HOFER LAW FILES OPEN RECORDS COMPLAINT AGAINST LOCAL SMALL CLAIMS COURT

Today I filed  an official Access to Public Records Act complaint against the Wayne Township Small Claims Court in Indianapolis. I don't do this lightly. Twenty years ago, I filed a complaint against a judge who was letting collection lawyer run the court, and although the judge was reprimanded, I was effectively blacklisted from all the Small Claims Courts.  I filed the complaint because I intend to continue to investigate patterns of filing collection cases in the small claims courts, and I can't afford to go to each court twice, once just to get turned down and the second time to get the information after convincing the court staff that the open records act applies.   My complaint is below.

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Consumer Law Office of Steve Hofer

3750 Guion Road, Suite 190

Indianapolis IN 46222

317-662-4LAW                                                                                                                  www.hoferlawindy.com

317-662-4529                                                                                                                                 hoferlawindy@gmail.com

                                                                                                             

August 21, 2014                                                Via Mail and Fax 317-233-3091

Luke Britt

Indiana Public Access Counselor

W470 Indiana Government Center South

402 West Washington Street

Indianapolis IN 46204

              OFFICIAL OPEN RECORDS COMPLAINT

                                              Agency: Wayne Township (Marion County) Small Claims Court

                                              5401 West Washington Street, Indianapolis IN 46241

                                              Date of Request/Agency Denied Access: August 4, 2014

Dear Counselor Britt:

I am hereby making a complaint of denied access under the Indiana Access to Public Records Act.  The agency in question is the Wayne Township Small Claims Court in Indianapolis.  On Monday, August 4, 2014, during regular business hours, between 2:30 and 3:00 PM; I went to the Wayne Township Small Claims Court for the purposes of reviewing a selection of recent cases filed by bad debt buyers.  The abuse of the court system by bad debt buyers is a matter of public concern.  For context see: The One Hundred Billion Dollar Problem in Small Claims Court: Robo-Signing and Lack of Proof, Peter A. Holland, published in Journal of Business & Technology Law, Vol. 6, p. 259, 2011 and online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1875727. See also the New York Times Magazine feature story Paper Boys: Inside the Dark, Labyrinth, and Extremely Lucrative World of Consumer  Debt Collection,  Jake Halpern, http://www.nytimes.com/interactive/2014/08/15/magazine/bad-paper-debt-collector.html?_r=0. 

At the Wayne Township Court, I was allowed to use the public access terminal to identify a selection of recent cases. I copied down some case numbers, approximately 20, and asked to see the files that went with the case numbers.  The attendant said that I was not allowed to see the files, that they were not public. The only public information was the information on the terminal. I told the attendant that she is mistaken, these are public records that are readily accessed by collection attorneys on a daily basis.  On that same day I had inspected files without incident at Pike Township Small Claims Court. The attendant told me that I would have to take it up with the supervisor who was not in, and would not be available until tomorrow. She would not give me the full name of the supervisor. I offered to make a written request, but I was rebuffed. 

I believe it is the responsibility of the agency to have persons trained in compliance with the act on duty during all regular business hours regardless of the presence or absence of any given supervisor.  I believe my treatment at this court conveys an image that the court’s policy is to be friendly to debt collectors but not to persons who want to police the conduct of debt collectors.

Finally, I would have made an informal request for an opinion by the counselor if it were not for a disturbing fact that I found out later.  In the MYCASE online record system, the defendants’ names are missing from the online records of a number of collection cases filed in Wayne and Lawrence Townships after 8/11/2014.   (See enclosed documentation.) If researchers aren't even able to get defendant names from the online system; it will be impossible to uncover problems with debt collectors misusing the court system[1].

Sincerely,

Steven R. Hofer

Attorney at Law

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The MYCASE documents that I attached included lawsuits filed by:

Credit Acceptance Corporation

LVNV Funding LLC

Convergence Receivables LC

Calvary SPV 1 LLC

MSW Capital LLC

Second Round LP

Credit Acceptance Corporation

NCEP, LLC

Jefferson Capital Systems, LLC

Enclosures – Mycase records

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[1] The Mycase sheets are included for illustration only. Because for this purpose the names of the defendants are irrelevant, I have partially redacted those that are included.  

  Co

New York Times - Inside the Criminial Underworld of the Debt Collection Industry

Last week's New York Times Sunday magazine had a feature story detailing the criminal underworld network behind the bottom feeder debt collection industry.  The article, by Jake Halpern,  titled Paperboys: Inside the Dark Lucrative World of Consumer Debt Collection explains how the industry uses lies and pressure to make huge profits by paying 1% of the face amount of the debt and collecting 100% through intimidation and unfair collection lawsuits.

Inside the Dark, Lucrative World of Consumer Debt Collection

 

When the collectors go to court, no matter how many times the debt has been assigned, the collector maintains that the debt is absolutely legitimate and absolutely owned by the agency collecting it.  This is often a fallacy.   The debts are sometimes sold to multiple parties, each trying to collect; and sometimes unauthorized people get a hold of the accounts list and start outlaw collection.  That's why individuals and the courts must insist on strict accounting for proceeds and ownership of the accounts.   They aren't doing it right now.

John Oliver Takes on the Payday Loan Industry

John Oliver Takes On the Payday Loan Industry

Sometimes it takes somebody from somewhere else to really see how much you are messing up.  John Oliver takes the time to expose the myths and lies in the payday loan industry.  Language Alert.

Wusik Rocks

This post has nothing to do with law but does have to do with customer service.  I want to give a shout out and hearty thanks to William K.,  proprietor of Wusik.com for going above and beyond the call of duty in helping me with a software installation issue.  If you are looking for music software that is powerful, affordable and always interesting, check out Wusik.  

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Hidden Fees in the Indianapolis Bike Sharing Program

Gary Welch's Advance Indiana blog has a great post explaining hidden fees in Indianapolis's bike sharing program. If you don't dock the bike every half hour, you can be charged astonishing fees. Read about it at this link.

The Affidavit From Hell

I've been spending a lot of time working on issues regarding assigned debts.  When bottom feeder collection agencies sue on these accounts, they rely on affidavits from employees who are allegedly knowledgeable about the status of the accounts. Here is an affidavit that was filed in court by the law firm of Bowman Heintz Bocia and Vician, P.C.  from Merrillville, Indiana.

The affiant, Jennifer Bernard, states that she is an employee of "AMER. ACC CO LLC AS ASSIGN OF ALL DEBT AS ASSIGN OF PEPPERTREE AS ASSIGN OF PMD FINANCIAL AS ASSIGN OF ASSET RECOVERY AS ASSIGN OF AARON'S SALES, plaintiff or servicing agent of the plaintiff."  If her paycheck is drawn on that company name, I'd be surprised if there is any space left over for the dollar amount of her take-home pay.

Next the affiant has to swear that she is familiar with the books and records, and here is where this person amazes me with her knowledge. "I am familiar with the record keeping practices of AMER. ACC CO LLC AS ASSIGN OF ALL DEBT AS ASSIGN OF PEPPERTREE AS ASSIGN OF PMD FINANCIAL AS ASSIGN OF ASSET RECOVERY AS ASSIGN OF AARON'S SALES's business and/or have personal knowledge of the following:"  It is incredible that one person is familiar with the books and records of not just AMER ACC CO LLC but also ALL DEBT and also PEPPERTREE and also PMD FINANCIAL and also ASSET RECOVERY and also AARON's SALES.  A person this knowledgeable about the accounting systems of many companies should be writing accounting books, not signing affidavits.

Affidavits like these are ridiculous on their face, but collection companies are taking these things to court every day in the thousands, and courts are issuing default judgments on these cases almost as fast.  Look at this case as an example. At each step in the chain of this debt there were opportunities to make mistakes in he documentation of the amounts owed, the amounts paid and the status of the assignment. If there was ever a valid debt in this case, six companies have in theory had the opportunity to collect payments on this account and six companies have had the opportunity to collect money on this account.  Actually, six companies have had the opportunity to make this account up out of thin air.

What is the relationship between American Acceptance Co. LLC. and the law firm of Bowman Heintz Bocia and Vician? American Acceptance's registered agent, Glenn Vician, is a named partner in the law firm doing the collection.  How close are the companies physically?  It looks like a six minute walk if you go the long way.

Death of a Borrower Doesn't Kill Student Loans - Elizabeth Warren is Mad About It - About Time Somebody Is

If you are a parent who (or even a grandparent) who has cosigned private student loans for your family member, you are in for a rude surprise if the borrower dies. The entire loan balance often becomes immediately payable.  This is a rude surprise for an older family member who thinks Junior is going to be the one who gets the education that nobody else in the family could get, only to find that Junior is dead and the bills for a professional education are suddenly falling on a senior citizen (or near senior citizen) with anything but a professional income.  Senator Elizabeth Warren, bless her heart, is trying to bring this injustice to light and hopefully craft a policy response.

I have had to counsel several parents and grandparents who suddenly found themselves the target of aggressive student loan collections.  I can tell you that as a general rule government-backed student loans are not the type that have this problem; and thankfully, private student loans cannot result in the garnishment of Social Security income.  Unfortunately private student loans (even for a cosigner) can't generally be discharged by bankruptcy, but that's something Senator Warren hopes to change.  (There is an exception to the rule against discharge of student loans in bankruptcy; and that is in the case of "undue hardship".  I think cases involving  cosigners on a fixed income with a dead or disabled student borrower might often meet the "undue hardship" standard.)

If you are asked to cosign student loans for your son or daughter, I suggest that you get quotes on life insurance and long term disability insurance sufficient to cover the loan. The cost of that insurance should be reflected in your decision to borrow the money since that risk is a cost that you will bear.  If a grandchild asks you to cosign a loan, you should ask yourself and your grandchild what kind of college worthy of the name needs grandparent cosigners.  If they don't have faith in the student's ability to pay back the loan from future income, then maybe the program isn't worth the money anyway.  Remember, the resources of parents are considered in the formula for determining student aid; but the resources from grandparents are not.  Worthwhile schools can usually fund a way to fund qualified students without Grandma giving an IOU.

If you are in Indiana and you are being subjected to collection activity as a cosigner, I am interested in hearing from you.  Please contact me through the links at the top right of this page.

Solving the Epidemic of Bad Debt Lawsuits in Indiana

I've been trying to understand the dynamic behind what appears to be a lot more lawsuits against consumers over bad debts, especially old credit card accounts, especially old credit card accounts that have been assigned to one or more debt buying company.  Today I dusted off a law review article from 2012 that I put aside for rainy day reading. The article is by Professor Judith Fox of the University of Notre Dame Law School.  It is entitled DO WE HAVE A DEBT COLLECTION CRISIS? SOME CAUTIONARY TALES OF DEBT COLLECTION IN INDIANA.  It was published in the Loyola Consumer Law Review, and you can download it here.  Professor Fox led a survey of all the third-party debt collection lawsuits filed in Indiana from January 1, 2009 to March 31, 2009.  She made some interesting findings and I want to share some of them with you

Thirteen debt buying companies filed 79% of the lawsuits studied.  Here they are in decreasing order of frequency.

Midland Funding

Arrow Financial Services

Asset Acceptance

LVNV Funding LLC

American Acceptance

Atlantic Credit & Finance

Credit Max

CACH, LLC

RAB Performance Recovery

NCO Financial

Unifund

Patriot Recovery LLC

Portfolio Recovery  

[If you've  been sued by any of these companies contact a consumer attorney member of the National Association of Consumer Advocates. You can find one in your area through www.naca.net.  If you are in Indiana, you can call me at (317) 662-4529.  Better yet, if you get a collection letter from one of these companies but haven't been sued yet, call us before you get sued.  Frequently, a consumer lawyer can make these collectors go away forever with just an attorney letter.]

These bad debt buying companies are what we in the consumer law practice call "bottom feeder" collectors. They buy accounts after they've been written off by the collector, and perhaps they have passed through hands of several other collection companies.  Because accounts are often old and pretty doubtful. buyers pay for these accounts, usually no more than two cents on the dollar. The bad quality of the accounts is reflected in the price that the When represented consumers as an attorney at UAW Legal Services Plans, whenever my clients would get a letter from one of these companies, I would send the collector a request for validation, and usually that was the last that I ever heard from the collector. We rarely had to defend a lawsuit on one of these assigned accounts.  Still, the collectors love to file lawsuits hoping to get default judgments (suits where the consumer does not respond to the complaint) because if the collector gets a judgment, a $2.00 investment turns into a judgment for $100.00 that remains on the consumer's credit report for 10 years and is potentially collectible for 20 years.  Even one of these bad debt judgments can be a financial disaster for a consumer who is struggling to overcome financial hardships and rebuild credit.  

The Debt Buyers' Dirty Little Secret - they often (usually?) can't prove their debt, and don't want to go to court.

In her law review article, Professor Fox points out that in these assigned debt cases, the accounts have usually passed through several hands, and at each step there is the potential for errors and lapses in record-keeping.  When properly challenged, it is not easy for a debt collector on an assigned debt to prove entitlement to the money claimed.  Still, in the 640 complete case files that were part of the Fox study,  the collectors almost always won a judgment.  The biggest reason is that in 535 of the cases (83%) the defendant never responded to the complaint. In only 23 cases did a defendant file a formal answer, which I believe is the consumer's best defense. In 40 cases, the consumer wrote a letter to the court. Writing a letter is sometimes better than doing nothing. Sometimes it is worse, depending on whether the trial judge treats the letter as a full answer.  Not surprisingly, in the Fox study, only 26 defendants, 4% of the total, were represented by attorneys; and some of those were represented by bankruptcy attorneys notifying the court of a pending bankruptcy.   The bottom line is that fair fights are rare in collection cases, and that's no accident. The debt companies want it to be that way. Not only are the debt collectors avoiding fair fights, they are trying to avoid showing up to court at all. 

Professor Fox's study observed that from 2005 to 2009 cases designated as "civil collection" matters in the case header (with "cc" in the case or cause number) increased 51.8%. In the same time-frame, small claims cases (designated "sc") in the header decreased 7.9%. To understand this section, you need to know that small claims ("sc") cases can be filed with a lower filing fee, but the claim cannot exceed $6,000.); whereas "cc" claims can claim any amount but require paying a higher filing fee, usually about a $50.00 difference.  Professor Fox surprisingly found that 64% of the "cc" cases were filed for a mounts less than $6,000; so, in theory, those cases could have been filed in small claims court, thereby costing the plaintiffs less to file.  Professor Fox speculates (I think correctly) on why collectors are paying more to file outside of the small claims docket.  The collection attorneys don't want to show up at court, and they don't want the consumer defendants to show up at court.  Usually on the small claims docket cases, there is an initial appearance date set that the defendant can show up and raise defenses. This isn't routinely set in the "cc" cases. Another factor is that the collection attorneys are usually from out-of-town, and sometimes from out of state. If the attorney has to show up at court even once it can make the case unprofitable.  (In the Fox study, the biggest debt buyer plaintiff was Midland Funding. Midland used a law firm in Merrillville Indiana for its collection cases all over the state. Merrillville, near Chicago, is several hours away from the southern half of Indiana.  

How can you tell if you were sued on a case where the collection attorney doesn't want to go to court?  Is the amount of the claimed debt under $6,000? if so, look at the court case number or cause number. Does the number have "cc" in it?  If yes, then the defendant could have sued you in small claims but sued you on the regular collection docket in hopes to avoid court. With this knowledge you have a lot more leverage in "cc" cases.   

Why I'm Not a Comcast Subscriber - Tips for cancelling cable, cell-phone and satellite television contracts.

People are surprised when I tell them that my family doesn't have cable television. In fact, we haven't had cable or satellite tv for more than 15 years; and we really don't miss it. A mixture of broadcast television, Netflix and Hulu Plus suits us just fine, and the money we save is enough for two Sirius radio subscriptions and a nice getaway vacation each year.  If I was ever tempted to go back to Comcast, this recording would surely warn me off. An in this recording, Ryan Block, an AOL employee recorded a Comcast employee's efforts to get him to not cancel service.  (I find that ironic, because years ago, I wasted hours of my life trying to get AOL to cancel my subscription.)

 If you are trying to cancel a cell phone contract, a cable tv contract, or a contract for satellite radio or satellite TV, go ahead and make one call, but set a strict time limit on it.  When the person tells you that they are recording the contract for quality purposes, you should tell them, "what a coincidence, so am I." Actually record the conversation if you can.  Don't let them keep you on the phone for a long time.  Ask the representative for a written address to send your cancellation complaint. Ask the representative for his or her name and employee number, then hang up and send your cancellation demand in writing. Follow up with a complaint to the FTC, the FCC, the BBB and your state's attorney general.  If the representative won't give you the address, do a google search, put the name of the company in the Google box with "address for cancellation" or "executive disputes"; and you will almost always come up with a good address.

Great Tips - What to Say to Debt Collectors if They Call

This is a very good instructional video by Alabama consumer attorney John Watts giving you tips about how to handle calls by debt collectors.  It is okay to screen repetitive calls by debt collectors, but I think it is important to talk to a collector at least once.  As John points out, the collector may not even be calling about your account.  If so, setting the record straight early on may help you avoid a lot of stress later. Another thing to keep in mind is that a telephone debt collector's livelihood depends upon establishing a position of power over you. Once it is clear in your mind that this collector can't make you do anything you don't want to do, that power goes away. Your power to waste the collector's time actually exceeds the collector's power to get money from you.  

Welcome to CLAOS - The Consumer Law and Other Stuff Blog

Welcome to Steve's (Totally Free!) Consumer Law Blog - the semi-official blog of the Consumer Law Office of Steve Hofer. I've blogged before. From 1999 through early 2014, I was the semi-official blogger of AFSCME Local 3357, the union for UAW Legal Services attorneys. If you are a UAW member, retiree, spouse, or surviving spouse, and you are looking for an attorney now that UAW Legal Services Plans are in the process of disbanding, feel free to contact me.  Even if you aren't in Indiana, where I am.  If you are out of my area, I will try to look up a former UAW member in your area who is practicing law; or in the case of consumer cases, find one of my fellow National Association of Consumer Advocates members who can help you out.  My contact links are to the right of this post.