Showing posts with label debt crisis. Show all posts

Thursday, February 9, 2012

FTC Issues Alert On Expired Debt

Don’t Let Collectors Trick You Into Paying Expired Debt

Posted February 7, 2012 in Creditor/Debtor, Featured by Keith Ecker

The Federal Trade Commission struck a $2.5 million settlement with one of the country’s largest debt collectors over charges that the company tricked consumers into reviving expired debts. Asset Acceptance used multiple fraudulent practices to collect old debts. As part of the settlement it must inform consumers whose debts are too old to be legally enforceable—also called time-barred debts—that it will not sue to collect on them.

In a statement issued by the FTC, the director of the agency’s Bureau of Consumer Protection, David Vladeck, said “Most consumers do not know their legal rights with respect to collection of old debts past the statute of limitations. When a collector tells a consumer that she owes money and demands payment, it may create the misleading impression that the collector can sue the consumer in court to collect that debt. This FTC settlement signals that, even with old debt, the prohibitions against deceptive and unfair collection methods apply.”

Making False Threats

Asset Acceptance is not just a collector of debt; it is a buyer of debt. The Michigan-based company is in the business of buying debt from creditors, such as credit card issuers, and then making attempts to collect on this debt. The company also has the ability to file reports with the three major credit agencies, which can lower a consumer’s credit score. Oftentimes, Asset Acceptance purchases consumers’ debts for pennies on the dollar in the hopes that it can use aggressive tactics to collect and make a profit.

“Credit card companies usually aren’t going to spend $1,000 on court fees to recover $1,500 in consumer debt, so they’ll sell the debt to someone like Asset Acceptance,” says Charles Gallagher, an attorney at Gallagher & Associates.

According to the complaint in the FTC action, as of September 30, 2010, Asset Acceptance held more than 34 million individual accounts with an original value of more than $42 billion, purchased for an aggregate of 2.54 percent of face value.

Two laws outline the methods which a company like Asset Acceptance may use to try to collect on consumer debt. These are the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCPA). The FFDCPA outlines what debt collectors can and cannot do when making attempts to collect on debt. The FCPA establishes rules for the credit reporting agencies as well as organizations that submit information to the agencies.

According to the FTC, Asset Acceptance committed nine violations of these laws, including:

Misrepresenting proof that consumers owed a debt when it had none
Providing information to credit reporting agencies while knowing or having reasonable cause to believe that the information was inaccurate
Failing to notify consumers in writing that it provided negative information to a credit reporting agency
Failing to conduct a reasonable investigation when a consumer disputed the debt with a credit reporting agency
Repeatedly calling third parties who do not owe a debt
Informing third parties about a debt
Using illegal debt-collection practices, including misrepresenting the character, amount or legal status of a debt; providing inaccurate information to credit reporting agencies; and making false representations to collect a debt
Failing to provide verification of the debt and continuing to attempt to collect a debt when it is disputed by the consumer
Failing to disclose that debts are too old to be legally enforceable or that a partial payment would extend the time a debt could be legally enforceable

It is this last violation that resulted in the FTC issuing a consumer alert about time-barred debt.

Time-Barred Debt

Under state law, each state establishes its own statute of limitations for when a debt collector can no longer file a lawsuit or threaten to file a lawsuit against a consumer to try to collect on a debt. This time limit begins at the point at which the consumer went into default. Most debt remains legally enforceable for anywhere from 3 years to 10 years. However, if the consumer makes any payment on this debt, the statute of limitations immediately restarts. And it was this element of the law that Asset Acceptance sought to exploit.

“Asset Acceptance knew it couldn’t sue on these time-barred debts, but they would call the debtor on the phone and say, ‘If you make a partial payment, that will hold us off suing you,’” Gallagher says. “In reality, that payment would restart the statute of limitations.”

In its consumer alert, the FTC provides consumers with the following guidance:

If you receive a call from a collector about a debt and you believe the debt may be time-barred, ask the collector if the debt is past the statute of limitations.
Ask the collector when the date of your last payment on the debt was.
If a collector doesn’t give you this information, send a letter within 30 days of receiving a written notice of the debt. Explain that you are disputing the debt and want to verify it. Provide as much information about why you are disputing the debt as possible.

“When you object to a debt, under federal law whoever is holding that debt has to jump through some hoops to prove they own it,” Gallagher says. “Oftentimes, these companies don’t do a very good job of record-keeping when transferring the debt. If they have to look for the original agreement, they might not be able to find it.”

Furthermore, by objecting to the debt, you can stop the collector from filing a report with the credit agencies. That is because the collector or debt owner can only make a report once they verify the debt. If you see that there is a report on your credit, write the credit agency and tell them that you believe the report is in error. The agency will then put a hold on the report until the collector or debt owner verifies the debt.

Finally, if you discover that the debt is not time-barred and is still within the time frame in which a collector can legally threaten a lawsuit, you have a couple options. First, you can try to negotiate the debt down.
“Even if they do prove the debt, you can usually negotiate discounts sometimes as much as 80 percent,” Gallagher says. “I’d say a bad settlement is 50 percent off.”

If that does not work and you believe the collector will file suit, you can contact a knowledgeable consumer law attorney who has experience with credit card litigation.

“Burying your head in the sand is no solution at all,” Gallagher says. “The law rewards the diligent consumer. You have to act. The worst decision you can make is no decision.”

Source: CLICK HERE

Sunday, January 22, 2012

Iceland Has Declared Independence From International Banks

http://www.disinfo.com/2012/01/iceland-declares-independence-from-international-banks/ Iceland seems to be placing itself out there as the smart ones in this global economy. Read more on the link above.

Monday, September 12, 2011

Greece Monetary Crisis...Doesn't This Sound A Bit Familiar?!

Greece Monetary Crisis...Doesn't This Sound A Bit Familiar?!

European Pressphoto Agency

Updated: July 22, 2011

Overview

Over the last decade, Greece went on a debt binge that came crashing to an end in late 2009, provoking an economic crisis that threatened both Europe's recovery and the future of the euro.

Over the next two years, Greece relied on bailout money from its richer neighbors and implemented austerity measures meant to cut its bloated deficit and restore investor confidence. It cut the pay of its public workers — a quarter of the work force — by 10 percent but continued to miss deficit targets as its economy sank. Investors continued to demand ever higher interest rates for Greek borrowing.

Prime Minister George A. Papandreou, who had discovered the full extent of the deficit only after taking office in November 2009, saw his popularity and that of his Socialist Party plummet. In June, he offered to step aside for a government of national unity, an offer that center-right New Democracy party rejected. The Socialists grew increasingly divided.

Greece barely avoided bankruptcy in June, as European leaders threatened to withhold a 12 billion euro installment of the bailout funds until another austerity package of cuts, tax increases and sales of public companies was adopted.

Even as Greece's government struggled to force the bill through in the face of days of massive street protests, the leaders of France and Germany and the European Central Bank clashed over a larger, longer-term second bailout package. German Chancellor Angela Merkel pushed to have bondholders take some losses on their investments; President Nicolas Sarkozy of France organized an ostensibly voluntary plan for French banks to roll over their bonds into longer-term debt; and the E.C.B. fought against both approaches while credit ratings agencies warned that even a "voluntary'' plan could be considered a selective default, potentially triggering writedowns across Europe. The stakes grew even higher as investors began driving up the interest rates charged on the debt of Italy and Spain, economic giants compared to Greece or Portugal.

But in late July, European leaders clinched a $157 billion rescue plan for Greece that could push the country into default on some of its debt for a short period but would also give Europe’s bailout fund sweeping new powers to shore up struggling economies. The outlines of the pact seemed particularly bold, dealing with the economic problems of bailed-out Ireland and Portugal as well as Greece, and calling for nothing short of a “European Marshall Plan” to get Greece itself on a road to recovery. The underlying economies of those countries — and others — remain remarkably frail, however, and the plan itself had many hurdles to overcome.

Background

Mr. Papandreou shocked investors and politicians across Europe when he announced in December 2009 that his predecessor had disguised the size of the country's ballooning deficit. After rounds of deep budget cuts and months of vague pledges of support from the rest of Europe failed to stop the steady rise of the interest rates, Mr. Papandreou in April 2010 formally requested a promised $60 billion aid package, calling his country's economy "a sinking ship.''

Europe woes weigh heavily on U.S. stock markets

By Matt Krantz, Adam Shell, and John Waggoner

Updated 11h 21m ago

For U.S. investors, the worsening European financial crisis is going from an Old Worldsideshow to the main event.

Recent news, including the resignation of the European Central Bank's chief economist late last week and fresh rumors about a possible Greek default, are feeding investors' imaginations on how precarious the situation there is.

U.S. investors, already worried about domestic problems, wonder if a European spillover will make things worse for a fragile U.S. economy. If Greece defaults, it could imperil European banks that hold its bonds and tip Europe into recession. U.S. companies would feel the shock waves because they get substantial revenue from Europe.

Europe is the biggest overhang on U.S. stocks, trumping even concerns about anemic job growth in the U.S., says Liz Ann Sonders, chief investment strategist at Charles Schwab. The reason: There is a "real possibility" that Greece will default on its debt.

"It's front and center now, and a default could come sooner rather than later," Sonders says. "The bottom line is no one has the full ability to calculate the implications of a Greek default."