John Gear Law Office, LLC Salem 503-339-7787 971-266-GEAR (24-hrs) - Law for Real People blog

Speaking of Student Loans

Thu, 17 May 2012 16:50:18 -0800

THE SCOOP ON STUDENT LOANS
      Whether you saw the cover story in the New York Times, or chuckled as President Obama advocated the issue on Late Night with Jimmy Fallon, student loans continue making headlines. With interest rates for Stafford Loans possibly doubling in July, now is an excellent time to inform yourself about this issue.
     For further reading, try The Student Loan Scam. This analysis of the $85-billion industry covers the history of student loans, exposes how universities have profited at students’ expense, and shares the stories of people whose lives have been shattered as a result. The Boston Globe calls “The Student Loan Scam passionate and informed.”
     Also: Read chapter 3, "Collection Abuses" from The Student Loan Scam. Read a recent Salon.com article featuring Alan Michael Collinge. Visit Alan's website for more information.
$20.00 Paperback

(Blurb above from a Beacon Press promo email. Beacon Press is one of the best.)

College no sure road to security any longer

Thu, 17 May 2012 10:56:01 -0800

No one is immune from bankruptcy. That's the message of a national survey released today by a South-Portland-based financial nonprofit. High-earners and college graduates are among the fastest-growing group of debtors filing for bankruptcy, according to the Institute for Financial Literacy. Bankrupty filing rates for people making $60,000-plus increased by more than 66 percent; college graduates by 20 percent. -- Maine Public Broadcasting report

Since "get a college education" is so often prescribed as the cure-all for all our ills, the warning photo to the left is apt -- the higher ed bubble is showing all the same signs as the housing bubble did in its last, frantic moments. Here's a good example of how cut-throat the student loan business (and it IS very much a business) has become. Colleges are holding transcripts hostage, which makes it difficult for the borrowers to get the job they need to pay the loans:

     This is happening at a time when recent grads are finding it particularly hard to find work, not just in their chosen fields, but anywhere. About half of recent college degree-holders were unemployed or underemployed last year, according to a recent Associated Press study. And the federal Consumer Financial Protection Bureau estimates student loan debt has passed $1 trillion, an amount greater than all outstanding credit card debt. The Department of Education put the default rate at 8.8 percent of student borrowers as of September 2010.

     It's no accident that colleges are using the withholding of official transcripts to punish students behind in their loan payments. It turns out the federal government encourages the practice. Schools are not required by law to withhold transcripts, but a spokeswoman at the Department of Education confirmed that the department "encourages" them to use the draconian tactic, saying that the policy "has resulted in numerous loan repayments."

     It is a strange position for colleges to take, however, because the schools themselves are not owed any money. Student loan funds come from private banks or the federal government. For federal Perkins loans, schools get a pool of federal money to apply to students' financial aid, and if students don't pay, that pool gets smaller. But the creditor is still the government, not the college. And in the case of so-called Stafford loans, schools are not on the hook in any way; they are simply acting as collection agencies, and in fact may get paid for their efforts at collection.

Resources for Nonprofits available for loan

Tue, 08 May 2012 17:45:05 -0800

     I've been especially gratified by the response to the services I offer for nonprofit organizations. When I went into practice, I knew that there were lots of places where many hardworking folks needed a hand, but I also know that too many nonprofits wait until it's very hard to help them to reach out and ask for it. Some of the most satisfying work I do is to help groups of volunteers who have formed (or are thinking about forming) an organization to pursue their vision for a better community. I love being able to share some of what I've learned over the years.

      And one reason I founded the Nonprofit Organizations Law Section as a professional practice section in the Oregon State Bar was that I saw that there wasn't enough sharing of resources among people who support the sector. Sometimes it seems like competitors in the for-profit sector were doing more sharing than nonprofits who don't even compete with each other.

     Then, today, it occurred to me that I could do more, because I have a lot of great resources on my shelf that could benefit more groups than just my clients. So, to continue with the sharing theme, I would like to offer to make my bookshelf available to nonprofits here in Salem (or with board members willing to come to Salem). Just call or send me an email to make an appointment to have your executive director or a couple board members come by to check out what's available -- when I got to looking at it today, I realized it's quite a decent collection of current materials.

   I hope I can share some with you soon.

Warning -- loans without appraisals not necessarily in your interest

Wed, 04 Apr 2012 13:51:54 -0800

Given the extreme hardship that many people are suffering as a result of loosey-goosey lending that skyrocketed from about 2001 forward, it's sad that we're already seeing ads suggesting to borrowers that they should not want to be as well-informed as possible before entering into a very serious transaction, probably the biggest financial deal that most people have ever done.

Remember, anyone offering to lend you money without a solid appraisal of the collateral is not doing so because YOU will be better protected. Lending without an appraisal just means that they are satisfied that THEY are protected (that there's enough value in the home to secure their interest).

Given the outrageous junk charges that lenders cram into loans, the appraisal is the last place to look to save money. Instead of getting a refi (which is just real estate jargon for a new loan) without an appraisal, maybe you should ask them to let you pay for an independent appraisal but cut the cost of it out of the other closing costs they charge, especially the loan application fee.

Never think for a minute that the lender is your friend -- because they are not, as millions and millions of Americans are learning to their sorrow.

Why I must apologize but cannot answer your emails

Fri, 30 Mar 2012 12:32:16 -0800

    Below are a few bits from an email I got this morning. This one pretty much resembles other emails I get from people all over Oregon, people I've never met or talked to. I usually get several of these a week, sometimes several a day.

Mr. Gear-
I am not sure if you can help me or not. I am in the middle of an arbitration with . . . . Suddenly, at the hearing, his witness came up with something that [Attorney _____] said [Attorney ______] had no knowledge of until then. I asked for a continuance so I could read and try to interpret what this new report means.

I e mailed [Attorney _____] and received a couple of brief definitions as well as this closing remark -- "This information that you requested is beyond the scope of your discovery request and is in the nature of an Interrogatory which is not a permitted discovery device in OR. However at least as to this request, I am providing a response to you as a courtesy."

My question is, can they actually . . . ? [Attorney _____] is trying to confuse me or turn around what I say . . . . I do not have the money for an attorney but am in desperate need of some advice on what to do, especially with this new information.

    I normally just delete these, but I feel so bad about not being able to respond that I thought I would try to explain to my anonymous correspondent -- and anyone else who emails me like this -- why they won't hear back from me. It's not because I'm a jerk (or at least not only that).

    What the typical "civilian" (nonlawyer) doesn't know is that lawyers -- who can sometimes seem so absolutely certain of everything -- are pretty much just like normal people. Underneath the facade of bravado bordering on (if not crossing well into) arrogance, is a human being full of doubts and fears about everything, from fear of being revealed as an imposter and someone who never should have been allowed near a law license, to fear of getting a bad reputation with other attorneys and judges, to fear of being bankrupted or ruined by a small mistake that blows up into a nightmare of hearings and appeals. It all boils down to the same old human fears -- that we're going to lose our careers, security, and families because of a mistake made while casually trying to help a stranger in need, so no one will love us and that we're going to wind up collecting soda cans in a shopping cart and sleeping under a bridge.

    Pretty unlikely stuff, but fear isn't about rationality, it's about the lizard part of the brain that determines how we think about things before we've had a chance to "think" about them at all. And this is the killer part: some of the nightmare stories around this particular fear are true.

    That is, unlike the urban legends about hidden razor blades in apples given away on Halloween (no doubt started by clever kids who want real candy, not apples!), there really are true tales of horror stories where lawyers have been hurt bad or even undone by giving legal advice to non-clients while just trying to help them, one human to another.

    So, absurd as it sounds to people who don't live with these fears, a lawyer who responds to a emailed cry for help like this is risking their ticket to practice and an ordeal of responding to bar complaints, malpractice suits, and just generally suffering for a long time.

    I hate the whole fear thing, and I do my best to try not to be afraid of everyone I talk to, and to remain a decent person despite being a lawyer. But, even ignoring the issue of constantly being asked to give away my only product (legal advice) to complete strangers, there's no way that I can stay in practice for long if I give legal advice to random callers and emailers, because there's no way to do that without screwing it up. And, given my low-costs, low-overhead, low-fee practice model, I can't afford any time spent answering a bar complaint lodged by a non-client -- the first one of those will probably put me out of business entirely.

    So, while it pains me to constantly be reminded what a disfigured and inadequate legal system we have and how it systematically, relentlessly, and remorselessly denies access to justice to precisely the people who most need it, I too wind up going along, refusing to help the stranger whose cry for help reaches my ear or email account.

    All I can suggest is that, when you find yourself in a bind and unable to afford even the Oregon State Bar's modest means program, you contact every elected official who is supposed to represent you and tell them how the lack of adequate civil legal services is affecting you. I have some ideas for broadening access to justice that I'm working on, and with luck they will bear fruit before too many more years go by; but in the meantime, since America has not yet recognized access to justice as a fundamental right, we ration it by price: those with money can have all they want; those without money are left with scraps or pushed out in the cold entirely. The corporations like it this way, and the corporations decide who gets elected in this country. Frighteningly, these corporations are becoming increasingly active in judicial races.

    Until real people -- human people -- unite to demand a civil justice system that is more than just rhetorically open to all, we're stuck. I do my part, I'd appreciate it if you would do yours: Every time you get a chance, every time a candidate asks for your vote, tell your elected officials and candidates, from dog-catcher on up, that you want them to fund a robust expansion of civil legal aid programs until every real person in America with a legal problem is able to afford to get the help they need.

Postscript: You would think that disavowing science and preferring the insights of revelation to all the evidence would keep you from getting an invitation to speak to a lawyer trade show all about the toys that could only be created after scientists unlocked some pretty deep secrets in nature. Weirdly, Ben Stein -- who has managed to cultivate a rep as a smart guy, but who pushes creationism -- was invited to give a keynote talk to the ABA Tech Show. Still, he is apparently smart on non-science matters:

    “We all have rights, but it can be staggeringly expensive to possess those rights,” Stein said, “Unless you can get access to a lawyer, there’s a greatly diminished chance of getting access.”
    “This makes [lawyers] and their clients richer in material and emotional ways, more powerful as human beings and citizens,” Stein said to a packed audience. “U.S. and Canadian lawyers take their greatest national inheritances and they share it with everyone else who is not necessarily rich. They let everyone all over North America know they have legal rights and what those legal rights are and what they aren’t.”

NEVER BUY ANYTHING from an outfit like this

Fri, 23 Mar 2012 19:41:39 -0800

This is the mice type from the postcard above. You basically need a Hubble telescope to read it. But that's the point - they don't want you to read it. They just want your brain to lock up on the word FREE! And the cute puppy.

The local Dish TV folks are a great example of everything wrong with businesses today, and they deserve a resounding non-response from anyone unlucky enough to get their junk.

   These guys not only mailed me their junk postcard at home (ignoring my vigorously expressed wish to not get junk mail, including listing our house and each adult in it on the Direct Marketing Associations "Do Not Mail" directory, and adamantly refusing to purchase anything from a junk mail solicitation).

    They also had the gall to send me this incredibly deceptive "offer," with its gigantic FREE and the picture of the adorable puppy -- and an entire paragraph of mice type so small that I simply cannot read it; I'm not saying it's hard for me to read, I'm saying that despite my transition bifocals, there is no way I can physically resolve print that small, glasses or not.

    By scanning the postcard and then blowing up the scanned image 300%, I was able to make out the following:

There is a $17.50/mo early cancel penalty (meaning you are screwed if you lose your job or your apartment and have to move before you've paid for 24 months. If you only use it one month, you could have to pay $402.5 in cancel penalties);
PLUS there's a one-time $99 setup fee -- that one is guaranteed to be "no-how, no way" for a refund, come hell or high water;
Oh, and did you see the $10/mo in hidden -- well, ok, disclosed in 4-pt type -- equipment rental fees? So every price shown is BS by at least $10/month.
Don't forget that the mice type also says that there are taxes and fees added --- Not that they could bother to tell you what they are before you sign up. After all, they only use huge computers to track the residents and consumer behavior of each and every person in some 100 million households in America in incredible detail; they couldn't possibly be expected to manage up to FOUR (gasp!) numbers on top of all that data. (Four? Yup -- the taxes and fees from (1) federal government; (1) one state government; and, at most, (1) county and (1) city government. Why, their little computer circuits would fry just thinking about being expected to manage all that complexity and having to tell consumers what the bill would be before they're on the hook for the early cancel fee!
Best of all, the mice type also says "Prices subject to change." What the hell does that mean?? If they double the price and you decide you have to cancel, are you still on the hook for the $17.50/mo? Probably -- because they told you, right there in 4 point microscopic type!

Any business that markets this way is sending you a clear, simple message:

"We don't respect you. The only thing we care about you is how much money we can make off you.

Moreover, we think our service is so overpriced that we'd never sell any unless we use BS teaser rates and microscopic disclosures to screw you out of your hard-earned money. We'll hide some pretty important details in tiny mice type, and then play hardball when you have to cancel early because you can't afford the service after we've finished jacking up the fees and you see the government fees and taxes added on for the first time . . . with your first bill.

And since we don't respect you, or our offerings, or ourselves, we'll ignore all that and just put cute puppies and the word FREE in big, bold letters everywhere, and rake in the cash from people who are way too trusting of people like us."

As a consumer, you should print that red text and keep it next to your mailbox or the chair you use when reading your mail. Every time you get a postcard or letter that looks like Dish's flyer here, remind yourself of what that kind of advertising is really saying.

Scams are like dandelions, with more blooming anew each day

Wed, 14 Mar 2012 13:30:01 -0800

Passing on this warning from your friendly neighborhood IRS. I'm not a tax lawyer, and you can't rely on this warning to avoid any penalties the taxman might hit you with should you run afoul of this scheme (or make any other tax errors). Best advice: don't fall for the too-good-to-be-true offers, especially where the IRS is supposedly passing out free money. The (very) few tax breaks in the tax code that benefit ordinary people in the 99% are well-known and widely publicized. So if you get told something by one guy that seems like a great deal but you've never heard of it before, be sure to check it yourself by running the idea past a few other independent sources, like your local library or senior tax volunteers service.

IR-2012-29, March 2, 2012

WASHINGTON –– The Internal Revenue Service today warned senior citizens and other taxpayers to beware of an emerging scheme tempting them to file tax returns claiming fraudulent refunds.

The scheme carries a common theme of promising refunds to people who have little or no income and normally don’t have a tax filing requirement. Under the scheme, promoters claim they can obtain for their victims, often senior citizens, a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college.

In recent weeks, the IRS has identified and stopped an upsurge of these bogus refund claims coming in from across the United States. The IRS is actively investigating the sources of the scheme, and its promoters may be subject to criminal prosecution.

“This is a disgraceful effort by scam artists to take advantage of people by giving them false hopes of a nonexistent refund,” said IRS Commissioner Doug Shulman. “We want to warn innocent taxpayers about this new scheme before more people get trapped.”

Typically, con artists falsely claim that refunds are available even if the victim went to school decades ago. In many cases, scammers are targeting seniors, people with very low incomes and members of church congregations with bogus promises of free money.

The IRS has also seen a variation of this scheme that incorrectly claims the college credit is available to compensate people for paying taxes on groceries.

The IRS has already detected and stopped thousands of these fraudulent claims. Nevertheless, the scheme can still be quite costly for victims. Promoters may charge exorbitant upfront fees to file these claims and are often long gone when victims discover they’ve been scammed.

The IRS is reminding people to be careful because all taxpayers, including those who use paid tax preparers, are legally responsible for the accuracy of their returns, and must repay any refunds received in error.

To get the facts on tax benefits related to education, go to the Tax Benefits for Education Information Center on IRS.gov.

To avoid becoming ensnared in this scheme, the IRS says taxpayers should beware of any of the following:

Fictitious claims for refunds or rebates based on false statements of entitlement to tax credits.
Unfamiliar for-profit tax services selling refund and credit schemes to the membership of local churches.
Internet solicitations that direct individuals to toll-free numbers and then solicit social security numbers.
Homemade flyers and brochures implying credits or refunds are available without proof of eligibility.
Offers of free money with no documentation required.
Promises of refunds for “Low Income – No Documents Tax Returns.”
Claims for the expired Economic Recovery Credit Program or for economic stimulus payments.
Unsolicited offers to prepare a return and split the refund.
Unfamiliar return preparation firms soliciting business from cities outside of the normal business or commuting area.

This refund scheme features many of the warning signs IRS cautions taxpayers to watch for when choosing a tax preparer. For advice on choosing a competent tax professional, see Tips for Choosing a Tax Return Preparer on IRS.gov.

For additional information on tax scams, see the 2012 Dirty Dozen list.

If you're over 60 and you struggle with your bills, take note!

Tue, 13 Mar 2012 16:50:27 -0800

Be on the lookout for the announcements about the Senior Farm Direct Nutrition Program, or contact your local AAA (Area Agency on Aging). It's an obscenity that many Oregonians, including many elders, don't have enough food every month. It's an even bigger obscenity that the food programs are so underfunded that they have to run a lottery to see which elders get to eat.

But, while this tiny little underfunded program isn't a solution, the faster they are overwhelmed with applicants, the faster policymakers will take note of the need and maybe do something about it.

Now accepting VA veterans benefits claims work

Sat, 10 Mar 2012 14:43:22 -0800

I'm in learn-by-doing mode here (see March 6 letter below), but if you have a problem getting benefits from the VA, I'd be proud to help you. As a veteran, I am highly motivated to ensure that you are treated fairly and that the laws (which are very favorable to vets who are entitled to benefits) are followed in your case and that you receive respectful consideration of your claims. I can't guarantee a favorable result, but I can guarantee to do my best for you. Another point in your favor: It's a very friendly practice area, and all the attorneys I've met who practice in this field are very willing to help their fellow practitioners, so you can be well-served regardless of where you are.

Post Removed at Request of HomeServe

Wed, 07 Mar 2012 19:42:54 -0800