Open the magazine and go to page 10 for an entertaining look at the
budget of the United States from a CPA's perspective.
Thursday, December 29, 2011
Wednesday, December 28, 2011
Bank of America Corp. and a debt collector it hired to go after
deceased customers' debts violated state law by repeatedly calling a
Florida woman about paying the credit-card bill of her late husband, a
Florida state-court judge ruled this month.
Judge Keith R. Kyle in Lee County, Fla., found that collection
attempts by West Asset Management, an Omaha, Neb., firm working on
behalf of Bank of America, amounted to harassment.
Friday, December 23, 2011
Friday, December 16, 2011
Thursday, December 15, 2011
that tracks allegations of illegal late-night phone calls, arrest
threats and other abuse. But few of the complaints are likely to
result in enforcement actions.
The debt-collection industry, booming as many Americans struggle to
catch up on their payments or walk away from what they owe, was the
subject of a record 164,361 complaints through Dec. 8 of this year,
according to the Federal Trade Commission. The total is 17% higher
than the 140,036 debt-collection complaints the FTC got for all of
Since the start of this year, though, the FTC has launched just four
enforcement actions against debt-collection firms under the primary
federal law used to oversee the industry. From 2005 to 2010, the
average was two cases a year.
The actions often target companies that are responsible for hundreds,
if not thousands, of consumer complaints.
Wednesday, December 7, 2011
An employee at West Asset Management in Omaha, Neb., explained that
she wasn't legally obliged to pay, according to a recording of the
November call reviewed by The Wall Street Journal. Then he veered into
a discussion about how she could "get this taken off your plate."
Mrs. Long, of Cape Coral, Fla., told the debt collector she had "lost
everything." She had sold the couple's motor home to help cover
medical bills and funeral costs. All that was left, she said, was
$2,000 in life-insurance proceeds.
"I can give you that," she said when asked for the money, "anything
just to get this off of my head."
When you die, your debts usually die with you. Surviving family
members rarely have a legal obligation to pay unless they co-signed a
loan, such as a mortgage or credit card. That leaves lenders in the
But debt collectors have found a way to help lenders get their money
anyway. Working on behalf of financial giants from Bank of America and
Capital One Financial Corp. to Discover Financial Services and
Citigroup Inc., collection firms target survivors who might agree to
pay at least part of what the dead person owed.
Debt collectors say the survivors have a moral obligation to pay,
especially in cases where they benefited from purchases rung up by
ACA International, the industry's main trade group, says that
collecting payments on debts owed by the dead helps ensure that
lenders will continue to extend credit at competitive interest rates
to older Americans. David Cherner, corporate counsel for the ACA, says
lenders must try to collect the debt or else write it off. "Just
because someone has passed doesn't mean the debt is wiped clean," he
None of the financial firms would say how much debt-recovery work is
outsourced. Nor would they comment on any individual collection cases.
The companies say that they comply with all applicable laws and make
sure surviving relatives are approached with sensitivity.
For the rest of the story, see this article in the Wall Street Journal:
written in Greek. Even for attorneys, they are often almost
The Obama administration on Wednesday is launching a new initiative to
make credit-card terms easier for consumers to understand, a move
White House officials trumpeted on the eve of an important Senate vote
on the president's pick to lead the agency.
The Consumer Financial Protection Bureau, a new federal agency created
by the 2010 Dodd-Frank law, plans to announce a project to simplify
credit-card agreements, the contracts the nation's banks send to
consumers to explain interest-rate policies and other terms.
Monday, November 21, 2011
I've seen examples of this in my bankruptcy law practice. Debt
collector has no valid debt to collect, but claims to have purchased a
debt owed by debtor and basically tries to threaten and shout at the
person long enough to convince them it is easier to pay the amount
than deal with the harassment. I've seen this tactic used mainly
against people who don't speak English well, and for some reason these
con artists seem to target women.
discovery requests and setting hearings until the debtor fails to jump
through a hoop properly, and then ask the court to sanction the debtor
by a day in jail. This tactic is being opposed by the Illinois AG.
(Note: The reference to courts issuing warrants for debtors who fail
to make a court ordered payment by a specific date is a little
different. In that situation, the court has usually heard evidence
and made a finding that the debtor has specific funds or generally has
the ability to make a specific payment, and ordered the debtor to pay
a certain amount by a certain date. When the debtor fails to make
that payment, it is usually the case that the debtor really is just
openly flouting the court's order.)
Friday, November 11, 2011
Ask hedge fund manager Daniel Ades about the future for recent college
graduates and he likes to draw a picture, a very ugly picture. He
sketches out a bell curve mapping the historical default rate on
student loans – then he draws another curve much higher to show the
likely default rate for the Class of 2011.
Mr. Ades has become an expert in the $242 billion market for bonds
backed by bundles of student loans, delivering consistently strong
returns by trading hundreds of millions of dollars worth of the debt
over the past four years. "We know all these deals inside out and we
know their default rates," he said.
But when it comes to the loans banks made to students who graduated in
2010 and 2011, the 31-year-old investor is steering well clear,
"because we can't quantify the risk," he said.
Investors like Mr. Ades have a unique view on the future for America's
job-seekers. Their investments depend on accurately predicting young
people's ability to pay their loans, which means they obsess about
everything from employment rates in different professions to the
long-term earning potential of young graduates.
Historically, investors have assumed 25% to 30% of student loans
bundled into their bonds will default but they are baking in 30% to
40% default rates for loans owed by the current crop of graduates,
said Chris Haid, a director in asset backed trading at Barclays
Capital. Even those assumptions are a best guess and defaults could
ultimately go higher if unemployment rises, Mr. Haid said.
This analysis translates into some surprising insights for students
and policy makers. For example, in the current economy, it may make
more sense to enter a technical college than to go to law school.