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Bankruptcy Act May
Devastate Debt Collection Practices
Adapted
from an article by AP Business Writer Marcy Gordon
WASHINGTON
(AP) - Debt collectors could phone people at any time of day or night
and charge them high fees if they fail to make good on bounced checks
within a month under a proposal championed by Senate Judiciary Committee
Chairman Orrin Hatch.
Hatch, R-Utah, is pushing the
measure as an amendment to legislation that would make it harder for
people to erase debts through bankruptcy
The
White House, meanwhile, on Friday reaffirmed its support for bankruptcy
overhaul legislation in principle but said President Clinton would veto
the House-passed version in its current form. The Senate bill is more
acceptable, although the administration has "serious
concerns" about some provisions.
The
administration's general view is that the bankruptcy legislation must
contain "appropriate safeguards against coercive creditor practices
that compel debtors to forgo their rights and that disadvantage more
scrupulous creditors."
Current
law has protections from creditor harassment. It prohibits creditors,
for example, from calling indebted consumers late at night, repeatedly
dunning them over the phone or threatening criminal prosecution without
legal grounds.
Sen.
Paul Sarbanes of Maryland, the Senate Banking Committee's senior
Democrat, said the proposal would
unfairly "allow unfettered collection activities not only against
the individual writing a counterfeit check but also against the consumer
whose checks have been forged."
In
recent years, there have been many cases in which consumers whose checks
had been stolen were subjected to "harassing collection
tactics" in violation of the Fair Debt Collection Practices Act,
Sarbanes wrote to Sen. Patrick Leahy of Vermont, the Judiciary
Committee's senior Democrat. He said Hatch's proposal would allow the
practice to continue legally.
Meanwhile,
senators working behind closed doors to draft the bankruptcy legislation
announced Thursday that their House counterparts had agreed to add
several consumer protections to the House bill that already were in the
Senate-passed version. Credit card companies would be required to
provide a toll-free phone number for consumers to find out how long it
would take them to pay off their balances by making only minimum monthly
payments.
In addition, the companies would
have to tell consumers the exact date when late fees are charged and
would be prohibited from dropping customers who regularly pay their
monthly balances in full. When low introductory "teaser" rates
are offered to lure new credit card customers, the companies would have
to disclose clearly when the normal, higher rates would replace the
"teaser" rates and what the higher rates would be. The same
requirements would apply to credit card solicitations made through the
Internet. |
CHUTZPAH CORNER
Marie Taylor bought and car and dutifully made her
payments to the Bank of America for 60 months. She waited a
couple of months, then she asked for her car title. Bank of
America said she missed a payment 3 1/2 years ago! They said
they hadn't been able to notify her although her address was
on the check. She paid the extra month. The bank then demanded
another $380 in late fees and sent her three repo notices in
ten days! We referred her to the Office of the Comptroller of
the Currency. |
OCL
to Amend Bylaws
The last two years, a Bylaws Committee
has been meeting and working on various enhancements,
additions, corrections, and other alterations. A copy of the
proposed amendments may be obtained by writing to the OCL.
Most of the changes are minor adjustments to the
language of the document, while other changes are more
significant, including the deletion of reference to the United
Consumers of Oregon, adding lists of specific duties of
officers and a mandatory Board meeting attendance requirement,
adding an auditor committee to be appointed by the Board
President, and elimination of the thirty-day written notice
requirement for amendments to the Bylaws. |
Turn
off the Tube!
Fact
#1 - The average American watches 3 hours and 46 minutes of
TV each day (26 hours and 22 minutes each week, more than 57
days of nonstop TV-watching per year).
Fact #2 - The average American
child sees 360,000 TV commercials before graduating from
high school.
Fact #3 - A recent study showed
each hour per week spent in front of the TV corresponds with
an average consumption increase of $208 per year. We all think
that we're immune and only 'other people' fall prey to ads,
but statistically-speaking that hour of Letterman is going to
cost $4 in excess spending.
Fact #4 - Turning off the TV
isn't enough -- we need to unplug! Idle plugged-in appliances
account for 5% of total U.S. energy consumption, cost more
than $ 3 billion each year, and spew 18 million tons of carbon
into the atmosphere. Idle TVs and VCRs alone cost U.S.
consumers more than $1 billion a year, or roughly $10 per
household. Emissions from power plants supplying that
electricity are equal to the pollution caused by 2 million
cars! |
Breaking
News
The Consumer League just received a call from the
Mortgage Bankers Association who want to work together to
craft stricter licensing requirements for mortgage bankers. |
New from HUD
HUD is joining the
fight against predatory lending, according to a program
announced earlier this week.
fighting
predatory mortgages
The Consumer League is working with
ACORN, Portland Housing and others to stop the growing
practice of these lenders in Oregon.
HUD's program will benefit FHA loan
holders. FHA insured 13 million homes last year.
The new protections include:
restructuring inflated mortgages, default counseling for FHA
borrowers, denying FHA insurance to FHA homes that have been
"flipped at inflated prices, places caps on the points
and fees charged FHA borrowers, deploying special teams to
pursue unscrupulous appraisers and lenders removing
appraisers involved with large numbers of foreclosures and
imposing tighter FHA down payments.
For people already injured by these
mortgages the FHA will have credit repair experts to help
restore the consumers to their credit rating that preceded
them falling into the clutches on these predators.
Dishonest appraisers may lose their
ability to work on FHA mortgages altogether, under the new
regulations. We have reported, at the Oregon Consumer League,
reports of inflated appraisals that are leading to
foreclosures in Oregon and SW Washington. The new regulations
will reign in these practices. Also caught in the same net
will be dishonest brokers. The agency will keep tabs on
brokers, appraisers and mortgage companies with computer
The rules also forbid offering gifts or
incentives for people to enroll with these mortgage lenders.
The practice obscures the hidden fees and real costs of these
mortgages, designed to overwhelm the borrower with debt and
then lose the house. The OCL is also working to discern these
practices in N/NE Portland where they are rumored to being
increasing.
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WHAT PREDATORY
LENDING LOOKS LIKE
The Oregon Consumer League has
received a number of calls from people who are losing their
homes because of predatory mortgage lenders.
The pattern is the same in all
three cases: the homeowner gets divorced and falls behind. The
predatory company promises to help. But instead they often
increase the interest rates, lose payments, add late fees, put
the house in forbearance or foreclosure, adding special fees
and overwhelming the borrower.
We have worked with Sue Duncan,
who got in this trap. The mortgage company, Ameriquest, lost
payments, refused repeatedly to give her a summary of her
account, said they never received checks that they cashed,
kept her on hold for us to three hours-- and so-
-on.
ACORN
has exposed Ameriquest and did a successful demonstration/sit
in at the mortgage company's NY office.
We
referred Sue to an attorney who referred her to Bill Barr,
noted consumer lawyer. We also told her about the new FHA
program to repair her credit.
Good luck, Sue.
We are also working with other victims and
please, if you know people in this situation, tell them to
call us at 493-3588. |
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OCL
IN THE NEWS
In a continuing effort to keep car title and payday
loan abuses in the news, Jason, together with Rep. Vicki Walker
have been interviewed on Associated Press and the Grants Pass
Daily Courier. The AP story ran in both the Seattle Times and
Salem Statesman-Journal. In addition, Jason was interviewed on
radio stations KPAM and KNEWS.
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Measure
81 Dies Ignominious Death
Measure 81 was defeated by voters by an
overwhelming margin-- 75% of voters turned down the measure
that would have given the legislature the power to handcuff
juries.
The increase in corporate influence in
the judiciary is frightening. The Wall St. Journal reported on
companies facing lawsuits dining and wining judges on expensive
junkets, billed as educational seminars.
There are increasing attacks on judges
and jury verdicts, impugning their impartiality.
We must remain vigilant against
incursions against the judiciary branch of government. An
example of this is the Republican Senate members refusing to
confirm judges to fill a huge number of vacancies on the
federal bench. Chief Justice Rehnquist has spoken out against
this politicization of the judiciary but the Senate ignores
him too.
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Roundtable
Works to Stop Abuses
The
Consumer Roundtable, started and chaired by Jason, our executive
director, is working hard on these issues with the Roundtable
members. Members include the Better Business Bureau, OSPIRG, the
Oregon Department of Justice, The Oregon Department of
Transportation--DMV, the Oregon State Bar, the Oregon Trial
Lawyers Association, the Oregon Law Center and the Lewis &
Clark Law Clinic.
New
members include several groups working to stop predatory
mortgage lending including: ACORN, a grassroots poverty group
working nationally to stop predatory lending. Human Solution,
Inc., Portland Housing Authority and
The other action group has been
working to draft regulations for the car title/payday loan
industries. The group is also looking at additional measures
necessary to protect the poor against predatory lenders.
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Business
Fraud Rising:
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Poor
Most Victimized
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The
National Consumer Law Center in Boston reports that business
crime, fraud and abuse are thriving on the backs of the poor.
The laws are poorly enforced and can't keep up with the scams
that pour forth not just from fast-talking retail sharks, but
far more from large companies and their law firms.
AUTO FRAUD. Consumers are sold
both new and used cars that are "lemons" or by
dealers who do not fully disclose the car's wreck or salvage
history, prior use as a rental vehicle and history of
mechanical problems.
AUTO TITLE PAWN. A car owner
pawns title to the car in exchange for cash. The effective
interest rate can be astronomical, and the car can be
repossessed if the buyer falls behind on monthly payments no
matter how much has been repaid on the loan.
HOME EQUITY FRAUD.
Home improvement
scams and deceptive lending practices are frequent problems
experienced by low-income homeowners. In many communities they
don't have access to traditional lending services and rely on
finance companies and other less regulated lenders. Many of
these loans have inflated interest rates, high closing costs
and unaffordable repayment terms.
PAYDAY LENDING. This form of
short term lending can devastate the finances of cash
1000¼.
RENT-TO-OWN businesses are mostly
furniture and appliance retailers which arrange exorbitant
lease agreements for those customers unable to pay cash. Those
who buy from rent-to-own businesses often pay
two to three times the cash price for their purchases.
ARBITRATION OF CONSUMER CLAIMS.
Merchants and creditors are increasingly inserting clauses
into the fine print of their contracts that prohibit consumers
from filing lawsuits and force all disputes to mandatory
arbitration. Arbitration clauses are drafted to stack the deck
against the consumer by allowing companies to select the
arbitrator, arrange for hearings in places convenient for the
companies but not for the customers, forbidding class actions
and prohibiting recoveries like punitive damages and attorney
fees.
What has led to these interest rate
gouges has been the repeal of usury laws in many states in the
1970s. This has allowed what was once illegal and severely
punishable to become legal in the name of law reform.
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Source: The Progressive Populist, April 1, 2000 |
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