Blogs

Chase Bank agreed in July 2015 to pay more than $200 million to settle claims made by 48 states as well as the Consumer Financial Protection Bureau that it sold faulty credit card debts to third-party collectors.
Understanding what happened provides valuable lessons to anyone who’s being sued for a past due credit card debt.
Chase Halts All Collection Lawsuits
The story began with a report in American Banker from January 2012 that JPMorgan Chase had suddenly halted all of debt collection lawsuits nationwide amid allegations that it falsely overstated the balances of thousands of delinquent accounts it sold to a third party.
Just a few months later, in September 2012, American Banker reported that JPMorgan Chase Bank was being investigated by lawyers representing Mississippi Attorney General Jim Hood, and other states are following suit.
Whistleblower Reveals Robosigning
The inquiries came as a result of a whistleblower suit filed by Linda Almonte, a former midlevel employee who documented a range of improprieties over the years at the banking giant. Those lapses included:

• failure to reconcile the inconsistent past-due balances generated by the bank’s computer systems;
• pressure from management to collect delinquent debts even in the absence of complete or accurate records; and
• robosigning of affidavits that brings into question the legal integrity of Chase’s claims against tens of thousands of consumers.

Internal bank documents and other employees backed Almonte’s accusations, which forced Chase to cease operations in a collections unit previously responsible for billions of dollars in annual revenues.
Consent Order
In 2013 Chase entered into a Consent Order with the Office of the Comptroller of the Currency after similar allegations were made against the banking giant.
Specifically, the federal government found what it termed as being, “unsafe or unsound practices,” in connection with:

• the Bank’s sworn document and collections litigation practices; and
• the Bank’s efforts to comply with the Servicemembers Civil Relief Act (“SCRA”)

Though this Consent Order wasn’t directly related to the actions pending by the states, it was an indication that something was amiss.
California Attorney General Takes Action
The State of California took its own action against Chase in May 2013, alleging widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.
On one day alone during the period in question, Chase filed 469 debt collection lawsuits in California. The Attorney General’s complaint against Chase claimed that, to maintain this pace, Chase employed unlawful practices as shortcuts.
Those shortcuts, the suit alleged, allowed Chase to obtain judgments, garnish wages, and place liens on property from California consumers at a rate that wouldn’t have otherwise been possible.
The state’s lawsuit seeks penalties of $2,500 for each violation of California law as well as an additional $2,500 for each violation against a senior citizen or person with a disability.
Chase argued that California legal authority precluded the In the lawsuit filed by California State Attorney General Kamala Harris. Superior Court Judge Jane L. Johnson in Los Angeles rejected that argument and in January 2014 denied the bank’s request that the lawsuit be thrown out.
As of this writing, the California lawsuit is ongoing.
A Lesson If You’re Sued For A Debt
Up until the investigation, Chase was filing tens of thousands of lawsuits around the country each month. Most of the people who were sued took no action to defend themselves, ending up with default judgments against them.
Those who stood up to the bank and demanded proof often won the case.
When you’re sued for a debt, the creditor or debt collector is required to prove to the court that you owe the money, that it’s a legally valid debt, and that it’s collectible.
It’s up to you to raise those defenses and demand proof, but when a debt collector can’t prove the case then it’s going to lose.
In many cases, companies that file debt collection lawsuits don’t have the proof they need to win.
Suing Debt Collectors
The Fair Debt Collection Practices Act regulates the ways in which debt collectors can try to collect money from you. In California, our Rosenthal Act provides most of the same protections but extends the regulations to original creditors such as Chase.
Under the FDCPA, a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. That includes misrepresenting the character, amount, or legal status of any debt.
If you’ve been contacted by a debt collector, you likely want to get some proof that you owe the debt before forking over your hard-earned money. If the numbers don’t match up or if the proof is (ahem) unavailable, you may want to talk with me about taking action.
Always Be Watching
The bottom line is this: when it comes to debt collectors, you’ve got to be on the lookout at all times.
Keep notes, demand proof, and talk with a lawyer who knows the score. An ounce of prevention will not only protect your rights, it might also save you a fistful of cash.
Related News Stories:

• Chase Whistleblower Suit Reveals Total Disregard For Consumer Protection
• Attorney General Kamala D. Harris Announces Suit Against JPMorgan Chase for Fraudulent and Unlawful Debt-Collection Practices (State of California)
• Consent Order Between Chase and Office of the Comptroller of Currency (OCC Website)
• JPMorgan sued by Mississippi AG over credit card misconduct (Reuters)
• California Lawsuit over Chase’s Debt Collection Practices is Still On (InsideARM)
• JPMorgan Fails To Dismiss California Debt Collection Case (Bloomberg)

Photo credit
The post Lessons From the Chase Bank Credit Card Robosigning Scandal appeared first on Shaev & Fleischman LLP.

My clients who are looking at bankruptcy as a way to get out of debt worry about their car. Is it a good idea to get rid of it in favor of a less expensive vehicle? Will either the court or their car lender force them to surrender the vehicle?
Cities such as New York, Boston and San Francisco have amazing public transit systems but that’s the exception rather than the rule. For many people, the possibility of being left without a car makes bankruptcy a non-starter.
Luckily, with enough planning you should be able to keep your car even as you go through bankruptcy.

Before asking if you can keep your car through bankruptcy, figure out if it's a good idea.Click To Tweet
Do You Want to Keep The Car?
Before making a firm decision on keeping this particular vehicle, consider the following:
Value. A car loses a significant chunk of value the minute it rolls off the lot, so there’s a fair chance that it’s not worth the balance on the note. Look at how much the car is worth on a trade-in or private party sale – if the car is valued at less than the payoff amount on the loan, it may be a better financial move to give it back to the finance company.
Costs of Ownership. Driving around a gas guzzler or a car with high maintenance costs? If so, it may be an unnecessary drain on your monthly budget. Giving it back and getting a different vehicle could end up saving you a lot of money, which will make it easier to stick to your monthly budget. Spend some time with a cost of ownership calculator to guide you.
Hassle Factor. If you live in an urban area where mass transit is plentiful and parking is difficult, consider how much effort you put into owning your car. When I lived in New York City I spent an inordinate amount of time looking for parking, and parking tickets were a fairly usual occurrence. Unless you need absolutely need the car, it may be more of an ongoing financial burden than it’s worth.
Does It Help Improve Your Finances After Bankruptcy?
There’s one more consideration when you’re deciding to keep the car through your bankruptcy case – whether it stands in the way of getting your finances back in shape once the case is over.
If you’ve got a huge car payment and high insurance premiums, this particular automobile might be what’s dragging you down financially.
A ticket or an accident will raise your insurance rates, so take a safe driving class to reduce your premium. Also look into discounts that may be available with your insurer under a multi-policy discount. Finally, shop around for a better auto insurance rate.
As to your monthly payments, see if you can refinance with a bank or credit union with a lower rate. This may not be an option if your credit score has already taken a nose dive due to your other debt problems, but it can’t hurt to ask around.
Doing a bit of digging will go a long way towards helping you understand if there’s any way you can lower the costs associated with this automobile. If so, then it may make sense to work to keep the car through a bankruptcy filing. If there’s no way to bring your costs down, it may be a better idea to give it back.
How Much Will A Replacement Cost?
Cars are built to last 200,000 miles or more with proper care, and they must all meet certain safety standards.
You do not need a brand new car. I don’t care what the automobile manufacturers say, there’s no justification for buying a brand new car aside from that new car smell and the envious looks your neighbors give you when you drive past them in the morning.
With that in mind, take a look around at the cost of a replacement car that meets your needs (as opposed to your wants). If you’ve got kids, you have certain needs. If all you do is drive to the train station in the morning, your needs are markedly different. Shop based on those requirements, taking care to search not only car dealerships but also places like Craigslist and neighborhood newspapers and websites.
Once you’ve got a sense of the real cost of a replacement car, you’ll know whether it’s a better idea to keep the car or not.
You Will Not Lose Your Car In Bankruptcy
There are two types of bankruptcy – Chapter 7 and Chapter 13. There’s also Chapter 11, but it’s for businesses and people who have very high debt loads.
Under Chapter 7, you wipe out many types of debts but can keep property only to certain limits. Depending on the limits in your area, you wouldn’t file a Chapter 7 case unless you want to keep the car and know it will be protected.
Chapter 13 is a different story because it involves paying off a portion of your debts over a 3-5 year period in exchange for the ability to keep all of your property. If you want to keep the vehicle but it’s valued above the limits then you’d look into filing a Chapter 13 case.
Before doing so, be sure to do a complete analysis of your finances to determine how much you’d be required to pay towards your debts, and whether you can afford to do so.
Protecting Your Car From The Lender
Under normal circumstances keeping your car is simple. All you need to do is make your payments on time, maintain proper insurance, and don’t total it in a wreck.
In bankruptcy, the story may be the same or different depending on where your case is going to be filed. In some states, filing a Chapter 7 case gives the car lender the automatic right to call the loan in default and repossess the vehicle. Remember that under Chapter 13 your property is protected so long as you’ve got an appropriate repayment plan in place.
You can terminate the loan and give the car back, owing no further balance once your bankruptcy case is finished. But if you want to prevent the lender from taking back the vehicle, you get a few choices.
Reaffirmation. Reaffirmation is a new promise to repay the car loan in spite of your bankruptcy filing. The lender sends you an agreement, you sign it, and the bankruptcy court approves it.
So long as the agreement is filed with the court within the time provided for by law and in a specific form, reaffirmation will protect you from waking up one morning to see the lender’s tow truck hauling your car away. You may even be able to renegotiate your interest rate with the lender as part of the reaffirmation process.
The major problem with reaffirmation that if you fall behind on the loan once the agreement is signed and after your bankruptcy case is over, the lender can pursue you for the unpaid balance under state law.
Official Bankruptcy Forms:

• Reaffirmation Agreement Cover Sheet
• Reaffirmation Documents
• Reaffirmation Agreement
• Motion for Approval of Reaffirmation Agreement
• Order on Reaffirmation Agreement
• Order on Reaffirmation Agreement (Alt.)

Redemption. The bankruptcy law lets you pay the lender an amount of money equal to the current value of the vehicle as payment in full. That can be handy if your car is worth far less than the loan balance, or if the interest rate on your current note is high.
Though you may not have the money handy, there are a number of lenders that do redemption financing for people in Chapter 7 bankruptcy. Shockingly, their rates are often better than you’d imagine.
Do Nothing. Some lenders won’t repossess the vehicle after bankruptcy so long as you keep making payments retain proper insurance. You don’t want to choose this option unless you’re certain of the lender’s policy.
Don’t Shortcut Your Decision Making Process
The decision is more than merely one of whether you can file for bankruptcy and keep your car. Keeping the vehicle is no problem so long as you file the right kind of bankruptcy case and follow proper procedures to protect yourself.
The bigger question is one of whether it’s a good idea to have a car, and whether this particular automobile is the right one for your needs and financial situation. Evaluate your budget as well as your alternatives before choosing on a particular course of action, because your choice will have long lasting effects on your budget long after the bankruptcy case is over.
The post Keeping Your Car Through Bankruptcy – Good Idea, or Budget Buster? appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.

The scope and extent of debts that may be discharged is an often litigated issue in bankruptcy. In a recent Chapter 13 case in the U.S. Bankruptcy Court for the Eastern District of Michigan, the bankruptcy court considered whether an otherwise dischargeable government penalty debt is nondischargeable if the debt arises from fraud.[1] Read More ›
Tags: Chapter 13, Chapter 7, Eastern District of Michigan

It’s been estimated that about 80% of people in the United States have credit report errors.  Those statistics are from 2009, so it’s likely that those numbers are higher in light of the rampant mortgage-related issues over the past few years.
Under the Fair Credit Reporting Act, nobody is allowed to furnish inaccurate or incomplete information about you to a consumer reporting agency. Furnishers of information (typically creditors and debt collectors) have a legal duty to investigate disputes regarding credit report errors, as well as to prevent identity theft and protect sensitive medical information.
If you have errors on your credit report, there are a few things you can to do to fix the problem.
4 Simple Steps To Take If You Find Credit Reporting Errors
If you think there are errors on your credit report you should take these simple steps:

1. get copies of all three (3) major credit reports – Experian, Equifax and TransUnion;
2. review every line of every single report – remember, not all credit reports say the same things;
3. if there’s an error on a report, file a complaint with the CFPB as well as a request for investigation with each credit reporting agency;
4. review the updated credit reports to ensure that the errors are corrected.

If You Find An Error on Your Credit Report
Federal law provides a mechanism for you to dispute an inaccurate or incomplete information on your credit report. The process is simple: notify the credit reporting agency of the error and request that the company investigate it on your behalf.
Sending a letter or calling the creditor or debt collector doesn’t trigger any of your credit reporting rights.
Though this takes some time and effort, most disputes result in getting the error resolved.
In addition, you have a right to sue not only the furnisher of information but also the credit reporting agency for damages if the errors continue after the dispute process.
Get the Government Involved
The Consumer Financial Protection Bureau has been the primary enforcer of the Fair Credit Reporting Act since 2012. Since that time, the consumer watchdog has handled approximately 105,000 credit reporting complaints.
The problems appears to be worsening, with complaints about credit reports up 45 percent nationally in the past year. The most common of those complaints revolve around incorrect information in their reports.
If you’ve gone through the dispute process under federal credit reporting laws but the errors aren’t corrected, you can file a complaint with the CFPB by clicking here.
Your Rights Under the Fair Credit Reporting Act
Your rights under the Fair Credit Reporting Act include suing the credit reporting agency as well as the entity that provided the incorrect or incomplete information.Identity theft victims and active duty military personnel have additional rights.
But those rights exist only if the investigation process hasn’t solved your problem. The law understands that mistakes are made when it comes to reporting information, and provides a way for you to correct those mistakes. It’s only when your best efforts fail that the right to sue kicks in.
If you need to sue for a violation of the Fair Credit Reporting Act, you may be able to recover damages as well as legal fees and costs. Even if you haven’t suffered a loss due to the inaccurate credit reporting, you may be able to recover some money under the law.
More important, a successful lawsuit for a violation of your credit reporting rights will lead to the errors being corrected.
Other Laws May Impact Your Rights
Entities that furnish information to credit reporting agencies are often governed under laws other than the Fair Credit Reporting Act. For example:

• The Fair Debt Collections Practices Act has rules applicable to debt collectors.
• The Real Estate Settlement Procedures Act applies to reporting of credit information by mortgage servicers under certain circumstances.
• The Fair Credit Billing Act (FCBA) contains rules on reporting of information by creditors after receipt of a consumer’s written dispute of certain credit card and similar billing errors.
• The Equal Credit Opportunity Act (ECOA) bars creditors from discriminating against consumers and protects consumers in “every aspect” of the parties’ dealings, including the “furnishing of credit information.
• The California Rosenthal Act has rules applicable to creditors and debt collectors.

These other laws may help you depending on the type of problem you uncover on your credit report.
Your credit report provides the only way for strangers to make certain decisions about you – potential landlords, insurance companies, mortgage lenders, car finance companies, credit card issuers, and even employers. Making sure your credit report is free from errors can be one of the most important parts of ensuring a healthy financial life.
The post 4 Simple Steps to Correcting Errors on Your Credit Report appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.