Just a few days ago, the Federal Trade Commission (FTC) issued a report detailing numerous problems with American’s debt collectors, along with recommendations on how to improve the system to make it more fair for consumers.  The report is entitled “Repairing a Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration”.  The information in the report included feedback gathered from consumer advocates and others during roundtable discussions across the US in 2009.

The major problems highlighted in the report include:

• Debt collectors fail to properly notify consumers about lawasuits filed against them
• Debt collectors filing lawsuits without enough evidence about the debt
• Courts granting default judgments (meaning debt collectors win withoout a trial) when consumers do not show up in court to defend themselves
• Debt collectors filing lawsuits on debts that are past the statute of limitations (which means the debt can no longer be sued on)
• Debt collectors seizing money and freezing bank accounts that are exempt from such debt collection efforts (this includes exemptions for head-of-household, social security income, unemployment benefits, and many other exemptions)
• Debt collectors forcing consumers to resolve disputes in private arbitrations that are biased, unfair and deceptive, and without adequate court supervision

To address these issues, the Federal Trade Commission made a number of recommendations, including:

• States should adopt measures to make it more likely consumers will defend themselves when they are sued, resulting in fewer default judgments
• States should require debt collectors to include more information about the alleged debt when they file their lawsuits
• States should take steps to ensure that debt collectors are not filing lawsuits for debts on which the statute of limitations has expired
• Changes should be made to federal and state laws that would prevent a certain amount of money in a bank account from being frozen, and make that amount exempt from garnishment

The problems identified above are happening every day here in Seminole County (including Lake Mary, Longwood, Altamonte Springs, Sanford, Oviedo, Winter Springs, Casselberry), as well as throughout Central Florida, including Orange County, Volusia County, Brevard County, Lake County, Flagler County and the cities of Bunnell, Cocoa, Daytona Beach, DeBary, DeLand, Melbourne, New Smyrna Beach, Orlando, Tavares, Titusville, and many others.

If you have experienced these problems, or any other problems relating to debt collection, we are here to help!  You can put our experience in representing consumers against debt collectors to work for you.  Please feel free to contact us by phone, fax or by filling out our simple web contact form for a free no-obligation consulation.  We’ll tell you about your rights and your ability to fight back against debt collectors.

The Federal Trade Commision (FTC) has released its 2010 annual report on the Fair Debt Collection Practices Act (FDCPA).  That report includes the latest statistics on debt collectors’ abuse, harassement, deceptive tactics and other illegal conduct that violates the FDCPA.  Those numbers shows that debt collection is growing worse, both in terms of how often it occurs, and how bad it is, based on 2009 statistics:

• In 2009, the FTC received a total of 119,364 complaints from consumers about debt collectors, both initial creditors (the banks and companies who initially lent money) and third-party debt collectors (those who were hired by creditors to try to force payment).  This is an increase of nearly 15,000 complaints from 2008.
• Consumers filed 41,028 complaints against debt collectors for abusive debt collection tactics such as repeated or continuous telephone calls.
• The FTC received 14,321 complaints that debt collectors used obscene, profane or other types of abusive debt collection tactics.
• 9,684 cconsumers complained that debt collectors called before 8:00 a.m. or after 9:00 p.m., or at a time they knew was inconvenient for the consumer.
• There were 2,517 complaints of debt collectors using or threatening to use violence to try to force a consumer to pay a debt.
• Consumers registered 27,420 complaints that debt collectors tried to collect a debt that the consumer did not owe, or they tried to collect more than the consumer owed, or they mischaracterized the amount or character of the debt in some other way.
• The FTC received 9,632 complaints that debt collectors were attempting to add on unauthorized charges, such as attorney fees, collection costs or other charges that were not permitted.
• 18,438 complaints addressed debt collectors threatening to take actions that were not permitted by applicable law
• Debt collectors made 11,505 false threats of arrest or seizure of property.
• Consumers complained 11,973 times that debt collectors impermissibly called them at work.
• The FTC received 10,758 complaints that a debt collector illegally notified a third party about the consumer’s alleged debt.
• Consumers complained that in 22,708 instances, the debt collector failed to provide the notice of consumer rights required by the FDCPA.
• 10,158 complaints dealt with the debt collector’s failure to verify the consumer’s debt, despite specifically being requested to do so.
• Consumers complained 7,411 times that the debt collector failed to stop communicating with the consumer, despite the consumer informing the debt collector that all collection activities should cease.

If you have been the victim of any of these types of abusive, harassing or deceptive tactics, please feel free to call me so that I can assist you in obtaining justice against these debt collectors who refuse to follow the law.

A series of new credit card regulations becomes effective on August 22, 2010.  This post briefly explains how those new regulations affect some of the fees that your credit card company can charge you for certain penalties.

Currently, your credit card company can charge you a late fee as high as $39, regardless of whether you are late with a $20 minimum payment or a $100 minimum payment.  Under the new rules, your late payment fee is generally limited to $25.  However, if one of your last six payments was also late, they can increase it to $35.  Also, if their actual costs incurred as a result of your late payment were more, they can increase their fee; however, I have a hard time envisioning any circumstances that a late payment by any typical consumer to a multi-billion dollar credit card company would justify a higher late fee.

Also, your credit card company will not be able to charge you a late fee that is higher than your minimum payment.  For example, if your minimum payment is $10, then they cannot charge you more than $10 as a late fee.

Similarly, they cannot charge you an over-limit fee that is more than the amount by which you went over the limit.  This way, if you go over your credit limit by $5, the most you can be charged for your over-limit fee is $5.

As a result of the new rules, your credit card company cannot charge you more than one fee for a single event that triggers penalties under your cardholder agreement.  So, if you make a late payment, then cannot charge you multiple fees for violating multiple provisions of your agreement.

Some additional regulations that are effective August 22, 2010 include:

• They cannot charge you any fees for not using your credit card
• They must explain the reason for any increases to your card’s annual percentage rate
• If they increase your annual percentage rate, they must re-evaluate the increase every six months and, if appropriate, lower that rate

Although these rules seem to be common-sense, they weren’t there to protect you in the past.

Debt settlement companies (debt relief companies) have been getting a lot of scrutiny lately, and with good reason.  Although they are making lots of money during this difficult economy, it is usually from the people who can least afford it – consumers who are already behind on their payments.

Often, these debt settlement companies will advertise that they can settle your debt at a significant discount from what you owe.  However, in most cases, this is simply a scam.  What many such companies do is convince the consumer to stop paying on their debts to credit card companies, home finance companies, store charge accounts, and sometimes even on their car payments and mortgages.  Instead, the consumer is instructed to send in just one payment – to them, of course.

At first, consumers feel relieved – they are now paying only one company instead of 3 or 4 or even more creditors.  Sometimes the creditors will send a letter asking why you’ve stopped paying.  When the consumer calls the debt relief company to find out, they are often told not to worry about it, since they are “in the middle of negotiations”.  Many times, this is simply false.

Instead, the debt settlement companies take a major share of the payments you have made to them, even though you thought the payments were going to pay down your debts.  In the meantime, your creditors usually escalate their contacts with you.  After a few months, it is not unusual to be sued by one of those creditors that you thought was being paid by the debt settlement company on your behalf.  Then, when you call the debt settlement company about the lawsuit, they tell you that they are not lawyers, and can no longer assist you.  You’re left on your own, at the receiving end of a lawsuit, and without your hard-earned cash to either pay your debt or retain an attorney to help you out.

By the time you realize what has happened and try to get your money back, most of it has been taken by the debt settlement company as their up-front fee for their “services”.  Even if you get some money back, you almost always lose a significant portion of it, and you end up with even more debt!  This is because the interest kept increasing while your debt settlement company was not paying your creditors.

Most consumers don’t know that their creditors have no obligation to deal with such debt settlement companies – and many simply refuse to deal with them.  Instead, many creditors will just file a lawsuit against you in an attempt to make you pay.  Virtually always, the debt settlement company can do nothing to force your creditors from suing you.

This does not mean that every debt settlement company is a scammer.  I myself have not personally experienced a legitimate debt settlement company, but there may be some non-profits or governmental agencies that may legitimately assist you.  On the other hand, I have represented many consumers who were taken advantage of by such debt settlement companies, leaving them in a much worse financial, legal and emotional condition than they were before.  If you are contacted by a debt settlement company, and are considering signing up, be sure to get a detailed explanation of how much they charge, when they charge it, and the exact dollar amounts that will be going to each specific creditor.  If they refuse to tell you the numbers in dollars and cents (beware those that deal only in percentages), or if they don’t promise to pay any set amount to specific creditors (and instead only talk about paying down debt generally without specifying the amounts for each creditor), or if they insist on getting paid up-front before your creditors, the debt settlement service may be just a scam.

If you have been defrauded by such a company, you may want to speak with consumer attorney near you, who should be able to advise you of your rights, and the possibility of recovering some of your money.