All items from Nebraska Debt and Bankruptcy Blog

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.

Posted 9 weeks 1 hour ago

Pensions must be Restored Vote Labor.jpg
The United States Supreme Court has ruled that inherited Individual Retirement Accounts (IRAs) are not protected under federal exemption laws.   Clark  v. Ramekers, 573 U.S. ____ (2014).  Even though inherited IRAs are exempt under federal income tax laws, the court said they are not really “retirement funds” under Section 522(b)(3)(C) of the Bankruptcy Code.  Justice Sotomayor cited three key legal characteristics of inherited IRA accounts that are exactly opposite of how normal retirement funds operate:

Posted 13 weeks 1 day ago

A report issued by the Consumer Financial Protection Bureau (CFPB) found that a debt buyer dismissed 70% of its lawsuits when the consumer filed a written answer to the lawsuit. 

As part of a debt collector examination, Supervision reviewed collection lawsuits initiated by the entity. Examiners found that in 70% of the cases, when the consumer filed an answer, the entity would dismiss the suit because it was unable to locate documentation to support its claims.

Junk debt buyers purchase nothing more than a list of names and amounts owed, but they do not receive any real proof of the debt.  They receive no copy of the credit card contract, no record of the payments and charges to the account, no copy of the multiple amendments to the contract, no evidence of whether the contract is written or oral, and no explanation of of how the finance charges were calculated. 

Despite the entity’s express or implied representations to consumers that it intended to establish that consumers owed a debt in the amount claimed in court filings, in numerous instances, the entity misled consumers because it demonstrably had no such intention.

Do we have consumer fraud issue here?  Debt buyers are intentionally misleading consumers by filing lawsuits they have no intention of litigating since they lack meaningful proof of the debt.

Posted 16 weeks 10 hours ago

I will be attending the American Bankruptcy Institute's Student Loan Debt Crisis Symposium being held in in Washington DC on May 30.  The timing of this event could not be better.  The student loan problem keeps getting worse and it is high time that bankruptcy practictioners create workable solutions for the millions of Americans who are trapped under the weight of these debts.  The common belief that student loans are never dischargeable is absolutely not true.  What is true is that Courts are looking at these debts with fresh eyes and the lenders have created new options to help struggeling borrowers. 
If you are attending this conference or if you have questions regarding student loans please contact me.
Sam Turco

Posted 24 weeks 6 days ago

Spider Web
What happens when a bank cannot produce a copy of their credit card agreement during a lawsuit for an unpaid account balance?  Well, that was exactly the situation when CitiBank sued Teresa Cooper in the Superior Court of Vermont, and that case typifies the current status of credit card lawsuits nationwide.  Banks cannot seem to produce a copy of their contracts when litigating unpaid accounts.
What CitiBank was able to provide the court was a copy of the monthly billing statements mailed to its customer and the bank sought to recover a summary judgment on the legal theory of Account Stated.  In short, the account was stated month to month via the billing statements, no objections were made by the borrower, so the balance must be true.
Amazingly, credit card companies have tremendous difficulties producing a copy of the written contract. This is because the contract is not contained in one document but is a result of several documents, perhaps dozens or hundreds of documents, generated during the time the account exists that must be read together to come up with the terms of the agreement. 

Posted 33 weeks 5 days ago

Lori Swanson.jpgMinnesota Attorney General Lori Swanson has filed a lawsuit against a junk-debt buyer, Bradstreet & Associates, accusing that firm of charging an inflated interest of 22% on debts for overdrawn bank accounts that may only charge 6% interest under Minnesota law. 

Companies have the right to collect legitimate debt.  But they shouldn't be charging peoeple for interest they don't owe."  Minnesota Attorney General Lori Swanson

Bradstreet & Associates spent $646,000 to purchase $9 million of overdrawn bank accounts from U.S. Bank and Wells Fargo.  The accounts were purchased from a Florida debt buyer for 3 to 7 cents on the dollar.
Bradstreet filed lawsuits in Minnesota misrepresenting the maximum interest rate that could be charged for these debts and in most cases obtained default judgments when consummers failed to respond to the lawsuit.
How did Bradstreet & Associates decide to charge 22% interest instead of the legal maximum of 6%?  The company has refused to comment on the lawsuit so we can only speculate.

Posted 33 weeks 6 days ago

If you have been sued by a credit card company or by a debt buyer such as Midland Funding, CACH LLC, LVNV Funding, Portfolio Recovery, Cavalry SPV, Asset Acceptance, Unifund CCR Partners or Encore Capital, you need to take immediate action.  Here are three things you must immediately do to win the credit card lawsuit in Nebraska:

Posted 35 weeks 3 days ago

Stinking Badges.png
I sued you, you didn’t file an answer,
and you didn’t come to court.
What more do I need to prove?
 --Remark made by an attorney for a junk-debt buyer.*
Junk debt is a debt that is sold by creditors at a deep discount with very little or no documentation of the original contract, no record of the payments and finance charges, and no records of the debt assignments.   In many cases the consumer owes no debt at all, and in most cases the consumer does not owe the interest, late fees, and legal fees demanded.
The shocking truth of credit card lawsuits is that it is nearly impossible for the plaintiff to provide a complete copy of the credit card agreement.  This is contrary to almost every other type of loan agreement.  Gosh, banks always keep a copy of the loan agreement, but when it comes to credit cards the banks make so many different offers to so many different people at so many different times that . . . well . . . it is hard to keep track of all those agreements.   

Posted 36 weeks 5 days ago

Across the State of Nebraska, you could have heard a collective groan of debtor attorneys as the Nebraska Bankruptcy Court issued a new ruling limiting the ability of debtors to avoid liens in motor vehicles.  In the case of In re Cardwell, the Court ruled that a debtor may not utilize the “Tool of the Trade” exemption of Nebraska statute 25-1556 to avoid such liens unless the vehicle is actually used in the debtor’s trade.
The debtors owned a 2006 Pontiac Montana worth $1,200 and a 1992 Ford F-150 pickup truck worth $800, and they pledged both car titles to First State Bank for a new loan.  After the bankruptcy case was filed, their attorney filed a motion seeking to avoid the liens since Bankruptcy Code 522(f) allows debtors to void liens.

Posted 39 weeks 18 hours ago