People having trouble paying their mortgage or who maybe need to get mortgage loan modifications should see a HUD- certified housing counselor first! While these folks are not lawyers, helping people hang onto their homes if they can is their job, so they are familiar with the programs for loan modification and their requirements. And, because they are government-funded, they do not charge clients for their services. Click here to find one near where you live: http://www.cbs.state.or.us/dfcs/ml/foreclosure/counselors.html.
The federal student loan system has become so bloated and rife with abuse of borrowers by debt collectors that I'm forced to conclude that the only people who should borrow to pay for schooling are those who could afford to pay for the schooling without borrowing if they chose. This story tells the tale, a ruthless firm that gets nice contracts to squeeze student-loan debtors, complete with morals that make the Sopranos enforcers look like choirboys.
Portland, OR - The decision of what bills to pay and what bills to put off is a game of financial roulette tens of thousands of Oregonians are forced to play every month as they struggle to recover from the economic downturn. The priorities are obvious - keep your family housed and fed and pay for transportation plus other items necessary for work - other creditors get what's left.
A new report from the National Consumer Law Center exposes how state exemption laws take these difficult decisions out of workers hands by giving debt collectors the ability to seize a substantial portion of a person's wages and the tools essential for their work. The report, No Fresh Start: How States Let Debt Collectors Push Families into Poverty, finds that Oregon law fails to meet basic standards that would allow debtors to continue to work productively to support themselves and their families.
Exemption laws are designed to protect debtors and their families from poverty, and preserve their ability to be productive members of society. Oregon gets an F when it comes to protecting wages. Current wage garnishment law allows debt collectors to push a family below the poverty level. A minimum wage earner working full time can have their weekly pay reduced to $268.50, less than the federal poverty level for a two-person family. If they work less than full time their wages may be reduced to $217.50, less than half of the federal poverty level for a family of four. Oregon's overall grade is a D. A copy of the NCLC report can be found here.
Oregon's archaic exemption laws fuel the lucrative and fast-growing debt buyer industry. "When a worker's wages are slashed below the poverty level to pay off old credit card debt that was bought for pennies on the dollar by an out-of-state debt buyer everyone loses. The debtor can't pay the landlord or the childcare worker and the family is forced to rely on government services to make ends meet," said Angela Martin, Executive Director of Economic Fairness Oregon, an advocacy group fighting for reform of Oregon's debt collection laws.
"In 2012, the FTC received more than 125,000 consumer complaints about debt collection, representing almost 25% of all consumer complaints it received. Debt collection lawsuits are clogging up civil courts across the nation," said Robert Hobbs, National Consumer Law Center's Deputy Director and author of Fair Debt Collection. "This report serves as a wake-up call for states to update their exempt property laws and stop putting millions of families at risk. Doing so will allow local courts to redirect their focus from the insatiable appetite of a debt machine that churns out millions of undocumented debt collection lawsuits each year."
The NCLC report includes several recommends for reforming state exemption laws, those include:
Preserve the debtor's ability to work, by protecting a working car, work tools and equipment. Protect the family's housing, necessary household goods, and means of transportation. Protect a living wage for working debtors that will meet basic needs. Protect retirees from destitution by restricting creditors' ability to seize retirement funds. Be automatically updated for inflation. ###
Angela Martin Executive Director Economic Fairness Oregon www.economicfairnessoregon.org
Oregonian opinion columnist Elizabeth Hovde wrote an execrable column the other day that proposed cutting food stamps for the "not so needy" -- you know, the folks with smartphones and on foodstamps.
Hovde's column shows that if she ever had any understanding of just how damn expensive it is to be poor in America, her perch of privilege has long since helped her forget that crucial fact. So I wrote a letter to the editor in response, which they ran today (below).
If you have no idea what I mean when I say it's really costly to be poor in America, click the image over there, which is to a great book, Shortchanged: Life and Debt in the Fringe Economy, which every politician in America should have to read and pass a test on before being allowed to legislate.
So commentary columnist Elizabeth Hovde thinks that we should stop giving food stamps to the not so needy, whom we can all recognize because they have both cellphones and SNAP cards ("Stop feeding the not so needy," Sept. 8)? Whenever the well-off write about how the not-really-needy folks are sponging off public benefits for their lavish cellphone-using lifestyle, I know that these writers have never been in the death grip of a boa constrictor service contract.
Boa constrictor contracts work like this: The company advertises a great monthly rate that you can easily afford when things are going OK for you financially. That's the rate that is splashed all over the flyers and posters and TV and radio ads. That rate is just sucker bait.
Then something happens: You're laid off, your hours cut or your partner's are, you come down with a bad case of the doctor copays or car repairs, your bus system quits running on weekends. It doesn't matter why you can no longer afford the service that you could once handle. Because no matter why, you are going to be told that you can only cancel or switch to a cheaper plan by paying several hundred dollars first. And if you just cancel the traditional way, by not paying, you are going to find yourself hounded by collection agencies for the monthly charges, plus the penalties, and then sued for them, plus court costs and attorney fees, and you'll have your wages garnished and your credit ruined. All because you couldn't afford to pay a penalty to stop a service contract you could no longer handle.
We need to do two things: Force companies to fully disclose how much their service contracts really cost, and let struggling folks cancel without getting hammered with penalties.
On the first, our motto should be "Service Contracts Oughta Reveal Everything," which spells SCORE.
SCORE would mean that anything that comes with an early-cancel penalty -- cellphone, Internet, satellite TV, gym membership, alarm system -- the company would have to tell you, in big bold type, at signup time, the true total of all the payments you must make to get past any penalties. That's first.
Second, we should require that contracts with early-cancel penalties must have waivers so that any customer on public benefits (such as SNAP, Medicaid, public housing) can cancel a contracted service without penalty.
Until we do a much better job of making sure that everyone knows what they're getting into with service contracts (with SCORE disclosures) and until we prevent early-cancel penalties from putting the squeeze on the poor, I suggest that Hovde just be thankful for the privilege that allows her to casually equate having a cellphone with being "not so needy." I see plenty of consumers who are being squeezed to death by contracts that they would love to escape, if it didn't cost more to cancel the contracts than to keep paying.
Gear is a Salem attorney.
Another Oregon attorney writes:
Apparently, Ms. Hovde must not realize that the people who qualify for food assistance generally have the least expensive and crappiest version of everything that she and her family rely on for their daily life, like:
* generic unhealthy processed food; * clothing from thrift stores or Wal-Mart; * cars with duct tape—if at all; * unattractive and often unsafe housing; * cheap and sometimes dangerous toys with little educational value for their children; * less responsive medical care; * less responsive public safety providers; * crappier schools; * crappier neighborhood infrastructure; * three-year-old game systems because it’s cheaper to entertain three kids with a game system then taking them to the moves once a month; etc.
She also apparently doesn’t understand life changes. I often see my clients qualifying for food assistance post-divorce when they already have nice cars (with zero value), good clothes (that won’t be replaced), smart phones on a family plan (that now isn’t being paid by the ex), three children and a spouse who is reluctant to provide adequate support.
I also bet Ms. Hovde has never seen the 10 page application for state assistance asking for the income information for everyone in the applicant’s household, and asking for the value of the persons vehicle, and other worldly possessions….
I’ve seen some real cases of benefits fraud in my work—eg. a trust-funder collecting TANF, OHP, SNAP who then faked earning $15K per year to claim an Earned Income Credit on his federal returns— so I know they exist, but anything that makes it harder for poor people to get help is a really bad idea.
Once upon a time, there was a country where the courts could tell the difference between business-to-business disputes and consumer-to-business disputes.
The law for the commercial disputes values efficiency above all other concerns, which makes a lot of sense for disputes involving businesses, which are often fictitious entities anyway (corporations), with no personal stake in the problems. Further, being fictitious legal persons, entirely created under the law and having no natural rights of their own, the corporations involved in most business litigation could hardly claim to fall under the 7th Amendment right to a jury trial -- the companies only had the rights that the law gave them, and since they essentially all just wanted their disputes resolved in a predictable, roughly fair way, it was no problem that Congress said that they could bind each other to arbitration clauses, which sent their fights out of the court system and into private arbitration, where there are no juries, and there is no open court system that creates precedent with each decision.
The problem is that, as in the Terminator movies, the creatures we created to help us have turned on us and taken over: the corporations have seized control of the courts and have persuaded a majority of the U.S. Supreme Court justices that, not only are they actually entitled to full constitutional liberties, including full First Amendment rights to "speak," they also should be allowed to force real people into arbitration, meaning that when you sue one of these fictitious people, you find yourself in a topsy-turvy world that Joseph Heller, author of Catch-22, could not have imagined on his most cynical day.
We've been heading towards this mess ever since the first decisions in the late 19th Century that perverted the 14th Amendment, turning it from an aid to freed slaves into a weapon for the just-forming multinational corporations. The recent "Citizens United" decision -- a fantastic act of historic judicial activism, with the Supreme Court majority going completely outside the bounds of the case before it to create a new superclass of corporate citizens (all the rights of people but none of the duties) is the best known of the long train of absurd decisions that, one by one, are turning real people into servants of the new superclass.
Which brings us to today's fantastic absurdity, where the federal 2nd Circuit, the appellate court for the Northeast, the second-highest court in all the land (and a leading court for commercial disputes), has held that a New York consumer -- that is, a flesh and blood person like you, one who might be under the vague impression that your Constitutional rights are at least as important as the "rights" of a legal fiction like a corporation -- must go to binding arbitration in Arizona to pursue the scoundrels who ripped off the consumer and essentially reduced the consumer to abject poverty (the company was one of the many (most?) bogus credit repair companies who promise to help you climb OUT of the hole with your credit cards).
There is no way to put it except to say that this is the kind of thing that terrifies people who study history, because this is the kind of thing that survivors study when they try to figure out "What was the spark that caused the explosion? How did what seemed to be a civilized place suddenly erupt in such fury?" I would love to be wrong about this, but since the DNA of corporations requires that they grab all the power and money that they can, and that they do everything that they can get away with (to compete with all the others), expecting corporations to restrain themselves and not abuse consumers and real people is like expecting Donald Trump to take and keep a vow of silence and poverty. Thus, absent a miracle -- never the thing to bet on -- this isn't likely to get better. And that means we might well be getting close to finding out something awful, like what the 21st Century American equivalent is for 19th Century France's guillotine. Read on:
Periodically, people ask me rhetorical questions like, "How much worse can the law of arbitration get? I mean, it's so incredibly bad that it has to have bottomed out, right?"
As Jane Wagner famously wrote [for Lily Tomlin], no matter how cynical you become, it's never enough to keep up.
The Second Circuit has just issued an opinion that reminds us that it is still possible for the law of arbitration to become even more terrible for consumers. In Duran v. The J. Hass Group, a woman who is essentially on the edge of being destitute alleges (very credibly) that she was the victim of a last-dollar scam, promised services that she didn't receive.
The defendants allegedly operated a credit repair scheme, under which they took a fee of almost $4,000 from the consumer to settle all of her credit card debt, and then did nothing for her. So her credit card companies were suing her, she owed all the money that she’d owed when she first interacted with the defendants, and she was now completely broke. These allegations make an extremely strong claim under the Credit Reporting Act. The allegations and facts are discussed in greater detail in the district court’s opinion, available at 2012 WL 3233818 (E.D.N.Y. June 8, 2012).
It probably will not surprise anyone who follows consumer law (although it would come as a surprise to nearly any actual consumer) that the defendant had an arbitration clause. What's striking is that the clause requires consumers (including the New York resident Ms. Duran) to arbitrate their claims across the country IN ARIZONA. Now, courts have been striking down these kinds of distant forum provisions in decisions going back 20 years. E.g., Patterson v. ITT Consumer Fin. Corp., 18 Cal. Rptr. 2d 563 (1993). But in the wake of more recent U.S. Supreme Court decisions, particularly the catastrophic Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (2010), a lot of bad actors out there have been experimenting with how unfair they can make their arbitration clauses and get away with it.
This strategy worked pretty well for the defendants in this case. The Second Circuit required Ms. Duran to arbitrate her claim, and enforced the provision requiring it to take place in Arizona. They noted that there is a "logical flaw" and an "unusual" quality to the result, because if Ms. Duran's only remedy is to argue to the arbitrator that it's unfair and unconscionable to require her to arbitrate in Arizona, she first has to GO to Arizona to do it. Oh well, the Court explains, this is what the Supreme Court would have wanted.
I think the decision is wrong, and that the better arguments are with the plaintiffs, and I'm very hopeful that a lot of other courts wouldn't go with this conclusion.
But the case does show how the U.S. Supreme Court's ongoing adventures in re-writing and expanding the Federal Arbitration Act have a cost. What will the next scam artist put in their arbitration clause? Is there any reason that the Second Circuit would not have enforced a clause requiring the arbitration to take place in New Zealand on Leap Day? After all, why couldn't the New Zealand arbitrator figure out if that's fair? What if the arbitration clause required that the arbitration take place on the newly non-planet Pluto?
If bad actors can get away with making arbitration clauses increasingly grossly unfair, and all the courts just wash their hands, do a Pontius Pilate, and say “well, this may SEEM really unfair, but oh well, it’s what the Supreme Court would have wanted,” mandatory arbitration will have no conceivable claim to any sort of legitimacy. It will become a complete joke, an openly rigged deal.
Because saying that a poor person in New York can only get a refund of money stolen from her if she travels across the United States to begin the process of trying to get it back IS a joke, and it IS a rigged deal.
The Dept. of Ed has released a new form for borrowers who wish to select Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), or the new Pay-As-You-Earn plan (available starting tomorrow). This form replaces the repayment section form AND the alternative documentation of income form (ADOI).
Borrowers should use this form; however, the Department of Education will continue to accept the old forms until April 2013.
The Washington Supreme Court today announced an important decision, finding --- as the Oregon Court of Appeals just did recently in the Niday case --- that the phony-baloney attempt to dodge recording fees known as MERS can't have it both ways and claim to be just an administrative convenience AND force people out of their homes. Another blow for justice in the Northwest.
John Gear Law Office LLC; John@JohnGearLaw.com and SalemConsumerLaw.com. My office is in the Security Building in downtown Salem at 161 High St. SE, across from the Elsinore Theater, a half-block south of Marion County Courthouse, just south of State Street. I'm in Suite 208B. There is abundant, free, on-street parking throughout downtown. I am only licensed to practice law in Oregon. This site may be considered advertising under Oregon State Bar rules.------ I don't give legal advice on this site. I'm not your attorney unless we have met in person and you have hired me by entering into a representation agreement with me. While I do want you to consider me when you seek an attorney, you should not hire any attorney based on brochures, websites, advertising, or other promotional materials. All original content on this site is Copyright John Gear, 2010-2014.
John Gear Law Office LLC; 503-339-7787; John@JohnGearLaw.com. My office is in Suite 208B of the Security Building in downtown Salem. That's at 161 High St. SE, across from the Elsinore Theatre, just a block south of Marion County Courthouse. There is abundant, free, 2-hour on-street parking throughout downtown. #### #### #### Lawyerly fine print: Licensed in Oregon. This site may be considered advertising under Oregon State Bar rules. There is no legal advice given or intended on my site. I'm not your attorney unless we have met in person and entered into a representation agreement; while I hope you will consider me when you seek an attorney, you should not hire any attorney based on brochures, websites, advertising, or other promotional materials.