Blog Archive for August 2009
Monday, August 17, 2009
FCRA and FDCPA Lawsuits Skyrocket
Debt Collectors and Creditors Beware, FCRA and FDCPA Lawsuits Skyrocket
On December 16th of 2008 I predicted a sharp increase in consumer credit related lawsuits in 2009. Boy did I nail that one. According to Jack Gordon, CEO of WebRecon LLC, a service that tracks FCRA and FDCPA filings, “we’re on pace to eclipse 8,500 such lawsuits in 2009. That’s a record for any one year.”
The issue at hand seems to be two-fold. First, more consumers are viewing litigation as an investment in their own credit future. These are the folks who are fed up dealing with the typical credit dispute protocol, which might work fine for 98% of disputes but isn’t 100% effective. That percentage who can’t seem to have legitimate errors removed from their credit reports using the bureau’s required methods are starting to find it necessary to escalate their efforts into the courts in order to regain their good credit names.
The second bunch seems to be coming from the shake down artists. These are consumers who have damaged themselves through poor credit management and have hooked up with lawyers, on a contingency basis, to see if they can clean up by suing debt buyers, collection agencies, lenders and credit bureaus despite having no damages caused by the aforementioned parties. In many cases it’s less expensive to throw a little money at the plaintiff rather than taking the case all the way to court, where even a jury verdict in the defendant’s favor is hugely expensive.
It’s been my experience that roughly 6% of FCRA and FDCPA cases make it to court. Two of the 31 cases where I’ve been an expert witness have seen the inside of a courtroom. The overwhelming majority of cases are settled prior to going to court, are dismissed or are disposed of via summary judgment.
It probably doesn’t surprise you but the lawsuits are not all filed by unique consumers and unique lawyers. According to Gordon, “Approximately 38% of all FDCPA cases are filed by repeat litigants.” It seems that there are many lawyers and many consumers who are habitual filers, meaning that they have sued multiple times under the FDCPA and FCRA.
While it’s completely plausible that a consumer can simply attract bad creditors or illegal treatment from a collector, it doesn’t take a rocket scientist to figure out that many lawyers and consumers have figured out that it pays quite well to be a serial litigant. A simple Google search on “collection attorneys” yields over 2 million results. The bottom line, suing collection agencies seems to be good business.
As a former collection agency owner, Gordon saw a strong need for a service that helped collection agencies avoid serial litigants. This has lead to the 2008 development of the ”FDCPA Litigant Alert.” This service culls the Federal and state court records and pulls out all FDCPA and FCRA filings and twice a month compiles a list of cases. This list can be purchased by collection agencies and used to avoid the overly litigious consumers. “A lawsuit does not have to be legitimate to be very, very expensive”, says Gordon. I think many collection agency owners would agree.
Originally published at Credit.com
Wednesday, August 05, 2009
Loan Modifications
Dear Mr. Ulzheimer, I must respectfully disagree with your column about Partial Payment Plans not being scored negatively by credit reporting agencies. A prospective lender has every right to know whether or not someone has modified a real estate loan. This is an indicator of debt overload and inability to service current debt. I do not think that your proposal does the borrower any great favor because the credit score artificially propped up will permit the borrower to get in further over his or her head than would currently be the case. Part of the housing problem is that the soundness of mortgages was overrated. Your proposal would contribute to the same problem of overrating the ability of the individual borrower to service new debt. A Partial Payment Plan should have some negative impact. I say this as a consumer/borrower myself. I have had 25 years of debtor bankruptcy experience as a small-town attorney, although I have not represented debtors under the 2005 amendments.
Tuesday, August 04, 2009
Free Credit Reports and FICO Scores
Am I able to receive a free report and FICO score? If so how can I get those.
Monday, August 03, 2009
Medical bills and credit reporting
Medical bills allow you to carry balances for 30, 60, 90, & 120 day periods. I wanted to know if you do not make that first 30 day payment is that considered late? Will they record and report it effecting my credit score?
Monday, August 03, 2009
Tax Issues and Credit Card Debt
Is there any resource you can forward to me about solving IRS issues?I will briefly recap in years 2002-2006 my husband and I defaulted on several 401k retirement loans and I computed our taxes incorrectly so I did not include the early penalty 10% (as we are under 62) nor did I include the amounts of the loans. The IRS assessed and continues to assess us penalties,extra fees, etc as we are unable to pay this debt. At one point in time I started making payments to the IRS but quit as everything I paid was not reducing any of the debt. I keep getting notices from the IRS but am too scared to open them. We do not own a home the only thing we own is a 2003 Dodge Van. This was my fault and I don't see anyway out of it or to stop the interest from continuing to accumulate. Although we make good money we are in credit card debt to about $21,000. I am afraid that IRS will start to garnish our wages and do not know what to do. Thanks for any information you can furnish. I even attempted to call JKHarris (the tax experts) and it seemed like a big scam.
Monday, August 03, 2009
Unpaid utilites, credit reporting and credit score impact
John,I have seen your interview on CNBC and I think you are the right person to help me and my husband in our current situation. We were living in Midtown Savannah Apartments in Midtown Atlanta during 2006-2007. In 2007 June, we broke the lease by paying a month's rent and moved to New Jersey. At the time of breaking the lease, the leasing office at Midtown Savannah held our deposit. This deposit they returned to us a month later, by posting a check to us to our New Jersey address. Now we were under the impression that all the settlement was made and nothing remained to be paid. In 2008 August, during a visit to a mortgage company to check how much we could get to buy a house, we ran a credit check and realized our scores were in the 650 range! We were shocked beyond belief, because we are regular full amount payers - have 2 credit cards - and have had no issues with paying our bills anytime. And then lo and behold we realized that there was a collection record against my name for 80$. On investigation, we realized it was a water bill for the month of June 2007 that was outstanding for our Midtown Savannah apartment. Its been a long time and we have been running in circles trying to determine how to eradicate this from our record and set our scores right again. My current score is around 660 and my husband's is 690. Please, please let us know and respond to our query. We will be very grateful for any assistance or suggestion in this regard.
This article should not be interpreted as legal advice or testimony. It does not represent any conclusive opinion of the author or any of the credit experts from ExpertCreditWitness.com.