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If you have never heard the term “debt buyer,” you might be amazed to learn that large companies exist solely for the purpose of buying and selling consumer debt. These companies buy and sell billions of dollars of debt. Some are part of public companies that trade shares of stock on stock exchanges.In other words, credit card companies, hospitals, personal loan companies, banks and other lenders regularly sell and resell debt – and this may include debt owed by you.Here’s how it works. Let’s say that you open a Mastercard or Visa account with a local bank. Over the years you may start running a balance – perhaps $2,000 or $3,000. You are able to make the minimum monthly payment but the balance grows slowly. At some point, you find yourself with a problem – you miss one or two monthly payments and your account becomes two or three months past due. The credit card company cancels your account and starts sending you collection letters.At that point, the credit card company may decide that it would rather sell your delinquent debt for cash before it gets too much older. Depending on how delinquent the debt is, a debt buyer may pay only 4 or 5 cents on the dollar. Your 2 month delinquent debt of $3,000 will be packaged along with other similar debt and sold in bulk to a debt buyer at this discounted rate.The debt buyer may attempt to collect the debt by dunning you (calling repeatedly) or the buyer may retain a lawyer and sue you.Debt buying is a perfectly legitimate business as long as the debt buyer follows the rules. Debt buyers also know that most consumers do not know the rules so the debt buyers often take advantage of a consumer’s ignorance of the law and inattention to what is going on.Some of the illegal tactics used by debt buyers include:

• repeated collection calls that violate the Fair Debt Collection Practices Act ban on harrassment and after hours calls
• misleading consumer into consenting to autodialed calls
• failure to respond to consumer disputes of debt
• farming debt to law firms for litigation without appropriate documentation
• threatening consumers with lawsuits for debts where the statute of limitations has run
• collecting on debt where the debt buyer has no documentation

Debt buyers know that most consumers will not respond to collection lawsuits. High volume collection law firms may file hundreds or even thousands of lawsuits each month, often with little or no lawyer oversight, yet the collection firms win most of these lawsuits by default when the consumer/defendant fails to answer.The Consumer Financial Protection Bureau is starting to go after debt buyers who pursue shady practices. Recently, for example, the CFPB imposed a $79 million penalty against to large debt buyers – Encore Capital Group and Portfolio Recovery Associates.According to the Collections and Credit Risk web site:

The CFPB found that Encore and Portfolio Recovery Associates attempted to collect debts that they knew, or should have known, were inaccurate or could not legally be enforced based on contractual disclaimers, past practices of debt sellers or consumer disputes. The companies also filed lawsuits against consumers without having the intent to prove many of the debts, winning the vast majority of the lawsuits by default when consumers failed to defend themselves. The alleged practices violated the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Even more recently a federal judge in the Northern District of Georgia declared Georgia’s post judgment garnishment statute unconstitutional because it failed to include various consumer protection safeguards having to do with funds that are not subject to seizure. Whether this judge’s ruling holds up on appeal remains to be seen.While I applaud the CFPB’s actions, you should not assume that the debt buying and collection lawyer industries will suddenly change their ways. The profit in buying and selling debt is so great that some debt buyers may look at CFPB’s fines as a cost of doing business.

• If you are receiving collection phone calls, you do not have to put up with harassment even if you owe the creditor money.
• If a sheriff’s deputy knocks at your door and hands you paperwork do not put that paperwork in a drawer and hope that the problem will go away.
• Most importantly, do not assume that the only reason to call a bankruptcy lawyer is to file a bankruptcy. If you live in the Atlanta metro area, I invite you to call my office at 770-393-4985 to talk with Susan Blum or myself about any debt issue you may be facing. Sometimes the Bankruptcy Code may offer a solution but many times, a strongly worded letter, advice about how to respond to a collection lawsuit or even an explanation about the collection letter you have received will help you decide how to proceed.

Collection agents rely on your ignorance of the law and your fear of challenging their apparent authority to intimidate you into acting for their benefit.  You do not have to play their game anymore.More about the debt collection business:  click hereThe post Don’t Fall Prey to Illegal and Immoral Behavior by Debt Buyers appeared first on theBKBlog.

Private Student Loans are the single worst debt in existence.  They lack any formal Income Based Repayment (“IBR”) plans and the debts are generally not discharged in bankruptcy without undergoing expensive litigation and claiming a special hardship.  In recent years, the National Collegiate Student Loan Trust, the largest holder of private student loans, has filed thousands of lawsuits against delinquent borrowers, and I count several hundred such lawsuits filed in Nebraska.
National Collegiate lawsuits are really no different than a basic credit card case, and they suffer many of the same problems:
Trusts Lack Capacity to Sue in Nebraska.
As a general rule, a trust is not a legal entity and lacks the ability to sue or be sued.  Rather, the lawsuit should be brought in the name of the Trustee.  (See Black Acres Pure Trust v. Fahnlander, 233 Neb. 28 (1989)).  The Uniform Law Commission has written extensively on this issue and has proposed a uniform law to create “statutory trusts” that would enjoy the same rights given to corporations to sue or be sued.

A common-law trust arises from a private action without the involvement of a public official. Because a common-law trust is not a juridical entity, it must sue, be sued, and transact in the name of the trustee and in the trustee’s capacity as such. By contrast, a statutory trust is a juridical entity, separate from its trustees and beneficial owners. It has the capacity to sue, be sued and transact on its own.”  Uniform Law Commission.

So, is National Collegiate a “common-law” trust or a “statutory” trust?  Does that distinction make a difference in Nebraska?  National Collegiate is organized as a Delaware trust agreement and that state does provide for statutory trusts empowered to sue.  There are arguments to be made both ways, but until the courts rule on this issue, the first defense to these lawsuits is to file a motion to dismiss.
National Collegiate Must Show They Own the Loan.
You did not borrow money from National Collegiate.  Most likely the loan originated from JPMorgan Chase or Bank of American or Charter West Bank.  The loan was then assigned several times and eventually wound up in one of the several trust pools managed by National Collegiate.  It is essential that National Collegiate be required to provide the “chain of assignment” showing how your loan was specifically assigned from the original lender to the National Collegiate Trust.  Failure to prove the entire chain of assignment means the lawsuit must be dismissed for lack of standing.
Statute of Limitations.
In Nebraska, lawsuits filed for breach of a written promissory note must be filed within five (5) years of the date of last payment or from an acknowledgement of the debt.  It is important to demand an account payment history from National Collegiate to verify the date of last payment.  Very often the records of National Collegiate are sketchy at best and they seem to struggle to provide detailed account statements. If they do assert a payment was made in the preceding 5 years, research your bank statements to see if their record of payment matches your records.
Did a Prior Bankruptcy Case Discharge Some of the Student Loan?
Have you filed bankruptcy before?  If so you may have discharged some of the National Collegiate obligation already.  Although Federal Student Loans are not discharged in bankruptcy (unless you receive a Hardship Discharge), when it comes to Private Student Loans only the amount qualified under Section 221(d)(1) of the Internal Revenue Code is excepted from discharge.  I have seen cases where loans were made for $30,000 per year when the actual cost of attending the college, including tuition, books, room and board and transportation expenses, was only $10,000 per year.  Also, only loans to a qualified educational institution are protected.  National Collegiate often sues for debts that have been partially or entirely discharged.
Statute of Limitations are not Tolled During a Chapter 13 Case in Nebraska.
If you can go five years without making a payment or requesting a loan deferment, the Nebraska statute of limitations may apply.  (See National Bank of Commerce v Ham, 256 Neb. 679 (1999)).,  The 5 year limit must run prior to the commencement of the lawsuit and you must affirmative claim this defense in the written answer filed with the court.  If you sense that you are about to be sued by National Collegiate, consider filing Chapter 13 to run out the SOL clock.
Negotiate the Debt.
National Collegiate is willing to cut a deal.  Even if they are successful in obtaining a judgment, they still have the burden of collecting the debt.  The fact that they have initiated a lawsuit means that they probably have not received any payment in years.  I have represented clients who were able to settle $150,000 of loans for $30,000.  Each case is unique, but National Collegiate is willing to consider reasonable settlement offers.
Image courtesy of Flickr and Occupy* Posters.

Choosing a college just got a little easier, thanks to a revamped government tool that provides information on what former students of each school might earn, how much debt they leave with, and what percentage can repay their federal student loans.
The revamped government website, the College Scorecard, was unveiled by the Obama administration on September 12, 2015 and lets prospective students and families easily find information about colleges and universities.
“Everyone should be able to find clear, reliable, open data on college affordability and value,” President Barack Obama said in his weekly radio address. “Many existing college rankings reward schools for spending more money and rejecting more students — at a time when America needs our colleges to focus on affordability and supporting all students who enroll.”
The site reveals a host of student outcomes at specific institutions, including:

• graduation rates;
• median salary information; and
• student loan repayment rates, including the share of a college’s former students who are paying down their federal loans within the first three years after leaving college.

The information is a step up from the old version of the site, which tracked former students in default on their federal loans. Those numbers hid the millions of borrowers who were in forbearance or otherwise not making their payments.
Now, students weighing their college options can see whether students at a particular school earn more than they would have had they entered the job market right after high school, graduation rates and typical student debt and monthly payments a student would owe for each school.
“Students deserve to know their investment of resources and hard work in college is going to pay off,” said Education Secretary Arne Duncan.
The Obama administration originally wanted the site to provide a college ratings system that would judge schools on affordability and return on investment. That plan was scuttled in the face of criticism from those in higher education as well as Congressional members who saw it as arbitrary, unfair, and a case of government overreach.
Click here to be taken to the College Scorecard.
Additional reporting:
Obama promotes online search tool with college-specific data to aid families in school choice
The New College Scorecard
Obama Administration to Unveil New College Comparison Search Tool

The post New Student Loan Tool Reveals Earnings and Repayment Data appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.

Fred’s after bankruptcy credit score is 707 Fred M was a small business owner.  Because his business was dragged down by the recession, he has $50,000 in credit cards that had gone bad. Last fall Bank of America sent him a warrant-in-debt in a $17,000 credit card. So, Fred filed bankruptcy with me in October […]The post Fred’s after bankruptcy credit score is 707 by Robert Weed appeared first on Robert Weed.