1 day 22 hours ago

National Credit Adjusters, LLC and Bradley Hochstein admit to illegal consumer debt collection practices.
Company and Its Former CEO Engaged In Illegal Debt Collection Practices
(Reprint from CFPB announcement 7/13/18) The Bureau of Consumer Financial Protection (Bureau) announced a settlement with National Credit Adjusters, LLC (NCA), a privately-held company headquartered in Hutchinson, Kansas, and its former CEO and part-owner, Bradley Hochstein.
NCAAs described in the consent order (below), the Bureau found that NCA and Hochstein used a network of debt collection companies to collect consumer debt on NCA’s behalf. Some of those companies engaged in frequent unlawful debt collection acts and practices that harmed consumers, including by representing that consumers owed more than they were legally required to pay, or threatening consumers and their family members with lawsuits, visits from process servers, and arrest, when neither NCA nor the collection companies intended or had the legal authority to take those actions. NCA and Hochstein continued placing debt with those companies for collection with knowledge or reckless disregard of the companies’ illegal consumer debt collection practices. NCA and Hochstein also sold millions in consumer debt to one of those companies with knowledge or reckless disregard of the company’s illegal consumer debt collection practices.
The Bureau found that NCA and Hochstein violated the Consumer Financial Protection Act of 2010 and that NCA violated the Fair Debt Collection Practices Act.
fraudIllegal actions by National Credit Adjusters and Bradley Hochstein.
Under the terms of the consent order, NCA and Hochstein are barred from certain collection practices and Hochstein is permanently barred from working in any business that collects, buys, or sells consumer debt. The order imposes a judgment for civil money penalties of $3 million against NCA and $3 million against Hochstein. As explained in the order, full payment of those amounts is suspended subject to NCA paying a $500,000 civil money penalty and Hochstein paying a $300,000 civil money penalty.
The consent order is available at:

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1 day 22 hours ago

Another Fairfax County Family Wastes Thousands with Freedom Debt Relief. I filed a bankruptcy case this week for Alexander and Alina yesterday.   They had been enrolled with Freedom Debt Relief for over five years–the longest enrollment I ever heard of. And according to Freedom Debt Relief, they had only four monthly payments to go […]
The post Another Family Wastes Thousands with Freedom Debt Relief by Robert Weed appeared first on Robert Weed.

3 days 1 hour ago

Depending on your situation, bankruptcy may be the best way to avoid foreclosure and keep your home. Before filing bankruptcy, you should step back and assess your individual situation. Just because something works for someone else does not mean it is the best option for you. Each person’s situation is unique to their specific circumstances. Some things you should consider before filing bankruptcy:
The post Is Bankruptcy the Best Way to Avoid Foreclosure and Keep Your Home? appeared first on Tucson Bankruptcy Attorney.

3 days 22 hours ago

By Dan Rivoli

City taxi drivers’ patience meter is running out.

The New York Taxi Workers Alliance rallied outside City Hall on Tuesday as cabbies said they want new regulations to boost wages and the values of yellow taxi medallions.

The driver group has advocated for a cap on for-hire cars and to make the meter fare the minimum rate industry wide and give app drivers 80% of trip fare.

The city Taxi & Limousine Commission, meanwhile, proposed a minimum wage standard so app drivers could make $17.22 an hour.

But the taxi drivers group opposed that, arguing that price would be a ceiling.

Bhairavi Desai, director of the alliance, said the focus should be on City Council regulations.

“There’s finally momentum in the City of New York to properly regulate this Wall Street darling,” Desai said, referencing Uber. “We don’t want the Taxi & Limousine Commission to play interference with our momentum.”

TLC spokeswoman Rebecca Harshbarger said the agency is working with the City Council and the industry to address drivers' economic challenges.

The rally followed the release of an over-$1 million Uber ad highlighting its service in the outer boroughs.

“As policymakers contemplate new industry regulations, they must ensure that people who have been ignored by yellow taxi and underserved by mass transit aren’t punished,” Uber spokeswoman Alix Anfang said.

Councilman Barry Grodenchik, who has taxi drivers in his Queens district, said there’s a new sense of urgency from Council Speaker Corey Johnson to add new regulations to the industry, in light of six taxi driver suicides.

“I want it done sooner, rather than later,” Grodenchik said. “My district can’t wait and I don’t think that there’s dilly-dallying going on. It's a very complicated situation.”

“The Council is deeply concerned with the emotional, mental, and financial pain drivers in this industry are currently experiencing and remains committed to finding a legislative solution,” Jacob Tugendrajch, a spokesman for Johnson, said. “The Council continues to work on legislation that would protect drivers, increase fairness and combat congestion.”

Inder Parmar, an Uber driver since 2013 who has cousins and neighbors who drive yellow cabs, backs efforts in the City Council to set a standard fare across the industry.

“Patience is running out,” Parmar said. “City Council, I have a request to them to act on it as soon as possible. This way, we do not see any other driver committing suicide.”

Copyright 2018 New York Daily News.

4 days 22 hours ago

joint bankruptcy, joint Chapter 7 bankruptcyMarried couples that face mounting debt can file for joint bankruptcy together for the purpose of discharging the debts that they cannot pay. This is simply known as a joint bankruptcy or joint Chapter 7 bankruptcy.
A Bankruptcy Attorney Can Help Determine Whether You Qualify for Joint Chapter 7
Allmand Law Firm, PLLC can help you and your family get a fresh start. If debt collectors are after you and it doesn’t seem like you’ll ever be able to pay off your debt, joint Chapter 7 is a powerful option available to help you start over again. Contact us today to discuss your situation with an experienced bankruptcy attorney.
Understanding the Joint Bankruptcy Option
When you and your spouse file for bankruptcy together, you file a single set of bankruptcy papers with the court. You disclose all property, debt, income, and expenses to the court. This information forms the basis of your petition.
The debts can be those owed by you and your spouse individually or debts owed by the two of you together. Any debt that you want to have discharged can be added. The benefit of this is that a single joint petition can discharge any debt that is allowed to be discharged by Chapter 7. There are, however, certain instances in which filing jointly may not make sense. We’ll discuss this in more detail below.
One thing you want to bear in mind is that Chapter 7 discharges your debts by cannibalizing your assets. While some assets can be protected, others cannot. If one spouse files for bankruptcy, any property that they own or property that is owned jointly would be automatically protected. So there is a danger in filing jointly.
Federal and State Bankruptcy Exemptions
Texas allows you to choose whether or not you use state or federal exemption rules to protect your property in bankruptcy. Those who choose either can double the amount of personal property exemptions they claim by filing jointly — up to $100,000. In addition,
Texas offers a homestead exemption for any residence up to 10 acres in a city or 100 to 200 acres in the country, depending on whether or not you have a family. In addition, Texas allows you to exempt one motor vehicle per licensed family member.
Most families will probably choose Texas exemptions, but Texas doesn’t exempt the proceeds of lawsuit settlements even though federal lawsuits would.
A bankruptcy attorney can help you determine which option better suits your situation.
The Pros of Filing a Joint Bankruptcy

  • It’s cheaper. Filing for bankruptcy is expensive. It’s cheaper to file jointly than it is to file two separate bankruptcies and will save you money on both attorneys fees and filing fees.
  • It eliminates all dischargeable debts. Filing a joint bankruptcy discharges all debts owed by you and your spouse. If one spouse files for bankruptcy, they can only discharge debts owed in their own name.
  • It’s more efficient. Filing for bankruptcy is a tedious time-consuming process. When you file jointly you can economize and streamline the process by getting it all done at once.

The Cons of Filing a Joint Bankruptcy

  • You expose all of your assets. Any property that is considered valuable can be liquidated by the trustee during a joint Chapter 7. If one spouse owns a lot of property, that property could be up for grabs. It may, in certain cases, be better to expose the assets of only one spouse.
  • You owe too much priority debt. There are certain kinds of debt that cannot be discharged by Chapter 7. These include taxes, mortgages, or child support. If you file jointly, you must pay your debts in full through a joint Chapter 13. In most cases, the spouse that owes the debt is better off filing for bankruptcy themselves.

Contact a Bankruptcy Attorney for More Information
An experienced bankruptcy attorney can help you determine if filing a joint Chapter 7 is in your family’s best interest. There are a number of factors that you need to consider. This includes what kind of debt you owe, what assets you have, and what assets you want to hang on to. For more information, contact Allmand Law Firm, PLLC bankruptcy attorneys today.
The post Filing a Joint Chapter 7 Bankruptcy Petition appeared first on Allmand Law.

1 week 10 hours ago

The June 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are James Shenwick’s comments about those sales results.
1. The volume of transfers rose from May. In June, there were 41 taxi medallion sales.
2. 36 of the 41 sales were foreclosure sales, which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value).  Another transfer was due to a partnership split, which also does not reflect fair market value and which we have also excluded from our analysis.
3. However the large volume of foreclosure sales (approximately 88%) is in our opinion evidence of the continued weakness in the taxi medallion market.
4. The four regular sales ranged from a low of $172,000 (one medallion), another at $175,000, another at $180,000 and a high of $200,000.
5.  Accordingly, the median value of a medallion in June was $177,500.
Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at

1 week 4 days ago

An individual who incurred excessive debt due to a failed business and divorce came to us for a consultation.  He was concerned not only with the amount of debt he had, but also about how that debt would impact his credit rating and ability to borrow money in the future.   We asked him to prepare the following information for the initial consultation: (1) the amount of money he owed creditors, including any pending lawsuits; (2) the property or assets that he owned; and (3) an after tax monthly budget, starting with the amount of money he made each month after taxes less his ordinary and necessary living and work expenses.
His initial consultation took about an hour, and we discussed how he should deal with the debt from the failed business and divorce. His choices were either workouts with creditors or a Chapter 7 bankruptcy filing.  After reviewing the information supplied by the client, we agreed that workouts with creditors was a better way to proceed then a Chapter 7 bankruptcy filing.
He made a list of all his creditors, and after reviewing his budget, determined how much of his monthly cash flow he could dedicate to paying his creditors. He contacted each of his creditors, and with advice from James Shenwick, he was able to enter into workouts with all of them.
These workouts generally involve either a single payment of a discounted lump sum to the creditor or payments of money over time against the monies due to the creditor (installment payments). The timeline for these payments to creditors ranged from six months to 18 months.
Another factor that must be considered in doing workouts with creditors (also known as out-of-court settlements) is the issue of  “relief of indebtedness income” under § 108 of the Internal Revenue Code(IRC).  Section 108 of the IRC provides that if an individual borrows money and does not fully repay a creditor, then he or she is enriched by the amount of debt not repaid to the creditor, which is considered taxable income. In round numbers, the IRC provides that if an individual borrows $100,000 and repays $50,000, then he or she must report $50,000 of income to the IRS and pay tax on that income. Generally, institutional creditors like credit card companies will report this relief of indebtedness income to the IRS via a 1099-R.
This client’s story continues with more good news! After repaying his creditors, he was concerned about his credit score (FICO score) and his ability to borrow money in the future to buy real estate or to lease or buy a car.  He obtained a credit report from Credit Karma, and upon review, we noticed several errors. Using a federal and state law known as The Fair Credit Reporting Act, he retained us to contact those creditors and the credit reporting agencies to correct the errors. It took some time and effort, but in approximately three months we were able to correct those errors, and the good news is that he reported to us that he applied for and obtained a new credit card, which showed that he was now creditworthy!  He was very excited about this news and thrilled to have reduced his debt and maintained his ability to obtain credit. Individuals with similar issues should contact Jim Shenwick at (212) 541-6224 or jshenwick@gmail.comfor a consultation regarding their options for dealing with debt. Jim

1 week 4 days ago


By Richard J. Parker: Shareholder in Parker, Butte, & Lane, P.C. (reprinted with permission of the author, December, 2017)
Immigration status is a complex legal issue for anyone not born in the USA. While some people born overseas are still U.S. citizens at birth, there are some hoops to jump through that do not exist for those born in the U.S. For example, even if Barack Obama had actually been born in Kenya, he would still be a U.S. Citizen, just as is John McCain who is a U.S. citizen despite being born in the Panama Canal Zone. Likewise for Ted Cruz who was born in Canada.
Immigration and Bankruptcy – the issues are: Can a non-citizen or any other undocumented person file for bankruptcy; the second issue is should they?

The first issue is easy.
Under the definitions section at 11 USC 109(a), a person without proper documentation of citizenship or legal status can in fact file bankruptcy if they meet the statutory criteria. The bankruptcy Social Security Official Form 121 even provides for the possibility that a debtor would not have a social security number or tax identification number. Although the concept sometimes puzzles court clerks, judges or United States Trustees in some parts of the country, the case law is clear. In addition, Official Form 121 certainly leaves that “no numbers” option open. Form 101 – the Petition page which – does not have quite the specificity as it asks for “only the last 4 digits of YOUR Social Security Number or federal Individual Taxpayer Identification Number (ITIN)” (emphasis added).
The right of a person to file without either number was upheld by in Florida in 2001. In re: Merlo, 265 BR 502.
After the debtor failed to list a social security number, the chapter 13 Trustee filed a motion to revoke confirmation and dismiss the case or in the alternative require disclosure of a number. In this case the debtor was a 70+ year old citizen of Argentina who was neither a U.S. Citizen nor a Legal Permanent resident (LPR). What his status actually was not discussed. the court held that the fact that he did not have and could not get a social security number did not prevent him from filing bankruptcy.
However, attention should be given to 18 U.S.C. 152 with regard to false oaths. See also FRBP 1005, FRBP 2002 (n), and 1 I U.S.C. 342(c). And remember that the right of the debtor to assert the Fifth Amendment in bankruptcy proceedings is limited.
The second issue is whether such a person should file.
Given the current political climate, non-citizens are under increased scrutiny in many aspects of their lives. In doing a triage of a person without legal status seeking to file a bankruptcy, the attorney should consider 5 major factors:

  1. Has the person used a social security number not issued to him or her by the government?
  2. Has that number been used to incur credit obligations?
  3. Does the person have ANY prior contacts with either immigration or law enforcement?
  4. Are there any reasonable alternatives to filing bankruptcy; and
  5. Has the person been adequately informed of the risks of the very public act of filing bankruptcy?

If the person has USED any social security number or tax identification number, it appears that this information must be disclosed on Official Form 101, even if it is not necessarily appropriate or required to put that number on the Petition itself. As an aside, many ITIN’s are set to expire in 2017 and 2018 if not renewed.
If the number has been used, that fact MIGHT lead to a charge of ID theft.
Perhaps one of the most notorious cases in this area is In re Perez, 374 BR 445, (Bankr., D. Colo., 2007) and 415 BR 445 (Bankr. D. Colo. 2009, after remand from the Colorado U.S. District Court). After a very complicated procedural history, the debtor did in fact receive a discharge in 2009 in his case filed in 2005. It is unclear what other non-bankruptcy issues the debtor had to deal with, though the bankruptcy court did mention identity fraud since the social security number used actually belonged to another person in California. While the cases are too complex to relate here, they do make for interesting reading.
The situation has been muddied more than a bit by the U.S. Supreme Court.
In 2009 the Supreme Court (unanimously) held that a conviction of aggravated identity theft could not be upheld as the government was not able to prove that the defendant “knowingly” used a means of identification of another person. Again, this is a fascinating read at 556 U.S. 646, 129 S.Ct., 173, L.Ed. 853, but beyond the scope of this discussion.
This case was followed by the Colorado Supreme Court in finding that a person buying a car with a social security number belonging to another person, but using his own name, could not be found guilty of “criminal impersonation.” In Felix Montes-Rodriguez v The People of the State of Colorado. (No 09SC322, 2010), the conviction of criminal impersonation was reversed. The decision included such interesting asides such as that a social security number is not a legal requirement for obtaining a loan, even though they are required by banks. The dissent did indicate that such conduct was now proscribed by a newer statute related to identity theft. There was of course a spirited dissent.
What if an invented or “borrowed” or otherwise invalid social security number has been used for credit purposes?
If an invented or “borrowed” or otherwise invalid social security number has been used for credit purposes, it is certainly possible that an affected creditor could file an adversary proceeding alleging misrepresentation in the credit application. They would of course have to prove all of the elements, including reliance. However, defense of such a case would greatly increase the cost of the case and further exposure of the debtor/defendant to official scrutiny.
If the undocumented person has had any prior contact with immigration or law enforcement, officials may be watching the bankruptcy filings as well as any civil or criminal actions. Immigration lawyers in Oregon and elsewhere have reported their clients being picked up in or just outside state courts and municipal courts and immigration lawyers in some parts of the country have reported Immigration and Customs Enforcement (ICE) officers appearing at 341(a) meetings to detain debtors. While the circumstances are unclear there has been a report of a DACA individual (Deferred Action for Child Arrival) arrested at a creditor’s meeting in Houston this summer.
Before making the decision to file bankruptcy, the prospective debtor needs to be informed of the risks of making use of the bankruptcy option.
This should include at least one meeting with an immigration attorney to discuss the risks in their local area and a signed informed disclosure. Enforcement priorities of ICE differ from state to state and even by District offices.  Knowledge of local culture and current practice is essential.
The foregoing does not mean that a person without a Social Security number or ITIN should never consider bankruptcy. In addition to the persons without any documentation, there are many people who are in the country who are present with permission, but do not have such numbers. For example, a person who is here on a short term business or visitor’s visa and is involved in an uninsured car accident. There is no reason for them not to file bankruptcy if it would be beneficial to them.
If a person is a Legal Permanent Resident (LPR) or has other permission to be present such as a work visa, filing of a bankruptcy is not a problem. Filing of a bankruptcy petition will not prevent the later maintenance or acquisition of either LPR status or US Citizenship. At one time in the past there was talk of making the filing of a bankruptcy a “sign of moral turpitude.” However, that “improvement” was not enacted. All that is required as far as the finances of an individual applicant is that they have filed all of their federal tax returns and that no federal tax is unpaid. Even if there is tax debt owed, the problem can be fixed by proving to Immigration that you have a written payment plan in place – usually that would be an installment agreement.
Another area in which personal finance seeps into the immigration world is if a person is acting as a sponsor of a non-citizen.
A sponsor is required to submit a 1-864 form which promises to support the arriving alien in order to avoid that person from becoming “a public charge.” The obligation can continue for a long as 10 years.
Some states have made use of this submission in dissolution cases. The signing of the Affidavit of Support MIGHT lead to a non-dischargeable domestic support obligation of a greater duration than might ordinarily be ordered. Before signing an Affidavit of Support for an arriving alien, the sponsor should obtain independent legal advice.
Only a few bankruptcy cases have been found which cite this immigration Affidavit of Support. in one such case. an Oklahoma state court had entered a Decree of Dissolution with no further spousal support. The ex-wife who had obtained permanent resident status via an T-864 filed by her husband, brought suit in the U.S. District Court for Specific Performance of the Affidavit of Support. After the court refused to dismiss her action, the ex-husband filed a chapter 7 bankruptcy. The ex-wife then filed an adversary proceeding alleging a domestic support obligation under the Code. After having the matter under advisement for 2 months, the bankruptcy court dismissed based on the “Rooker-Feldman” doctrine.
The First Circuit SAP reviewed this decision in Schwartz v Schwartz, 409 BR 204 (2008), ultimately holding that both the “Rooker-Feldman Doctrine and res judicata precluded the bankruptcy court from consideration of the Decree of Dissolution entered in the state court.
While it seems likely that most other bankruptcy courts would also decline jurisdiction, it is an added complication.
There have been many state court decisions which relied upon the 1-864 Affidavit of Support in fixing a spousal support obligation at 10 years. See, inter alia, Davis v United States, 499 F3d. 590 (6th Cir. 2007) in which the state court was ordered on remand after appeal to specifically enforce the Affidavit of Support, thus changing the duration of support from 8 years to 10 years.
There is case law and practice in some states (Florida among them) which while allowing filing by non-citizens holds that exemptions are not available to such filers since they are not “residents.” However, a debtor should be able to use federal exemptions if denied the use of state exemptions.
A bankruptcy attorney will frequently see a prospective client whose major debt is an uninsured auto accident which has led to a license suspension. That is generally not an issue for a citizen and a bankruptcy discharge will require a state to return driving privileges to such a person. However in recent years it has become virtually impossible for an undocumented person to obtain an Oregon driver’s license or obtain reinstatement of a suspended license. See ORS 807.062 for requirements to obtain a driver’s license. Some non-citizens avoid this problem by obtaining an international driving permit which is good for 1 year unless you become a “resident.” A “resident” must obtain a driver’s license within 30 days of residency. There is also a problem that many people encounter when seeking to obtain a commercial driver’s license.
While many people are legally present, although not legal permanent residents, many states regulations deny commercial driver’s licenses to anyone who is not a U.S. Citizen or LPR. This is based upon a Department of Transportation regulation which many immigration attorneys consider to have been improperly promulgated.
While the staff attorneys of a US Trustee office may not go looking for undocumented aliens on the docket, they are an arm of the Department of Justice and if a referral is received from a panel trustee, a disgruntled creditor or ex-spouse, they are obligated to investigate and possibly make a referral to the US Attorney. While the US Trustee is under a duty to investigate such matters, it appears that there is not as strong an imperative as there is in preventing the bankruptcy system from being used by people in the marijuana industry.
That being said, there have been reports that in some districts it is routine for the US
Trustee to advise ICE of any filings by persons with ITIN ‘s. Also, while the Bankruptcy Code does not seem to require government issued photo ID, it is US Trustee policy.
While there are some areas of law (workers compensation, wage and hour laws and civil rights among them) in which the federal government will essentially look the other way when immigration status is raised as a shield, that ignoring of the status is done not for the benefit of the individual, but for the good of the system and society. Such an incentive to ignore immigration status is not present when a bankruptcy is filed for personal benefit without an aspect of the public good.
In general, the attorney for the bankruptcy attorney should err on the side of caution and seek other solutions to the financial problems being suffered by a prospective debtor who may be subject to adverse immigration consequences.

Richard J. Parker: Shareholder in Parker, Butte, & Lane, P.C., Portland. OR; B.A. Reed College (1975) ;J.D., Golden Gate University School of Law (1978); member of the Washington State Bar since 1978 and the Oregon State since 1980; practices focus on bankruptcy, student loans,  collections and immigration law; past Chair, Consumer Bankruptcy Sub-committee of the OSB Debtor-Creditor Section (1998-1999); editorial board of the OSB Debtor–Creditor Section Newsletter (2003-president); Co-chair of the Pro Bono Bankruptcy Clinic Sub-Committee 2012-present): Member of the OSB Debtor Creditor Section Executive Board, (2013- present): past Section Secretary and current Treasurer.

The post THE PERILS OF BANKRUPTCY FILING BY AN UNDOCUMENTED PERSON appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

2 weeks 5 days ago

scamEver wondered what you should do if you are scammed by a car dealership or a car salesman?  What are the used car dealer tricks?  How do you avoid a car dealer lying to you about financing?
In order to be a victim you need to learn how to beat the salesman or dealership.
Below are a series of articles or links to various resources.  If you read them all you will see a pattern of lying, scheming and outright fraud.  Know their games before you are caught in their web of deceit.
Now don’t get me wrong – I really believe there are honest car dealers, but they are so few that they are painted with the same brush as all the bad ones.  Do your homework in order to avoid losing money, time and your senses.

Common Auto Dealer Scams – below are links to several articles:
scamCar Buying Scams Exposed

  1. The Old “Financing Fell Through Scam (aka Spot Delivery Scam)”
  2. The Classic “Lie To The Customer About Their Credit Score” Scam
  3. The Oops, “Forget To Pay Off Your Trade In” Scam
  4. The Immoral “Straw Purchase Scam”
  5. The Made Up “Your Online Lender Bounces Checks” Scam
  6. The High Pressure “Forced Warranty” Scam
  7. The Ridiculous “Dealer Prep” Scam (Excessive Fee)
  8. Watch out for “We’ll Payoff Your Car No Matter How Much You Owe!” Ads
  9. The Dangerous Previously Wrecked Used Car, Sold “As Is” Scam
  10. The Sneaky “We lowered your payments! Come back and re-sign!”

scamThere are several federal and state statutes in place that prohibit car dealer fraud and misrepresentation. While “lemon laws” cover the sale of defective vehicles, car dealer fraud laws are meant to protect consumers looking to purchase a car, truck, van, or motorcycle.

Link to part 1 of this series
The post How To Avoid Scams by Car Dealers & Salesmen, Part 3 appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

2 weeks 5 days ago

scamEver wondered what you should do if you are scammed by a car dealership or a car salesman?  What are the used car dealer tricks?  How do you avoid a car dealer lying to you about financing?
In order to be a victim you need to learn how to beat the salesman or dealership.

Below are a series of articles or links to various resources.  If you read them all you will see a pattern of lying, scheming and outright fraud.  Know their games before you are caught in their web of deceit.
Now don’t get me wrong – I really believe there are honest car dealers, but they are so few that they are painted with the same brush as all the bad ones.  Do your homework in order to avoid losing money, time and your senses.
Common Auto Dealer Scams
The following is a reprint from Public

Let’s face it: Americans love to drive, and buy hundreds of thousands of cars each year.  While most auto dealerships play by the rules, there are still some dealers that do not. This list takes a closer look at some of the more common abuses and provides information on steps that consumers can take to educate and protect themselves.
1. Bait and Switch
2. Packing the Contract
3. Advertising Bait and Switch
4. Hiding a Lemon or Wreck
5. Financing Fraud – Lying about credit scores
6. Buy-Lease Switch
7. Trade-in Fraud
8. Co-signer Scam
9. Requiring Options
10. Yo Yo Sale
Number 1: Bait and Switch – False statements about the price of the car.
You walk into a dealership and a salesman gives you a price quote. But when you are preparing to finish the deal, the price on the contract is not the same price that you were quoted. You may also notice that your contract contains other fees that increase the Total Cash Price of your vehicle. Click on this link see what you should watch out for: Sample contract (Front | Back).
What you should do:
• Make sure that the Total Cash Price on the written contract matches the price that you were told. If the prices are different, you may be the victim of fraud.
• If the dealership refuses to honor the representations made to you by the salesperson, refuse to sign the contract and walk away from the dealership.
Number 2: “Packing the Contract” – Adding unwanted options and accessories.
scamSome dealerships “pack” a contract with add-ons like service contracts, warranties, options and accessories that you did not ask for. Common add-ons are “protection packages” and rust-proofing. Click on this link see what you should watch out for: Sample contract: (Front | Back).
What you should do:
• Before you sign, look at your contract carefully for any items you did not authorize.
• If you were told something was included for “free”, check to see that the item is in the contract and that you were not charged for it.
• If you find any items that you don’t want, tell the salesman that you will not pay for it. Put a line through the item in the contract and reduce the Total Sale Price by that amount.
Number 3: Advertising Bait and Switch
liar, scamDon’t be fooled by advertisements that offer a handful of vehicles for extremely low prices. Some dishonest dealers will claim that those few cars have been “already sold”, then they will try to sell you other cars at higher prices.
What you should do:
• Read the fine print of all advertisements especially if it looks too good to be true.
• If you are interested in buying one of these “special deals”, call the dealership to make sure it’s still available. When you call, specify the car’s VIN (Vehicle Identification Number) which should be included in the advertisement.
• Take the ad to the dealership and make sure you know the car’s Kelley Blue Book ( value.
Number 4: Hiding a Lemon or Wreck
scamWhen buying a used car, watch out for cars that were previously wrecked, or cars that had to be returned to the manufacturer because of multiple repair problems (known as “lemons”). Learn more at What Do I Need To Know Before Buying or Leasing a Car? and What can I do if my car is a Lemon?
What you should do:
• Always test-drive a vehicle.
• Always have a mechanic inspect a used car before buying it.
• Ask for the repair records. If the dealership doesn’t want to provide it, then buy your car elsewhere.
• You can check a vehicle’s prior registration history by using a vehicle history report search service like Carfax (
Number 5: Financing Fraud – Lying about credit scores
scamCredit repair schemes
Another common scam used by dishonest dealers is to trick customers into believing that you have bad credit. They may tell you that your credit score is too low and you don’t qualify for a low interest rate. The point of this is to convince you that the high-interest financing offered by the dealership is a good deal. Learn more at What Do I Need To Know Before Buying or Leasing a Car?
What you should do:
• Get a copy of your credit report which includes your credit score. You can get a copy of your credit report from any of the three credit bureaus:
–  TransUnion, 1-800-888-4213
– Experian, 1-888-397-3742
– Equifax, 1-800-685-1111
• Shop around for financing. Credit unions and other financial institutions often offer lower interest rates than what the dealerships offer.
Number 6: Buy-Lease Switch
BUYING a car means that when you finish making payments on it, you will OWN the vehicle.
LEASING means that there is a period of time – the lease period – when you’ll be making monthly payments on the car and at the end of the lease period you will NOT own the car (unless you make a large payment to own it). Plus, if you want to return the car before the lease period is over, you’ll have to pay a big penalty (an “early-termination fee”) to do that.
Customers are routinely scammed when salespeople lead you to believe that you are purchasing when you are really leasing (and vice versa). Other misrepresentations include telling customers that you will own the car at the end of the lease. This is false because almost all leases require you to make a large payment at the end of the lease in order for you to own the car.
What you should do:
• Make sure you read and understand the entire written contract. If you want to buy a car, make sure the contract you are signing doesn’t have the word “lease” in it. It seems obvious but many customers are easily tricked at the dealership Bring a friend if you are not sure.
• Don’t allow yourself to be pressured into a lease if you want to buy.
• Shop around and make sure you understand what your obligations are.
• Learn more by downloading: What should I know before buying a car? or by downloading What should I know before Leasing a Car?
Number 7: Trade-in Fraud
con artist scamMany customers who trade in their old cars are tricked by dealerships who are not truthful about the value of the trade-in. They might tell you, “A 1999 Toyota like yours only sells for $3,000.” But the Toyota’s wholesale value may really be worth a lot more. Customers who don’t know what they can get for their car if they were to sell it today (the wholesale value) are likely to accept statements like these and may walk away with very little for their trade-in. The dealership will then turn around and sell the trade-in for much more. Learn more at What Do I Need To Know Before Buying of Leasing a Car?
What you should do:

  • If you are not sure of the condition of your car and/or its market value, you may want to take it to a few dealerships. Tell them that you are thinking of trading in your car and see what they offer you for it. This amount may be a more accurate estimate of your car’s market value.
  • If you are thinking about trading in your old car, make sure you know its current market value. You can go to the library or bookstore to find a book that lists values of most cars.

Also try these websites:
Kelley Blue Book (
Edmunds (
Number 8: Co-signer Scam
When customers don’t qualify on their own for financing, dealerships often suggest that they get a friend to co-sign. Often, however, a salesperson will tell the co-signer that he/she is only signing as a reference to help the primary buyer. This is false. If you are thinking of co-signing for someone, you should know that the co-signer is equally responsible for paying the debt and can be sued if the primary buyer doesn’t make payments.
What you should do:
• In most cases, it is not a good idea to be a co-signer for any type of loan.
• Only co-sign if you are prepared to make the payments for the car.
Number 9: Requiring Options
Some dealerships will tell customers that they have to buy additional options or accessories for them to qualify for financing, a special interest rate or a reduced price. This is not an accepted business practice and may be illegal.
What you should do:
• If you hear this pitch, leave the dealership right away.
Number 10: “Yo Yo Sale”
scamTypical Scenario: You purchase a car and drive it home. The next day, you receive a call from the dealership, informing you that there is a problem with the financing and that you have to return to the dealership. When you return to the dealership, the salesperson states that you did not qualify for financing, but that they can still process the deal at a higher interest rate (or with a larger down payment).
What you should do:
• Most auto contracts are contingent upon the approval of financing, so the dealership can cancel the deal if the financing falls through. However, problems with financing should not lead to a renegotiating of the terms of the original contract. If you still want the car, get your own financing.
• Ask to speak with the finance company representative to clarify the nature of the problem.
• If the dealership insists on a higher interest rate or additional payments, walk away.

You may also want to check out our Auto Fraud Diagnostic Tool (Click Here)

Link to part 3 of this series
The post How To Avoid Scams by Car Dealers & Salesmen, Part 2 appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.