California Debt Blog

Watch Your Credit Card Statements Closely

Bad news for consumers: credit card companies are closing cards and raising interest rates. The latest is Advanta announcing that they are closing accounts. From the press release: "the Company will shut down all credit card accounts to future use at that time."

In addition, Capital One has announced that it is reviewing all accounts and raising interest rates. Bank of America is also raising interest rates and closing accounts, in addition to cutting credit limits. American Express has been doing this for some time.

Your credit card company is entitled to do this. The credit card agreement states that the company can change the terms with 30 days notice. This includes closing your account, raising your interest rate and lowering your credit limit. Now is the time to shop around for a credit card, but do not voluntarily close your oldest card, as that will affect your FICO score.    

Judge's Ruling Blow to MERS

Tim O'Reiley of the Las Vegas Business Press wrote "U.S. Bankruptcy Court Judge Linda Riegle has ruled that the Mortgage Electronic Registration System (MERS) could not represent lenders seeking to foreclose on delinquent homeowners already in bankruptcy unless it could produce the actual loan note."

What does this mean? At its most basic, it means that MERS must show that they have the actual loan note if MERS plans on foreclosing. However, the ruling is a trial level court ruling. MERS points out in the article that they have lost this argument before but won on appeal.

The key to this is going to be on appeal. However, at this time, homeowners are still free to ask MERS, or whoever is trying to foreclose, to produce the note. This ruling adds validity to that argument.

NY AG Sues Debt Settlement Firms

New York has long been progressive in protecting consumer rights. When Eliot Spitzer was the Attorney General, he went after Wall Street and insurance companies. Now, Andrew Cuomo continues that legacy.

New York's AG has filed lawsuits against two debt settlement companies, Credit Solutions of America and Nationwide Asset Services. The AG contends that these companies make false and misleading promises. In fact, between 1/3 of one percent and one percent of consumers actually get the savings advertised.

Two important parts of the story:

• According to AG Cuomo, “These companies claim to be the light at the end of the tunnel, but time after time they have shown that they only add to the burdens of Americans dealing with debt.”
• Many consumers have faced continued harassment and lawsuits by their creditors, despite CSA’s promise to intervene on their behalf.

In English, this means that the companies are making things worse for consumers and are not ending the harassment that they claim they will end. Why not? Because not only do creditors not have to work with these companies, in most cases they do not work with any debt settlement company.

Be wary of these tv ads and their slick pitches. Most debt settlement programs do not work!

New Survey Results Show Most Consumers Do Not Understand FDCPA

A new KGTV 10News Survey USA Poll shows that most consumers do not know their rights under state and federal debt collection law. The poll showed the following:

• Only 25% of respondents were familiar with the FDCPA;
• 10% of respondents think that consumers have too much protection;
• Over 40% of respondents had been contacted by a debt collector in the past 5 years;
• Almost 90% of respondents said that the debt collector did not inform them of their rights;
• Only a quarter of respondents were treated respectfully by the debt collector;
• Almost half of the people said that they were threatened in some way by the collector;
• More than three quarters of people were contacted by the collector after telling the collector not to call them.

The results are not surprising.Remember, once a collector is told not to call you, they must stop calling you. And if you are threatened, that is a debt collection violation.

Debt collectors, not all of them, but a large number, do not seem to care about the law. The reasons: it is hard for the government to enforce and few individuals want to enforce their rights. They are usually intimidated and pushed into letting the debt collector run roughshod over them.

The important thing is that consumers need to learn their rights under the FDPCA (Fair Debt Collection Practices Act) and the Rosenthal FDCPA, also called the Rosenthal Act.

Midland Funding on San Diego News

Midland Funding has made the news in San Diego. See, it is not just me who is unhappy with what they do. From the KGTV 10news.com website: "Because of the dubious debt, Dave couldn't get security clearance to follow his unit to Iraq." Yes, a dubious debt kept this guy from going to serve our country.

Midland wouldn't comment on Dave's case. But, Midland did make $115,000,000 in the first quarter of this year. That is up 10% from lat year. And, for the record, that is $115 MILLION dollars.

It is amazing that Midland keeps up with these tactics. And that people keep paying them. If you are contacted by Midland, you need to immediately contact an attorney to learn your rights.

Debt Collectors on Facebook

I have told you how debt collectors are using Myspace. Well, now a story about debt collectors on Facebook. (Caveat: I am in the video.)

Debt collectors are getting more brazen. They are using any means possible to contact debtors. And, at least right now, they seem to be getting away with it. As I said to Steve Large with CBS13 ""I think this is opening up a whole new can of worms and it's going to create more problems. But in this economy debt collectors are trying to get more creative to make money."

If you receive a friend request on Myspace or Facebook and you do not know the person, do not friend them.

Waiting Too Long on a Foreclosure is Dangerous

I have received a rash of calls lately from people who are about to be foreclosed on or have been foreclosed on. They want to know what to do. For most people, I have to tell them it is too late.

A few things to keep in mind if you are behind on your mortgage:

1. You can file bankruptcy if your situation warrants it. But, it is not an overnight process. Most bankruptcy attorneys need a week or more before they can get you ready to file bankruptcy.

2. If you believe your loan had some improprieties such as TILA or RESPA violations, an audit needs to be done. This is a process that can take from a couple of weeks to a month.

3. Even if I have everything in front of me and had enough time to prepare the lawsuit, it still takes a day to file it and then it has to be served. So, you are looking at 4 to 5 days in most cases to file and serve a lawsuit.

4. Once you have been foreclosed on, you can expect to hear from the bank or the purchaser in just a few days. If you think the foreclosure was not done properly, you need to move on this and have an attorney review it ASAP.

The moral of this is that the time frames can come up on you quickly. The longer you wait, the harder it is. You need to get legal help as soon as possible.

Debt Collection: Fatal Attraction Style

Talking Points Memo has an interesting article on the alleged fatal attraction style of collection by Auto Financing Network. According to the lawsuit filed by Jennifer Dicks "AFN registered the URL to Dicks' name and created a site titled 'Jennifer Dicks isn't paying for her Cavalier!'"

Now that is bad. But then "that's when the relentless text message campaign of shame began." One text message reads "All you do is lie. It isn't registered to you so call again. I wish you died when you fell off the roof. If ur not married good. He can do soooo much better."

Now these are some nice collection methods. (Please note the sarcasm.) First, text someone. Then set up a website that says she does not pay for her car. Is it amazing that people do not like debt collectors?  

By the way, these are all Rosenthal Act violations and FDCPA violations.