National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

Sanctions

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Court Rejects Bank’s “Devil Made Me Do It” Defense

A bankruptcy court awarded almost $70,000.00 in damages for PNC’s stay violation. In re Ogden, No. 11-19841 (Bankr. D. Colo. June 1, 2015). It is easy to feel imaginary malice behind the often frustrating interactions with impersonal, computer-operated, entities with which we all find ourselves conducting business. In this case, however, the court found that the debtor’s sense of actual ill will was confirmed by testimony from PNC’s representative in its defense to the charge of stay violation. [Read more…] about Court Rejects Bank’s “Devil Made Me Do It” Defense

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Chase Gets Off the Hook, ABI Gets $7.5m, Debtors Get $20

We’ve heard on the street that the $20 checks for debtors are starting to roll in.  The payments are part of a $50 million settlement between the United States Trustee Program and JP Morgan Chase, N.A. that was approved by the Bankruptcy Court for the Eastern District of Michigan on March 9, 2015.

The settlement concerns approximately 50,000 improper payment change notices filed by Chase in thousands of bankruptcies across the country.  The improprieties of these notices range from failing to review the accuracy of the notices before filing, to notices signed in the names of employees or former employees who had nothing to do with the accuracy of the notices.  See the Department of Justice press release here for further information.

The settlement includes a variety of remedies for affected homeowners in bankruptcy.  These range from outright forgiveness of the loan (for only 325 loans), adjustments/credits to credits, suspense accounts or escrow accounts (for 30,508 loans); and/or cash payments in the amounts of $600.00 and/or $20.00 (for 18,908 loans).  Some debtors have already started receiving these cash payments.  The settlement also includes a payment of $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program.

There have been several concerns raised regarding the settlement.  It appears no parties outside the USTP were consulted as to the practical ramifications of ongoing bankruptcies including standing chapter 13 and 7 trustees and debtors’ counsel.  The USTP has been given no record or database of names of the thousands of affected debtors by Chase’s improper notices.  The parties appointed an Independent Reviewer, Ms. Amy Walsh of The Morvillo law firm, to verify whether Chase fulfills its settlement obligations and to verify Chase’s numbers of incorrect notices by a sampling methodology.  Of note, the Morvillo law firm lists on its Representative Clients webpage that its partners have also represented officers, directors, or partners in several financial institutions including J.P. Morgan.

The order and the settlement can be found here.

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Green Tree Servicing Settles with FTC and CFPB for $63 million

The Federal Trade Commission and the Consumer Financial Protection Bureau have announced a $63 million settlement in a dispute with the national mortgage servicing company, Green Tree Servicing. The FTC and CFPB charged Green Tree with thug-like collection methods including: barraging the debtor with phone calls as early as 5 a.m. and as late as 11 p.m.; threatening debtors with arrest, imprisonment, and garnishment; yelling at consumers and using obscene language; mocking illnesses and other personal situations causing financial distress; revealing debts to employers, neighbors, family; and taking payments out of debtors’ accounts without consent. It also failed to honor loan modifications, misapplied payments, provided incorrect creditor information to consumer reporting agencies, and overcharged or demanded unnecessary fees. $48 million of the settlement will go to affected consumers and $15 million represents civil penalties.

In addition to the $63 million dollars, the settlement requires Green Tree to clean up its act by implementing “a home preservation plan to offer options to consumers whose loans were transferred to the company during the time covered by the complaint.” It must cease collection on disputed debts until the completion of an investigation and verification of amounts owed. “The proposed order also prohibits Green Tree from making material misrepresentations about loans, processing procedures, payment methods, and fees, from taking unauthorized withdrawals from consumer accounts, and from violating the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Real Estate Settlement Procedures Act.” In short, the order requires Green Tree to competently and honorably perform the services a loan “servicer” is meant to perform.

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$2 Million Jury Verdict Against Mortgage Servicer

On Monday, Alena Hammer obtained a $2 million jury verdict against Residential Credit Solutions, Inc. (RCS), a national mortgage loan servicer, for its breach of contract, violations of the Real Estate Settlement Procedures Act (RESPA), and violations of the unfairness and deception provisions of the Illinois Consumer Fraud and Deceptive Business Practices Act. All of Hammer’s claims dealt with RCS’s misconduct in handling and servicing the mortgage loan on Hammer’s home in DuPage County, Illinois, where Hammer has resided for the last 27 years.

[Read more…] about $2 Million Jury Verdict Against Mortgage Servicer

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Attorney’s “No Money Down” Fee Collection Practice Violates BAPCPA

Two cases out of the Western District of Louisiana found that attorney Glay H. Collier’s fee collection practices violated sections 526, 528, 362 and 524 of the Bankruptcy Code. Wheeler v. Collier (In re Wheeler), No 11-1670 (W.D. La. May 22, 2014) and (July 17, 2014), and Patrick v. Collier (In re Patrick), No. 14-11203 (Bankr. W.D. La. July 23, 2014). [Read more…] about Attorney’s “No Money Down” Fee Collection Practice Violates BAPCPA

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New York AG Settles with Usurious Lenders

In January, 2014, New York Attorney General Erik T. Schneiderman announced that his office had reached a settlement with Western Sky Financial, CashCall, WS Funding, and their owners for violations of New York’s usury and licensed lender laws in connection with personal loans made over the internet. The usurious loans were made at interest rates ranging from 89% to 355%. The settlement involves repayment to borrowers who paid back the principal plus the legal interest rate of 16% and modification of all outstanding loans. The companies will also be required to pay $1.5 million in penalties. The settlement was approved on April 29, 2014. Consumers who are eligible for a refund should be contacted by the fund administrator within 90 days of the court’s approval of the settlement and asked to submit a claim. Questions may be directed to the Attorney General’s Consumer Helpline at: (800) 771-7755.

New York Settlement Agreement

 

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Three Cases of Discharge Injunction Violations

Three recent cases involve sanctions for violation of the discharge injunction by a creditor filing suit in state court over a debt discharged in bankruptcy. King v. Williams (In re King), No. 12-3701 (8th Cir. March 5, 2014); In re Gracia, No. 13-1373 (B.A.P. 9th Cir. April 4, 2014); In re Hopkins, No. 09-5835 (Bankr. S.D. Ia. April 1, 2014). [Read more…] about Three Cases of Discharge Injunction Violations