As a bankruptcy lawyer, I see many hard working people who fall prey to these internet payday loans. And they are afraid if they stop paying the loans that somehow the consumer had done something illegal. So I’m happy to have proof of what I tell them. In most cases it’s the internet payday loan company are the ones who have broken the law.
One common scam was claiming that the internet payday loans did not have to follow state law, because the payday loans were made by Indian Tribes. Scott Tucker, who set up most of those Indian Tribe payday loans, got fined a billion dollars (good luck actually collecting that) and sentenced to 16 years in Federal prison.
Scott Tucker, king of the internet payday loan outfits, also was a professional race car driver. He won’t be able to do that during his 16 year prison sentence.
Last October the Federal Trade Commission obtained a federal court judgment against Tucker for $1.266 billion dollars.
Fifteen years later, Lilly is still getting garnished!
Lilly came to see me in my Sterling office last Friday. When she was much younger, she got a high interest car loans from Ford Motor Credit.
The car got repossessed, and in 2003, Ford got a judgment against her for $8,051.35. Plus $1,207.70 for Ford’s lawyer and $33.00 filing fees.
Like many people, she wanted to protect what was left of her “good credit,” so she never talked to a lawyer about it.
She works in a medical office and has had different jobs, each lasting a few years. Periodically Ford Credit would catch up with her job and put a garnishment on her pay.
Fast forward to 2018. Lilly has paid $23,955.42 in garnishment against that $8,051.35 judgment. And she still owes $15,814.38! How can that be? $29,768.25 in interest of the judgment. Plus $709.50 filing fees for the garnishments. (Most courts in Virginia charge about $73.00 for a garnishment, it used to be less. So from that calculation Lilly was probably garnished nine times over the 15 years.) You can see it for yourself, here.
Symphony Claims Her New Start
A week after I saw Lilly. Symphony came to see me, also in my Sterling office. Just like Lilly, Symphony had a high interest car loan with Ford Motor Credit, and her car got repossessed in 2016. Ford got a judgment against her in July 2017. They started garnishing her in January 2018.
As soon as that garnishment hit her payroll office, Symphony came running into see me. We got her bankruptcy filed before her first short-check payday, although the day after the check was cut.
Under Virginia law, filing bankruptcy stops a garnishment and sends that money back to your paycheck.
Filing Bankruptcy Stops and Garnishment and Gets that Money Back
Filing a Chapter 7 bankruptcy stops a Virginia garnishment and gets back to you the money taken. Both Lilly and Symphony now have their money back. (Not for Lilly the whole $23,000–just the money they had gotten from her for this garnishment, which started in January 2018.)
Filing Bankruptcy Helps Your Credit
Both Lilly and Symphony are getting a benefit they didn’t expect. Like most people, they believe the bank’s propaganda that filing bankruptcy hurts your credit score. For them, like most people, filing bankruptcy helps.
Fair Isaac, who invented the FICO score, say that if your credit score is in the mid 700’s, filing bankruptcy will drop you about 100 points. With a repossession and judgment, Lilly and Symphony had made their credit about as bad as you can make it. There scores were nowhere near 700. For them, and for most people, filing bankruptcy improves your credit.
A study by the Federal Reserve Bank of Philadelphia showed that the average person who file bankruptcy had an average credit score of 538. And those people saw a 90 point improvement in their credit score in the next six months or so.
The Lesson of All This
If you have a repossession, go talk to a bankruptcy lawyer right away. Don’t wait for that garnishment that’s surely gonna come. Take advantage of the new start you have a right to, under the law.
Last night, the United States Senate blocked an effort to restore a neglected part of America’s Bill of Rights: The Seventh Amendment to the Constitution.
The Seventh Amendment grantees a jury in civil cases; cases where people are suing other people, or corporations. (The better known Sixth Amendment guarantees your right to trial by jury in a criminal case.)
The erosion of the Seventh Amendment goes back to 1925. That’s when Congress passed the Federal Arbitration Act. The Federal Arbitration Act allowed parties to a contract to agree to resolve disputes in a private, secret proceeding. In the last twenty years, big businesses of all stripes have gotten you to “agree” in fine print. That fine print is in the terms and conditions you sign almost every time you do business with a big business. Your constitutional right is lost.
After the financial crisis, in 2010, Congress specifically asked the CFPB to look at arbitration clauses.
After five years of study, on July 10, 2017, the Consumer Finance Protection Bureau outlawed that fine print surrender of your right to a jury. Starting in 2019 banks and other consumer finance companies and credit bureaus would NOT be allowed to force consumers away from as trial by jury into an arbitration. The Senate, voting 51-50, blocked the CFPB rule. The Senate let the banks, finance companies and credit bureaus to keep doing what they’ve been doing. Taking away your trial by jury right in fine print.
Consumer advocates loudly supported the CFPB rule and denounced the Senate vote. But the people who like to talk about the constitution were silent. Sen. Mike Crapo (R-ID) sponsored the law, saying there is no evidence that consumer are better off with the right to a jury trial. He wants to see “evidence” that we need that right. According to Sen. Crapo, the fact that a right is in the constitution is not evidence enough
Trial By Jury Was Important to the Founders
Patrick Henry said that trial by jury was essential to keep the wealthy from oppressing the poor.
During the ratification of the constitution, the right to a jury trial kept coming up in the debates. Trial by jury was long established in English law, but the Crown had narrowed those rights for the American colonies. The states feared that the Federal government might someday start acting like the king. The specific right to a jury trial in civil cases was demanded as protection for the average citizen against the power of the wealthy. Patrick Henry was one of those who made that argument. Today the Federal Arbitration Act and fine print agreement have swept away the right to a jury trial. Just as Henry, and the others feared.
Two years after bankruptcy, Jim gets 3.25% car loan
Just got an email from Jim, who filed Chapter 7 bankruptcy with me in 2015. His case was approved and discharged in May 2015. In August 2017, he got a car loan at 3.25%.
I tell people to try to get three years after the bankruptcy, to get the best rate on a car loan, but even two years—well, two years and two months—Jim was able to get a really good rate.
Jim got that really good rate from his credit union. It was State Department Federal Credit Union. That’s something else I tell people. Sometimes the factory is having trouble selling their cars; then you want to get a loan from the dealer. Otherwise a credit union is the best place to get a car loan.
Now Jim is Getting Ready to Buy A House
Jim had seen that it’s possible to get approved on a mortgage. insured by Fannie Mae, just two years after BK. He wanted to know if I had heard of that.
Yep, lots of people get approved for mortgages two years or so after filing Chapter 7 bankruptcy.
The best way to have good credit is to have good credit. But once you get into trouble (Jim has a medical emergency that had wrecked his credit) filing bankruptcy is nearly always the fastest way back. People struggle with damaged credit for years, I talked to three people like that just today, when they could get out of trouble and back to good credit far more easily. Take it from Jim.
Yesterday, the Consumer Finance Protection Bureau put another credit repair outfit out of business. This was National Credit Advisors. These folks claimed that you can use them to “free yourself from bad credit.”
According to the Consumer Finance Protection Bureau, they collected $20 million from 50,000 consumers over a three year period. And accomplished almost nothing. (They promise that “One of our certified credit analysts will review your credit report with you and provide a customized in-depth credit evaluation.” Which boils down to nothing.)
In addition to agreeing to go out of business, although the website is still up today, National Credit Advisors agreed to pay a fine of $150,000. Not much if they scammed people out of $20 million.
Three signs of a scam
Looking at their website, I see all three earmarks of a scam.
First of all, they are far away. Sherman Oaks, California. Why do people trust somebody they never heard of in a city far away? I don’t know, but people do.
Second, they don’t show their face. National Credit Advisors does not give you the name, or picture, of the people behind it. It seems like scammers never do.
Third, they don’t have a real address. On their website, National Credit Advisors lists their address as 13636 Ventura Blvd. If you Google 13636 Ventura Blvd, Sherman Oaks CA, it’s a UPS store! Obviously their “certified credit analysts” aren’t working there at the UPS store. From that, you gotta suspect those analysts really aren’t anywhere.
What’s the Lesson?
If you need to protect your legal rights, see a lawyer! I know lawyers are expensive. But not as expensive as sending money to a scammer that just makes your problem worse. And when I say “see” a lawyer, I mean sit down face to face, with someone in your community who takes the time to understand your problem. (Someone who is licensed by your state Supreme Court. And who has a location where you can send the sheriff if they just take your money and don’t do anything.)
Trial is set on September 25, 2017, for Upright Law, at the bankruptcy courthouse in Roanoke VA.
The US Justice Department, through the Office of the United States Trustee, is asking that Upright be banned from accepting cases in Virginia. They are also asking for refunds for fees that their clients paid. The government claims that Upright engages in various unethical practices.
You can read the government’s complaint, here Robins v Upright Law. And here’s Upright Law’s answer. Answer. Here’s a link to news coverage of this case.
Here’s a picture of the building in Chicago where Upright Law has its headquarters. Virginia is one of at least five states where cases against Upright Law are pending. It’s an Illinois law firm, with its main office in this building, in Chicago.
Upright Law assigns cases to “limited partners” in states around the country. You can read more here. And here.
Here is what the government says they will prove, in order to get Upright Law kicked out of Virginia. Basically, the Justice Department says that Upright Law uses sales people, not lawyer, in Chicago, which they call “closers” to give legal advice and make promises to consumers in Virginia. The Virginia consumer does not get to talk to an actual lawyer until about half of the “legal fee” has been paid.
Even after two local “partners” were blocked from the bankruptcy court for two years, Upright it still advertising here.
After the trial, Upright was fined for unauthorized practice of law. (Basically having sales people pretend to give legal advice.) Two local lawyers who were “partners” to Upright were barred from practicing bankruptcy law, one for a year and one for eighteen month. That decision is under appeal, so those lawyers are still able to work for now. Amazingly, Upright is still advertising here.
The Upright ad promises “Start Bankruptcy for $0 Down.” Unless talking to their sales office in Chicago counts as starting bankruptcy, that’s a lie. It also says “No office visit required.” That’s one of the things Judge Blacked ripped them for. The judge said, “An attorney has an affirmative duty to meet with and counsel his clients, answer any questions the client may have and explain the legal significance of their actions.”