Watch Out for Signs of Predatory Lending

Consumer Rights Under the FDCPA

The FDCPA helps protect consumers from many things, one being “predatory lending.”  Predatory lending has no official definition, but if a lender practices deception, exploitation, violates consumer protection laws, or charges more than reasonable loan terms, they are considered to be participating in predatory lending. Borrowing areas including credit card agreements, mortgages, payday loans, and bank loans are all susceptible to predatory loans. It’s important to be aware of certain warning signs of predatory lending if you are planning on borrowing money. If you see any of these signs, be cautious:

1) No Transparency: If you are ever unclear of terms of your loan or it is filled with confusing legal jargon, be weary.

2) Secret Interest: Costs related to the loan called “fees” or “charges” are many times just interest pretending to be something else. This includes overdraft charges from your bank or service charges on your credit card.

3) Secret Additional Services: Occurs when a lender adds extra services into your loan’s term without notifying you that similar services may be available elsewhere for a lower cost.

4) Lies: Double check to make sure your loan documents contain all accurate (and consistent) information.

5) Redlining: This term means when lenders aim their loans at specific groups of people, which is an illegal practice. According to studies, subprime loans disproportionately affected women, racial minorities, people with less education, and senior citizens.

6) Excessive Interest: Lenders sometimes hide how much interest they are charging by only letting you know about the short-term interest rates, or not telling you at all. For example, payday loans can have a yearly interest rate of over an absurd 300%.

When borrowing money, it is incredibly important to be educated in what a reasonable loan are so that you are not tricked and taken advantage of by predatory lenders. The government has passed multiple laws to try and protect consumers from predatory lenders, including the Fair Debt Collection Practices Act (FDCPA), Fair Housing Act, HOEPA, TILA, and RESPA. Learn more about these laws and what you’re entitled to as a borrower to avoid getting scammed.


Steps to Take In Order to Protect Your Rights

Gathering Evidence

Steps to take in order to protect your rights

There are 4 basic steps that you can take in order to protect your rights and prevent any abusive or coercive collection activities from continuing as follows:

Step #1: Whenever you receive any correspondence, letters, or other notices from a debt collection agency SAVE THEM (you may send copies of them to our firm should you be unsure if they are illegal)

Step #2: Anytime a collection agency or debt collector attempts to contact you by e-mail or telephone, BE SURE YOU SAVE THESE MESSAGES AS WELL!

Step #3: Keep thorough notes regarding any contact with collection agencies or debt collectors (their names and what they tell you could be critical down the road)

Step #4: Any inaccurate statements or other notices should be disputed in written form and not orally (follow up with a written communication to support this)


Bankruptcy and the FDCPA

Illegal Debt Collection Practices

After you file for bankruptcy, it is illegal for your creditors to attempt to collect discharged debts. Nevertheless, many creditors hope that debtors don’t know how far their protection extends and will continue to attempt to collect debts even after they’ve been excused by the court. These actions are illegal and it’s important to understand the protection you receive after filing bankruptcy to prevent you from being taken advantage of.

Many debts are discharged during bankruptcy. This means that the court excuses them and you are no longer responsible for paying them. Your bankruptcy filing and the FDCPA (Fair Debt Collection Practices Act) protect you from multiple credit stresses.

  • Creditors may not send you any letters saying that you owe payment. If they do, keep them to show your attorney as evidence.
  • Creditors may not call you on the phone and ask for payment. You have no legal obligation to pay discharged debts. Take note of the phone call to show your attorney as evidence.
  • Creditors may not lead you to believe that you are breaking the law by not paying discharged debts or threaten legal action against you.

The reason creditors continue to attempt to collect payments for debts after they have been discharged is obvious – they want to make money.

If your debt was discharged in bankruptcy, you have no legal obligation to pay the debt. Sometimes a third party collector will get involved by offering the original credit company money to buy your discharged debt. Then this new collector can harass you about paying the debt. This method of debt collection is also illegal and can be fought under the FDCPA.

Remember to record any illegal actions creditors take, and contact an attorney if you feel you might have a valid FDCPA claim.


What can an FDCPA Attorney Do for You?

Hiring a Lawyer

The FDCPA was passed in 1978 in order to protect consumers with considerable debt and who are behind in their payments from ruthless collection practices at the hands of any collection agency. Under the guidelines of the act, there are provisions as to what a debt collector is legally allowed to do and what is forbidden, as well as what your rights are as a consumer and if you are encountering abusive and coercive debt collection practices.

For all practical purposes, your needs would best be served by hiring the services of an experienced and qualified FDCPA attorney who can handle your claim against any collection agency that is abusing or harassing you either on the phone or in written form. The following is a list of the 3 primary ways that you can benefit from hiring an attorney to help you with your circumstances.

FDCPA attorneys focus on consumer laws as they relate to the consumer’s rights and the debt collector’s methods and/or practices for the collection of those debts – we are very knowledgeable of aggressive methods and tactics that many 3rd party collection agencies illegally practice when trying to collect a debt for the original creditor that hired them to recoup the lost funds. The FDCPA demands that the consumer’s personal dignity as well as their rights are always respected during any collection activities.

With the help of the FDCPA’s guidelines, your attorney can defend you against any collection activities that are deemed as being abusive, coercive, and/or illegal in nature – the guidelines established by the FDCPA, the FCBA (Fair Credit Billing Act) and the FCRA (Fair Credit Reporting Act, as well as any state’s UDAP (Unfair and Deceptive Acts and Practices) laws are there to protect you from any illegal and unscrupulous practices employed to collect a debt.

Your attorney will usually validate whether or not the debt in question is accurate by contacting that collection agency to verify the debt – interestingly enough, if that collection agency does not provide accurate and satisfactory information, then your attorney will most likely demand that the debt be cleared and settled in full and finally with no further action ensuing from that point. The attorney may even request a “compliance audit” in order to have your account reviewed by a competent professional. The results of the audit may result in the filing of a formal complaint against that particular collection agency.


The FDCPA provides protection for relatives of deceased debtors

Consumer Rights Under the FDCPA, Stopping Harassment

When dealing with a close relative’s death, it is horrible timing to have to think about money as well. Unfortunately, with death comes funeral and burial costs, and sometimes you need to handle financial obligations your relative may have left behind.

The Fair Debt Collection Practices Act (FDCPA), enforced by the FTC, provides protection from assuming responsibility of a deceased relative’s debt. It is important to know your rights under the FDCPA in case you are put in the tragic situation of dealing with death and debt.

Generally, when a person dies, their debt would be paid from their estate. If money from the estate is not enough to pay off the debts, then they would typically remain unpaid. Most relatives are not legally required to pay debts. There are exceptions in certain states where people are required to cover debts left by their spouse. Because legal obligations are often limited by state law, I recommend speaking with a FDCPA attorney in your state.

Debt collectors may approach you, as a living relative, to pay the deceased’s debts. If this occurs, do not provide any of your personal information such as your social security number, bank account numbers, etc. There have been cases of con-artists finding contacts in obituaries and posing as debt collectors to steal identities and money. When contacted, tell the debt collector to get in touch with the deceased’s representative instead. It is generally illegal for the creditor to tell anyone about the deceased’s debt besides a spouse, parent, or guardian, unless the creditor needs contact information for the representative of the deceased.

If the creditor is bothersome and upsetting, the FDCPA gives you the right to take action which prevents the debt collector from contacting you. To do this, write a “cease and desist letter” which asks the creditor to stop contacting you in any way. Once the creditor receives the letter, they can only contact you once more to announce any further action or the end of their collection attempts. Make sure that you make a copy of the letter and send it by certified mail so you have a receipt.

While you are technically able to ignore debt collectors when they contact you, if you are at all responsible for the deceased’s debts you may want to try and negotiate an arrangement with them. Contact a FDCPA attorney to understand state-specific laws and finding the best direction to take during a difficult time.


Tips on Stopping Harassing Debt Collectors in Their Tracks

Stopping Harassment

The FDCPA was passed into law in 1978 in order to protect all consumers who have gotten into serious debt from abusive and coercive collection practices performed by 3rd party collection agencies. Nothing is more annoying and stressful for the consumer than receiving hounding letters and obnoxious phone calls whenever one of these 3rd party entities get involved in the collection process. Fortunately, there are 4 steps that you legally can take in order to halt these unfair collection practices.

Step #1: Catch that collection agency in the act of breaking the laws of the FDCPA and not following proper guidelines for collecting the debt that you owe – believe it or not, there are still numerous collection agencies that are still breaking the law where the FDCPA is concerned and whenever they can get away with it. You are allowed to file a complaint with either your state’s Attorney General and/or the FTC (Federal Trade Commission) if you feel you are being subjected to illegal collection activities. If this is currently happening, you may want to consider hiring the services of an experienced and knowledgeable attorney to help you.

Step #2: Send a “Cease and desist” letter – this is probably the first thing that you should do once you have identified that the collection agency’s practices are in violation of the FDCPA. Sending this type of letter is considered to be the best method to employ for contesting “bogus” or incorrect debts (those debts belonging to another individual or those that debts that you have proof of having paid off). It’s also an excellent method to use for contesting collection activities applied to smaller debts.

Step #3: Request a “debt validation” – send the collection agency a certified letter (with return receipt requested) asking for a formal validation of the debt currently owed. Additionally, you want to make sure that they inform you who the original creditor was. What is critical with this step is that you do it within 30 days of your first contact with that particular collection agency. It is not unusual for a collection agency to send you a bogus verification. If you find out that this is the case, look at Step #1 above and proceed as recommended.

Step #4: Pay only pennies on the dollar to settle your debt – believe it or not, you can oftentimes settle for only pennies on the dollar like you can with the IRS, provided you can prove that the collection agency in question has violated the FDCPA. Just be aware of the fact that the decision to settle the debt depends on the debt collector’s attitude.


Debt Collection Practices that are Prohibited by the FDCPA

Illegal Debt Collection Practices

Any time consumers get into a position where they are in financial trouble and unable to pay their bills on time, it is almost a certainty that they will have to deal with the original creditor and possibly a debt collection agency and one or more of their representatives. The FDCPA (Fair Debt Collection Practices Act) of 1978 protects consumers from any debt collection practices that are deemed as being abusive, coercive, illegal, and/or unfair. The following is a list of those practices which are prohibited under the FDCPA.

No collection agency and their representatives (or other debt collectors) are allowed to:

  • demand that you pay more than what you actually owe
  • ask you to pay expenses, fees, and/or interest allowed by law
  • call you continually or on a repetitive basis
  • use abusive, obscene, or profane language when discussing your debt that is owed to the company that they are representing
  • call you prior to 8:00am or later than 9:00pm
  • try to contact you by telephone at any time that is inconvenient to you
  • make threats to take any action that they cannot or won’t take against you
  • inform any 3rd parties regarding your debt as this is in direct violation of certain privacy acts
  • call any 3rd party repeatedly in order to obtain more of your personal information
  • attempt to contact you by phone at your place of employment if you have informed that collection agency or debt collector that your employer does not approve of this
  • fail to mail you a written notification pertaining to a validation of the debt in question
  • ignore any formal written requests you have sent the collection agency or debt collector regarding the debt in question and then continue attempting to collect the debt
  • persist with any further collection efforts before you have received any verification of the debt that you owe being accurate and valid
  • continue attempting to collect the debt even though you have mailed them a formal “cease and desist” letter

It is advisable that you contact an experienced and qualified FDCPA attorney if you find yourself in the midst of these types of circumstances and want some relief so that you can regain your peace of mind. Just know that we are always here to assist you in anyway we can and answer all your questions if needed. You can contact us by filling out the Free Claim Review found on this website, the Contact Us page, or even by leaving a comment below.


Welcome to the FDCPA Claims Blog

FDCPA Claims

Welcome to FDCPA, your best source on the web for information regarding the FDCPA and FDCPA legal claims. The Fair Debt Collection Practices Act, which went into law over 30 years ago, protects victims of illegal and unfair collection practices wherein a collection agency is involved. There are a number of federal and state laws which offer numerous protections for indebted individuals who are being constantly dunned by these (oftentimes) ruthless agencies.

You do need to understand that the creditor (e.g. issuing credit card companies) is allowed to do and/or say certain things and still remain legal in the process. Conversely, the collection agency is not acting legally if they do and/or say those identical things since they are in direct violation of the FDCPA. Therefore, legal claims can be filed against those collection agencies that violate the FDCPA when dealing with debtors.

Despite the fact that the FDCPA applies to collection agencies and not the original creditor, the laws under the act also apply to debt collection attorneys, so they must operate within the guidelines of the legislation as well. In addition to this, the statutes of the FDCPA impose limitations on monetary damages. As it currently stands, victims of FDCPA violators can only recover $1,000 in damages. These typically include the FDCPA violation, the resulting damages, and “reasonable” lawyer’s fees.

How We Can Help

We know the ins and outs of the FDCPA legislation and can help you should you feel that you have a case against any collection agency that has violated the act. Monetary damages can be awarded to the victim based on traumas that are medical and/or psychological in nature. Damages can also be awarded due to financial loss created when a person’s credit score has been improperly reduced. The average individual today that is over their head in debt is not usually aware of the protections offered under the FDCPA.

If you feel that your rights under the FDCPA have been violated, then maybe it is time for you to consult with an attorney to see if you legitimately have a case against a collection agency. We invite you to search our site for information regarding your circumstances. Or you can contact us either via the Contact Us page or the Free Claim Review page. We will be more than happy to help you in anyway we can and answer all questions that you may have.


Mortgage Brokers Sued for Deceptive Marketing in Soliciting Reverse Mortgages to Seniors

False or Misleading Information

Two mortgage brokers have been sued for allegedly using unfair and deceptive marketing practices in soliciting reverse mortgages to seniors. Illinois Attorney General Lisa Madigan filed the suits against 1) Hartland Mortgage Centers Inc., based in Woodridge, Illinois, and 2) American Advisors Group Inc. (and company president Reza Jahangiri), based in Irvine, California.

According to Madigan, the companies use extremely misleading language in their advertising, sometimes even disguising their loans as government benefits that borrowers don’t have to repay. Under the FDCPA, it is illegal for mortgage brokers to make false statements or mislead consumers in any way, such as misrepresenting what borrowers are signing up for and what they will owe.

Both lawsuits claim that the defendants targeted seniors to take out Home Equity Conversion Mortgages, also known as reverse mortgages, which allow elderly homeowners (age 62+) to borrow money against the equity in their home.

Consumers reported that they were unaware that what the companies were offering were reverse mortgages, or even a loan of any kind. Allegedly, the companies falsely implied to seniors that they could be eligible for lifetime monthly income or lump-sum payments as part of government benefit programs offered to all seniors. In fact, the offer was actually for loans that would eventually need to be paid back.

With a reverse mortgage, older homeowners can sometimes continue to live in their homes. Borrowers receive money based on their home’s value, the amount of equity in the home, and their age. Proceeds are payable in a lump sum, in monthly installments, or as a line or credit to draw upon. Reverse mortgages come with strict terms and conditions which require borrowers to repay the loan upon certain conditions being met, including when the last surviving borrower dies, sells or moves out of their homes or when the owner allows the property to deteriorate and fails to repair it.

As you can see, a reverse mortgage is a complex loan and should only be taken out after consumers have had an opportunity to carefully consider their financial future and consult with a qualified expert.

In Madigan’s suit, the court is asked to enter permanent injunctions against both companies which will ban them from engaging in deceptive advertising and marketing illegal in Illinois. Consumers are also asked to be reimbursed as well as each defendant to pay civil penalties of $50,000, with additional penalties of $50,000 for each fraudulent act committed, and a $10,000 penalty for each act committed against a person 65 years or older.


The “Drop Dead” Letter: A Useful Tool for Stopping Harassment from Debt Collectors

Stopping Harassment, Written communications

If you are receiving unwanted and harassing phone calls or letters from debt collectors, you have the right to request that the collection agency end communication with you. Writing a letter called the “drop dead letter” – also known as a “cease and desist letter,” which has legal stature based upon the Fair Debt Collection Practices Act Section 805, prohibits a collection agency from contacting you once they receive it.

Once the debt collector receives the drop dead” letter, they are allowed, by law, to contact you one time to inform you of any action they intend to take. After that, all communication must stop all together. You cannot request only certain forms of communication, such as no phone calls at work, as after you send a cease communications letter to a collection agency ALL communication must stop.

In the letter you will state that under FDCPA, the collection agency must cease all communication with you or you will file a formal complaint with the Federal Trade Commission (who is responsible for enforcement), the States Attorney General office and/or the American Collectors Association or local State Bar Association. Also, include in the letter that you will take the appropriate actions if any negative information is placed on your credit report.

The cease and desist letter must be made in writing and can be sent at any time. It is important to keep a copy of the letter, and I recommend sending it by certified mail and saving the return receipt form. This is evidence that you sent the letter and the debt collector received it, which is necessary if you ever need to sue the creditor under the FDCPA.

Are there any reasons not to send a “drop dead letter” to a harassing bill collector?   Yes.  It is possible that after you send a drop dead letter, the bill collector will turn his file over to his company’s legal department to institute a lawsuit.  By sending a drop dead letter you are, in effect, ending all negotiations and telling the bill collector to “put up or shut up.”