Debt-collection law firm sued by Consumer Federal Protection Bureau (CFPB) alleging it is a “mill” firm with predatory practices

On Monday, July 14, 2014, the CFPB filed a lawsuit in federal court in Atlanta alleging that Frederick J. Hanna & Associates produced deceptive or faulty lawsuits when suing consumers on debt. Hanna’s office generally represents Bank of America, Chase, Capital One and Discover and the CFPB lawsuit claims that they did not do basic “homework” when filing lawsuits to determine whether these borrowers owed the money or not. The lawsuit is seeking to have Hanna’s office change their practices, pay restitution to consumers, and to “disgorge ill-gotten revenues.”

Beware of companies that offer help with student loan debt

Because student loan debt has tripled from that of a decade ago to more than $1 trillion dollars (with an average debt load of more than $20,000 per graduate), predatory lenders are running amuck. Statistics show that more than half of the recent college graduates are unemployed or have jobs that cannot support student loan repayment plans. For the debt settlement industry, all this means is a new industry of enticing customers. Why? Because these debt settlement companies offer, for a big upfront fee, to help borrowers lower their monthly loan repayments obligations. Hopefully, the federal and state governments will get involved and bring suits against the predatory companies for their questionable practices.

Debt settlement company, LVNV Funding, violates FDCPA in Federal Bankruptcy Court

Consumer debt buyers, like LVNV Funding, are filing proofs of claims on debts that are unenforceable according to the 11th Circuit Court of Appeals because the state statute of limitations has run. The statute of limitations on contract debt in Georgia is 6 years from the “last transaction” date (e.g., the last date a payment was received by the creditor). The Fair Debt Collections Practices Act, which only governs debt buyers and not original creditors, is a consumer protection statute that “imposes open-ended prohibitions on, among other things, false, deceptive, or unfair” debt collection practices. The 11th Circuit decided that filing a proof of claim against someone in an active bankruptcy on stale debt violates this provision of the FDCPA.

The 11th Circuit Court of Appeals Upholds Stripping a Second Mortgage In A Chapter 7 Bankruptcy Case …

If you are “underwater” on your primary residence (i.e., the first mortgage exceeds the fair market value of your real property), you may be able to file bankruptcy and void the junior lien(s). Bank of America recently appealed the Bankruptcy’s Court’s order voiding a wholly unsecured second priority lien on a residential property owned by a Chapter 7 debtor. The 11th Circuit upheld the Bankruptcy Court’s order and allowed the Chapter 7 debtor to “strip off” the junior lienholder’s priority lien on his home. Good news for those of us who owe more than our home is worth!