There are two parts to this story. Part I, for the lawyers: the 4th Circuit ruled on Powell v. Palisades Acquisition, ruling that debt buyers are subject to the FDCPA when filing an assignment of judgment: "it would be incongruous now to hold that an assignment of judgment filed in a debt collection action is not similarly subject to the FDCPA, given that a debt collector who obtains a judgment through a successful summary judgment motion stands in exactly the same position as a debt collector who files an assignment of judgment."
Part II, for everybody: look at how insane the parts of this collection case were that were completely legal, and in fact enabled by the law.
In 2000-- in a time before cell phones, 9/11, the Iraq War, and the Dot Com Boom, literally during the Clinton administration-- Aleta Powell fell behind on a credit card bill during a bout of unemployment. In the Year of Our Lord 2015, she will still be dealing with this debt. 5/33 of a century later! In 2003, the bank sued her, but relented after she agreed to a payment plan. When she missed a payment, they got an uncontested judgment against her at Maryland's statutory interest rate of 10%-- almost double the rate here in Minnesota, which is one of the few states to set a reasonable judgment interest rate. The bank sold the judgment to a debt collector in 2007. The debt collector, as debt collectors often do, broke the law to try and collect the money from her. Had the case not landed before the 4th Circuit, this would have been a completely unremarkable case.
Let's compare the beginning and present, here: when 15 years younger, Ms. Powell fell behind on an $8,000 credit card bill. That bill today, with Maryland's statutory interest, is $21,519.28. Wow.
A new report from Herb Weisbaum at NBC reveals the major problems debt collectors are causing for a huge number of seniors. With 42 million Americans in debt for medical bills, and 35% of Americans with accounts in collection, it's not hard to suppose that a lot of them are seniors. But the depth of the industry's dealings with seniors is extraordinary.
One person interviewed for the article, Michael, tells his story of dealing with collectors. Something that both he and the article seem to miss is that many of the collection tactics he is describing are illegal.
The Consumer Financial Protection Bureau (CFPB) recently reported that for older Americans, debt collection is the top complaint. About one out of three complaints submitted to the agency by seniors is about debt collection. The major complaints include being hounded for medical debts currently in dispute, attempts to collect the debts of deceased family members from their relatives, and illegal threats to garnish Social Security and other federal benefits.
Michael, a 77 year-old retiree who lives in the Seattle area (he asked that we not use his last name for privacy reasons) realized he could not pay his credit card bills after he stopped working. So he contacted the two card companies and made payment arrangements that he could handle. That worked for a while, but eventually, they turned it over to collection. The calls started immediately, he said.
The latest debacle-in-waiting hidden in Congress' $1.1 trillion CRomnibus bill is a massive cut to the much-beloved Pell Grant program. The Washington Post reports:
Since 1965, Pell Grants have helped thousands upon thousands (millions?) of students attend college who would have otherwise been locked out by the preposterously inflating cost of higher education. According to the Washington Post, the program is currently running a surplus, though due to these cuts could face a funding shortfall within a year.
More fuel for the fire.
Congress will cut $303 million in funding for a federal program that allows many of the nation's poorest students attend college, part of a massive spending package to keep the federal government open through the end of the year.
The Eighth Circuit in McIvor v. Credit Control Services, Inc. struck down a consumer claim under the Fair Debt Collection Practices Act last week, making it more difficult for consumers to bring claims against debt collectors who violate federal law. A quick rundown:
Credit Control Services was attempting to collect an unpaid car insurance bill from Sarah McIvor. Sarah, however, had paid this debt to the original creditor years earlier. When CCS put the debt on her Trans Union credit report, she wrote a letter to Trans Union stating that she did not owe the money and asked that it remove the debt. Following a federal law called the Fair Credit Reporting Act, Trans Union sent Sarah's dispute to CCS, and, under the same law, CCS was required to investigate the dispute and return the results to Trans Union. CCS refused to remove the debt, and sent Trans Union an "all clear" on the information.
Under the FDCPA, debt collectors like CCS are required to "communicate that a disputed debt is disputed." This requirement was set with credit reporting in mind: Trans Union, and the other credit bureaus Experian and Equifax, remove debts marked as 'disputed' from consideration when calculating your credit score (to oversimplify, they don't find disputed debts reliable enough to use). Which makes CCS' "all clear" communication to Trans Union a problem, because under the FDCPA it was required to mark the account as 'disputed.'
The court, however, got hung up on CCS's argument that Trans Union already knew about the dispute, and so the "all clear" update lacking mention of it was not "false, deceptive, or misleading." This ignores one salient fact: that Trans Union rubber stamps whatever CCS and any other creditor sends it. Trans Union relies on collectors and creditors to provide it debt information, knowing little about these accounts itself, so if CCS does not mark an account as 'disputed,' Trans Union will not report it as disputed. In Sarah's case, this hurt her credit-- remember, calling the account 'disputed' removes it from her credit score calculation.
The 8th Circuit declined to take judicial notice of this fact, however, and dismissed the case.
I have had a startling number of clients hounded by debt collectors over credit cards used primarily for groceries. As of last year, US Today estimated that it costs between $7,592 and $15,028 a year to feed a family of four. Food is a major and necessary expense, a tremendous source of consumer spending, and I'd like consumers to get it right. This week's post is going to talk all about it.
Here is the nutrition label for a can of Coca-Cola:
This label format appears on the back of just about every item in the grocery store. Shoppers, either habitually or when feeling particularly nutrition-minded, flip the box or jar over and scan this for red flags. Because grams are a meaningless measurement to most of us, we rely primarily on the "% Daily Values" listed to make our decisions. By that metric, a single can of Coca-Cola seems relatively harmless. An average adult diet is somewhere north of 2,000 calories a day, so 140 calories per can is acceptable. Ditto the low sodium, lack of fat or cholesterol-- heck, it's even only 13% of your carbohydrate intake needed in a day! A can of Coke seems like a downright modest splurge-- and even drinking one or two a day wouldn't be the end of the world.
Do you notice anything missing from this label?
Excluding Trans Fat, which was added only in the last few years, look at the whole chart. Where is the "% Daily Value" for sugar? Sugar, especially added sugar, metabolizes into fat almost instantly, messes with insulin levels, and causes tooth decay to boot.
Sugar is the elephant in the room of the food industry, the hands-down largest factor in the obesity epidemic, and a major contributor to the meteoric increase in health care costs nationwide. If you go to the grocery store and buy a standard, early 21st century selection of American groceries, even one that leans health-conscious, you are going to eat and drink, as a matter of course, several times the daily recommended intake of sugar.
The FDA website says that "No daily reference value has been established for sugars because no recommendations have been made for the total amount to eat in a day," which suggests that there is no data on sugar consumption. To be clear, there is significant data on healthy sugar consumption. The FDA's statement is actually a lie/neologism, better worded as: "the FDA does not make a recommendation because no recommendation has been made by the FDA." Because the FDA has curiously omitted sugar consumption recommendations from its labeling requirements, here are a few recommendations:
American Heart Association: 25g/day for woman and 37g/day for men
Mayo Clinic: 25g/day for woman and 37g/day for men
World Health Organization: 25g/day
This puts a rather insidious spin on that can of Coca-Cola, which is more than 100% of the recommended daily sugar intake for an adult male. But there are bigger problems than just soda (and snacks and candy and ice cream and cakes, etc.), because sugar is added to e-ver-y-thing. There is added sugar in cereal, oatmeal, spaghetti sauce, barbecue sauce, canned fruit, juice, tea, energy drinks, granola bars, baking mixes, yogurt, almost all frozen foods, ketchup, dried fruit, protein bars, salad dressing, crackers -- seriously, everything-- enough products that even a seemingly-balanced diet contains many times the recommended intake of sugar. Not a little over: many times! For those who didn't know this before, it's almost a certainty: you eat several times the recommended amount of sugar. This maybe starts to explain why the FDA leaves that number off the chart.
So, here is the aforementioned Public Service Announcement to consumers: when looking at the amount of sugar in a service, divide the number of grams by 4. That is the number of teaspoons of sugar in each serving. If you wouldn't sit down and eat that many teaspoons of sugar out of a bag, don't buy it.
The attorneys of Drewes Law have access to post and edit the blogs. Attorney Bios.