credit: MrsMinifig/Flickr
Jay S. Fleischman is a lawyer who helps victims of unfair debt collection
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