In-house counsel are exempt from the Fair Debt Collection Practice Act [FDCPA].   The United States Supreme Court held in Heintz vs Jenkins, 514 U.S. 291 (1995), that an attorney collecting a debt for another person had to obey the FDCPA rules.  An attorney who works as an in-house employee for a creditor is not a debt collector under the FDCPA when that attorney collects his company’s own debts because the law only covers those who collect on behalf of someone else.  The in-house attorney is considered an employee of the creditor and is not considered a separate entity.

This distinction is important when one compares the collection tactics employed by certain creditors.  While most debt collectors must obey the FDCPA, some creditors and in-house counsel can violate that law with impugnity and not be prosecuted because they do not meet the legal definition of a FDCPA debt collector.  So while FDCPA collection attorneys can only sue you where you live as Jay Fleischman points out, in Where Can I Be Sued For A Debt, some lawyers will sue you anywhere in your state.  Chase Bank typically sues Illinois residents in Cook County Illinois even though those people live many miles away.  This creates a hardship for a resident of southern Illinois who lives hundreds of miles away from the Cook County Courthouse and are unable to appear and defend the collection lawsuit.  Chase gets away with this action because Chase hires in-house counsel to handle the cases.  The lawyers typically send defendants a letter that Chase will dismiss the lawsuit and refile in locally if the defendant objects, however, most collection defendants do not respond and face default judgments in Cook County.  Congress should close the in-house counsel loophole and amend the FDCPA to cover all persons who attempt to collect a debt.

This week, Presidential Candidate, Senator Barack Obama, stated that the Big Three Automakers, Ford, General Motors and Chrysler, would probably need an infusion of about $4 billion to build the cars that Americans will need in the future.  The Senator was correct in that a cash infusion is necessary and he may even be correct on the amount of money necessary for research and development; however, he is mistaken in how much will be needed to help the big three survive long enough to build those cars of tomorrow.  So the big question is:  Will the Federal Government bail out the Big Three Automakers?  Or, will their inability to operate profitably be thrust onto the backs of the American taxpayers?

In the second quarter of 2008, GM and Ford posted combined losses of over $24 billion.  Sure, you can say whatever you want about statistics, write-downs and accounting procedures, I will agree that the number may be higher due to these items.  Let’s say $10 billion off the mark.  Would that be fair to GM and Ford?  So, now these two huge automakers are only bleeding somewhere over $14 billion a quarter.  Yea, that sounds much better.  Chrysler could not renew all of its short term debt, thereby leaving a gap of $6 billion on the table.  Have you seen their stock prices lately?  As a side note, their stock, credit worthiness and heartbeats are also being downgraded by every big and small ratings agency in the world.  The only other entity that can lose money faster than these entities and still stay in business is the Federal Government. Read the rest »

Many states provide for where a person may be sued; some say that the lawsuit must be filed where the person lives, where the Plaintiff lives, or where the wrong occurred. Under the Fair Debt Collection Practices Act, however, many of those options are removed.

Under the FDCPA, unless a debt collector is suing to enforce an interest in real property, it must bring any action on a debt against a consumer in the judicial district where the consumer signed the contract at issue or in the judicial district where the consumer resided when the suit was filed. 15 U.S.C. § 1692i(a)(2).

The recent case of HESTER v. GRAHAM, BRIGHT & SMITH, P.C. AND R. SPENCER SHYTLES, from the 5th Circuit Court of Appeals, puts a fine point on this requirement. In this case, Ms. Hester entered a retail installment contract in Tarrant County, Texas, and lived in Smith County, Texas when a lawsuit was filed against her for collection of an unpaid debt. In a case brought against the debt collector and their lawyers under the FDCPA, she argued that the defendants sued her in an improper judicial district when they sued her in Dallas County, Texas.

The court, in this decision relating to whether the lawyers who filed suit against Ms. Hester were debt collectors under the FDCPA (they are) and on the issue of attorney’s fees to be awarded to Ms. Hester’s lawyer for bringing the case, dispensed with the issue of proper court venue for the debt collection lawsuit. The fact that the consumer was sued in a location other than where she lived or where the contract was first entered into was deemed a violation of the FDCPA.

So if you’re sued for a debt, look carefully to where the debt collector sues you. If it is in the wrong place, you may have the right to sue for money damages under the FDCPA.

Credit card losses at large banks continue to pile up. This will mean less credit for consumers in the future.

Citigroup reported that it lost $176 million on credit card securitization operations in the second quarter of 2008. That is on top of setting aside $735 million for credit losses and over $345 million in North America alone in additional costs of credit. Even if you don’t know what all those things mean, that’s a lot of money!

Keep in mind this other tidbit: Citigroup earned $243 million in the year-ago period on the same credit card lending activity. Read the rest »

Do you live in Nebraska? Do you have credit card debt that is out of control? Do you need help but not sure where to turn? Then look no further, help is around the corner.

Credit Advisors is a company with over 50 years experience in helping individuals manage and eliminate debt. They have also been approved for the Bankruptcy Credit Counseling course.

Why do I recommend this company? Read the rest »