Recently in Debt Buyer Collection Lawsuits Category

Should Student Loan Debt be Dischargeable in Bankruptcy?

September 22, 2012, by Christie D. Arkovich, P.A.

student loan bubble.jpgEarlier this year, total student loan debt surpassed credit card debt for the first time ever. Student loan debt and the resulting high tuition are without a doubt in a huge bubble after having raised 800 percent in the past few years. After graduation, students are presented with the bill and most have no idea how it got that high.

Why is this? The cause of this student loan bubble is not unlike the mortgage crisis. The initial theory was to expand homeownership to the masses. Thereafter, lax lending standards allowed more and more people to buy homes. More buyers led to higher prices. The mortgage loans were securitized on Wall Street to unidentified investors. As the demand for these investments grew, the need for more questionable loans grew. People began to fear being left behind, if they didn't buy now, they would be priced out of a home forever. It was actually cheaper to buy a home than it was to rent one with first month, last month and security deposit required in cash. Who cared if the loan couldn't later be repaid when it was determined that the homeowner didn't actually have a job that paid $200,000, but instead worked as a gardener for $20,000. Turns out that kind of thing really matters now that our housing market tanked 50% or more across the board as a direct result of this chain of events. Poorly run mortgage servicers or those with their own agenda has multiplied the number of foreclosures. The resulting crash hurt everyone, even people who could normally afford their home payments but god forbid lost their job or had to move.

Feeding the securitization beast was a common problem among mortgage brokers and investment banks. They had to create product to sell to the securitization machine. Kinda like making meth in large quantities in the popular show Breaking Bad that I am now hooked on and spent half of this past Labor Day weekend watching.

Do you know that private student loans are also securitized? These trusts are filing state court lawsuits to collect student loan debt in greater numbers this year than ever before.

Similar to the subprime mortgages, there is little interest in whether a student of womens study or social studies can actually afford to pay back $200,000 in student loans. There is little risk to the private banks who lent this money. These private loans are guaranteed by the government. They are non-dischargeability in bankruptcy. So why exactly is the interest rate for private student loans as high as 11-12%?

Students often don't know what the real world is about. They are taught to go to college rather than trade schools. They are taught to go to the best college that will accept them and obtain professional and graduate degrees to get the best jobs. The disclosures about these student loans, default rates of the schools, and amount of debt expected upon graduation is ludicrous. There is a complete lack of transparency. Hopefully that will change with a recent bill introduced into Congress.

There is a case to be made that allowing some student loan debt to be discharged in bankruptcy may bring some sanity back into the system. It may cause lenders to re-prioritize and conduct a tradtional analysis of whether a particular loan makes sense. Investors in securitized student loans would begin to pay attention to the possibility of default and discharge. Students who are hopelessly in debt will start to become hopeful that they can buy a home or have kids during their lifetime. And tuition would start to come down.

How long does a judgment last in Florida?

September 17, 2012, by Christie D. Arkovich, P.A.

courthouse.jpgUnder Florida law, a creditor has up to twenty years to try and collect a judgment. That's an intimidating number, two whole decades. Something not to take lightly. To become a lien on real estate, a certified copy of a final judgment must be recorded in the public records in the county in which the real property is located.

Once recorded, Florida law provides that the judgment acts as a lien on non-homestead real property for an initial period of ten years. See Florida Statute Section 55.10. The judgment can be re-recorded and act as a lien for an additional ten years. Prior to 2004, a recorded judgment acted as a lien for only seven years, but could be re-recorded up to two additional times for a total of twenty years.

In comparison, a bankruptcy remains on someone's credit report for 10 years. However, the last 18 months is the most important time period in anyone's credit history and often the bankruptcy after it gets old enough is considered irrelevant.

We often see the problem lasting longer for someone who allows a default judgment to be entered against them. When someone avoids addressing the problem by aggressive action against an abusive debt collector, settlement or bankruptcy, they are limited in income or asset ownership for the entire 20 year period of the judgment.

We see lots of people who know they can't pay off the debt in full decide just to ignore the problem. Unfortunately, the problem gets bigger and is followed by seizure of assets such a vehicle used to get to work, garnishment of wages or bank accounts. A consumer usually has options, particularly nowadays when poor business records are maintained by the debt collectors and violations of law abound.

For advise on how to avoid a judgment, please contact Christie D. Arkovich, P.A.

I've just been served, what do I do?

September 1, 2012, by Christie D. Arkovich, P.A.

lawsuit.jpgIn Florida, typically someone who is sued is served with the lawsuit and given 20 or sometimes 30 days to file a response. If the lawsuit was filed in small claims court, you are given a date to appear at a pretrial conference instead of filing a written response.

The most important thing is: Don't ignore the deadline. It doesn't matter that you think you might be able to work it out or that you called the attorney's office who filed the lawsuit. If you don't file a timely written response with the court, or attend the pretrial conference, a default will be entered against you. A default judgment can last up to 20 years in Florida and is very hard to challenge.

Before the deadline expires, please see an attorney. Many attorneys, including our office offer a free consultation for foreclosure defense or debt collection matters.

At the consultation, you can expect to discuss the following:

1) Whether to present an aggressive defense to the lawsuit in an attempt to win the case;

2) Identify weaknesses in the other side's case;

3) Whether to attempt to negotiate a settlement which may reduce the principal owed, interest rate or fees and costs;

4) The expected length of the case so you can make plans;

5) Whether you should consider filing bankruptcy which may eliminate this and other debts and stop the lawsuit; and

6) What happens if a judgment is entered against you.

Christie D. Arkovich, P.A.

Grieving father struggles to pay deceased son's student loans

June 17, 2012, by Christie D. Arkovich, P.A.

What if I've co-signed my children's student loan debt that is now in default?

Here in Tampa, Florida, I just read an outrageous story today in Nation of Change that exemplifies the problems in the world of student loans. Basically, shortly out of college, this man's son was killed in a car accident. Most of his student loans were private and co-signed by his father who makes $21,000 a year as a gardener. Private loans survive someone's disability or death.

The debt (over six figures) has changed hands many times and has been wrung through the Wall Street securitization process. He doesn't know the exact amount or who is owed. But the debt collectors are all over this poor guy.

There are solutions however. It's just that most people have no idea that options exist and what to do about it. No one is telling people what can be done because hardly anyone represents the student or their co-signing parents. They are at the mercy of the system. Their main point of contact for information is the enemy: the debt collector. Or endless govermental websites that leave a person more confused than ever.

We commonly hear the term criminal lawyers, bankruptcy lawyers, PI lawyers. Well one day I hope people turn to student loan lawyers to solve their student loan debt. There aren't many of us, but I have a feeling that we will be worth our weight in gold shortly as the student loan bubble pops.

For more information of what can be done about student loan debt, please see our Student Loan Survival Center.

Proper Standing and Assignment is Not Only Required for Foreclosures, But Also for Credit Card Lawsuits

August 20, 2011, by Christie D. Arkovich, P.A.

creditcards.bmpAll this talk about a foreclosure plaintiff needing to have proper standing, chain of title and assignment records reminds us that the same is required, but often overlooked, in credit card lawsuits.

In Florida, debt collectors bringing lawsuits for unpaid credit card balances are required pursuant to Florida Statute Section 559.715 to show that any assignment of consumer debts is done with "written notice of such assignment within 30 days after the assignment". If the creditor cannot produce evidence of the notice, the case should be dismissed. See LVNV Funding, LLC v. Harris (Fla. Miami Dade Cty. Ct. June 24, 2009). Also the courts regularly require documentation of the assignment by an authorized representative of the original creditor before a third party is allowed to obtain a judgment against the consumer.

Increasingly, evidence has appeared that shows debt buyers do not actually own the debt they are suing to recover. Large portfolios of accounts are divided and subdivided and sold to multiple buyers. Sometimes the debt buyer fails to pay in full for the accounts, and the right to collect is returned to the original creditor. More layers of complexity are added if the debt was pooled as part of a securitization. The debt collector will rarely reveal the existence of the trust even though it is the true owner of the debt.

Continue reading "Proper Standing and Assignment is Not Only Required for Foreclosures, But Also for Credit Card Lawsuits" »

Consumer Attorneys Getting Debt Buyer Lawsuits Dismissed due to Lack of Evidence

March 13, 2011, by Christie D. Arkovich, P.A.

Debt buyers pay pennies on the dollar for the right to collect delinquent credit card balances and other consumer debt, but they do not often pay the creditor for the back-up documentation. After a lawsuit is filed in Florida, if the consumer's attorney requests that such documentation be produced, and the debt buyer fails to do so, the lawsuit can be dismissed. In Florida, documentation upon which the claim relies must be attached to the initial Complaint but it often is missing. Since most cases go unchallenged, the debt buyer gets a judgment without having proved its case.

However, more consumers are recognizing that hiring an attorney to defend a debt buyer's lawsuit can help. As a result there is an uptick in dismissals is resulting from the assembly line debt buyer lawsuits. One of the frequent approaches taken by consumer's counsel is that they ask for the affidavits upon which the debt buyers rely to prove up the debt be stricken when the supporting documentation is not provided. In Florida, all affidavits used in connection with summary judgment must attach the books and records upon which the affiant reviewed and relied. In some cases, the documentation is contracdictory such as in an alleged assignment of the debt where the assignment does not exist or it is faulty. Riddle v. Unifund CCR Partners, 298 S.W. 3d 780 (Tex. Ct. App. 2009).

Affidavits can also be challenged for admissibility when the business records exception to hearsay is found to not apply. Many counsel skip over challenging the application of the business records exception, but it can be a very valuable tool. For instance a Missouri appellate decision in Asset Acceptance v. Lodge, 2010 WL 3759538 (Mo. Ct. App. Sept. 28, 2010), stated:

The qualification of records within the business records exception to the hearsay rule requires testimony as to the mode of preparation of the record and that it was made at or near the time of the act, condition or event it purports to show ...The business recrods exception to the hearsay rule applies only to documents generated by the business itself. Thus, documents that are part of a file belonging to a holder's business but were not generated or prepared by the holder in the holder's ordinary course of business do not fall under the business records exception... [The debt buyer] did not prepare the documetns in question, but rather only received the documents from HSBC and held them in their files.

A recent appellate decision in Wisconsin came to a similar conclusion by stating that a witness must have personal knowledge about how the records were made so that the witness is qualified to testify that they were made at or near the time of the event, by or from information transmitted by, a person with knowledge. Palisades Collection, LLC v. Kalal, 781 N.W.2d 503 (Wis. Ct. App. 2010).

For additional information, please go to the website for Christie D. Arkovich, P.A.