The Rosenberg Law Group specializes in representing consumers in debt collection defense, debt settlement, and debt settlement scams. With the ballooning of debt and the skyrocketing of default rates, it serves a consumer well to have a basic understanding of the principle tools at their disposal to protect themselves.
1.DEBT COLLECTION DEFENSE
a. Dispute debts
b. Defend against law suits and garnishment efforts
i. FAIR DEBT COLLECTION PRACTICES ACT (FDCPA), _ 15 U.S.C.__ § 1692_ et seq., is a statute added in 1978 as Title VIII of the _ Consumer Credit Protection Act_. Its purposes are to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information's accuracy. The Act creates guidelines under which debt collectors may conduct business, defines rights of consumers involved with debt collectors, and prescribes penalties and remedies for violations of the Act.
ii. FAIR CREDIT REPORTING ACT codified at _ 15 U.S.C.__ § 1681_ et seq. Regulates the collection, dissemination, and use of consumer information, including consumer credit information. Under § 616 of the Act, (_ 15 U.S.C.__ § 1681n), a consumer may recover either actual damages or a minimum of $100 and a maximum of $1000 plus punitive damages and reasonable attorney's fees and costs for willful noncompliance with the Act. Under § 617 of the Act, ( 15 U.S.C.__ § 1681o), recovery for a negligent violation is of actual damages, plus attorney's fees. Under § 618, a consumer may file suit in state or federal court to enforce the Act, and the statute of limitations is the earlier of 2 years from discovery and 5 years from the violation. ( 15 U.S.C.__ § 1681p_.)
· Negotiate payment settlement with creditors. Debts must generally be in default before a creditor will settle them for a lump sum payment. Settlements can be as favorable as ten cents on the dollar. Credit unions will rarely settle debts for less than the full value of the loan.
3.DEBT SETTLEMENT SCAMS
a. Credit Card Debt Settlement Scams:
} Protection under the Debt Adjusting Act.
A debt adjusting agency under Washington State law subject to the provisions of Revised Code of Washington. Section 18.28 defines “debt adjusting" as “the managing, counseling, settling, adjusting, prorating, or liquidating of the indebtedness of a debtor, or receiving funds for the purpose of distributing said funds among creditors in payment or partial payment of obligations of a debtor." RCW § 18.28.010(1). A debt adjuster or debt adjusting agency is any person or business that engages in the business of debt adjusting for compensation.
There are fee limitations for the provision of debt adjusting services. The Washington Supreme Court has recently ruled that an entity that provides debt adjusting services may not charge more than fifteen percent of any one payment made by or on behalf of the debtor. Carlsen v. Global Client Solutions, LLC, 171 Wn.2d 486, 499 (2011). The Court held that fee limits apply when the entity is either a debt adjusteror providing debt adjusting services.
Exemption: “Solely incidental to the practice of Law."
Relief Offered: Any violation of the Debt Adjusting Act entitles the consumer to the disgorgement of all fees paid.
} Protection under the FTC’s Telemarketing Sales Rule. That rule prohibits companies from making misrepresentations about any product or service, including claims about financial products or services. The statute also requires that companies have competent and reliable evidence to back up key claims about their financial products or services.
There are two main areas where the debt settlement company is vulnerable to the Telemarketing Sales Rule. First, their business model is generally flawed. Debt settlement companies typically order a consumer’s debt from greatest to lowest debt owed, but then pay the creditor who is owed the least first. This approach is inherently flawed as the creditor with the greatest amount of debt is the one most likely to sue on that debt. Further, the debtor will be told to ignore notices of pending litigation or even summons and complaints: the debt settlement company will handle it. They do not.
The second problem with a debt settlement company’s business model is that they often claim that the debtor will be represented by an attorney. In fact no attorneys involved, or if they are, they merely “review" the file. When legal action does occur, the company will inform the debtor that they cannot represent them.
b. Home Loan Modification Rip-Offs:
} Protection under the FTC’s MARS rule and other regulations. The MARS Rule requires that Attorneys must place money in trust fund and bill against. Others may only be paid after modification is achie ved.
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