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The Consumer Financial Protection Bureau has filed a lawsuit against the debt collection firm of Fredericak J. Hanna & Associates and its three principal owners “for operating a debt collection lawsuit mill that uses illegal tactics to intimidate consumers into paying debts they may not owe.” The CFPB complaint alleges that the Hanna firm files thousands of lawsuits that are based on faulty or unsubstantiated evidence.
According to CFPD Director Richard Cordray the Hanna firm is “taking advantage of consumer lack of legal expertise to intimidate them into paying debts they may not even owe. Today we are taking action to put a stop to these illegal debt collection practices.”
The CFPB alleges that the Hanna firm “operates like a factory” by producing hundreds of thousands of lawsuits without any meaningful attorney involvement against consumers who may not actually owe the debt. One attorney at the Hanna firm signed over 130,000 lawsuits in a two-year period which the CFPB says is misleading to consumers since no attorney could actually review that many lawsuits for accuracy.
The Hanna firm also systematically uses sworn statements (“affidavits”) from its clients attesting to the validity of the debts even though it is obvious that the signers could not possibly know if the information is correct.
The Hanna firm relies on deception and faulty evidence to drag customers to court and collect millions, . . . We believe they are taking advantage of consumer lack of legal expertise to intimidate them into paying debts they may not even owe. Today we are taking action to put a stop to these illegal debt collection practices.” Richard Cordray, Director of the CFPB.
Are these types of lawsuits filed in Nebraska? Absolutely, and it is common for these lawsuits mills to attach essentially worthless affidavits to the lawsuit or to offer such sworn statements in Summary Judgment motions. These sworn statements generally are signed by an employee of the debt buyer! The statements usually state something like this: “I know from my experience in reviewing such records and from common knowledge of how Credit Cards work that those records are made and maintained by individuals who have a business duty to make entries in the records accurately at or near the time of the event that they record.”
See the problem with this statement? The statement is not “I am the custodian of the credit card company’s business records.” Rather, the statement is “I know a guy who maintains these records.” To admit such statements into evidence as a Business Record exception to the Hearsay rule of evidence (See Nebraska Rule of Evidence 27-803(5)), the sworn statement must be made by a record keeper of the credit card company, not the debt buyer. But those statements are hard to get, so the debt buyers use these deceiving sworn statements to fool the Courts and the uneducated defendants that they have evidence of the debt when they really do not. This is the misleading practice the CFPB is calling out as deceptive, misleading and illegal.
The Consumer Financial Protection Bureau (a federal agency) has filed a lawsuit in federal district court against Frederick J. Hanna & Associates and its three principal partners for operating a “collection lawsuit mill” that uses illegal tactics to intimidate consumers into paying debts they may not owe.According to the CFPB, Hanna & Associates violated federal law which prohibits deceptive practices in the consumer financial marketplace. The Agency wants compensation for victims, a civil fine and an injunction against the firm and its partners.The allegations in the complaint include:
- intimidating consumers with deceptive court filings. Hanna & Associates allegedly used automated processes to generate lawsuits with little or no involvement by attorneys. One of the firm’s lawyers, for example, “signed” more than 130,000 collection lawsuits in a two year period.
- introducing faulty or unsubstantiated evidence. Lawsuits filed by Hanna & Associates included sworn statements about a particular individual’s debts. These sworn statements were issued by officers of the banks, credit card issuers and debt buyers who had hired the Hanna firm. The CFPB argues that these officers could not possibly have had personal knowledge about the individual cases and that the Hanna firm has dismissed over 40,000 suits in Georgia alone when these sworn statements were challenged by defendants.
In a statement, Hanna & Associates denied any wrongdoing and stated that it has followed all state and federal laws.I will keep an eye on this litigation and let you know if the Hanna firm reaches a settlement with the CFPB or if the case goes to trial.While this particular litigation may not impact you directly, I hope that you pick up a few things from this case.First, just because a plaintiff (credit card company, debt buyer, etc.) makes an assertion against you in a lawsuit, you should not automatically assume that you have no defense.Perhaps you think that you do owe money to the plaintiff. However, if the debt is stale (the statute of limitations for collection may have run) or if the plaintiff has little or no documentation proving you owe money, you would have a viable defense.Second, credit card companies and other consumer debt issuers most likely do not have paper files. Their “documentation” may be an internal ledger sheet or a bogus “sworn statement” from a company official. This documentation can be challenged and may give you leverage to negotiate.As always, if you get sued do not ignore the lawsuit. If you do not respond (or call a lawyer for advice) within the set time to respond (usually 30 days) your case will go into default and all of your options to challenge the legitimacy of the lawsuit will disappear. The post Giant Collection Law Firm Sued by Government for Deceptive Practices appeared first on theBKBlog.
The Consumer Financial Protection Bureau (a federal agency) has filed a lawsuit in federal district court against Frederick J. Hanna & Associates and its three principal partners for operating a “collection lawsuit mill” that uses illegal tactics to intimidate consumers into paying debts they may not owe.According to the CFPB, Hanna & Associates violated federal law which prohibits deceptive practices in the consumer financial marketplace. The Agency wants compensation for victims, a civil fine and an injunction against the firm and its partners.The allegations in the complaint include:
- intimidating consumers with deceptive court filings. Hanna & Associates allegedly used automated processes to generate lawsuits with little or no involvement by attorneys. One of the firm’s lawyers, for example, “signed” more than 130,000 collection lawsuits in a two year period.
- introducing faulty or unsubstantiated evidence. Lawsuits filed by Hanna & Associates included sworn statements about a particular individual’s debts. These sworn statements were issued by officers of the banks, credit card issuers and debt buyers who had hired the Hanna firm. The CFPB argues that these officers could not possibly have had personal knowledge about the individual cases and that the Hanna firm has dismissed over 40,000 suits in Georgia alone when these sworn statements were challenged by defendants.
In a statement, Hanna & Associates denied any wrongdoing and stated that it has followed all state and federal laws.I will keep an eye on this litigation and let you know if the Hanna firm reaches a settlement with the CFPB or if the case goes to trial.While this particular litigation may not impact you directly, I hope that you pick up a few things from this case.First, just because a plaintiff (credit card company, debt buyer, etc.) makes an assertion against you in a lawsuit, you should not automatically assume that you have no defense.Perhaps you think that you do owe money to the plaintiff. However, if the debt is stale (the statute of limitations for collection may have run) or if the plaintiff has little or no documentation proving you owe money, you would have a viable defense.Second, credit card companies and other consumer debt issuers most likely do not have paper files. Their “documentation” may be an internal ledger sheet or a bogus “sworn statement” from a company official. This documentation can be challenged and may give you leverage to negotiate.As always, if you get sued do not ignore the lawsuit. If you do not respond (or call a lawyer for advice) within the set time to respond (usually 30 days) your case will go into default and all of your options to challenge the legitimacy of the lawsuit will disappear. The post Giant Collection Law Firm Sued by Government for Deceptive Practices appeared first on theBKBlog.
Springtime is supposed to be a joyful time for those who have graduated from college. However, for many members of the class of 2014, graduation means that they have left their student lifestyle behind, and they are about to meet their student debt obligations head-on. Typically, this reality is felt the most six months... Read more »
The post Obama Introduces The New Pay As You Earn Plan Capping Student Loan Payments appeared first on AllmandLaw.
Springtime is supposed to be a joyful time for those who have graduated from college. However, for many members of the class of 2014, graduation means that they have left their student lifestyle behind, and they are about to meet their student debt obligations head-on. Typically, this reality is felt the most six months... Read more »
The post Obama Introduces The New Pay As You Earn Plan Capping Student Loan Payments appeared first on Allmand Law Firm PLLC.
Springtime is supposed to be a joyful time for those who have graduated from college. However, for many members of the class of 2014, graduation means that they have left their student lifestyle behind, and they are about to meet their student loan debt obligations head-on. Typically, this reality is felt the most six months […]
The post Obama Introduces The New Pay As You Earn Plan Capping Student Loan Payments appeared first on Allmand Law Firm PLLC.
Current Chapter 13 Bankruptcy Client I have a client that is currently in a chapter 13 bankruptcy case, but is struggling to make her plan payments. The trustee has filed a motion to dismiss the case for failure to make timely payments. My client is approximately $1500 behind even though her trustee payments are being+ Read More
The post Re-Filing Chapter 13 Bankruptcy Provides A Welcome Surprise appeared first on David M. Siegel.
This article in the Norfolk paper about Portfolio Recovery explains something I had only guessed at, before. Debt collectors know when your finances improve. Debt collectors pay the credit bureaus to tell them. I’m a Virginia bankruptcy attorney, and I know people want to put off filing bankruptcy for as long as possible. Some people come […]
The post Debt Collectors will be on you like a duck on a junebug by Robert Weed appeared first on Robert Weed.
The Supreme Court finally addressed the issue of when an IRA does not count as a retirement account. For nearly ten years, the question of whether inherited IRAs are protected during bankruptcy has gone unanswered. Finally, the Supreme Court has answered it with a unanimous no. In Clark v. Rameker, Heidi Heffron-Clark filed for bankruptcy... Read more »
The post Are Funds in an Inherited IRA Protected in Bankruptcy? appeared first on AllmandLaw.
The Supreme Court finally addressed the issue of when an IRA does not count as a retirement account. For nearly ten years, the question of whether inherited IRAs are protected during bankruptcy has gone unanswered. Finally, the Supreme Court has answered it with a unanimous no. In Clark v. Rameker, Heidi Heffron-Clark filed for bankruptcy... Read more »
The post Are Funds in an Inherited IRA Protected in Bankruptcy? appeared first on Allmand Law Firm PLLC.
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