As part of the effort to help consumers gouged by credit card companies, more changes to credit card rules were proposed by the Federal Reserve Board on September 29, 2009.  These proposed changes affect the so-called “Regulation Z” dealing with Truth-in-Lending aspects of credit cards.  They would help improve consumer protection from credit card companies by:

• Generally prohibiting interest rate increases during the first year the account is opened
• Generally prohibiting increases to interest rates that apply to existing credit card balances
• Prohibiting the credit card companies from issuing credit cards to consumers younger than 21 years old, unless the consumer or co-signer (such as a parent) has the ability to make the required payments
• Prohibiting credit card companies from charging over-limit fees unless the consumer consents to such a fee prior to the transaction
• Prohibiting creditors from using “two-cycle” billing methods as a way of increasing interest charges
• Prohibiting creditors from allocating payments in a way that maximizes interest charges
• Limiting fees charged for subprime credit cards

These proposed changes continue to implement the Credit Card Act recently passed by Congress.  Please note that these are not final rules, but are the Federal Reserve’s proposals for implementation beginning February 22, 2010.  There will also be additional changes scheduled to go into effect on August 22, 2010.

Every so often, we get calls from consumers who tell us about a debt they disputed and didn’t believe they owed.  Unfortunately, some consumers may be tempted to ignore “papers” they receive from lawyers or courts, which can result in a default judgment against them.  Whether or not we can assist them in getting the default judgment set aside depends on the specific facts involved.

A default judgment can be rendered when the person defending a lawsuit fails to show up when summoned to court.  Just believing you don’t owe the debt is not enough – you must show up in court, either personally or through an attorney.  If you don’t, you may waive your right to defend against the lawsuit.  If a default judgment is entered, the other side essentially wins.  That often means the get everything they asked for, even if those charges are not appropriate or authorized.  That could mean additional charges for interest and the attorney fees for their lawyers.

However, a default judgment does not necessarily mean you have no alternatives.  If the judgment was entered within the past year, you may be able to get relief from the judgment for reasons of mistake, inadvertence, surprise, excusable neglect, fraud, misrepresentation, or other reasons.  There are other possible ways to set aside the judgment if they are properly brought to the court’s attention within a reasonable time, including a void judgment, satisfaction or release, or that the judgment has been discharged.  These reasons must be set forth in a motion asking the court to set aside the judgment pursuant to Florida law.

In addition, a judgment could be void if the person against whom judgment was entered was unaware of the litigation.  This is not all that rare, thanks to what we call “sewer service“.  This occurs when the process server does not actually deliver the lawsuit papers to the person being sued, but instead throws them into the sewer or otherwise gets rid of them.  For a news story on how the New York Attorney General has sued 37 law firms and debt collectors for this abuse that affects over 100,000 faulty judgments, please click here.  One consumer discovered he had been sued in New York; the process server claimed to have served him at his house in New York City, even though he lived in Florida, not in New York.

If you were not properly notified of the lawsuit against you, your constitutional rights to due process may have been violated.  This may be another basis for setting aside a judgment.

If you would like a free consultation to determine whether we can help you in setting aside a judgment, please feel free to call, fax or email us.  We will be happy to respond promptly, even in the evenings and on weekends.

If you’ve been sued on a credit card debt, you may have received a document either with the lawsuit papers or soon after called a “Stipulation for Entry of Final Judgment Execution Withheld” or something similar.  We have seen such documents sent in by a debt collection law firm that does business under the names of Hayt, Hayt & Landau and Robert J. Orovitz, PA.  It may have been accompanied by a letter from one of the lawyers in that firm, such as Robert Orovitz, Dana Kalman, or Christian Walled.

Although it sounds like a settlement letter, and although the specific payment amount may be left blank, there are some serious consequences you should consider before agreeing to it.

First, the lawyers and their law firm (Hayt, Hayt & Landau and Robert J. Orovitz, PA) represent the credit card companies, ranging from original creditors such as Capital One (Cap One) to debt buyers such as Arrow Financial.  I have yet to see them represent a single consumer against any credit card company.

Second, although they suggest they will be flexible in the terms of payment, many people don’t realize the important protections they are losing.  For example, if you agree to it, you are not only agreeing that you owe the alleged debt, but you are also agreeing that you have no valid defenses.  For example, even if the credit card debt is barred by the Statute of Limitations, you are waiving that defense.  If the credit card debt includes charges you did not authorize, you are waiving that defense.  If the credit card debt includes inappropriate charges, interest or attorney fees, you are waiving your right to dispute those charges.

That document instead is a formal judgment against you.  They are simply agreeing that they will not garnish your wages or execute against your bank account or other assets as long as you make your payments as scheduled.  If you miss even one payment, or if your payment amount is slightly short because you had other unexpected expenses that month, they can proceed with garnishment and execution.  And, you have now given up important rights under Florida laws that related to what assets of yours they can now seize.

Know your rights before you sign them away!  Call us for a free consultation, or contact us by email, fax or through this blog.